How Ethereum 2.0 Could Shift the Crypto Markets

Many investors are convinced the launch of Ethereum 2.0 will correspond with their upcoming 5th-anniversary date of July 30. But the actual release date is speculation as digital finance gurus have been anticipating Ethereum’s next upgrade all year. Initially targeted for January 2020, the release date was then pushed to the 2nd quarter and finally the 3rd quarter. As Ethereum has been postponing the launch, some are still hopeful that July will bring them Ethereum 2.0.

How Will Ethereum 2.0 Work?

The new Ethereum 2.0 is designed to replace the original proof-of-work (PoW) system that utilizes miners. The new system uses the proof-of-stake (PoS) system where users can mine blocks dependent on how many tokens they hold. There are validators instead of miners in the new system to ensure a more efficient way of processing blocks.

In the short term, Ethereum will be operating both the original Eth1 platform and the newer Eth2. Ethereum 2.0 will be rolled out in 3 different stages to incorporate the original system effectively and entirely fully.
• Stage 0: Beacon chain – consisting of the PoS system to test functionality
• Stage 1: Shard chains – consisting of 64 shards to test the shard system functionality
• Stage 2: State execution – consisting of smart contracts and the final phase to complete the entire functionality of 2.0

Ethereum 2.0

Will the Move to 2.0 Give Ethereum a Price Boost?

There is some speculation that this rollout of Ethereum 2.0 will help their position of the market price. Ideally, users can move their current Ether tokens (Eth1) over to the 2.0 system to generate Eth2 tokens. However, coins that exist as Eth2 in the new system cannot be converted back to their original state of Eth1. Having 2 parallel systems working simultaneously could have some side effects.

With both Eth1 and Eth2 systems working separately and requiring miners and validators, stakers and agents, incentives are necessary. This setup can cause the Ethereum inflation rate to increase briefly until Ethereum 2.0 has completely merged with Eth1. Some users may not like this inflation schedule seeing it as a disadvantage, but it looks unavoidable at this time.

Price Fluctuation Factors

During this transition time for Ethereum 2.0, price fluctuations are imminent, depending on some additional factors.
• By switching from mining, it could create a supply and demand scenario as users with the most stake can validate.
• As Eth2 is generated in the new network, the supply and demand principle will come into effect, causing market variables.
• As the world gets ready for 2.0, new investors are taking an interest, creating more of a demand for Ethereum tokens.

How the crypto market prices will react once the new Ethereum 2.0 launches have yet to be determined. Investors wait eagerly for the predicted rollout, hoping for the best-case scenario for their Ether investments. One thing is for sure, the world’s cryptocurrency enthusiasts have set their calendar for July’s launch. It will be interesting to see how Ethereum merges with the PoS system and how it will affect the market.

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