Ethereum vs Bitcoin: The Battle for Long-Term Stability and Security
Ethereum vs Bitcoin – Ethereum researcher Justin Drake recently sparked debate within the crypto community by suggesting that Ether (ETH) will soon become “ultra sound” money as its issuance decreases, while its competitor Bitcoin (BTC) approaches its 21 million supply cap. In a Feb. 5 post on X (formerly Twitter), Drake explained that in order for Ether to become ultra sound again, its issuance must either decrease or the burn rate must increase. He confidently stated, “I believe both will happen.”
Ethereum’s Deflationary Shift and Bitcoin’s Supply Growth
Ethereum achieved a deflationary status following the Merge in 2022. However, after the Dencun upgrade in April 2024, Ethereum’s supply began to rise again as the upgrade reduced fees for Layer-2 networks and decreased the overall amount of Ether burned. Comparing Ethereum’s supply to Bitcoin’s, Drake pointed out that Bitcoin has added 657,000 BTC to its supply since the Dencun upgrade, while Ethereum added 469,000 ETH during the same period. At current prices, Bitcoin‘s newly minted coins are worth around $63.4 billion, while Ethereum‘s are valued at just $1.23 billion.
Drake also emphasized the growth rate difference between Bitcoin and Ethereum, noting that Bitcoin’s supply grows 0.83% annually, 66% faster than Ethereum’s supply increase.
Bitcoin’s Supply Cap and Security Risks
Drake further raised concerns about Bitcoin’s security as it nears its 21 million supply cap, claiming that this could lead to long-term risks. He explained that most of Bitcoin’s miner revenue comes from block rewards (around 99%), with just 1% coming from network fees over the past week. This heavy reliance on block rewards, according to Drake, could expose Bitcoin to security vulnerabilities because of the low cost of a potential 51% attack.
Drake argued, “The Bitcoin blockchain is cooked,” highlighting that it would take around $10 billion and access to 10 gigawatts of energy to launch a 51% attack, a cost that he believes is manageable for nation-states.
Bitcoiners Respond: The Case for Bitcoin’s Sustainability
In response, analyst James Check defended Bitcoin’s long-term sustainability, pointing out that critics often overlook important factors such as energy advancements, mining efficiency, and economic incentives. Check believes that if Bitcoin achieves reserve status, high transaction fees will become inevitable, much like the costs associated with securing gold in vaults.
Check also highlighted that mining rigs‘ cost dynamics and advances in energy sources, such as nuclear power and wasted energy utilization, will help reduce Bitcoin’s mining costs. He stressed that Bitcoin mining could even stabilize energy grids, making it an efficient solution for some energy operators.
Ethereum’s Challenges: Staking and Systemic Risks
While Drake praised Ethereum’s deflationary model, he acknowledged that Ethereum faces its own challenges, particularly with excessive staking and risks associated with liquid staking platforms like Lido. To address these concerns, Drake proposed a new model called “Croissant Issuance,” where supply issuance declines as more ETH is staked, eventually reaching zero when 50% of ETH is staked, and capping issuance at 1% per year to promote market-driven equilibrium.
The ongoing debate between Bitcoin and Ethereum communities highlights key differences in how each blockchain addresses supply control and network security, shaping the future of crypto assets.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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