- Presently, Ethereum does not have a max supply of ETH in existence, but that might change in the future.
- Ethereum’s co-founder, Vitalik Buterin, proposed a hard-cap in his Ethereum Improvement Proposal, which could give us a hard cap of 120 million ETH.
- The fixed supply may have far-reaching consequences on Ethereum and its price.
- Ethereum currently trades at $1,719 .94 and has a market capitalisation of $196,729,686,270.54
Ethereum is a decentralized open-source blockchain with its own cryptocurrency, Ether, which is considered a major alternative to Bitcoin. ETH also serves as a platform for other cryptocurrencies and is widely used for DeFi and for the execution of smart contracts.
Since it officially launched in 2015, Ethereum has grown to become the second most valuable cryptocurrency by market capitalization sitting at $196,729,686,270.54, only surpassed by Bitcoin. Ethereum currently trades at $1,719 .94, and its limit is currently uncapped.
Ethereum’s co-founder, Vitalik Buterin, proposed a hard-cap that could have far-reaching effects on the entire project and its price.
Hard Cap For Ethereum Could Change The Game
Presently, there is no issuance limit or a cap on the amount of ETH in circulation, which distinguishes it from other cryptocurrencies like Bitcoin, which is capped at 21 million BTC, and BNB, which has a maximum supply of 170,532,785 BNB.
Ethereum’s co-founder Vitalik Buterin told a joke about fixing a hard cap on the number of ETH that can be issued. He proposed 120,000,000 ETH as the number of coins that can be in circulation for ETH. He suggested that the community considers the recommendations of his Ethereum Improvement Proposal.
If Ethereum implements his recommendations and fixes a hard cap on ETH, we could see the Network’s centralization. The algorithms used for proof of work could unify the miners’ operation for Ethereum, just like the scenario with Bitcoin.
Presently to gain Ether, individuals will have to solve problems, and this utilizes a lot of computing power that may not be readily available to the average miner.
The creation of a fixed supply rate helps adjust the distribution and allotment at an even rate, thereby preventing mining power concentration in powerful machines.
On the Flipside
Secondly, by fixing a supply cap to ETH, we could see a sharp increase in inflation rates which will inevitably translate to an increase in revenue for miners. Holders of ETH and investigating are bound to see a significant increase in profits following inflation when supply is fixed.
As supply reduces, demand increases, and so does the price. This is a move that may see Ethereum challenge bitcoin for a larger market share.
Ethereum’s Rise and Rise
Ethereum was founded in 2015 by Vitalik Buterin and Gavin Wood to be used for DeFi to execute smart contracts.
Ethereum also pioneered the blockchain smart contract platform concept and can host other crypto-currencies called tokens using its ERC-20 compatible standards.
Presently, there are over 280,000 ERC-20 compliant tokens and over 40 are part of the top 100 cryptocurrencies by market capitalization.
Secured by the Ethash proof-of-work algorithm, Ethereum’s popularity has soared, making it the second-largest cryptocurrency by market capitalization.