The narrative of Ethereum in money is deliberately pushed into the system around the DeFi movement, which is a fundamentally wrong proposition. There are some important arguments using which we can debunk this myth as it is important to clear the speculations associated with Ethereum as a digital asset.
Ethereum and Fiat: Important Similarities
It is quite apparent from the operating principle and working mechanism of ethereum that the digital asset is essentially a fiat currency. Both ethereum and fiat currency is similar in the sense that these don’t have a fixed supply and the schedule of both follows an inflationary model of market supply. Another important area where both fiat currency and ethereum have striking similarity is policy decision making. In the case of fiat currency, the decision is taken by regulators, which are central banks, while in the ethereum case, the policies are made by a small community of ethereum consisting of developers, miners, and other important members of the ecosystem.
It is certainly encouraging for all those who believe that ethereum is money that every change in the supply side of ethereum has only reduced its issuing rate till now although, on the flip side, the option is always open for the ethereum community to increase the supply by taking consensus from the majority of the stakeholders in this regard, just like the option of increasing the currency in the market exercised by federal governments and policymakers across the globe. When it comes to the limited supply of assets, only two options are reliable – one is Bitcoin, while the other is Gold as the quantity of both these assets is deemed to be fixed.
However, the issue with the narrative that Ethereum is money can be easily resolved by creating better alternatives that can be used with the DeFi movement of Ethereum. And this is exactly what the community is focusing on currently. For instance, ERC-20 has been created keeping this idea in mind and also the project of bringing Bitcoin to ERC-20 also reflect similar efforts in the same direction. It goes without saying that DeFi is an important element in the whole crypto ecosystem and will ultimately pave the way for a complete automated financial system. For that to happen efficiently, ethereum needs to step towards creating alternatives that can fully leverage its DeFi movement that is progressing at an enviable rate for now.