Bitcoin vs Ethereum » Supply Cap and Deflationary Model?
Bitcoin proponents have argued that Ethereum’s monetary policy has changed at least 11 times in its seven-year existence, while BTC has seen no change.
Bitcoin and Ethereumtwo main ones cryptocurrencies from market capitalization, have always been against. As the new year began, the first debate emerged comparing the limited supply of 21 million BTC to the deflationary supply of ETH, with disagreement over which of the two is considered hard currency.
One Twitter user compared the supply emission of the two cryptocurrencies and suggested that “if the limited supply in BTC is healthy, the decreasing supply in ETH is ultra-healthy”.
The comparison between the two did not sit well with bitcoin proponents, who were quick to point out that the strength comes from the reliability of monetary policy, not the ever-changing policy. Dan Held, a famous proponent of Bitcoin, highlighted flaw in the argument and noted that an ever-changing argument has less credibility. He said:
“Time builds trust with people, it’s not just about code. By your logic, if we were to use another crypto with more deflation, it would be “more solid”.
Another Bitcoin supporter questioned the reliability of Ethereum’s monetary policy, recalling that the same monetary policy has “changed at least 11 times in its seven years of existence.” In contrast, Bitcoin has not changed its monetary policy once.
Historical emission rate projected with ether
Ether became deflationary in August 2021 with the introduction of Ethereum Improvement Proposal-1559 (EIP-1559). The upgrade introduced a burning mechanism that automatically burns a portion of transaction fees, reducing the overall supply of ETH in circulation.
In response to Alex Gladstein’s argument that “administrators” can arbitrarily change Ethereum’s monetary policy, independent Ethereum educator Anthony Sassano asserted that every change in the Ethereum network is approved by thousands of node operators managed by community members.
Leo Glisic, founder of the Maitri network, said that ETH had become a strong currency now, but BTC will not peak until 2140.
Bitcoin has faced similar currency changes and source code adjustments in the past.
The most notable came in 2017, when there was a growing demand to increase Bitcoin’s block size to accommodate more transactions per block and make it more scalable.
Most of the Bitcoin community remained against any modification of Satoshi Nakamoto’s original code. As a result, the Bitcoin network experienced a difficulty in 2017, leading to the formation of Bitcoin Cash (BCH), a cryptocurrency with a block size of 8 MB compared to 1 MB for BTC.
However, BCH has seen very little on-chain development today and is currently trading at a 97% price drop from its all-time high.
By Prashant Jha, Cointelegraph
Prashant Jha is a crypto journalist focused on the US and UK markets. His interests lie in blockchain technology and crypto adoption in developing economies.
The opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move involves risk, you should do your research when making a decision.
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