Ethereum 2.0 Beacon Chain may speed up enterprise blockchain adoption
Eth2’s rollout could result in enterprises flocking to a more secure and scalable Ethereum network.
The highly anticipated security and scalability upgrade to the Ethereum network launched as planned on Dec. 1, marking a huge milestone for the Ethereum community. On the surface, the Eth2 Beacon Chain will help ensure an increase in scalability and capacity across the Ethereum network. However, the initial launch of the Beacon Chain signifies much more than promised network benefits, and could potentially drive enterprise blockchain adoption even further.
Corey Petty, chief security lead at Status — a globally distributed collective working to build products, tools and infrastructure for Eth2 clients — told Cointelegraph that Phase 0 of the launch of the Beacon Chain represents a significant milestone because many core building blocks such as networking and a proof-of-stake consensus will now be rolled out:
“Beacon Chain is a fundamental requirement for the latter phases of Eth2 and should be tested in isolation. We expect the other phases to be rolled out more quickly after that, while the gradual and phased rollout allows us to ‘soft-start’ the network.”
Proof-of-Stake consensus perks
Although the Ethereum 2.0 network has been launched and is currently being tested in isolation, there is much to be said about the advent of a reliable proof-of-stake, or PoS, network, which Eth2 hopes to demonstrate.
According to Petty, Ethereum 2.0’s Phase 0 activation shows that a significant threshold of Ether (ETH) holders were confident enough to stake 32 ETH each, worth approximately $332 million combined. These funds cannot be accessed until Phase 2 is completed, which Petty noted should be between 2021 and 2022. Petty further said that Ether holders’ willingness to stake for Phase 0 shows they believe the upside of Eth2 is greater than the downside of losing approximately $19,000.
The promises of Eth2 would ultimately allow the network to overcome its dilemma of sacrificing security for decentralization or scalability, which has been the case for Ethereum since its creation in 2015. The network previously relied on a proof-of-work consensus mechanism that made it vulnerable to possible 51% attacks, whereby a malicious group of miners may make changes to the network if they control the majority of the computing power. A recent 51% attack on the Ethereum Classic protocol resulted in $5.6 million worth of ETC being double-spent.
Ben Edgington, lead product owner at ConsenSys, who has been working on developing Eth2 from day one, confirmed to Cointelegraph that Ethereum has been working toward a PoS consensus mechanism since its earliest days. According to Edgington, the Beacon Chain has been in development for two years, noting that this is the coordination layer intended to keep the Ethereum network secure and organized.
As such, Edgington explained that a PoS consensus is more secure than a PoW consensus due to the fact that an attack on the chain will result in stake taken away from network stakers. “We can now put a precious cost on attacking the chain,” he said. Echoing Edgington, Petty noted that security is achieved by active participation in the consensus algorithm. He remarked that once more devices can run on the new network, the Ethereum ecosystem will become more secure, decentralized and scalable.
Enabling enterprise applications
With a PoS consensus mechanism in place, it’s notable to point out that Ethereum 2.0 will enable enterprise-grade applications to run on a decentralized network. This important development provides an alternative to other major enterprise applications that use private, permissioned networks such as IBM’s blockchain, which is powered by Hyperledger Fabric.
In addition to a more trusted and reliable network, Petty explained that Eth2 will enable secure transactional throughput that “more than quadruples Visa’s centralized capacity of 24,000 transactions per second.” This is expected to be the case thanks to the use of rollups.
According to Edgington, rollups are similar to sharding in the sense that the solution provides scalability. He explained that rollups allow for some transactions to be taken off-chain, while leaving just enough transactions on chain to ensure trustlessness. “Something must be on chain to show third-party operators are being honest. This allows for high throughput while ensuring security of the network,” he said.
Specifically speaking, Petty shared that Eth2 will be able to scale approximately 100,000 transactions per second. In addition, the network will provide security, decentralization and lower gas fees. As a result, more enterprises will flock to the Ethereum network, according to Petty, who added:
“Eth2 will work to solve the trilemma that has kept enterprises on the periphery of the Ethereum ecosystem and further open the gates for them to run decentralized applications (dApps) securely and efficiently at scale.”
For example, Ethereum has been an important component of the Baseline Protocol, which is being leveraged by Coke One North America, or CONA, for cross-organizational supply chain transactions. The Baseline Protocol works well with tamper-resistant state machines like the Ethereum mainnet.
John Wolpert, technical steering committee chair for Baseline Protocol, told Cointelegraph that Eth2 will eventually ensure that the Ethereum network won’t slow down under load. “The network won’t slow to the point where a business-to-business workflow has to stop and wait for too much time for on-chain confirmation of any given workstep,” he explained.
Enterprises will not benefit immediately
Wolpert further pointed out that the Eth2 Beacon Chain won’t have an immediate effect of baselining techniques, noting that there is enough headroom on the current public network for projects currently in the works. Meanwhile, Wolpert explained that the successful deployment of the Beacon Chain should give enterprises the confidence that Ethereum is a reliable mainnet to manage baseline proofs.
John Whelan, managing director of Santander Bank and chairman of the Enterprise Ethereum Alliance, further told Cointelegraph that enterprises will start seeing the benefits of Eth2 in terms of scalability, privacy and genuine settlement finality.
However, Whelan also mentioned that the Beacon Chain’s having launched does not mean it is running smart contracts. “We still need the other phases of Eth2 to realize its potential in terms of scalability and cost reduction. However, Eth 2.0 is real. It is not vaporware,” he said.