A new academic study found that Ethereum (ETH) compared to Bitcoin (BTC) has an important function that ultimately makes it a superior store of value can make.
A recent report published on the Social Science Research Network notes that ETH’s built-in deflationary mechanics set it apart from BTC.
“Bitcoin, with an eventual maximum amount of token supply, is increasingly accepted as an alternative long-term digital store of value with similar anti-inflationary characteristics to gold.
However, recent innovations on the Ethereum blockchain have shown that it is possible for cryptocurrencies to become deflationary, particularly through the destruction of transaction fees.”
Earlier this year, Ethereum began to permanently increase transaction fees to burn by the London hard fork as a means of curbing inflation.
Since the end of October, the upgrade has burned $3 billion worth of Ethereum.
Bron: Social Science Research Network
According to the research, the upgrade not only reduced the overall supply of ETH, but also slowed down the issuance of tokens, making the cryptocurrency with the second largest market value the world’s first deflationary currency.
“We show that after the recent change in transaction protocol, the digital currency Ethereum exhibits a significantly slower net issuance rate of tokens than Bitcoin, achieved by destroying the fees associated with each transaction.
In many cases, the amount of Ethereum burned exceeds the number of new tokens created by the network, potentially making Ethereum the world’s first deflationary currency.
We believe this offers better inflation hedging characteristics than Bitcoin, so Ethereum may offer a better long-term store of value than Bitcoin.”
In contrast, Bitcoin supporters such as Michael Seller, the head of MicroStrategy, prefer Bitcoin because they believe Bitcoin is more secure and reliable in terms of hash rate, as its products have not changed and protocols rarely change. Ethereum is undergoing continuous evolution and has witnessed changes in its issuance.
Explaining why he thought Bitcoin was the best choice for Wednesday’s Tucker Carlson show, Sailer said:
“Bitcoin is the highest form of ownership ever invented by mankind.”
MicroStrategy bought another $414 million worth of Bitcoin on Monday, amounting to a purchase of 7,002 BTC. This caused the company to increase its total Bitcoin holdings to 121,000 BTC, valued at over $6 billion at the time of writing.
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