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Ethereum Upgrade: The Unfortunate Truth - YouTube
Channel: Max Maher
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the good news is ethereum 2.0 is coming
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soon the bad news there's an unfortunate
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side to this upgrade this has led to a
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barrage of questions what is ethereum 2
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what happens to my existing ether and
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how can I profit from this upgrade to
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understand this we need to know the
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fascinating way ethereum works ethereum
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is what's called a general purpose
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blockchain a blockchain where other
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applications called dapps can be built
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on top I like to think of ethereum as
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the electric grid alt the wires poles
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and electrical substations and ether the
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token is like the electricity running
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through the power grid powering the
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ecosystem transactions of ether are
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stored and validated on a ledger now you
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can think of The Ledger as this huge
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spreadsheet containing every single
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transaction ever done in the history of
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ethereum and you can guess it takes a
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whole lot of work to keep up with that
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massive spreadsheet the upkeep and
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validation process is called consensus
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currently in ethereum consensus is done
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by miners these high-powered computers
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that race to solve tough math problems
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called hash problems the first to solve
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the problem gets the right to fill out
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the next sheet on the spreadsheet this
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is called minting a block of
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transactions in exchange for minting a
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block miners are then paid in ether for
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their hard work but this comes with an
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issue it's wasteful imagine this Rubik's
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Cube is one of those tough hash problems
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you in 100 other miners are lined up
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fighting to solve it as quickly as
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possible until one of you finally gets
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it that winner gets the reward they get
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to complete the block of transactions
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but there's a problem it's expensive
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everyone else's hard work trying to
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solve this Rubik's Cube is a complete
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waste of resources this is where
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ethereum 2.0 comes in this upgrade to
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proof of stake takes out the need for
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strong computers and massive electricity
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requirements and exchanges it for
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locking up or staking your crypto in
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order to help with consensus at the end
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of the day we have the same result this
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nice safe Ledger of transactions but the
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way we get there is much better however
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this isn't the only problem with
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ethereum and it unfortunately won't
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solve one of the biggest problems of
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them all which we'll discuss in a minute
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now due to the complexity of upgrading
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ethereum which is a whole lot like
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trying to swap out a jet engine
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mid-flight the upgrade will happen in a
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few phases phase zero is also known as
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The Beacon chain this is an entirely new
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proof of stake blockchain you can think
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of it like a new brain overseeing the
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entire network this has already happened
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phase one is known as the merge this is
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next and will be massive the shift to
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proof of stake and merging of
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transactions phase two is sharding in
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this phase the database will split into
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64 different channels in order to
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process more transactions to make things
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easier let's say you take the same
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single lane road every single day to
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work sometimes it flows just fine other
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times there's massive traffic jams and
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you're sitting there frustrated because
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you can't get through this is how
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ethereum currently Works a single Lane
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on its way to do the work now imagine if
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your single Lane route to work could
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expand to 64 different Lanes allowing
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way more traffic to flow through this is
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essentially sharding now the question is
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when in the world will this happen it
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feels like we've been about to upgrade
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for years now can we really trust it
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soon well we know phase Zero The Beacon
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chain is already live and running the
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merge is then expected sometime in the
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second or third quarter of 2022
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according to ethereum co-founder Joe
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Lubbock then sharding that's going to be
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a while potentially sometime 2023 I
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wouldn't hold your breath on that one
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now we're going to talk about how you
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can profit from the upgrade but first
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what this upgrade won't do this is
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extremely important it won't create an
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entirely new coin at merge ether will
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remain the one and only coin however it
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might see a nice little boost in price
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your existing tokens will not be
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invalidated don't send your tokens
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anywhere to someone promising that
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they'll send you eth2 tokens back
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there's no such thing second and this
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one is unfortunate the upgrade will not
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reduce gas fees but how is this possible
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we're getting rid of expensive mining
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fees have to go down right unfortunately
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no the upgrade will have an impact on
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the consensus layer and unfortunately
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gas fees are paid on the execution layer
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of ethereum those fees that you're
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paying right now we'll simply go to
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people's staking ether instead of minors
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like it does currently now this isn't
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exactly the end of the world because
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layer 2 technology is getting better and
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better and these services offer access
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to ethereum with far lower fees already
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but it does beg the question if this
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upgrade doesn't fix gas fees what's the
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point is it even worth caring about the
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upgrade well there are a few essential
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reasons but before we cover those I have
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a bit of a work around one of the
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biggest downsides to nfts are gas fees
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today's sponsor FTX has that figured out
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they allow you to trade not only cryptos
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but nfts for insanely cheap up to 85
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percent less than competitors on top of
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this they're constantly doing nft
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giveaways like their nft Oprah or
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something and you get free crypto with
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every trade over ten dollars check them
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out and support the Channel with the
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link down in the description so if the
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ethereum upgrade doesn't help with its
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gas what does it do first it makes
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ethereum eco-friendly the transition to
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proof of stake makes the network 2 000
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times more energy efficient requiring
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99.9 percent less energy to process
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transactions that's amazing amazing that
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also means more institutional investors
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will likely buy ether as they'll get
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less backlash by investing in something
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that isn't bad for the environment
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second is scalability remember that 64
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Lane Highway the upgrade will help
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network congestion and settlement times
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theoretically this will allow for up to
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100 000 transactions per second where it
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currently can support around 30. third
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is higher security Now this one has a
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bit of debate but it seems to mostly
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come down to a few misconceptions
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ethereum currently is extremely secure
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but so is proof of stake an argument can
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be made that proof of stake is actually
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more secure because if an attack happens
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proof of stake ethereum can simply
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upgrade and remove the attacker's coins
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so we understand what the upgrade is
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isn't and how it works but how can we
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actually profit from the upgrade the
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easiest method is simply holding let me
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explain currently only 8.3 percent of
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ethereum is being staked that's
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considered off the market the higher
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percentage stake generally the better
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because there's less ether floating
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around ready to be traded staking lowers
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the available Supply 8.3 percent is a
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low amount which means there's room to
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grow many of the largest cryptos have 70
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plus of their supply staked ether's
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price will go up if it hits those levels
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second in the transition of proof of
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stake viewer ether tokens will be minted
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lowering inflation combine this with the
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token burn mechanism that ethereum
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enacted and we have a fair bit of
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upwards pressure on The Ether token then
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of course you can stake ethereum
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yourself which you absolutely should do
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if you plan to hold long term anyways
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staking rates will be between 7 and 12
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apy depending on how many people stake
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Network fees percentage of eth burnt and
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whether you're a validator or not in
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order to get the highest rates possible
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you'll want to be your own validator but
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this is more work and you need a fair
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bit of ethereum to make it happen in
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order to be a validator you'll have to
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actually run software on your computer
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or purchase server space and you'll
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personally validate transactions on The
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Ledger you will be updating that
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spreadsheet the reason you make more
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money doing this is you're getting paid
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directly from the ethereum protocol and
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doing the work yourself the downside is
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you need 32 eth to make it work if you
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are are interested there's tutorials all
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over online on how exactly to get
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started now most people don't take this
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approach so instead you can stake
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ethereum in a variety of D5 services for
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a solid yield and essentially no work or
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if you're looking for the easiest way
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possible you can stake in a centralized
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exchange but they tend to take much
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higher fees than anyone else overall
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ethereum 2.0 is a massive upgrade a
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shift to proof of stake the eventual
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introduction of shards and more
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accessible staking will help unlock the
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true potential of ethereum but this
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doesn't solve everything gaspies which
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we'll have to look to layer 2 providers
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to solve but nevertheless there's a ton
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of upwards pressure on the coin from
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lower Network inflation to more token
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burning and increased popularity nfts
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like meta's new launch on Instagram it
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really is an exciting time in crypto if
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you'd like to learn even more about this
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space check out my patreon Linked In the
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description my goal is to help give you
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all the tools you need to understand how
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to take advantage of the crypto space
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and better your future there we talk
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about the newest strategies have
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hundreds of success stories coaches who
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help everyone from beginners to experts
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exclusive research reports trade signals
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and a whole lot more for an insanely
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cheap price that will be linked in the
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description just make sure you grab your
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spot ASAP I'd like to thank you so much
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for watching I'm Max Maher and I hope
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you have a profitable day
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