Either Bitcoin or Ethereum has the ability to become the world's first non-sovereign digital currency. However, both of these cryptocurrencies must overcome some shortcomings in order to realize this vision. A recent report analyzed the different paths of Bitcoin and Ethereum towards "currency".
The two cryptocurrencies in the top two in terms of total market capitalization want to become currencies, mainly depending on how they define "currency". The report wrote:
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Bitcoin's approach is to focus on consolidating its monetary base, while Ethereum focuses on increasing the total currency.
Source of funding: Reverse pyramid layering currency
The report pointed out that there is no single definition of currency. As can be seen from the above figure, different layers have different requirements for currency trust and liquidity. Bitcoin first focuses on the monetary base, while Ethereum mainly focuses on currency utility.
Bitcoin advocate Anthony Pompliano said in his recent blog that the idea behind the concept of "Ethereum is money" is fundamentally flawed. He believes that Ethereum is no different from fiat currency because it is similar to fiat currency and has no fixed supply. He further pointed out that Ethereum's monetary policy is determined by a small group of individuals, which also fully reflects the function of fiat currency.
At the same time, co-host David Hoffman of the Crypto POV podcast explained in a recent article why he thinks Ethereum will become a currency. He pointed out that the application of Ethereum will eventually help Ether become an organic project, and eventually make it a currency.
In the long run, "If Bitcoin can survive its hard-coded monetary policy, and Ethereum can prove that it can obtain monetary value on the basis of changing currencies." Then Bitcoin and Ethereum do Ability to become the world's first digital currency without any government involvement. The upcoming upgrade of the ETH 2.0 version may increase the possibility of Ethereum becoming a currency in the future.
The report concludes that both Bitcoin and Ethereum must create pockets of circular economy, rather than relying on "overpromotion". The report writes:
In particular, Bitcoin, in order to lay its own currency foundation in the future, Bitcoin users need to begin to consider Bitcoin and satoshi as a natural accounting unit.
All fiat currencies are centralized and cannot compete with a fixed supply of 21 million. Therefore, other currencies cannot compete with detrusted Bitcoin, and its total amount will not change. "How is Bitcoin different from all other forms of currency?" The question is still under debate.