Crypto

Ethereum May Dethrone Bitcoin as the Best Cryptocurrency Store of Value, According to a New Study

Ethereum May Dethrone Bitcoin as the Best Cryptocurrency

Ethereum may dethrone Bitcoin (BTC) as the best cryptocurrency store of value, according to a new study.

According to a new report co-authored by researchers from several higher institutions, universities, including Sydney and Macquarie, recent improvements in Ethereum’s monetary policy have made it a greater store of value than Bitcoin, BTC. The main cause of this is supposed to be the deflationary effect that the EIP-1559 plan has had on currency issuance.

Ethereum is a hot topic right now

Ethereum and its potential future as a store of value have been fingered in a recent report published by representatives of Australian universities last month. “Better than Bitcoin?” the paper asks. “Can cryptocurrencies conquer inflation?” is a paper co-authored by Ester Félez-Vias of the University of Technology in Sydney and other researchers that contrasts Bitcoin’s issuance with Ethereum’s new issuance mechanism, which is deflationary.

According to the paper

“We show that, following a recent modification in its transactions protocol, the digital currency Ethereum has a much lower net issuance rate of tokens than Bitcoin, owing to the removal of transaction fees.”

This is because of the activation of EIP-1559, a proposal to burn Ethereum proportionally to network usage. While there was significant criticism to this plan when it was first offered — primarily from miners and mining pools — it is now contributing to Ethereum’s newfound value as a potentially deflationary currency in the future.

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Expired Fees

The network has burned a considerable sum of Ethereum in fees as a result of the deployment of EIP-1559. After only 3 months on mainnet, this modification has resulted in the removal of over one million ETH from circulation. In this regard, the report states:

“In many circumstances, the amount of Ethereum burned exceeds the network’s ability to create new tokens, potentially making Ethereum the world’s first deflationary currency. We believe that this has stronger inflationary hedging features than Bitcoin, and that Ether may thus be a better long-term value storage option than Bitcoin.”

Similar burning strategies are being used by other cryptocurrency initiatives in the hopes of replicating the same result. Binance coin just launched a network update that included fee burning as well. However, there is a fundamental difference between Binance currency and Ethereum: the latter has no hard issuance cap, whereas Binance coin has.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.