Ethereum: Are bitcoins really immune to inflation?

Ethereum: Unpack the secret of Bitcoin inflation resistance

For months, the debate on the immunity of Bitcoin inflation (BTC) was the subject of discussion between cryptocurrencies and investor enthusiasts equally. While some say that bitcoins are impermeable to price fluctuations due to their lack and limited supply, others say that this narrative is simplified and even misleading. In this article, we will deepen the concept of inflation and the way it applies to both bitcoins and other cryptocurrencies, such as Ethereum (ETH).

understand inflation

In economics, inflation refers to a lasting increase in the overall level of goods and services in time. It is characterized by an uneven decomposition of wealth, in which some people or groups use disproportionately with price increases, while others try. The main rotor of inflation are usually demand factors, such as growing economy or an increase in aggregate demand.

Bitcoin inflation problem

So can bitcoins be really resistant to inflation? The answer lies in his project and the basic economy. Here are some key points to be considered:

• Limited supply

  

  : The total bitcoin supply has a limit of 21 million, which means that when more people join the market, the number of new bitcoins increases. This limited offer, combined with a relatively small market capitalization, makes prices unlikely.

• Extracting and transaction indicators : The process of checking the correctness of transactions in the block chain and coins New Bitcoins requires significant computing energy and energy expenditure. When more miners join the network, extraction costs increase, which can lead to a reduction in profitability and higher feet.

• centralized exchange domain (CEX) : Many CEX are controlled by institutional investors or large financial institutions, which often have significant parts of Bitcoin reserves. These centralized entities can manipulate prices, which leads to an artificially inflated market.

Ethereum: Another story

Although it is true that Ethereum (ETH) also stands in the face of fears of potential supply and price variability, its basic economy is significantly different from bitcoin prices. Here are some key points to be considered:

• SCALLING : The Ethereum project allows you to create a wide range of decentralized applications (DAPP), which increases the demand for the network, and then increases prices.

• tokenization : The ability to create, trade and assemble new systems on the Ethereum platform creates an excellent ETH offer, which makes it less susceptible to price inflation.

• Ingroperability : Open Source Ethereum architecture enables excellent interaction between various applications and networks, promoting a solid ecosystem that promotes admission and reduces the risk of market variability.

Inflation resistance: myth?

The concept that bitcoins are resistant to inflation is an improper idea. Although it is true that some aspects of Bitcoin design may limit their price variability, the general narrative surrounding its resistance to inflation is defective. The combination of limited supply, an increase in transaction indicators and a centralized CEXS domain can contribute to an artificially inflated market.

To sum up, the concept of “inflation -resistant” cryptocurrencies, such as Bitcoins and Ethereum, is too simplified. Both platforms are facing unique challenges that affect their ability to maintain price stability. Understanding the basic economy and complexity of each resource, we can better appreciate the complexity of the cryptocurrency market and avoid unfounded statements about the preservation of its price.

Release of responsibility : This article is only for information purposes and should not be considered as investment advice. Cryptocurrency markets are unstable by nature, and prices can change quickly.