El Salvador President Nayib Bukele took a victory lap on Monday after the Bank of England’s British pound rapidly depreciated against the dollar. The institution has since resumed quantitative easing. Its action marks a clear pivot that many in the Bitcoin community predicted central banks would be forced into months in advance. Bukele’s Callout Bukele tagged the Bank of England with a triumphant “Told you,” over Twitter, scoring over 14,000 like and 2000 retweets from his followers. His brief comment…
Shark Tank star Mark Cuban recently aired his thoughts on Ethereum’s upcoming “Merge” upgrade. He pointed out how Ethereum’s utility as a smart contract platform and as a deflationary asset are at odds.
In an interview with Altcoin Daily on Sunday, Cuban explained that there is an inverse relationship between deflation and utilization of Ethereum.
- “If utilization goes up, and the value of a token goes up, then the cost to do something goes up,” he explained. “So you have these two competing interests.”
- Since the implementation of EIP1559, transaction fees on Ethereum went towards burning ETH’s supply. Hence, as transaction fees rise, more ETH ends up burning, which many consider bullish for long-term holders.
- In September, Ethereum is slated to undergo another upgrade called “the merge”, transitioning its consensus mechanism to proof-of-stake. This event should also reduce the coin’s supply issuance by ~90%, making it a net deflationary asset.
- However, high fees could also drive transaction activity away to other chains, making ETH lose the deflationary effect of fees. As Cuban mentions, Ethereum will need to find “equilibrium” at this point.
- Nevertheless, Cuban thinks that the network’s transition to proof of stake is a net good for “environmental reasons.”
- When asked whether the Merge would be a ‘sell the news event’, he responded “I don’t know.”
“Where Ethereum really becomes valuable is when the applications are there,” he concluded. “There’s no deflation if there are no applications used.”
- Bitcoin, the first and largest cryptocurrency, has historically been cited as crypto’s store of value asset, due to its limited supply. However, Cuban argued in January that Bitcoin is actually not an inflation hedge, labeling the term a “marketing slogan.”