The virtues of EIP-1559 as a mechanism for making ETH a deflationary cryptocurrency and possibly greater store of value than Bitcoin are highlighted in the paper.
Bitcoin’s status as the greatest crypto storage network has been called into doubt by Australian university experts, who believe Ethereum is on its path to becoming “the world’s first deflationary currency.”
Four Australian researchers published a study on Nov. 18 that explores how the EIP-1559 update makes ETH a potentially superior store of wealth. Ester Félez-Vias of the University of Technology Sydney, Sean Foley of Macquarie University, Jonathan Karlsen of the University of Western Australia, and Jiri Svec of the University of Sydney collaborated on the study.
During Ethereum’s EIP-1559 update in August, the network burnt a percentage of transaction fees, resulting in the burning of over one million ETH from the circulating supply of 118,583,580.
Transaction fees equivalent to more than half of the 12,000 freshly generated ETH each day are burnt at times, according to the research, owing to EIP-1559. They predict that as Ethereum’s rich ecosystem of decentralized financial dApps grows in popularity, more ETH will be burnt. Ethereum is already less inflationary than Bitcoin, according to academics.
“Annualizing the rate of Ethereum creation since EIP-1559, the expected increase in the total Ethereum supply is only 0.98%, being less than half the 1.99% increase in Bitcoin supply which is almost certain in the same period.”
Ether has “greater inflationary hedging qualities than Bitcoin, and Ether may thus offer a stronger long-term value storage than Bitcoin,” according to the experts.
Due to uncontrolled money creation during the epidemic and inflation rising throughout the year to 6.2 % in the United States in October, there has been significant interest in Bitcoin’s hard cap of 21 million coins and its appropriateness as an inflation hedge. However, according to the report, investors may want to investigate Ethereum for this reason.
In reaction to Bitcoiners praising BTC as “hard money” or “sound money,” Ethereum supporters have started dubbing ETH “ultrasound money.”
However, proponents of Bitcoin, such as MicroStrategy CEO Michael Saylor, believe it is immensely more secure in terms of hash rate and more trustworthy due to its constant supply and seldom altered protocol. The issuance of Ethereum has changed over time due to its ongoing development. On Tucker Carlson’s broadcast on Dec. 1, Saylor outlined why he feels Bitcoin is the greatest alternative, saying:
“Bitcoin is the highest form of property that the human race has ever invented.” MicroStrategy purchased another $414 million worth of Bitcoin on Nov. 29.