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Comparing the monetary policy Bitcoin and Ethereum

The online edition of Crypto Briefing provided an analysis of the differences between the two monetary systems, Bitcoin and Ethereum.

As you know, inflation and monetary inflation are fundamental factors that affect the stability and reliability of the monetary system within kryptonite ever-changing and more complex economic system.

Mining (issue) of Bitcoin coins and tokens, the Ether takes place in decentralized networks (blockchains Bitcoin and Ethereum). Then crypto currencies go into circulation from miners who are rewarded by them for work performed, and maintain network in working and safe condition.

Unlike Bitcoin, which is known to cope with monetary inflation with the help of halving programmed halving rewards miners after the extraction of the next 210 000 blocks in the network, Ethereum chooses a different path – “minimum emissions” to maintain the financial interest of the miners in the development and protection of the network.

Thus, if the monetary policy of Bitcoin is not dependent on human factor and strictly programmed, then Ethereum it is subjective, depends on the consensus of the validators and may be subject to risks from outside intruders.

And although it is still the number of issued tokens ETH is decreased, and never increased, it is possible that future changes to monetary policy Ethereum can lead to increased emissions.

In accordance with the current specification Eth 2.0, the rate of production will be significantly reduced under Proof of Stake. Source:

This circumstance allows to draw a parallel with monetary policy, Fiat money, where you can both increase and reduce the rate of growth offers a centralized way.

Thanks to the Protocol provided to limit the total production of coins of BTC during the life cycle of the project and programmed halving the amount of mined coins, BTC is easily predicted at any point in time.

However, this predictability has a price. Bitcoin miners every four years, the stress from the reduction of remuneration for mining and often because of this leaving business. Since the income of miners kompensiruet due to the increase in commissions for transactions in the network services of the blockchain over time, becoming more expensive, which is unlikely in the future will have a positive impact on the competitiveness of the Bitcoin network.

The projected emission of Bitcoin over time. Source: Bitcoin It

At the same time, further increase in the price of Bitcoin could mitigate this problem.

As you can see, Ethereum has a more stable structure of the issue and Bitcoin more decentralized and protected from human intervention.

Because Ethereum is at the stage of transformation in the Ethereum network 2.0, where the issue of tokens will be fundamentally different from the existing release of ETH is dramatically reduced.

Upgrade code 1559 EIP will contribute to a significant change in monetary policy, Ethereum.

The subsequent reduction in fees combined with a decrease in the rate of combustion of ETH may ultimately turn ETH in a deflationary asset.

The projected release of ETH. Source: Anthony Sassano

However, fans of Bitcoin more willing to sacrifice financial stability in exchange for a more decentralized policy.

American entrepreneur and investor Antonio Pompliano, critical in relation to monetary policy Erthereum, believes that the draft DeFi arising on the blockchain Erthereum represent the interest and potential to radically change how people interact with the world of Finance. However, these relationships will be built through a stable coin and Bitcoin, and neither Ethereum.

At the same time, people with the economic approach is more inclined to sacrifice some part of decentralization in exchange for the structure of the issue of cryptocurrencies, which ensures long-term viability of the network.



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