The crypto community is arguing over better monetary policy

The two market-leading cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) are constantly being compared to each other, and the debate about the monetary policy of the two industry leaders has now been revived again in the new year. The BTC cap of a maximum of 21 million BTC stands against the deflationary rate of increase of ETH.

A Twitter user specializing in crypto-money politics, aptly named “Ultra Sound Money”, has therefore taken it upon himself to compare the mechanics of the supply levels of the two cryptocurrencies, concluding: “If supply limits BTC to hard money, then a decreasing amount of supply makes ETH ultra-hard money.”

An assessment that, as expected, went down badly with Bitcoin fans, which is why they point out that the degree of hardness (“health”) of a currency also depends on the credibility of the associated monetary policy, which, however, would be too changeable with Ethereum. So funds Dan Held, considered one of the most well-known Bitcoin advocates, that the Twitter user’s argument weakens in this context:

“Trust develops in people over time, it’s not just about programming code. According to your logic, we could just develop a new cryptocurrency with even more deflation and it would then be even ‘harder’.”

Also another bitcoin advocate beats in the same vein, criticizing the evolution of Ethereum’s monetary policy so far because it “has changed at least eleven times in the seven years since it was founded”. In contrast, Bitcoin’s monetary policy has always remained the same since its inception.

Ethereum supply growth rate development. Source:

Ethereum first introduced “deflation” in August 2021 with the major Ethereum Improvement Proposal-1559 (EIP-1559). The associated burning mechanism automatically burns a portion of the transaction fee for each transaction, thereby gradually reducing the available supply of ETH.

Alex Gladstein responds that Ethereum’s “admins” can still change monetary policy arbitrarily in the future. However, Ethereum influencer Anthony Sassano warns that any major change on the ETH network must be sanctioned by thousands of nodes run by community members. A small group could therefore not exert such far-reaching influence.

Leo Glisic, the founder of the Maitri network, calculates meanwhile, claims that Ethereum is already a hard currency, while Bitcoin will not reach that status until 2140 at the earliest, when the absolute cap on the market leader’s supply is reached.

It should also be noted that Bitcoin has also previously made several changes to the original programming code. In particular, in 2017 there was a notable adjustment that expanded the block size to accommodate more transactions per block and provide more scalability.

Overall, however, the majority of Bitcoin fans are extremely skeptical of such changes, which is why in 2017 there was a so-called hard fork, which produced the Bitcoin hash offshoot. So while the block size of BCH was expanded to 8 MB, it was limited to 1 MB for BTC. Despite this supposedly better scalability, the price of Bitcoin Cash is currently a whopping 97% below its previous all-time high, making its little brother Bitcoin now almost meaningless.

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