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Ethereum 2.0: What Does the Upgrade Mean for Retail Investors?

Benson Toti

You’ve probably heard a lot about Ethereum 2.0 but what does it mean for retail investors? Can part-time traders benefit? Or will it be only large companies that stand to gain?

Also known as ‘Serenity’, 2.0 is the last stage of the Ethereum journey, as set out by creator Vitalik Buterin back in 2015.  The upgrade seeks to improve on every aspect of Ethereum so far: making it quicker, more scalable and cheaper to use. Win-win, right?

There will be changes to Ethereum that will change the direction of the currency away from where it is today. The annual issuance of Ethereum 2.0 will be halved from its current issuance rate, taken down to two million new coins per annum.

This means there will be half as much Ethereum entering circulation, potentially leading to higher demand and higher prices. A sentiment seemingly shared by some, especially if the recent buy ups of Ethereum by corporates in recent weeks are anything to go by.

Fees will be reduced significantly, which makes the currency more attractive to retail buyers but also, importantly again, to large companies.

If Ethereum 2.0 becomes more scarce due to all these attractive changes to corporate investors who have been holding ETH will be pleased with the news.

More than a just a Currency

Buterin has been vocal about how both Ethereum and Bitcoin have many other applications than just cryptocurrencies or forms of investment.  Ethereum 2.0 will use a proof of stake (PoS) system where coin holders can stake some of their coins to help validate other transactions.

With vast sums of ETH 2.0 tied up in staking, there will be even less ETH 2.0 available on the market.  To Buterin, this isn’t a bad thing. This is exactly what he has been aiming for; the uses of Ethereum, and Ethereum 2.0, extend far beyond just being used as a currency.

The switch to Proof-of-Stake combined with planned upgrades like Sharding at the eWASM (Ethereum Web Assembly) will revolutionise the way Ethereum is used.  Sharding allows for work to be divided up in small parts (or shards) across many different chains so they can be processed more quickly.  The eWASM will allow for smart contracts and dApps to be run across different shard chains on the new ETH 2.0 network.

All of these changes are set to make Ethereum 2.0  better than ever.  Will they all be implemented without hick-ups? Possibly not.  But if you’re into Ethereum for the long game the signs look good.  With the first phase of Ethereum 2.0 being rolled out at some point this year, and 1:1 exchange for ETH and ETH 2.0, now could be a great time to buy.

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