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A Letter to Ethereum

How to Flip Bitcoin

GM

How does one flip BTC?

Consistency

What makes bitcoin so great? Consistency is key. It is a sufficiently decentralized technology that just keeps going. It's consistency makes it a good store of wealth and the promise of an immutable supply solidifies it in our minds as a good way to transport value through time.

A Dream

Dreamers have, for a very long time, aimed to take bitcoin from the top spot in cryptocurrency. Honestly, it is entirely unnecessary and childish to want to do this. It is tribalism at its finest but it is the type of people that are in crypto. Many people have looked to achieve this and no one has had a chance, except for Ethereum.

The Truth is Ethereum is a great asset, and is number one in a lot of hearts and minds. As Bitcoin's child it sought to be as decentralized and secure as bitcoin while innovating on what a blockchain can do. In the process, it has garnered demand for many different financial uses, mirroring bitcoin almost as a collateral asset.

Ethereum was incapable of beating Bitcoin's promise of transporting value over time because of it's fluctuating supply. The inflation ground to a halt when Ethereum switched from proof-of-work to proof-of-stake. However, the supply is still mutable based on the demand for ethereum's block space. Increase in demand for block space will cause a decrease in supply, and a decrease in demand an increase in supply.

Fluctuation is not consistency. People have to make projections on the supply to monitor the value of the asset over time. It isn't consistent. But dynamism is a natural part of economics. The blockchain is also very mutable, as it has had many forms in its almost 9 year history.

Dynamism

In recent months, the cryptocurrency market has turned upwards as bitcoin has been listed on the stock market in the form of an ETF. Now we can own BTC in our IRA's and 401k's. As hopes lifted so did the price of BTC. The storehouse of wealth is now available to all of us for a fee.

We receive guaranteed consistency with BTC. A safe bet for our future and protection from debasement of currency. What might Ether offer then? Ether offers some degree of protection from debasement of currency as another decentralized and secure blockchain, but it also hosts future income.

There is nothing the world likes more than guaranteed future income. This was the cause of the 2008 financial crisis, and many of the speculative bubbles that have burst in human history. Yield is a beautiful thing because an individual can wrap the future into a current moment.

The current search for yield is in owning debt instruments. Certificate Deposits, Bonds and even checking account deposits are nothing more than someone's debt and someone's credit. The risk involved is the likelihood of a default on this credit resulting in the loss of yield.

Ethereum is not someone's debt but rather a token on a blockchain. When staked, it earns interest based on the activity of the blockchain and the fees it generates. This return is not consistent but rather dynamic, but it has little likelihood of default.

Existing Yields

Currently, accepted yield bearing financial instruments exist on a spectrum based on risk and yield. Bonds being the safest and offering a minimal yield. Certificate deposits tend to mirror Bonds in yield and offer little risk because they are FDIC insured. Further down the spectrum are loans and other debt instruments.

Each of these assets are denominated in dollars, which means it is subject to debasement which means that the yield could potentially offer negative real returns when calculating for the expansion of the money supply, better known as inflation.

Ethereum, its ability to resist debasement and the native yield opportunities, provides a strong & secure alternative to dollar denominated yield.

If Ethereum ever Flips Bitcoin, this would be the only way that would occur.

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#staking#flippening#ether#btc#yield
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