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A recent paper written by members of several universities, including Sydney and Macquarie, argues that the recent changes in Ethereum’s monetary policy make it a better store of value than Bitcoin. It is said that the deflationary effect caused by the EIP-1559 proposal in currency issuance is the main reason for this situation.
Ethereum in the spotlight
A new paper published by members of Australian universities last month focused on Ethereum and its future as a store of value.this Paper, Titled “Better than Bitcoin? Can cryptocurrencies beat inflation?” Written by Ester Félez-Viñas of the University of Technology Sydney and other scholars, and compared the issuance of Bitcoin with the new issuance model of Ethereum, This makes the currency deflationary.
The paper states:
We show that with the recent changes in the transaction protocol, the net issuance rate of the digital currency Ethereum is significantly lower than that of Bitcoin, which is achieved through burning fees
Associated with each transaction.
This is related to the activation of EIP-1559, the proposal to destroy Ethereum in proportion to the amount of network usage. Although the proposal met with some opposition when it was put forward-mainly from miners and mining pools-it is now promoting a new appreciation of Ethereum as a currency that may be deflationary in the future.
Burning fee
Implement EIP-1559 As a result, the network consumes a lot of Ethereum fees.this Change Has resulted in more than one million Ethereum After only three months of implementation on the mainnet, it ceased to circulate. In this regard, the research report pointed out:
In many cases, the amount of Ethereum burned exceeded the speed at which new tokens were created on the network, leading to the possibility that Ethereum could become the world’s first deflationary currency. We believe that this provides better inflation hedging characteristics than Bitcoin, so Ether may provide a better long-term store of value than Bitcoin.
Other cryptocurrency projects are adopting similar burning schemes, hoping to reproduce the same effect.Binance Coin active The renewal of its network has also implemented cost burning. However, Binance Coin and Ethereum are fundamentally different: The latter has no issuance cap, while Binance Coin has a hard issuance cap.
What do you think of the “Better than Bitcoin? Can cryptocurrency beat inflation?” The paper and its conclusions? Tell us in the comments section below.
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