Is ETH a Better Value Store Than Bitcoin?

There is plenty of debate as to whether Ethereum (ETH) is a better value store than Bitcoin (BTC).  Recent academic research on this subject matter reveals ETH just might be the better store of value.  This report details the benefits of using EIP-1559 in the context of creating ETH as a deflationary cryptocurrency.  The report also highlights why ETH is likely a superior value store than other cryptos such as Bitcoin.

About the Research

The research noted above was conducted in Australia.  The academicians delved into whether Bitcoin really is a better store of value than ETH.  ETH and Bitcoin are two of the world’s most popular cryptocurrencies.  The study revealed ETH is poised to develop into one of the first-ever deflationary currencies in the world.  

The details of the research were recently published in mid-November, highlighted how the EIP, short for Ethereum Improvement Proposal upgrade, would make ETH a superior value store.  The analysis was conducted by academicians from Macquarie University, the University of Western Australia, the University of Sydney and the University of Technology Sydney.

The EIP upgrade this past summer saw the Ethereum network burn transaction fees and a million of the crypto coins from the more than 118 million currently in supply.  The researchers state the transaction fees that add to in excess of half the recently minted 12,000 ETH coins were burned as a result of the EIP upgrade.  These crypto specialists believe the demand for Ethereum is spiking as a result of its comparably robust decentralized finance applications that create a superior overarching ecosystem.  This ecosystem will likely lead to additional ETH burns.  

Furthermore, one of the key takeaways from the research is that Ethereum is that much less inflationary than the much-vaunted BTC.  Using the EIP upgrade, the anticipated hike in aggregate ETH supply is 0.98%.  This figure is juxtaposed with the 1.99% hike in BTC supply that will likely occur in the same period of time moving forward.  These calculations were made by annualizing the rate of the crypto coins’ creations, with a focus on the period of time that has passed since the EIP upgrade was implemented.

Why the Research Matters

Those interested in adding crypto to their portfolio should understand the research detailed above is important as it concludes ETH offers superior inflationary hedging characteristics than BTC.  As a result, ETH will serve as a better store of value across posterity, especially compared to BTC.

Some BTC proponents insist BTC is the better value store as it is that much more secure in the context of hash rate.  BTC’s infrequent protocol changes combined with its finite supply are inherently attractive to inflation-averse investors.

There had been an increase in investor interest in the BTC 21 million coin ceiling, especially in the context of using it as a potential hedge against inflation.  After all, it is no secret that the federal government printed a significant amount of money, greatly adding to the M2 money supply calculation following the start of the ongoing coronavirus pandemic.  

The resulting 6.2% inflation this past October has some investors wondering if cryptocurrencies that are less likely to inflate in value might be a safer place to park their money than traditional currencies and securities.  

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