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Let’s Stop Making it Too Complicated: Ethereum 2.0 Update And Web3

Ethereum is one of the founding fathers of blockchain technology, surpassed only by Bitcoin in market capitalization.

It is also the preferred venue to build dapps and DeFi protocols. Its smart contract feature is very versatile and the network is safer than any other option. Moreover, Ethereum, so far, is the only cryptocurrency project that has ever seriously challenged Bitcoin.

Credit: https://coinmarketcap.com/charts/

If we take a look at the chart above, we can see that, by mid-2017, when most initial coin offerings (ICO) were being conducted, Ethereum was only 6% below Bitcoin. At this time, Bitcoin’s market cap was $43.1 billion and Ethereum’s was $34.8 billion.

The gap soon widened again due to a bull run on Bitcoin. However, Ethereum didn’t lose its drive — it reached $132 billion on January 10, 2018.

In the present day DeFi boom, Ethereum is still the first option for developers, who trust in its decentralization and security. But this same preference has led to network congestion and high transaction fees.

Currently, Ethereum can only process around 14 transactions per second, which is not enough to handle the growing DeFi industry and all its users. The fees, which started rising in late 2020, reached above $60 recently.

So the ecosystem turned to other platforms with smart contract support, like TRON and EOS, to tackle this issue. But the one that became most popular was Binance Smart Chain (BSC). This blockchain, very similar to Ethereum, launched in September 2020.

The key to BSC’s success is its EVM compatibility. It allows developers to quickly import protocols to the new chain while continuing to use the same wallets for their Ethereum tokens. Overall, the transition for everyone is seamless and the interfaces are the same in most cases. But before digging deeper into BSC, let’s talk about Ethereum 2.0, the planned upgrade to the Ethereum network.

Ethereum 2.0

Credit: https://www.cybavo.com/

Ethereum has been showing signs of congestion ever since the boom of 2017. Back then, its developers proposed a set of changes to scale the network. The changes are to culminate in Ethereum 2.0.

The upgrade will bring two major changes to the blockchain. First, the consensus algorithm will change from proof-of-work (PoW) to proof-of-stake (PoS). This means that block validators won’t require GPU devices, but a given amount of tokens.

Secondly, the upgrade will implement ‘sharding’. This splits the blockchain into different subchains which can each process as much as the main chain. Specifically, Ethereum 2.0 will be sharded into 64 chains, with Ethereum 1.0 being the first of these.

The first phase of this upgrade was put in place with the ‘Beacon Chain’. Users who want to participate as validators have to register and stake at least 32 ETH.

Sharding is the second phase, expected to be deployed in 2021. The third upgrade, to be implemented in late 2021 or early 2022, will enable cross-shard transactions and merge both versions. At this point, Ethereum 2.0 will become the only Ethereum blockchain.

Ethereum vs Binance Smart Chain (BSC)

Credit: https://cryptoslate.com/

As we mentioned, BSC is Ethereum’s biggest competitor. Since February, BSC has processed more daily transactions, and it’s held the third largest market cap in the cryptocurrency listings for a few months now.

BSC’s strategy is to emulate the good aspects of Ethereum, from looks to working features, and improve upon its deficiencies. It has different token standards, like BEP-20 and BEP-721, which are almost identical to Ethereum’s ERC-20 and ERC-721 (fungible and non-fungible, respectively).

The new chain, however, is faster and cheaper. Fees on BSC are below a dollar, even with 5 times the amount of daily transactions. Block time is around 5 seconds compared to Ethereum’s is 13. And most importantly, BSC already uses a PoS consensus algorithm.

Despite all these benefits, and its obvious popularity, there are various concerns about BSC. The main goal of cryptocurrencies is to decentralize money and financial processes. While BSC claims to be decentralized, its ties with the Binance exchange, a centralized company, brings doubt to this claim.

Moreover, consensus is reached by a set of only 21 validators. To put this into perspective, there are currently over 136,000 validators registered for Ethereum 2.0.

Concerns aside, BSC is a very popular blockchain and has hosted many dapps.

Kirobo and the Web3

Kirobo and the Web3

Kirobo is an Israel-based blockchain technology company that aims to solve a central issue in the cryptocurrency ecosystem work: irreversibility. Currently, transactions cannot be reversed, so if you send tokens to the wrong address you will lose them forever.

In both Ethereum and BSC, hundreds of dollars are lost every day because users send tokens to a smart contract address instead of an actual recipient. With Kirobo, users can retrieve their funds before the recipient approves the transaction.

To use Kirobo, you must connect your wallet to the interface — it works with any wallet that has the ‘Wallet Connect’ protocol. Then you enter the receiving address and set a password. You must then provide this password to the recipient, who enters it to release the funds. Since the smart contract cannot enter the password, you can retrieve your tokens if something isn’t right.

This innovative protocol was initially built only for Bitcoin. But as dapps on Ethereum became more and more popular, Kirobo added support for that blockchain too.

Now, with BSC becoming the preferred option for Web3 dapps and DeFi protocols, Kirobo was quick to integrate this blockchain into its interface. This way users are safe to interact with the best protocols in the crypto ecosystem.

The article is not investment advice and must be used for informational purposes only. It is very important to do your own analysis. You can use KIRO for utility purposes only. Israeli, Canadian, and USA citizens cannot buy KIRO.

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Alex Goldberg

Alex Goldberg

A huge crypto fan. I believe that the decentralized world is the future, Blockchain technology is changing the world.