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In this article, we detail Ethereum's upcoming switch to proof of stake (PoS): what the blockchain's current issues are, why it's switching to PoS and more.

With new tokens and platforms being developed all the time, an apt word to describe the crypto industry would probably be “dynamic.” While new cryptocurrencies pull out all the stops to break into the market, well-established cryptocurrencies are faced with the challenge of maintaining their rankings amid fierce competition. One way to do so is to constantly look at their offerings, and adjust/reinvent themselves in tune with consumer needs.

Ether, the second most popular cryptocurrency after Bitcoin, has enjoyed a much higher rate of adoption and growth than the latter in merely the first five years of its existence. Still, the platform is plagued by a number of issues such as high gas fees and slow transaction speeds, and its competitors are catching up 

. Change is imminent, and Ethereum is stepping things up — with big changes listed in its road map. 

This article will explain everything you need to know about Ethereum's forthcoming upgrade, with information about what Ethereum is, why the Ethereum blockchain is switching to the 

 (PoS) consensus, and how the move will help solve the issues currently faced by the network.

Ethereum is a community-run technology powering the Ether cryptocurrency (ETH) and thousands of decentralized applications (DApps).

The network allows users to send crypto to anyone by paying a small fee. Ethereum also powers various applications that can be used by everyone, but can't be taken down by anyone.

Known as the world's programmable blockchain, Ethereum has built on Bitcoin's innovation. It comes with a number of significant differences and improvements.

Both Ethereum and Bitcoin allow you to use digital money without intervention by payment providers or banks. However, Ethereum is programmable, and can therefore be used to send many digital assets, including Bitcoin.

Ethereum is designed for more than payments — it’s a marketplace of financial services, apps and games that cannot censor you or steal your data.

 network, which is a decentralized, distributed public ledger that verifies and records all transactions. The Ethereum network is not operated or managed by a centralized entity — it’s managed by all of the distributed ledger holders. All participants have access to a copy of the Ethereum ledger, which includes details about all previous transactions.

 to verify transactions and keep the network secure. People use computers to solve complex mathematical equations (also referred to as 

), whereby each transaction on the network is confirmed, and new blocks can be added to the 

 at the heart of the system. Miners are rewarded with crypto tokens — e.g., ETH for Ethereum participants.

Like Bitcoin, ETH can be used to purchase and sell goods and services. However, Ethereum is unique in the sense that users can build their own applications that run on the Ethereum blockchain, like how software runs on a computer. These Ethereum-based applications can store and transfer personal data and handle complex financial transactions.

Proof of stake, or PoS, is a crypto consensus mechanism that helps process transactions, validate entries on the blockchain, and create new blocks while securing the blockchain.

PoS reduces the computational work required to verify blocks and transactions that keep the blockchain and its cryptocurrency secure. It changes how blocks are verified using the coin owners' machines. The owners put their coins up as collateral for the opportunity to validate blocks. 

 their coins are referred to as "validators." Validators are then chosen at random to 

 or validate a block, rather than the consensus being based on a competition-style mechanism such as proof of work (

If a coin owner wants to become a validator, they must first stake a specific amount of coins. Ethereum users must stake 32 ETH to become a validator. The blocks are simultaneously validated by more than one validator. After the block has been validated by a specific number of validators, it is finalized and closed.

Different PoS mechanisms use different methods for block validation. When it transitions to PoS, Ethereum will use 

 for transaction submissions. A validator will verify transactions and add them to a shard block, which requires attestation by at least 128 validators. Once the shards are validated and the block created, at least two-thirds of the validator pool needs to agree that the transaction is valid for the block to be closed.

Why Is Ethereum Switching to Proof of Stake?

 projects, the Ethereum network has grown tremendously in the last year.

So far, Ethereum has been the preferred network for developers working on NFT or DeFi projects, with over 200 DeFi projects currently hosted on the its blockchain. This increased adoption has led to a substantial rise in the number of transactions made on the Ethereum network. On the flipside, there’s also been a noticeable increase in the number of problems encountered on the network.

With more transactions occurring, miners have had to expend more computational power for the verification of transactions. This higher computational power consumes more energy, to the point where users have begun to evaluate the network’s 

At present, Ethereum uses 113 terawatt-hours (

 is equivalent to what the entire population of the Netherlands uses in a year. A single Ethereum transaction can consume the same amount of power as an average U.S. household in about a week.

This high energy consumption has become a significant concern among the scientific community, which has started to warn Ethereum developers about the negative impact of the network's

 on the environment. Since then, the PoW consensus mechanism has faced scrutiny by global lawmakers. In Sept. 2021, 

, partially over mounting environmental concerns.

The Ethereum network is also quite slow, with a current rate of only 15 transactions per second (

) — significantly slower than competitors like 

, whose TPS rates are in the hundreds and thousands, respectively. Another issue faced by Ethereum is its

 (transaction costs). Users pay exorbitant fees to have their transactions verified with the current PoW mechanism.

PoS: The Solution to Ethereum's Current Problems

Switching to PoS will decrease the amount of computing power required to process transactions, making Ethereum more environmentally sustainable. However, lower energy consumption isn’t the only benefit to be effected by 

After implementing the PoS consensus mechanism, Ethereum 2.0 will ostensibly use 99 percent less energy, allowing the network to scale and potentially perform as many as 100,000 TPS.

When Is Ethereum Switching to Proof of Stake?

Ethereum plans on transitioning its entire network to the PoS mechanism in a dramatic event called 

Ethereum's PoS approach has already been tested on the 

, launched on Dec. 1, 2020. As of March 2022, 9.5 million ETH ($37 billion in current value) has already been staked.

There are still two phases to go, but the full release of Ethereum 2.0 is expected in Q2 of this year (2022).

Proof of Stake (PoS) vs. Proof of Work (PoW)

With PoW, the probability of mining a block is determined competitively and is based on the size of the stake the person holds (i.e., the number of coins they possess).

With PoS, randomly selected miners are selected to validate transactions. The amount of computational work done by miners determines their probability of mining a block.

On a PoS blockchain, the block creator is selected by an algorithm based on users' stakes, rather than being determined by competition.

With PoS, the validator collects network transaction fees as a reward for completing a block.

PoS miners, on the other hand, can easily work with a standard server-grade unit. The only prerequisites they need to meet are securing a stake and building a reputation.

However, with PoS, it’s practically impossible for hackers to add a malicious block — as they would have to own 51% of all the cryptocurrency on the network to do so.

PoS systems, on the other hand, are less proven but much more cost- and energy-efficient than PoW systems.

 on March 16, 2022. In this decision’s direct aftermath, the value of ETH and a number of other cryptocurrencies increased. In general, rising interest rates hurt growth stocks. However, in this case, the declines had been priced in since January, so the market saw the rising rates as a good way to reduce inflation in the U.S. economy.

However, Ethereum faces a direct threat from faster and more efficient competitors eating into its market share. The network plans to address this challenge with Ethereum 2.0, which replaces the current PoW consensus mechanism with PoS. This change in approach will make the network faster, increase transaction capacity, reduce costs, boost security and decrease energy use, bridging the gap between Ethereum and key rivals like 

The Ethereum 2.0 upgrade is scheduled to conclude in 2023. According to analysts at

, ETH has the potential to cross $3,200 by end 2022, a +27.90% increase on its current price of $2,921 per coin.

It’s reasonable to presume the upgrade will boost the Ethereum network and help maintain its dominance in the DApp space. Given its branding, market dominance and planned upgrades to its infrastructure, Ethereum is without a doubt a solid long-term investment option. 

(Editor’s note: The views expressed above must not be considered investment advice. There is a lot happening right now, and 

. Please be cautious, conduct thorough research, and invest only what you can reasonably stand to lose.)

 on an exchange like Bybit. Here’s how you can 

 by filling in details such as your name, phone number, email ID, address and other 

 If you don't already possess USDT, USDC, UST, BTC or DAI, you’ll first have to buy one of these tokens using a credit card, debit card or bank transfer.

 You can then complete your transaction at a price of your convenience using a

. Select the crypto with which you wish to buy ETH, enter your order price, and select the amount of ETH you want to acquire. If the token price reaches your specified amount, your order will execute and the ETH tokens will reflect in your account.

The Ethereum network is switching to the PoS system, and we’re excited by this major (and possibly industry-changing) move. While Ethereum’s impending upgrade to 2.0 is something to look forward to (with high expectations in the crypto community), only time will tell whether it lives up to its promises. In the meantime, be sure to 

Ethereum's Switch to Proof of Stake: What We Know So Far

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