Bitcoin (BTC) and Ether (ETH), the top two cryptocurrencies by market capitalization, have always been at odds. With the start of the new year, the first debate has arisen comparing the limited supply of 21 million BTC and the deflationary supply of ETH and which of the two qualifies as more sound money.
One Ethereum-focused Twitter user called it “ultra-solid money,” compared the issuance supply of both cryptocurrencies, and suggested that “if BTC’s limited supply is strong, then ETH’s declining supply is ultrasonic.”
if capped-supply BTC is sound
decreasing-supply ETH is ultra sound pic.twitter.com/L2tsFzPQ7q
— ultra sound money (@ultrasoundmoney) January 15, 2023
The comparison between the two did not sit well with Bitcoin proponents, who were quick to point out that strength comes from the credibility of monetary policy and not one that is constantly changing. Dan Held, a popular Bitcoin proponent, he pointed the flaw in the argument and noted that one that is constantly changing has less credibility. He said:
“Time builds trust with humans, it’s not just about code. According to his logic, if we launched another cryptocurrency with more deflation, that would be “more robust.”
Another Bitcoin advocate questioned the credibility of Ethereum’s monetary policy and recalled that the same monetary policy has “changed at least 11 times in its 7 years of existence”. Secondly, Bitcoin hasn’t changed its monetary policy in twice as long as eth has existed.
Ether turned deflationary in August 2021 with the introduction of the Ethereum Improvement Proposal (EIP)- 1559. The upgrade introduced a burn mechanism that automatically burns a portion of the transaction fee that decreases the overall supply of ETH in circulation.
In response to Alex Gladstein’s argument that such “administrators” can arbitrarily change Ethereum’s monetary policy, independent Ethereum educator Anthony Sassano claimed that every change to the Ethereum network has been approved by the thousands of node operators run by community members.
The term “admins” implies that there is a small group with superuser powers that can change things on Ethereum which is completely false and has been proven false many times.
You can believe what you want about the sound money vs ultra sound money debate.
— sassal.eth (@sassal0x) January 16, 2023
The term “admins” implies that there is a small group with superuser powers that can change things on Ethereum, which is completely false and has been proven false many times.
You can believe what you want about the solid money versus ultra-sound money debate.
Leo Glisic, founder of the Maitri network said that ETH has become solid money now, but BTC won’t top out until 2140.
The bitcoiners’ argument that if a network’s monetary policy can be changed multiple times makes it less credible comes from their own past. Bitcoin has also faced similar currency changes and original code tweaks in the past. The most notable came during the 2017 era, when there was a growing demand to increase Bitcoin’s block size to accommodate more transactions per block and make it more scalable.
Most of the Bitcoin community was against making any changes to Satoshi Nakamoto’s original code. As a result, the cryptocurrency ecosystem saw a hard fork in 2017 that led to the formation of Bitcoin Cash (BCH), a cryptocurrency with a block size of 8MB versus BTC’s 1MB. However, today BCH ranks 26th with very low on-chain development and is currently trading 97% below its all-time high.
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