Serenity is the name of the next major update for Ethereum. At the time of writing this book, serenity is still under development. This update will require a hard fork. Serenity will change the consensus protocol to casper, and will integrate state channels and sharding. Complete details of how these will work is still unclear at this point of time. Let's see a high level overview of what these are.
Before getting into state channels, we need to know what payment channels are. A payment channel is a feature that allows us to combine more than two transactions of sending ether to another account into two transactions. Here is how it works. Suppose X is the owner of a video streaming website, and Y is a user. X charges one ether for every minute. Now X wants Y to pay after every minute while watching the video. Of course, Y can broadcast a transaction every minute, but there are few issues here, such as X has to wait for confirmation, so the video will be...