Can Ethereum become a currency? On how moderate inflation drives a healthy crypto economy

Question

【Crypto World】Regarding Bitcoin being hailed as “Digital Gold,” people often discuss whether it can become a currency. But this question actually applies to Ethereum as well. Many say “inflation can't be a currency,” but that logic doesn't really hold up.

Imagine: if the money supply were completely fixed, what would early holders do? They would gradually absorb the wealth growth of the entire economy. What about new contributors? They would be permanently locked out. This is similar to the logic of wealth accumulation in some authoritarian regimes, just in a different form.

A healthy economy requires an expanding money supply to keep up with GDP growth. Only then can new participants be absorbed and fairness ensured. Ethereum's current inflation rate is about 0.8%, which is quite moderate. Coupled with real use cases—DeFi protocols, stablecoins, Layer2 solutions—this infrastructure fully qualifies to operate as a currency.

Moderate inflation is actually key. It gradually dilutes overly concentrated wealth over time, giving ordinary contributors a fair chance to participate and promoting healthier, more sustainable ecological growth. This is the true logic of circular development.

BoredStaker · Accepted Answer

Damn, finally someone explained it thoroughly. An inflation rate of 0.8% is really not a big deal; in fact, it's much healthier than fiat currency.

This logic is indeed brilliant. Completely fixed supply is a breeding ground for wealth concentration. Who would want that?

ETH as currency? I think it's possible. The DeFi infrastructure is all in place, but it ultimately depends on adoption.

The religious belief in fixed supply needs to be broken. It's unrealistic.

The inflation paradox is well resolved, but the real issue is that people still prefer to hodl rather than spend it. That's the bottleneck.

HodlKumamon · Answer

0.8% I need to review the historical data... Wait, this logic really hits the point, fixed supply = wealth permanently transferred to early holders, kind of like a modern aristocratic inheritance.

Now, dollar-cost averaging into ETH has become the best solution for newcomers to get on board. Embrace those worries about being permanently locked out, because gentle inflation is the true fair start.

Well said! Compared to those narratives of zero inflation, 0.8% is nothing. The support from DeFi + L2 applications is indeed strong, and this is the kind of money that can be spent.

I've heard too many arguments about fixed supply; actually, bears are more convinced by this "breathing currency" idea. Growing together with the economy is the long-term approach.

Huh? Are people still worried about inflation... Early Bitcoin believers' PTSD that can't be washed away, but little do they know, the healthiest systems actually need liquidity.

CounterIndicator · Answer

Oh wow, I need to have a reality check... Early crypto hoarders are now the new aristocrats, haha.

That makes sense, but how can we ensure that the 0.8% figure remains stable in the long run? Who will vouch for it?

Will ETH become a true currency? It still depends on whether the Layer2 ecosystem takes off. Right now, it feels more like an investment asset.

Fixed supply = wealth concentration, expanding supply = inflation pressure. No clear answer to this, brother.

Thinking back, those who hoarded ETH back then have all cashed out, and new entrants are getting cut... Where does this fairness come from?

BlockchainDecoder · Answer

Hmm... This logic is interesting, but is 0.8% really moderate? Data shows that fiat currency has a long-term inflation rate of only 2-3%, and when viewed annually, our ratio still shows a difference. It’s worth noting that the attributes of currency and application scenarios cannot be confused, and no matter how active DeFi is, it cannot change the reality of the holder structure.

GasFeeCrier · Answer

Haha, it's the same logic again. The story of early holders lying win is told so smoothly.

0.8% inflation sounds good, but what about during a bear market? All the sweet talkers disappear then.

Can ETH be used as money? First, get the gas fees sorted out, bro.

This statement would be more convincing if said in 2021. Now? It feels a bit like hindsight.

I only half believe in the fairness of inflation; the key still depends on who holds the majority of the coins.

Tokenomics911 · Answer

An 0.8% inflation rate is indeed moderate, but it's a bit optimistic to say ETH can become a currency... Are there many actual users?

StakeTillRetire · Answer

The 0.8% inflation rate is honestly quite reasonable, much more moderate than the US dollar haha. However, the idea that fixed supply alone makes something a currency is indeed too naive; the real bottleneck is still the actual use cases... ETH is currently supported by DeFi and L2, but can it be widely adopted as a daily payment tool? That's the real question.

Can Ethereum become a currency? On how moderate inflation drives a healthy crypto economy

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