Creator of Ethereum Ponders Limiting Supply

Source: russia-insider.com

Vitalik Buterin mulls tweaking Ethereum after watching the activity going on in the world of cryptos. Some coins are being forked and refined to make them better suited to a range of decentralized applications. He is of the opinion that limiting the supply maybe the appropriate tweak. Bloomberg reported 'The 23 year old helped sell one of the first digital currencies in 2014 when he introduced ether to the public. Three years later he's witnessed scads of other digital currencies raise more than $3 billion in 2017 via so called initial coin offerings. The sheer number of coins now being created has made him ponder the previously imponderable: limiting the supply of ether'.

At the Ethereun Developers Conference, Buterin said 'I'm concerned a lot of these token models aren't going to be sustainable'. By limiting the total amount of a coin that can be mined will help underpin its value. He is not considering a cap on the amount of coins mined rather he is considering of imposing fees on applications built on top of ethereum, those fees will destory ether tokens over time. Below is a screen shot of what he feels about Ethereum supply -

Source: reddit.com

Buterin's views on the need to differentiate it from fiat currencies, he stated 'If the token is being burned, then you have an economic model that says the value of the token is the net present value of basically all future burnings, it's just a currency that goes up and down. It feels kind of like voodoo economics and the price of the token isn't really backed by anything. Introducing some kind of sinks into Ethereum is definitely something we're looking at. By sinks, I mean fees that lead to the token actually being destroyed.'

Another possible solution might be to lock up some of the ether currently in circulation as Ethereum moves to a new way of verifying transactions on its network. Known as proof of stake, it requires users whom want to be rewarded for validation transactions to deposit ether for a set amount of time. The more ether they set aside, the bigger the reward for verifying the network.