It’s a whole new era for the world’s second-largest blockchain community. Here’s what it could mean for the future.
Ethereum as a store of value
Bitcoin is as valuable as it is (just under $20,000 at publication) because of its limited supply. There will only ever be 21 million Bitcoin in circulation once it’s wholly mined.
This forced scarcity makes the cryptocurrency act like digital gold. Because there is only so much to go around, it’ll (theoretically) retain its value forever.
According to Cryptoslate, about two percent of Ethereum investors have held the cryptocurrency since its inception in 2015. And 60% of investors have kept their coins for at least one year.
After the Merge, new Ethereum coins will enter circulation at a far lower rate than they did with proof-of-work. And the network burns a portion of the ether used to pay transaction fees after an upgrade last year. So essentially, the amount of new cryptocurrency entering circulation is nearly zero after the Merge.
This stabilization of the supply of ether makes it deflationary. According to CoinDesk, billionaire investor Mark Cuban agreed with the sentiment.
What does this mean for you, the investor?
Ethereum is already the most used utility blockchain in the world. And now, as Bitcoin sits below $20,000, talks of the flippening are starting up again. The flippening is a long-debated event where Ethereum finally overtakes Bitcoin as the number one cryptocurrency.
Bitcoin’s status as a store of value is no secret. Securities Exchange Commission Chairman Gary Gensler calls it the world’s only crypto commodity. However, if Ethereum proves it is similarly a store of value, it’d also fall under Commodity Futures Trading Commission’s jurisdiction.