How does H2 ensure security?

H2, also referred to as Ethereum 2.0, ensures security largely through its transition from a proof-of-work (PoW) to a proof-of-stake (PoS) mechanism. In PoW, the network is secured by miners expending computational energy to solve cryptographic puzzles, creating what is referred to as an "energy wall." However, H2 relies on a different approach known as a "value wall."

In PoS, participants are required to stake their ether (ETH), effectively locking up a significant amount of value to secure the network. This staking process incentivizes honest behavior because the staked funds can be slashed (i.e., taken away) if a participant acts maliciously. The required staking of ether creates a significant economic barrier for potential attackers, as they must stake more ether than others to gain control, which is both costly and risky.

As a result, as the value of ether rises, so does the security of the network due to the increased economic incentive to act honestly and the higher cost imposed on potential attackers. This mechanism ensures the integrity of the system, preventing attacks like double spending by increasing the economic security of the network proportionally to the value of the staked ether 1.

For more details, you can refer to the discussion by David Hoffman and Ryan Adams on the Bankless podcast in the episode on "The Evolution of Monetary Policy" 1.