Ethereum could displace Bitcoin as a store of value, says new study

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Ethereum could displace Bitcoin as a store of value, says new study By Angel Di Matteo @shadowargel

Facing the arrival of Ethereum 2.0, the updates that are taking place in the main network and the deflationary nature with which it currently operates, the researchers agree that Ethereum could be much more attractive to safeguard value than Bitcoin


A new study carried out by researchers attached to the University of Sydney and Macquarie University notes that Ethereum, the second largest market capitalization digital currency, it could have the potential to replace Bitcoin as the main digital store of value.

Ethereum A better alternative to safeguard value?

The study carried out by the researchers of the aforementioned study houses alleges that, as cryptocurrencies are making their way into the traditional sector and enjoy greater adoption, investors see in them the possibility of storing value compared to the financial uncertainty that is currently experienced. Yes OK Bitcoin Historically considered as the best reserve asset for these purposes, the research indicates that the properties that make up the network of Ethereum they could better fit this principle.

In the abstract of the research, the authors propose:

“However, recent innovations in the Ethereum Blockchain network have shown that it is possible for cryptocurrencies to go deflationary, specifically through the destruction of transaction fees. With up to half of the network blocks destroying more Ethereum than is created, the notion that Bitcoin offers the best inflation coverage among cryptocurrencies is increasingly under threat. “

Deflationary properties

In that sense, here the study refers to the implementation of the EIP-1559 a few months ago, which introduced a commission burn system precisely to limit the amount of ETH that goes to the market, although this at the time was lent to strong debate because it deteriorated the conditions of the mining community.

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According to data published by the website, since the EIP-1559 a total of 1,090,879 have been burned ETH at the time of publication, while on the other hand there has been a global total equivalent to 1,599,199 ETH. Doing basic subtraction results in a positive balance equal to 508,320 ETH, figure that constitutes the amount of new Ether working capital, which corresponds to 30% of the ETH originally generated.

The most important thing to note about this is that the burning of ETH has already exceeded the amount of Ether generated, which produces negative balances that gradually limit the global total of Ethereum circulating. The fact that there are fewer and fewer units, technically should increase the value of the digital currency amid the increasing demand in the market.

It is worth noting that in recent months Ethereum it registered new all-time highs, strongly approaching USD $ 4,900 per unit at a time of great demand among investors and network users.

Expectations with Ethereum 2.0

On the other hand, expectations are also growing regarding Ethereum 2.0, the expected update to the network that will implement important operational changes, this to further favor both commercial and technological adoption of what its Blockchain it can offer.

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Among the most important operational changes is the migration of Proof of Work (PoW) to Proof of Stake (PoS), with which the network will require a lower consumption of electrical energy and the participants will be able to help in the processing of the blocks through a system of guarantee funds (Staking) and thereby derive passive profits.

However, the biggest bet points to technology, since the changes would bring greater scalability for the network, which implies a greater volume of operations in short periods of time, as well as a significant reduction in commissions for operations natively .

More solutions on the way

But while it arrives Ethereum 2.0, many enthusiasts and investors also have their eyes on the solutions currently available on the market, including second layer solutions (Layer 2) and the Rollups, that would help to further streamline the flow of operations in the main network.

In addition to this, recently the lead developer and co-founder of Ethereum, Vitalik Buterin, presented a new proposal to solve the problems associated with high operating costs, better known as the EIP-4488, which would also implement an increase in the size of the network blocks.

In relation to the latter, in Twitter a researcher summarizes the benefits associated with this proposal as follows:

“Technical TLDR: EIP-4488 reduces the cost of call data from 16 to 3 GAS per byte, with a limit on call data per block to mitigate security risks.

End User TLDR: Accumulation overhead decreases, lowering L2 fees ”.

Ethereum space opens

Whatever the reason, Ethereum It is listed as one of the currencies with the best growth in this last period, remaining in the second place in the ranking of the cryptocurrencies with the highest market capitalization, with more than USD $ 532.5 billion currently in circulation.

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Currently the digital currency is trading at the time of publication at about USD $ 4,500, capitalizing on a slight drop of 2.7% in the last 24 hours.

Recommended reading

Source: Bitcoinist, Zycrypto, Study

Version by Angel Di Matteo / Daily bitcoin

Picture of Unsplash

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