An academic report highlights the benefits of EIP-1559 to make leading altcoin project Ethereum a deflationary currency and potentially a better store of value than Bitcoin.
More deflationary than the leading altcoin Bitcoin
University researchers in Australia have questioned Bitcoin’s (BTC) reputation as the best store of value, claiming that Ethereum is on its way to “becoming the world’s first deflationary currency.” The November 18 article by four Australian researchers discusses how the Ethereum EIP-1559 upgrade potentially makes ETH a better store of value. cryptocoin.com As we reported in August, Ethereum saw EIP-1559 burn some of the network’s transaction fees, burning more than 1 million ETH out of a circulating supply of 118,583,580. At times, the report says, transaction fees, which account for more than 50% of the 12,000 newly minted ETH per day, are burned thanks to EIP-1559. Researchers believe that as demand for Ethereum increases due to the robust ecosystem of DeFi applications, more ETH will be burned. The researchers write that Ethereum is already less inflationary than Bitcoin:
When we consider the annual Ethereum creation rate since EIP-1559, the expected increase in total Ethereum supply is only 0.98%, which is less than half of the almost certain 1.99% increase in Bitcoin supply over the same period.
The researchers conclude that ETH “provides better anti-inflationary properties than Bitcoin and therefore Ether can offer a superior long-term store of value than Bitcoin.” There has been growing interest in Bitcoin’s 21 million fixed capital and its suitability as an inflation hedge as widespread money printing during the pandemic and inflation soared to 6.2% in the United States in October. However, the research suggests that investors may also want to consider Ethereum for this purpose. ETH advocates started calling ETH “ultrasound money” in response to Bitcoiners who touted BTC as “hard money” or “sound money”.
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