An academic report cited the leading altcoin project Ethereum as a deflationary currency. The report highlighted the benefits of EIP-1559 for Ethereum, which is potentially seen as a better store of value than Bitcoin.
At university in Australia, he questioned Bitcoin's (BTC) reputation as the best store of value, claiming that Ethereum is on its way to "Becoming the world's first deflationary currency."
The November 18 article by four Australian researchers discussed how the Ethereum EIP-1559 upgrade could potentially make ETH a better store of value.
Ethereum burned some of the network's transaction fees with EIP-1559, with more than 1 million ETH being burned from the circulating supply of 118,583,580. At times, the report says, transaction fees, which account for more than 50% of the 12,000 newly minted ETH per day, are burned thanks to EIP-1559.
Researchers believe that as demand for Ethereum increases due to the robust ecosystem of DeFi applications, more ETH will be burned. It is stated that Ethereum is already less inflationary than Bitcoin.
“When we evaluate the annual Ethereum creation rate since EIP-1559, the expected increase in total Ethereum supply is only 0.98%, which is less than half of the almost certain 1.99% increase in Bitcoin supply over the same period.”
The researchers conclude that ETH;
“Provides better anti-inflationary properties than Bitcoin and therefore Ethereum may offer a superior long-term store of value than Bitcoin.”
There is growing belief in Bitcoin's 21 million fixed capital and its suitability as an inflation hedge due to widespread printing during the pandemic and inflation rising to 6.2% in the United States in October. However, it is suggested that investors may also want to consider Ethereum for this purpose. ETH advocates started calling ETH “ultrasound money” in response to Bitcoiners who touted BTC as “hard money” or “sound money”.