Was Ethereum 2.0 the beginning of the end for currency competition?
In September 2022, the Ethereum network took the big step: changing from Proof of Work to Proof of Stake. With this transition, the network will be much more efficient and scalable; however, the criticism that Ethereum has said goodbye to the competition with Bitcoin with this step does not disappear.
In recent years, the Ethereum network has been running on the proof-of-work consensus mechanism that Bitcoin also uses. This secures the network thermodynamically through the mining process. Ethereum has had increasingly higher transaction fees in recent years, which has made it difficult to scale.
The core of Ethereum 2.0 is Ethereum Merge. The Ethereum network was changed from Proof of Work to Proof of Stake, which means that the Ethereum network was able to operate with 99.9% more energy efficiency in one fell swoop. This lays the foundation for high scalability when running smart contracts. In the future, shard chains will greatly increase scalability.
Why Bitcoin Runs on Proof of Work? Criticism of Proof of Stake
Many Ethereum supporters enthusiastically announced the move to proof-of-stake, which should finally reach a new level of efficiency. The network must continue to grow, and more and more dApps must be built on the network. Proof of Work was considered slow and consumed a lot of power. Critics speak of it as a method that is harmful to the environment.
Bitcoin deliberately uses proof of work to thermodynamically secure the network. Therefore, Bitcoin has proof of a physically provided and decentrally distributed line. This is what makes the Bitcoin network so incredibly secure. Ethereum left this path with the move to proof of stake.
There are mechanisms here, such as freezing stakes in the event of a planned acquisition. Still, it’s hard to deny that securing proof of work is superior to physical performance in this case.
Is Ethereum’s Competition with Bitcoin Over?
In the early years of the Ethereum network, Ethereum fans often referred to the network as a better alternative to Bitcoin. Other followers, who took a more thoughtful approach, saw Ethereum as a completely different network with different functions than the Bitcoin network.
After the Merger it should be impossible for the ether token to become a better currency than bitcoin. Through proof of work and its massive hash rate, the Bitcoin network is extremely secure and not controlled by any central party, neither individual, nor state, nor corporation. This toughness characterizes Bitcoin, and makes it the ideal decentralized currency. Furthermore, Ethereum acts as a decentralized network with its own diverse functionalities. This makes the ether token extremely valuable in the future.
By Audy Castaneda
