This is really about inflation but first, we need to talk about batteries for a moment. Bare with me. A good battery will hold a charge and spread the usage out evenly as the energy is depleted at a steady rate. Some batteries, like deep cycles are designed for sustained usage and hold up quite well. Below is a brief excerpt from the Encyclopedia of Electrochemical Power Sources, 2009 to illustrate what is really the main concern, or point of a battery (which you already know)
Basically, you want the charge that you put into a battery to be there for you when you need it. “The energy efficiency has an important impact on the economy of the battery” which is to say, if it don’t hold a charge, it ain’t worth shit. I have a cellphone with a battery like that and it sucks. Maybe some of you can relate. Imagine having a phone, or a computer, or any battery powered tool that preformed well directly after charging but would accomplish less and less with each cycle and passing moment. Imagine a kind of bonded curve that makes each use cost more energy the further from charging it is used. If you were using such a tool you would need to front-load all of your tasks and rush to do everything as quick as you can so-as to extract as much possible energy value out of the charge. I recently heard someone refer to money as a battery that stores our time and energy to be spent later. This image came quickly to mind after hearing that. First of all, it’s a really good analogy as we charge our bank account through some work with economic returns and then go spend that charge strategically, in a budgeted and intentional manner (hopefully, right?) all in hopes of getting the most out of the charge. “The energy efficiency has an important impact on the economy of…” the dollar, or the other currency.
In countries that have experienced hyper inflation there is a very similar scenario to the way that you would need to deal with that battery. Here is a quick definition of hyper inflation from Investopedia:
Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. While inflation is a measure of the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.
Although hyperinflation is a rare event for developed economies, it has occurred many times throughout history in countries such as China, Germany, Russia, Hungary, and Argentina.
It would not be uncommon in a place experiencing hyper inflation to see everyone trying to go to the grocery store on the very first day of the month. Immediately after they got paid, while their currency still has the same buying power. Like the battery we discussed, their financial charge, the stored energy within the money is being lost with each passing moment making the returns on each dollar (or whatever the currency is called) less and less as time passes. As buyers buy up all of the supply as fast as possible the prices must rise as later shoppers come for the depleted inventory. It’s not hard to see how this might create significant problems so we need not elaborate on it here.
Suffice to say that it is of the upmost importance that we store our time and energy in the most efficient battery available to us. While it doesn’t always occur to folks that they have options in regard to where they store their work, time, energy, production, etc. There are at least a few options available. Now I don’t want to get hyperbolic and start acting like we are experiencing hyper inflation here in the United States. We’re not, but we are definitely experiencing inflation. I mean just the other day I was in a store waiting on someone for something and started noticing how high some of the prices had gotten. At first I thought about how expensive everything was getting but then immediately wondered to myself, “Is the shoe worth more now, or is the dollar just worth less?” I’m sure this is a topic for a thesis paper on macro-economics but I’m simple, I just thought “We literally just printed 1/5th of all the dollars that have ever existed, THIS YEAR!!!” IT wouldn’t even be reasonable to suspect that the dollar’s value hadn’t diminished precipitously. How could it not? iIt was cut up and stepped on with cutting agents just like the cocaine that gets snorted through it. It seems to me that if you save a dollar, you are actively loosing money. But what is the alternative?
In walks the hero Satoshi Nakamoto, with a brilliant and complex solution . It is nothing short of miraculous that someone could pull this off. He introduces a kind of currency that could be exchanged on a distributed ledger maintained on multiple, decentralized nodes, on a technology known as a blockchain. Bitcoin, the currency is created by mining, which is really just running a node and investing incredible calculation resources in exchange for a token, a battery that contained the value of that work. Bitcoin stored this energy with an efficiency that was unprecedented. Not only is it stored on an immutable ledger, it’s represented by a token with a known number and a fixed limit. There can be no money printers for the very existence of this money is fruit of the work invested in the chain. In contrast with the dollar, bitcoin is far more efficient and far more sound.
There is another option, another blockchain that was born out of the minds of young folks who had been tutored and trained by working with bitcoin. Ethereum set out to be more than a ledger, it is more of a global computer built on a blockchain. It is programable and has the ability to write smart contracts, which opens up a world of opportunities for exchanges, dapps, daos, and anything else we can dream up it seems. The value of this system is, at least in my mind, fairly self evident. Ethereum is also created in the mining process like bitcoin, as described above. But since the implementation of EIP 1559 each transaction will burn a base fee, resulting in an overall decreasing supply of the asset from now on. The Ethereum communities, with a bit of a wink and a nod at bitcoiners declaring BTC as a “sound money,” pronounced Ethereum to be “ultrasound money.” It is deflationary and so theoretically increases it’s stored charge/value as it is used and the total supply is burned. It would charge itself by using it. I wish my damned phone would do that!
It seems inevitable to me that the value of both of these coins will only continue to rise, especially if we are denominating their value in dollars. The ultimate value of Ethereum seems to be fairly open and expansive as the capacity of it improves. For example, the global digital remittance market size is expected to reach USD 42.46 billion by 2028. If Ethereum and/or Bitcoin capture even one percent of that market, which by the way is inevitable, the price of eth would be multiplied many times over. It will win in the markets, and so will Bitcoin. On top of that, everything being denominated in dollars is worth a higher number of dollars every day. Almost anything seems better to hold onto than dollars, except maybe a snake. Meanwhile, Ethereum will continue to burn supply along the way, making it the most efficient battery we have ever seen.