Should Ether Keep Without a Limited Supply or Not?

blockchain technology

Does Vitalik Buterin, Ethereum’s Blockchain creator, regret about not limiting Ether’s supply? Accordig to Bloomberg, “he may have created too much of a good thing.”

Why Should Ether Have a Limited Supply?

Vitalik Buterin has created Ether, in 2014 when he was just twenty years old. Three years later and with the ICO market expanding, he asks himself if he should have limited Ether’s supply. Just in 2017, ICOs raised more than $3 billion dollars, but not all of them could succeed.

“I am concerned a lot of these token models are not going to be sustainable,” said Buterin in an interview in the Ethereum Developers Conference in Mexico.

Bitcoin has a supply limit of 21 million coins, but Ether does not have the same limit. Vitalik Buterin is not thinking about limiting Ether’s supply in the same way as Bitcoin. The idea that this young developer has, is to impose fees on applications built atop Ethereum.

“If the token is being burned, then you have an economic model that says that the value of the token is the net present value of basically all future burnings,” he commented. But otherwise, “it is just a currency that goes up and down. It feels kind of like voodoo economics and the price of the token isn’t really backed by anything. That is a very spooky thing,” he said.

What to do with Ethereum then?

The intention, and what Ethereum team is looking for, is to introduce some kind of fees that would allow the token to be destroyed. Though, this is not the only single way to limit its supply. For example, another way could be locking some ether in circulation. This is known as proof-of-stake (PoS). PoS means that miners can only mine a percentage of blocks equal to the percentage of Ether they own. In this case, if one miner owns 1 percent of the Ether in the market, it will be able to mine only 1 percent of the blocks.

And Buterin does believe that Proof-of-stake can be a valid option.  He said that “the Ethereum community may transition to proof-of-stake as early as the end of the year.”

About the ICOs, he has also given a statement.

“The token models we have right now are lopsided and give skewed incentives. The worst part is the front loading. Basically getting $140 million before you have a product. The right way to do that is to come up with a mechanism that either splits the ICO up across rounds or has a mechanism where if it does not go well people can get refunds or anything similar.”

What About Ether’s Performance This Year?

Since the beginning of the year, the currency has grown around 3900 percent. In January, the currency was traded around $8 dollars, while now it is traded at $313 dollars. Its market capitalization grew too. While in January Ether had a 4 percent market share, it peaked to 31 percent in June and now it has 14 percent market capitalization.


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