Bitcoin vs. Ether: A New Perspective
In the ongoing debate about digital currencies, Bitcoin has been the heavyweight champion of the cryptocurrency world, often dubbed the best store of value. However, a recent study from a gang of researchers down under is throwing a wrench in the gears, suggesting that Ether may be well on its way to dethroning Bitcoin as the champion of value retention.
The Research Findings
On November 18, a paper authored by four Australian academics spotlighted the Ethereum Improvement Proposal (EIP) 1559 upgrade, which may give Ether an edge over Bitcoin. Co-authored by researchers from various universities including the University of Technology Sydney, the paper highlights how EIP-1559, which implemented a system that burns a portion of transaction fees, potentially makes ETH a more attractive store of value.
Burning Up the Competition
With the launch of EIP-1559, more than a million ETH has already been burned from the total circulating supply. In fact, at times, transaction fees have led to over 50% of the 12,000 new ETH minted each day being incinerated. This indicates that as the demand for Ether rises—thanks to a growing ecosystem in decentralized finance (DeFi)—the supply is being significantly reduced.
Less Inflationary, More Valuable?
Annualizing the creation rate of Ethereum since the EIP-1559 upgrade, the expected ETH supply increase currently sits at just 0.98%. This is notably less than the 1.99% increase expected from Bitcoin in the same timeframe. The researchers subtly implied what many of us suspected: Ether could be a better choice for those seeking inflationary hedging properties.
Currency Wars: Bitcoin’s Defense
Despite the upbeat predictions for Ether, Bitcoin’s legion of supporters, including prominent figures like MicroStrategy’s Michael Saylor, maintain a staunch defense of BTC’s supremacy. They emphasize Bitcoin’s fixed supply of 21 million coins and its unmatched security. Saylor, appearing on Tucker Carlson’s show, reinforced his belief in Bitcoin being the utmost form of property humanity has created. To them, arguing in favor of Bitcoin feels like going against the laws of nature.
What’s Next for Investors?
As cryptocurrencies continue to evolve, investors may want to keep their eyes peeled for Ether alongside Bitcoin, especially considering the growing buzz around ETH being dubbed “ultrasound money.” In a market where rates of inflation and economic uncertainty are at the forefront, it’s worth asking: can you truly afford to ignore the growing utility of Ether? After all, the race for the best store of value is only getting started, and a little friendly competition never hurt anyone, right?
