Course Content
What Is Ethereum 2.0 And Why Does It Matter?
Ethereum 2.0 is a long-awaited upgrade to the Ethereum (ETH) network that’s promised significant improvements to the functionality and experience of the network as a whole. Some of the more notable upgrades include a shift to Proof of Stake (PoS), shard chains, and a new blockchain at the core called the beacon chain. All of this and more is expected to be phased in through a carefully planned roadmap. But that’s just the tip of the iceberg. With Ethereum being one of the most popular cryptocurrencies on the planet, there are important details to what Ethereum 2.0 truly is and how it’ll impact the crypto-verse as a whole.
What Is Ethereum 2.0 And Why Does It Matter?
About Lesson

The biggest differences between Ethereum and Ethereum 2.0 involve the use of the Proof of Stake (PoS) consensus mechanism, shard chains, and the beacon chain. Let’s take a look at these differences in more detail.

Proof of Stake

Proof of Work (PoW) is Ethereum’s (and many other blockchains’) way of keeping the network secure and up-to-date by rewarding miners to create and validate blocks on the blockchain. Unfortunately, PoW is not scalable since it demands an increasing amount of computing power as the blockchain grows.
Proof of Stake (PoS) solves this by replacing compute power with “skin in the game”. That’s to say, as long as you have a minimum of 32 ETH, you can commit it (i.e., stake it), become a validator, and get paid by confirming transactions. If you’d like to get a deeper dive into how PoS and staking works, check out Proof of Stake Explained.


Anyone who wants to access the Ethereum network must do so through a node. A node stores a copy of the entire network, which means the node has to download, compute, store, and process every single transaction since the beginning of Ethereum’s existence. While you as a user don’t necessarily have to run a node just to transact, this slows everything down.

Shard chains are just like any other blockchain, except they only contain specific subsets of one whole blockchain. This helps nodes by only having to manage a slice, or shard, of the Ethereum network. This should increase transaction throughput and Ethereum’s overall capacity.

The beacon chain

With shard chains working in parallel, something’s got to make sure they all stay in-sync with one another. Well, the beacon chain takes care of that by providing consensus to all the shard chains running in parallel.

The beacon chain is a brand new blockchain that plays a central role in Ethereum 2.0. Without it, information sharing between shards wouldn’t be possible and scalability would be nonexistent. For this reason, it’s been stated that it’ll be the first feature shipped on the road to Ethereum 2.0.