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$BTC And $ETH – The $BTC and $ETH Debate

1/ Tokenomics Deep Dive of @Bitcoin and @ethereum

BTC and ETH are the two cryptos that revolutionized Web3, so it feels right I start my Tokenomics series with them.

In this thread, we’ll be looking at:

2/ •Inflationary/deflationary supply of BTC and ETH

•emission rate of BTC and ETH

•token distribution/allocation of BTC and ETH

•utility of BTC and ETH

So let’s dive in!!!

3/ BTC total and max. supply is 21 million with a circulating supply of 19 million.This means 90% of BTC is in circulation and about 2 million BTC is yet to be mined.

Initially BTC was regarded as inflationary as more of it was mined to reward miners.

Until Halving….

4/ BTC employs a mechanism called Halving.

This halving cuts the block subsidy(the amount of new BTC minted in each block) in half, thereby reducing the flow/supply of BTC into the market.

This results to scarcity of BTC and makes BTC a deflationary asset.

5/ ETH on the other hand, has a total supply and circulating supply of 120.8 million and no max. supply.

ETH was initially regarded as an inflationary asset due to its infinite supply.

Until EIP-1559 and The Merge happened.

6/ EIP-1559 is a fee ‘burning’ mechanism that ‘burns’ a bit of the transaction fees.

The merge is transition in consensus mechanism that takes out miners rewards reducing the supply of ETH

These combined mechanisms reduces the supply of ETH and makes ETH a deflationary asset

7/Emission Rate of BTC

Initially,new block was mined every 10mins and miners rewarded with 50 BTC resulting to high emission rate.

With Halving,emission rate has reduced to 6.25 BTC per block and this reward will reduce every 4 years till the last BTC is mined in 2140

8/ Emission rate of ETH

Before the merge, miners were rewarded in ETH for securing the network.

But with the merge, ETH experienced a drastic reduction in its daily emission.

9/ Distribution of BTC Due to the pseudonymity of BTC and Satoshi, not much is known about the initial distribution of BTC

But from

we can see some wallets with large holdings of

BTC

Bitcoin, Ethereum, Dogecoin, Litecoin statsBitcoin, Ethereum, Dogecoin, Litecoin stats

10/ Distribution of ETH

@ethereum started out with 72 million ETH out of which 60 million were distributed to ~ 1000 investors at an open-crowd sale in 2014.

The remaining 12 million ETH were shared between the @ethereum foundation and early contributors.

11/ Utility of BTC In terms of use cases, BTC is most times regarded as a store of value, a digital gold.

People use it as a hedge against inflation.

It is used for fast and permissionless transaction.

12/ On the other hand, ETH is also used for permissionless transaction.

Also @ethereum network is regarded as the foundation of smart contracts. Think of DApps, DAOs and NFTs.

The more people use the @ethereum network to build and develop, the more valuable ETH becomes.

13/ Conclusion

BTC and ETH has done relatively well in market dominance and considered as valuable assets.

With a good utility causing a spike in demand, their value won’t wane.

This post is based on this twitter thread.

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