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RE: What Gresham's Law tells us about cryptocurrency

in #bitcoin7 years ago

It is worth noting that plenty of crypto currencies are inflationary, disinflationary (rate of inflation goes to 0 over time) or deflationary (like bitcoin where there is a hard cap on supply and the rate of added supply decreases).

It will be interesting to see if Gresham's law applies within Crypto itself. I think that inflation protection is very important but I wouldn't necessary consider it the primary driver of Crypto's growth.

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If you consider the deflationary character of bitcoin, and a lot of other currencies therefore, it should have a steady rate of price growth. Look at this chart from 2014:

I've seen that chart and it definitely is compelling, but I guess my big question is how do you think Ethereum compares (has had like a 15% inflation rate this year and has no definitive hard cap on supply) .

Yes that is true, but recent updates that came along with Casper stated that the total supply (which is not really decided yet) definitely won't increase. And as the Ethereum network grows and becomes the host of more and more dApps, I see eth becoming more valuable as well. But that is really just an educated guess.