Ethereum 2.0, Smart Contracts & NFTs: The Most Important Ethereum Buzzwords Explained Simply!

(Photo: BS / Choong Deng Xiang)

In recent years, the term Ethereum has appeared more and more in the media. It seems that the interest in this blockchain platform is increasing every day. But what is Ethereum and what role does Smart Contracts & NFTs play?

Certainly these are important questions that investors want answered before they dare to enter the market. There are many trading opportunities and also popular payment methods such as the market leading PayPal can be used without any problems. Millions of users trust the company’s services, and buying Ethereum with PayPal is one of the preferred methods. The rapid availability of cryptocurrencies, precisely because deposits can be made flexibly in the markets, is one of the most important criteria for investors.

Reason enough to shed some light and explain the most important terms related to the second largest cryptocurrency. In this way, even beginners in the world of cryptocurrency can understand the basics and express their opinion.

Ethereum 2.0

Ethereum 2.0 is the next generation of the Ethereum blockchain currently in development. The blockchain will be completely new based on the Proof of Stake consensus model instead of the current Proof of Work model. This means that Ethereum 2.0 will be more energy efficient than the current Ethereum blockchain.

It will also contain a number of improvements in scalability and speed. For example, it will be possible to perform several transactions at the same time (multi-threading), which will significantly increase the speed.

Further, the so-called hashing update will be performed. Sharing means that the blockchain is divided into several smaller blocks (“fragments”) so that each block contains only a small portion of the entire blockchain. This allows nodes to focus on a smaller part of the blockchain, which greatly improves scalability. The update will be developed and rolled out in three phases. These include:

  • Stage 0 – Beacon Series
  • Stage 1 – Shard Strings
  • Phase 2 – State implementation

So far, the new update for ETH 2.0 has not been fully rolled out, but it is said to be right at home. According to some experts, full implementation will take place during 2022, but there have also been reports on the Internet that deployment is not expected before 2023.

smart contracts

Many people have heard of “smart contracts,” but few know what they are and how they work. Smart contracts are computerized contracts that are automatically executed when certain conditions are met. These contracts are stored on the blockchain and can be accessed by anyone who has access to them.

It also allows transactions to be conducted between two or more parties without the use of an intermediary. With it, financial transactions can be processed faster and more cost effectively.

What makes smart contracts special is that they are decentralized and cannot be manipulated. Decentralization means that it is not under the control of a central body – unlike regular contracts, which are controlled by governments or corporations.

Tamper protection means that they cannot be tampered with, unlike regular contracts, which are written by humans, and are therefore prone to error or tampering. They can be used for a variety of applications, for example b- to process securities transactions or automate supply chains.

NFTs

NFTs are digital assets stored in the Ethereum blockchain. These objects can be anything from digital artwork to game objects. One of the most interesting aspects of NFTs is that they are not interchangeable – each one is unique.

What also distinguishes NFTs is that they are stored on the Ethereum blockchain. Blockchain is a decentralized database hosted by many different computers around the world. These computers are referred to as “nodes”. Each node has a copy of the entire blockchain. Once someone creates a smart contract on the Ethereum blockchain, it is stored across all nodes.

So if you decide to create an NFT, it will be backed up on all nodes. On the contrary, this means that NFTs are extremely secure – there is nowhere to be stolen or lost.

As mentioned earlier, as the name suggests, NFTs are not interchangeable, making each digital artwork unique. This means that it is excellent for managing collections and digital inventories. For example, a collection of digital artwork such as NFT can be stored for safekeeping or for sale.

German rapper Kol Savas also took advantage of this feature in 2021. He transcribed the lyrics of his first song “The King of Rap” and has kept them as a digital artwork ever since. A short time later he sold it on October 14 for 30 thousand euros.

Besides, it can also be used to represent digital property. For example, one can store a house as an NFT and keep track of home ownership. If the house is sold, one can easily find the new owner by searching for the relevant NFT. Thus, it will be impossible for thieves to steal the property and remain undetected because the new owner will be immediately visible.

Conclusion: The Internet has an interesting future

Ethereum 2.0, smart contracts, and NFTs are the components that make Ethereum a powerful and versatile blockchain platform. The update allows developers to create decentralized applications that can run smart contracts. Thanks to NFTs, users have the opportunity to share, manage and market digital things. All these features make Ethereum ideal for creating and managing digital content. These factors are also likely to have a significant impact on the price. Although the price of Ethereum has seen a rapid downward trend in recent months from over €4,144.35 on November 11, 2021 to €1041.91 on July 12, 2022, it is now steadily rising. If the update arrives as requested, Ether could see a huge leap up. Some analysts see the price exceeding $5,000 in 2023.

Author: Jennifer Waltz

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