{"id":7148,"date":"2022-10-11T18:21:42","date_gmt":"2022-10-11T18:21:42","guid":{"rendered":"https:\/\/xcoins.com\/?p=7105"},"modified":"2023-09-15T11:09:36","modified_gmt":"2023-09-15T11:09:36","slug":"is-eth-becoming-truly-ultrasound-money","status":"publish","type":"post","link":"https:\/\/xcoins.com\/en\/blog\/is-eth-becoming-truly-ultrasound-money\/","title":{"rendered":"Is ETH Becoming Truly Ultrasound Money?"},"content":{"rendered":"\r\n<p><em>The Merge has propelled Ethereum to become the number one hard-money currency worldwide by one key measure, overtaking Bitcoin in the eyes of many. We explain why this breakthrough is significant.<\/em><\/p>\r\n\r\n\r\n\r\n<p>September 15th marked the end of an era for Ethereum, the world\u2019s second-biggest crypto. After years of anticipation, the <a href=\"https:\/\/xcoins.com\/en\/blog\/ethereum-merge-survival-guide\/\">Merge<\/a> went live and recent data shows that it\u2019s already delivering on its promises.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>Since its live date, we\u2019ve seen a sharp drop in Ethereum\u2019s net issuance rate (also known as inflation rate), suggesting that the crypto is well on its way to becoming <a href=\"https:\/\/xcoins.com\/en\/blog\/is-ethereum-becoming-deflationary\/\">deflationary<\/a>.<\/p>\r\n\r\n\r\n\r\n<p>In this article, we\u2019ll break down why the change in Ethereum\u2019s issuance rate is significant, the impact of the Merge, and what Ethereum\u2019s future holds.<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\" id=\"h-ethereum-is-now-created-at-a-slower-rate-than-bitcoin\"><strong>Ethereum is now created at a slower rate than Bitcoin<\/strong><\/h2>\r\n\r\n\r\n\r\n<p>As of October 11th, Ethereum\u2019s annualized net issuance rate sits at 0.09% \u2013 that\u2019s according to data compiled by <a href=\"https:\/\/ultrasound.money\/\">Ultra Sound Money<\/a> that shows that only 8,030 new ETH have been added to the net supply since the Merge took place.<\/p>\r\n\r\n\r\n\r\n<p>The net issuance rate, or inflation rate, figure is calculated by dividing Ethereum\u2019s new supply by its existing supply. Prior to the Merge, Ethereum\u2019s inflation rate was approximately 3.77%, meaning that it has decreased by roughly 3.68%.<\/p>\r\n\r\n\r\n\r\n<p>In comparison, Ethereum\u2019s biggest rival, Bitcoin, has an annualized issuance rate of approximately 1.87% based on data gathered by <a href=\"https:\/\/messari.io\/charts\/bitcoin\/iss-rate\">Messari<\/a>.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>This latest development means that Ethereum is now arguably more inflation-resistant than Bitcoin, the world\u2019s biggest cryptocurrency commonly <a href=\"https:\/\/xcoins.com\/en\/blog\/why-gold-was-the-global-asset-of-choice-throughout-history-and-why-thats-changing\/\">dubbed \u2018digital gold\u2019<\/a>.<\/p>\r\n\r\n\r\n\r\n<figure class=\"wp-block-image size-large is-resized\"><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone wp-image-7110\" src=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/10\/image-1024x410.png\" alt=\"A graph shows Ethereum\u2019s inflation rate has fallen below Bitcoin\u2019s following the Merge\" width=\"840\" height=\"336\" \/><\/figure>\r\n\r\n\r\n\r\n<p><em>Ethereum\u2019s inflation rate has fallen below Bitcoin\u2019s following the Merge (Source: <\/em><a href=\"https:\/\/ultrasound.money\/\"><em>Ultra Sound Money<\/em><\/a><em>, data from October 11th 2022).<\/em><\/p>\r\n\r\n\r\n\r\n<p>Bitcoin has long held the attention of both crypto and traditional investors because of its scarcity and attractiveness as a store of value. However, the historic Merge upgrade has made Ethereum significantly more inflation-resistant, an attribute that\u2019s most commonly ascribed to Bitcoin. As a result, the asset is garnering investors\u2019 attention as \u201cultra-sound\u201d currency, challenging both Bitcoin and conventional assets like gold.<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\">The impact of the triple halving<\/h2>\r\n\r\n\r\n\r\n<p>There are three reasons for the dramatic reduction in Ethereum\u2019s issuance rate. Firstly, the Merge marked Ethereum\u2019s official transition from a <a href=\"https:\/\/xcoins.com\/en\/blog\/proof-of-work-vs-proof-of-stake-the-pros-and-cons\/\">proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS)<\/a>. It\u2019s estimated that by becoming a validator-secured network, <a href=\"https:\/\/xcoins.com\/en\/blog\/ethereum-staking-will-reduce-energy-use-by-more-than-99\/\">Ethereum will reduce its energy consumption by up to 99%<\/a>.<\/p>\r\n\r\n\r\n\r\n<p>In addition to ending mining, the <a href=\"https:\/\/xcoins.com\/en\/blog\/will-the-london-hard-fork-push-up-ethereums-price\/\">EIP-1559<\/a> mechanism has also reduced the ETH that goes into circulation by requiring that the network burns a proportion of transaction fees. These two factors, paired with the introduction of <a href=\"https:\/\/xcoins.com\/en\/blog\/how-to-stake-ethereum\/\">Ethereum staking<\/a>, have caused the \u201c<a href=\"https:\/\/xcoins.com\/en\/blog\/ethereums-triple-halving-is-fast-approaching\/\">triple halving<\/a>\u201d that slashed Ethereum\u2019s inflation rate.<\/p>\r\n\r\n\r\n\r\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" class=\"alignnone wp-image-7108\" src=\"https:\/\/xcoins.com\/wp-content\/uploads\/2022\/10\/crypto-miner-2022.jpg\" alt=\"machines that used for mining of Ethereum \" width=\"940\" height=\"627\" \/><\/figure>\r\n\r\n\r\n\r\n<p><em>The Merge transitioned Ethereum from PoW to PoS, meaning that new ETH is no longer created through the energy-intensive process of mining.<\/em><\/p>\r\n\r\n\r\n\r\n<p>Looking more closely at the numbers, Ethereum\u2019s previous <a href=\"https:\/\/ethereum.org\/en\/roadmap\/merge\/issuance\/\" target=\"_blank\" rel=\"noopener\">PoW network issued roughly 13,000 ETH in rewards<\/a> to miners every day. But since the token-burning mechanism was introduced, and staking rewards were implemented, only around 1,600 ETH is dished out daily in rewards. According to the Ethereum Foundation, these changes have cut Ethereum\u2019s daily issuance by 90%.<\/p>\r\n\r\n\r\n\r\n<h2 class=\"wp-block-heading\">Ethereum eyes a deflationary future<\/h2>\r\n\r\n\r\n\r\n<p>It\u2019s evident that the triple halving has positively affected Ethereum\u2019s inflation rate, which has sparked a lot of interest and momentum around Ethereum as a long-term asset. This isn\u2019t surprising, considering the current economic situation around the world.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>With rampant inflation, rising prices, and incessant money-printing, Ethereum\u2019s decreasing inflation rate demonstrates the value of Eth as an inflation hedge. It also positions the asset as an attractive way to store wealth, in a similar way that Bitcoin is viewed as digital gold.<\/p>\r\n\r\n\r\n\r\n<p><img decoding=\"async\" class=\"alignnone\" src=\"https:\/\/lh3.googleusercontent.com\/3owxE7iWtsu_GyMdw2Ph2FcOAkeXkXom9H_WASkADSKYa5HM1BJsFO2xaTc_InoSThP3mHQP74mKNHU1Q_DjoDuYIefFgtKPJEwgNzd8ghbCOukjucrUY8hLzgcBrJ6wLIZeah4w2jv22Nrfd4nZirtNel9assVqGzY2rG9au_82FeGPPH9OdMLteQ\" alt=\"a graph showing Bitcoin\u2019s annual issuance rate is now more than 10x higher than Ethereum\u2019s following the Merge\" width=\"624\" height=\"320\" \/><\/p>\r\n\r\n\r\n\r\n<p><em>Bitcoin\u2019s annual issuance rate is now more than 10x higher than Ethereum\u2019s following the Merge (Source: <\/em><a href=\"https:\/\/messari.io\/charts\/bitcoin\/iss-rate\"><em>Messari<\/em><\/a><em>).<\/em><\/p>\r\n\r\n\r\n\r\n<p>If Ethereum does become completely deflationary, it will likely attract a lot more institutional investment over the next few years. This is just another reason why it\u2019s becoming increasingly attractive to investors. This is evident from the fact that ETH is currently outperforming both BTC and the stock market.<\/p>\r\n\r\n\r\n\r\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone\" src=\"https:\/\/lh5.googleusercontent.com\/eSfYwOgDuthT23HDtWmhOYlYrjv7iB3NYeaAF2UW5u8ZbOgrJHlgsk76uJ-O_QthKGEhTuzwevIec7_BV_K5B64Fw7PnvuIW1v90HypQ146w0SBC5YKmgamKkfloRIttfajg0dSPs9ebuseNbecgigjM-4W2VpnoV2AHBbCnRbcVUn-VCzOoyEwzSg\" alt=\"a graph showing Percentage change in the price of Ethereum in comparison to Bitcoin and the Nasdaq Composite.\" width=\"613\" height=\"378\" \/><\/figure>\r\n\r\n\r\n\r\n<p><em>Percentage change in the price of Ethereum in comparison to Bitcoin and the Nasdaq Composite.<\/em><\/p>\r\n\r\n\r\n\r\n<p>In order for Ethereum to be considered deflationary, the network needs to issue fewer tokens than it burns every day, whether this happens will depend on the number of transactions on the network. If use of Ethereum continues to grow over time, we could indeed see Eth tip deflationary in the near future.\u00a0<\/p>\r\n\r\n\r\n\r\n<p>According to Ultra Sound Money, between September 26 and October 3, 466,000 ETH was burned while 603,000 new ETH was issued. Although Ethereum isn\u2019t entirely deflationary yet, the Merge indicates that it\u2019s not so far away, especially considering how far it\u2019s come in the past couple of years.<\/p>\r\n\r\n\r\n\r\n<p>If you\u2019re considering purchasing <a href=\"https:\/\/xcoins.com\/en\/buy-crypto\/ethereum\/\">Ethereum<\/a>, at Xcoins, we offer 0% processing fees on your first verified purchase, and no verification when you buy up to $150 worth of crypto. <a href=\"https:\/\/app.xcoins.com\/en\/signup\">Sign up now<\/a> to benefit from buying crypto instantly and securely.<\/p>\r\n\r\n\r\n\r\n<p>As always, this article does not constitute financial advice and you should be sure to do your own research and consult a professional financial advisor before making any investment decision.<\/p>\r\n\r\n\r\n\r\n<p><br \/><em>To stay up to date on all things crypto, like Xcoins on <\/em><a href=\"https:\/\/www.facebook.com\/xcoinsofficial\"><em>Facebook<\/em><\/a><em>, and follow us on <\/em><a href=\"https:\/\/twitter.com\/realxcoins\"><em>Twitter<\/em><\/a><em>, <\/em><a href=\"https:\/\/www.instagram.com\/xcoins.hq\/\"><em>Instagram<\/em><\/a><em>, and <\/em><a href=\"https:\/\/www.linkedin.com\/company\/54161996\/\"><em>LinkedIn<\/em><\/a><em>.<\/em><\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>The Merge has propelled Ethereum to become the number one hard-money currency worldwide by one key measure, overtaking Bitcoin in [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":7213,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[740],"tags":[],"class_list":["post-7148","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-analysis-2"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.1 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Is ETH Becoming Truly Ultrasound Money? 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I Xcoins","description":"The Ethereum Merge cut ETH\u2019s issuance rate ten-fold, tipping it below BTC\u2019s. We explain why this is a game-changing development.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/xcoins.com\/en\/blog\/is-eth-becoming-truly-ultrasound-money\/","og_locale":"en_US","og_type":"article","og_title":"Is ETH Becoming Truly Ultrasound Money?","og_description":"The Ethereum Merge cut ETH\u2019s issuance rate ten-fold, tipping it below BTC\u2019s. 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