In recent years, the debate over which cryptocurrency holds superior long-term value has intensified. While Bitcoin (BTC) has long reigned as the dominant digital asset by market capitalization and public recognition, a growing body of research suggests that Ethereum (ETH) may be poised to overtake it — not just in adoption, but as a more effective hedge against inflation and a stronger store of value.
A groundbreaking study conducted by researchers from leading Australian institutions — Ester Félez-Viñas from the University of Technology Sydney, Sean Foley from Macquarie University, Jonathan Karlsen from the University of Western Australia, and Jiri Svec from the University of Sydney — challenges the conventional wisdom that Bitcoin is the ultimate digital gold. Their findings point to Ethereum's evolving economic model, particularly after the EIP-1559 upgrade, positioning ETH as a potential deflationary currency for the first time in blockchain history.
Ethereum’s Shift Toward Deflation
One of the most transformative changes in Ethereum’s ecosystem was the implementation of EIP-1559 in August 2021. This upgrade fundamentally altered how transaction fees — commonly known as "gas fees" — are handled on the network. Instead of all fees going to miners, a significant portion is now permanently burned (removed from circulation), effectively reducing the total supply of ETH over time.
As of the latest data, over 1 million ETH have already been burned from a circulating supply of approximately 118.5 million. This mechanism introduces a deflationary pressure that contrasts sharply with traditional inflationary monetary systems — and even with Bitcoin’s predictable but still inflationary issuance model.
👉 Discover how Ethereum's deflationary mechanics are reshaping digital asset economics
The researchers highlight a crucial statistic: more than 50% of newly minted ETH is offset by burned transaction fees daily. As network activity increases — driven by decentralized applications (dApps) and the booming decentralized finance (DeFi) sector — more transactions occur, leading to more ETH being burned. In periods of high usage, the burn rate can exceed the issuance rate, resulting in net deflation.
This dynamic sets Ethereum apart from Bitcoin, where new coins are steadily introduced through mining at a fixed halving schedule. Currently, Bitcoin’s annual supply growth sits around 1.99%, while post-EIP-1559 Ethereum’s projected supply increase is just 0.98% — less than half, and potentially negative during peak activity.
Ethereum as an Inflation Hedge
With global inflation rates spiking — the U.S. saw a 6.2% year-on-year increase in October 2021 — investors are increasingly turning to digital assets as hedges against currency devaluation. Historically, Bitcoin has dominated this narrative due to its capped supply of 21 million coins. However, the Australian study argues that Ethereum now offers superior inflation-resistant properties.
Why? Because scarcity isn’t just about a hard cap — it’s about net issuance. Even without a fixed supply limit like Bitcoin, Ethereum can become scarcer over time if more tokens are burned than created. This makes ETH not only scarce but increasingly scarce under certain conditions.
Moreover, Ethereum’s utility-driven ecosystem fuels demand. It powers smart contracts, NFTs, DeFi protocols, and Web3 applications — use cases far beyond simple peer-to-peer cash transfers. This growing demand, combined with a shrinking or stagnant supply, strengthens its case as a long-term value storage solution.
The "Better Money" Narrative Gains Traction
Ethereum advocates have begun referring to ETH as "sound money" — a direct counter to Bitcoin maximalists who label BTC as "hard money." While Bitcoin emphasizes immutability and security through its proof-of-work consensus and static protocol, Ethereum prioritizes evolution and adaptability.
Critics like Michael Saylor, CEO of MicroStrategy, remain staunch supporters of Bitcoin, citing its higher hash rate and protocol stability as key advantages. During a December 1 appearance on Tucker Carlson’s show, Saylor called Bitcoin “the highest form of property ever created by human beings.” His company further demonstrated its commitment by purchasing an additional $414 million worth of BTC on November 29.
Yet, Ethereum’s continuous innovation — including its transition to proof-of-stake (expected in 2025) and layer-2 scaling solutions — reflects a different philosophy: one that values upgradability and functionality alongside monetary policy.
Market Performance and Investor Sentiment
At the time of writing, Bitcoin was trading at approximately $57,000 (equivalent to 816,041 Indonesian Rupiah), while Ethereum traded near $4,600 (65,722,960 IDR). Despite BTC’s higher price per unit, ETH showed stronger momentum: up 1.9% over the past week compared to BTC’s 2.9% decline.
This shift in performance aligns with broader trends in institutional and retail interest. DeFi protocols locked in over $100 billion in total value on Ethereum, and NFT marketplaces like OpenSea rely heavily on its infrastructure. These real-world applications drive consistent network usage — and thus, consistent fee burns.
👉 See how real-world adoption is fueling Ethereum's economic transformation
Frequently Asked Questions (FAQ)
Is Ethereum truly becoming deflationary?
Yes. Since the EIP-1559 upgrade, Ethereum has experienced periods of net deflation whenever the amount of ETH burned in transaction fees exceeds the amount issued to validators. As network usage grows, especially during high-demand events like NFT mints or DeFi surges, deflationary pressure increases.
Can Ethereum surpass Bitcoin in market cap?
While Bitcoin still leads in market capitalization and brand recognition, many analysts believe Ethereum has the technological and economic foundation to close the gap — especially if its deflationary trend continues and scalability improves with upcoming upgrades.
Why do some experts still prefer Bitcoin over Ethereum?
Bitcoin is valued for its simplicity, security, and unchanging protocol. Investors seeking a purely digital store of value with minimal risk of protocol changes often favor BTC. However, those looking for utility, yield-generating opportunities, and adaptive monetary policy lean toward ETH.
Does Ethereum have a maximum supply limit like Bitcoin?
No. Unlike Bitcoin’s hard cap of 21 million coins, Ethereum does not have a fixed supply limit. However, its effective supply can decrease due to token burning, making it functionally scarce even without a cap.
How does EIP-1559 affect users transacting on Ethereum?
EIP-1559 introduced a base fee that is burned rather than paid to miners, making transaction pricing more predictable. Users also pay a priority fee (tip) to validators for faster processing. The burning mechanism reduces overall supply over time, benefiting long-term holders.
What role does DeFi play in Ethereum’s value proposition?
DeFi is central to Ethereum’s ecosystem. It enables lending, borrowing, trading, and earning interest without intermediaries. Over 80% of DeFi activity occurs on Ethereum, driving sustained demand for ETH as both collateral and gas payment.
Final Thoughts: A New Era for Digital Value
While Bitcoin remains a powerful symbol of financial sovereignty and censorship resistance, Ethereum is evolving into something different: a dynamic, deflationary digital asset with deep economic moats built on real-world utility.
The research from Australian academics adds weight to the argument that Ethereum may offer better long-term value storage than Bitcoin, particularly in an inflationary macroeconomic environment. Its ability to adapt, scale, and reduce supply through usage gives it unique advantages in the rapidly evolving crypto landscape.
👉 Explore how next-gen blockchain economics are redefining digital wealth
As investor priorities shift from pure scarcity to utility-driven scarcity, Ethereum stands at the forefront of this transformation — not just as a cryptocurrency, but as a foundational layer for the future of finance.