The potential of Ethereum becoming a form of real currency sparked a debate that revealed more of the digital currency’s flaws than its benefits.
Cryptocurrency investment manager Charles Edwards says that Ethereum has entered the hard money game. It has been less than three months since Bitcoin’s inflation rate was lower than Ethereum’s.
Even if OPEC decides to cut supply rates, oil won’t suddenly become hard money. “Hard money” refers not only to low supply inflation. It is also to inflation’s immutability, @alpha authority on Twitter.
Hard Cash versus Hard Fees
There has been much debate about whether cryptocurrencies will eventually overtake fiat currencies in terms of value. In the future, Bitcoin could achieve what other digital currencies can only dream of.
Investopedia advises using hard currency because it is stable in terms of goods and services. This means that it can cut down on transaction costs and risks.
For cryptocurrencies, this would mean that there will be no alteration of a coin’s value. Ethereum’s regulations can be –and have been– altered, unlike Bitcoin’s. The alteration of its supply schedule multiple times, indicates its flexibility.
The burning of ETH, which seeks a larger market cap, momentarily offsets ETH’s deflationary nature. In other words, Ethereum’s protocol and issuance schedule are flexible enough to be considered hard money.
Other controlled blockchains, like as Cardano, are already showing to be more economical than ETH. Even if Ethereum’s inflation rate is lower than Bitcoin’s, the digital coin’s supply is also lower than Bitcoin’s.
The limit to Bitcoin’s supply is 21 million bitcoins (BTC). People mined 80% of this, yet it would take over 100 years to deplete the new supply of coins. Because of this, Digital Scarcity occurs. The total circulating supply of Ethereum is unknown; there is no overall cap.
Deflationary base assets, according to some users, are bad for Ethereum apps and may impede the currency’s future growth.
Ethereum’s DeFi Space
According to JPMorgan researchers, ETH’s dominance in Decentralized Finance (DeFi) is eroding due to new strong competitors. Competitors include Terra, Avalanche, and Solana, who previously chose Ethereum above Bitcoin.
After dropping from over 100% in 2021 to 70% by the end of the period, its share of total value locked in DeFi may continue to fall further. Bloomberg reports that the Wall Street banking giant’s analysts believe that the network’s requisite scaling may arrive too late.
According to the experts, Ethereum engages in a fierce battle to maintain its application space dominance. The conclusion of that battle is far from certain. This loss of dominance could lead to ETH’s price falling.
