Bitcoin vs Ethereum » Supply cap and deflationary model?
Bitcoin proponents claim that Ethereum’s monetary policy has changed at least 11 times in its seven years of existence, while BTC has not.
bitcoin and Ethereum, the two largest cryptocurrencies by market cap, have always been opposites. With the start of the new year, the first debate arose comparing the limited supply of 21 million BTC to the deflationary supply of ETH, with disagreements over which of the two is considered a real hard currency.
One Twitter user compared the issuance of the two cryptocurrencies and suggested that “if the supply of BTC is limited, then a decrease in the supply of ETH is very good.”
The comparison between the two did not sit well with bitcoin proponents, who were quick to point out that the strength comes from credibility in monetary policy rather than ever-changing policies. Dan Held, a well-known bitcoin proponent, pointed out the lack of argument and noted that the ever-changing argument is less credible. He said:
“Time builds people’s trust, and it’s not just about the code. According to your logic, if we launched another cryptocurrency with more deflation, it would be “more reliable”.
Another Bitcoin proponent questioned the validity of Ethereum’s monetary policy, recalling that the same monetary policy “changed at least 11 times in its seven years of existence.” In contrast, Bitcoin has never changed its monetary policy.
Projected Historical Ether Emissions
Ethereum went deflationary in August 2021 with the introduction of the Ethereum Improvement Proposal-1559 (EIP-1559). The update introduced a burn mechanism that automatically burns a portion of transaction fees, reducing the total amount 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 stated that every change on the Ethereum network has been approved by thousands of community-managed node operators.
Leo Glisic, founder of the Maitri network, said that ETH is now a hard currency, but BTC will not peak until 2140.
Bitcoin has experienced similar monetary changes and code of origin adjustments in the past.
The most notable of these occurred in 2017, when there was a growing demand to increase the bitcoin block size to accommodate more transactions per block and make it more scalable.
Most of the bitcoin community opposed any modifications to Satoshi Nakamoto’s source code. As a result, the Bitcoin network underwent a hard fork in 2017, leading to the formation of Bitcoin Cash (BCH), a cryptocurrency with an 8MB block size compared to BTC’s 1MB.
However, BCH has had very little development on the network today and is currently trading with a price drop of 97% from its all-time high.
Prashant Jha, Cointelegraph
Prashant Jha is a crypto journalist specializing in the US and UK markets. His interests are in blockchain technology and the adoption of cryptocurrencies in emerging 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, so you should do your own research when making a decision.
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