The Ethereum 2.0 upgrade is a significant event for most digital asset investors. It will increase efficiency, lower network costs, and bring the whole blockchain and crypto space closer towards a Web3 reality.
Ethereum has struggled with lack of scale and skyrocketing fees for gas, so the transition to a more reliable, scalable proof-of–stake (PoS), blockchain will be a welcome relief.
However, most casual investors are unaware that Polkadot’s Substrate platform is making huge inroads towards the development of a parallel, decentralized internet infrastructure, which many believe will surpass Ethereum’s.
Similar: Introduction to the Substrate Infrastructure and Polkadot Architecture
Since the Polkadot whitepaper was released, its value to Ethereum’s ecosystem as well as the many possibilities that make up the Web3 experience have been the main selling point of Polkadot.
How does Polkadot stack up against Ethereum? How does Ethereum compare to Polkadot? And, has Polkadot’s potential threat to the dominant smart-contract network become viable? This is a quick overview of the technical differences between Polkadot and Ethereum’s upcoming upgrade.
There are two routes to the decentralized Internet
We must first understand what Polkadot has to offer and how it differs from Ethereum in order to fully appreciate the value.
It is clear that Ethereum was once a groundbreaking technology and a popular platform for DApp development. However, Ethereum’s Achilles heel has been scalability over the years. The Ethereum blockchain can only process 15 transactions per second (TPS) and handles approximately 1 million transactions daily. This results in volatile gas fees. This number will increase as Ethereum 2.0 is upgraded, but it will still be far below traditional centralized infrastructures like Visa which can process over 1,700 transactions per second.
In addition to Ethereum’s slow network and congestion, its outdated consensus algorithms use up to 112.15 TWh annually, which is roughly the same as the power consumption in Portugal or the Netherlands. Ethereum relies heavily on a proof of work (PoW), which requires computationally intensive mining in order to add blocks to the chain and verify transactions.
Related: Inside the mind of a blockchain developer: Proof-of work blockchain consensus
Ethereum 2.0 will address these concerns by switching from a PoW algorithm into a more efficient PoS algorithms, which will ultimately allow Ethereum to become carbon-neutral and attain greater speed.
Sharding will be used by Ethereum 2.0 as a scaling solution. This will allow the network to be broken down into smaller pieces that can simultaneously process transactions. This will theoretically allow Ethereum to process infinite transactions per second. However, in practice it will limit the number of shards that can be created.
Even though the testnet has been live, the transition to Ethereum 2.0 remains a work in process. In frustration at the delays, ambitious developers such as Gavin Wood (Ethernet co-founder) left Ethereum to create the Web3 Foundation or Parity Technologies. Parity Technologies and Web3 Foundation are primarily focused on three main technologies: Parity Ethereum (also called Serenity), Parity Substrate, and Polkadot.
These projects and organizations have the ultimate goal of accelerating the Web3 vision.
Their victories as well as their defeats
Parity Technologies is a core blockchain infrastructure company and provides many tools and software to developers that make it easy for them to launch their blockchains. Parity Substrate, a toolkit that allows you to build custom blockchains, powers many of the most well-known blockchains around the globe, including Kraken, Polkadot and Chainlink.
Parity Ethereum is, however, the software that runs Ethereum 2.0 clients like Geth or Prysm. The Substrate framework is Parity’s primary contribution to Polkadot. It is used to create custom blockchains and parachains over the Polkadot Relay Chain.
Related: Polkadot’s Parachain Auctions Make a Decentralized Web3 Possible
Substrate, which is a modular system that allows custom blockchains to built, is a far superior alternative to Ethereum’s current system and its upcoming sharding platform. Developers have the ability to pick and choose which features they wish for their parachains, depending on the technical difficulty.
These are just a few examples of the ways that Substrate can change the functions of blockchains.
Zeitgeist uses prediction markets to predict the future. ).
Substrate makes it easy to create a few palettes, launch your chains, and then assemble them in under an hour. This is far more efficient than starting from scratch. They may outperform Ethereum in certain tasks in the future. They can communicate with each other using XCMP (a cross-consensus messaging format that Polkadot developed) that allows interaction among networks within the same relay chain.
Substrate provides developers with a set of modules that can help them create compatibility between legacy chains and new blockchains like Bitcoin and Ethereum. Substrate doesn’t require you to create blockchains connecting to Polkadot. Substrate can be used by any developer to create forkless, upgrade-able blockchains on any ecosystem other than Polkadot and Ethereum.
Polkadot’s Nash equilibrium staking system incentivizes validators that behave in the best interest of the entire network. This is a departure from Ethereum’s current focus on rewarding miners for their efforts. This can lead to high barriers to entry and centralization.
The Polkadot Relay Chain can also process more transactions than Ethereum’s. It can process approximately 1,000 transactions per second, compared to Ethereum’s mere 15.
Polkadot’s armor has one flaw: Parity Technologies had a security breach in its multisig wallet software in 2017. More than $30 million of ETH was taken from multiple multisig wallets.
Not confrontation but complementarity
Polkadot, when all is said and done will be a complement to Ethereum. Both blockchain ecosystems are working towards the same goal: a decentralized World Wide Web.
Although Polkadot has a lot of features and an improved capacity, it’s still very early stages and only a few applications (Moonbeam, Moonriver) are running on its network. However, Ethereum is still a master of all trades with hundreds of thousands developers and projects. This gives it an advantage in terms adoption.
Both Polkadot as well as Ethereum have different purposes, but they can complement one another in a decentralized future.
A glimpse into the future
Both Polkadot (Ethernet) have their strengths and weaknesses. They may even co-exist in the future to create a decentralized Web. Substrate could be used by developers to create social media platforms and video-sharing apps with Ethereum’s ERC-20 token currency. There are many possibilities for the future of both Polkadot as well as Ethereum, with more developers joining the ranks to accelerate the transition to a Web3 web.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Subsocial is a social networking platform that Oleh Mell developed. It was created to support the future social networks. These apps will have built-in monetization and censorship resistance. Users will be able to control their content and social networks. Subsocial, a unique app built with Substrate palettes, is designed for social interaction and is one-of-a kind in the Dotsama ecosystem. Subsocial supports apps such as YouTube, Shopify and Airbnb so these interactions don’t have to be social networking.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.