Ethereum 2.0’s Beacon Chain Officially Launches

December 1, 2020

It’s official! Ethereum 2.0’s Beacon Chain is launching. At the time of this writing, more than 675,000 Ethereum tokens have been deposited to the Ethereum 2.0 staking contract with the average balance of an Ethereum address being 32.01 Ethereum tokens, according to BeaconCha.in. 32 tokens are a requirement for becoming a validator on the upgraded version of Ethereum and earning annual staking rewards of over 4% per year.

 

What Is the Significance of the Beacon Chain?

The launch of Ethereum’s Beacon Chain is going to allow for scalability and transaction speed on the Ethereum blockchain to increase dramatically. The Beacon Chain will act as the main chain of the whole blockchain through which other side chains will be able to finalize transactions. The aim of this new network infrastructure is to make sharding possible.

 

What Sharding Means for Scalability

In blockchain speak, sharding is the process of grouping transactions together away from the main chain. Transactions are validated on side chains that don’t affect the speed or scalability of the main chain. This makes everything more efficient as transactions get moved to the main chain already validated and the user experience improves.

 

Moving from Proof-of-Work to Proof-Of-Stake

For many, the fact that launching the Beacon Chain means over 21,000 validators are officially committed to the Ethereum upgrade is a significant development. Still, moving to a proof-of-stake consensus algorithm is a multiyear process that involves further development.

Many other altcoins already operate on a proof-of-stake system and allow investors to stake tokens directly on a hardware wallet or trusted crypto exchange. Ethereum is still a few steps away from that.

That being said, many Ethereum supporters who believe it can one day overtake Bitcoin as the world’s most valuable cryptocurrency are holding out hope that a 2.0 version of the network will be the catalyst that sends it to the moon. Only time will tell what happens.

 

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