Beacon Chain is a key component of Ethereum 2.0, a planned upgrade to the Ethereum network that aims to improve scalability, security, and energy efficiency. It acts as the backbone of the Ethereum 2.0 network, maintaining and updating the overall state of the network, including the current validator set and the current state of all shard chains.
The Beacon Chain uses a consensus algorithm called Proof of Stake (PoS) which allows validators to participate in the network by staking their Ether (ETH) as collateral. Validators are chosen to propose and vote on new blocks based on the amount of Ether they have staked. This process allows for a more decentralized and energy-efficient network compared to the current Proof of Work (PoW) algorithm used in Ethereum 1.0.