Ethereum’s anticipated move to a proof-of-stake consensus mechanism would overhaul its monetary policy, perhaps making ETH more scarce than Bitcoin.
Vivek Raman, an Ethereum researcher, believes that Ethereum’s (ETH) plan to switch to a proof-of-stake mechanism would allow it to surpass Bitcoin (BTC) as the most popular cryptocurrency.
In an exclusive interview with Cointelegraph, Raman said, “Ethereum does have the potential to overtake Bitcoin from an economic standpoint and due to the influence of the supply shock.”
The Merge, a long-awaited update that will complete Ethereum’s move from a proof-of-work to a proof-of-stake system, is slated to take place in September. In addition, The Merge will revolutionise Ethereum’s monetary policy, making the network more ecologically friendly and lowering ETH’s total supply by 90 percent .
“Ethereum is deflationary, especially with fee burns, whereas Bitcoin is inflationary. Each halving reduces inflation, “highlighted Raman.
While Bitcoin will continue its purpose as digital gold, according to Raman, Ethereum will still have “a greater adoption space” as the primary layer of the decentralised finance (DeFi) sector.
The Merge won’t alleviate Ethereum’s high transaction costs, which is still the major problem keeping Ethereum from growing. According to Raman, that is not a concern since Ethereum will depend on layer2 scaling methods to sustain most users’ activity.