Software engineer thinks Ethereum is a better currency than Bitcoin is it?

There is no denying that Ethereum as an ecosystem has interesting qualities. The activity around the protocol alone is proof of this. However, is it a better currency than Bitcoin? This software engineer with a BA in economics is of the opinion that ETH “becomes more of a global currency than BTC. ”He leads the case in 11 tweets and we are here for the discussion.

Adriano Feria makes some good arguments, but he is wrong about one crucial aspect that makes his whole argument collapse like a castle of cards. His thread starts like this:

2 / Ether was created to fund the security of the network. It was designed to provide remuneration to miners (ether is used to pay miners and the output is a form of subsidy). Its only purpose is to act as a utility token, which is just one form of money, the very one

– Adriano FΞRIA 🦇🔊 (@AdrianoFeria) July 1, 2021

So far, so good. The only problem here is the claim: “The issue is a form of payout.“That is it, but this is the only way to create ETH, which means that it is much more than”some form of subsidy“For the miners. It’s inflation, it’s how the sausages are made, it’s magic … and it tends to change whenever the developers feel like it … but that’s neither here nor there, so let’s move on.

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Tweets one through five are a lengthy explanation of the classic argument: “ETH has more use cases than BTC.“So much is true and nobody denies it. Is that reason enough for The Flippening? It can very well be, but that’s just theory at this point. It has not happened yet, and it is nowhere near that. Does a Swiss knife inherently have a larger market than a screwdriver?

In any case, that has nothing to do with today’s question, is ETH “more likely to a global currency than BTC? “

To wrap up the first leg of his tweet storm, Mr Feria claims that ETH “is NOT a commodity and has never been. ”Many people would disagree on this point and argue it to death. We won’t do that.

Wait, but what is the flippening?

It is in this mythical and hypothetical time that Ethereum’s market capitalization outperforms Bitcoin’s. If you want one deep dive, Bitcoinist got you.

However, this has little to do with today’s question …

ETH price chart on Bitfinex | Source: ETH / USD on TradingView.com

Is ETH becoming more of a global currency than BTC?

As we approach Mr. Feria’s fault, he says: “The market is starting to see ether as a competitor to Bitcoin, despite the original narrative that they were completely different types.“He’s not wrong, the market is starting to see it that way. The market is wrong because they “completely different types.“But that’s neither here nor there …

Mr. Feria claims a universal truth that everyone should be aware of that “the value of money is determined“According to supply and demand. And then he makes the mistake:

7 / other asset / good / service: supply and demand. Supply is determined in part by the issuance model, which, unsurprisingly, is referred to as monetary policy. The 2.0 monetary policy of the ETH + EIP-1559 will lead to a decreasing total supply with a simultaneous reduction of the float maturity

– Adriano FΞRIA 🦇🔊 (@AdrianoFeria) July 1, 2021

He thinks, that, “The monetary policy 2.0 of the ETH + EIP-1559 will lead to a decreasing total supply. “That’s just not true. The “ethereum Improvement Proposal “1559 promises many things, including less volatile transaction fees through the introduction of an algorithmic model and basic fees. These basic charges are burned and a disinflationary environment is created.

However, the total supply will continue to increase. The estimated burn is no higher than the daily output. By far not. Currently the daily output is about five times higher. And that can change, it’s not set in stone. While a little burning is certainly good for the ETH holders, the protocol is anything but “a decreasing total supply. “

Also, and this is important, Ethereum does not have a hard and fast limit. In accordance with their current monetary policy, they will shape ETH forever.

Bitcoin has a hard cap of 21 million BTC. That is the total offer. It is fixed and known in advance. Because of this property alone, Bitcoin is becoming more of a world currency.

That doesn’t necessarily mean there is no place for Ethereum and its vibrant ecosystem. They are both”completely different types“Of projects with very different characteristics, after all.

Is there more to this currency issue?

Mr. Feria concluded his dissertation by saying that Ethereum’s future proof-of-stake consensus mechanism, mixed with all the exciting developments in their ecosystem, would be a “self-reinforcing mechanics for the appreciation of the ether.“That may very well be true, and it goes into the“ Demand ”category. However, an increase in ETH demand does not mean a decrease in BTC demand.

So play Mr. Feria’s scenario:
At ETH the demand is increasing dramatically, but the supply is endless and growing all the time.
At BTC, the demand is increasing at the current rates and the supply is strictly limited.
You do the math.

10 / Prices that are needed to further expand one’s monetary leeway and to mature into a world currency.

– Adriano FΞRIA 🦇🔊 (@AdrianoFeria) July 1, 2021

In any case, everything is speculation right now. Feria also thinks that “The increase in value from all these supply / demand dynamics will consequently increase liquidity and stabilize prices.“Others think so Proof-of-stake is a disaster and that the coming ETH burn will increase volatility and act as a permanent feature.halving. “Who is right and who is wrong? We have to wait and see.

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However, as a currency, BTC is second to none.
Not just from ETH, but from everything that has been under the sun since the beginning of time.
Just when it can be considered a currency, but that’s an issue for another time.

Selected picture by Markus Spiske on Unsplash – Charts from TradingView

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