Ethereum Classic’s (ETC) latest 20% reduction in block rewards from 4 ETC to 3.2 ETC took place as the network completed it’s 10,000,000 block in line with the protocol’s established monetary policy.
While the Fed just printed $500 billion overnight, #EthereumClassic is reducing the block reward in about 11 hrs or block 10 ml. Consumers increasingly desire trust-minimization and transparent-predictable monetary policy. ➡️https://t.co/GQYvTWzIxk#Blockchain #Cryptocurrency pic.twitter.com/4xwgSevx5P
— ETC Core (@etc_core) March 16, 2020
The lowering of reward is primarily of interest to ETC miners, developers and holders but was promoted by the community as a means of raising awareness of the frailty of the current fiat-based monetary system.
Scarcity and Value
While the Ethereum blockchain moves towards a proof of stake (PoS) consensus, Ethereum Classic will endeavour to be compatible with its sibling chain but will remain as a proof of work (PoW) model with a maximum total supply of between 198.3 million and 210.6 million ETC.
Having a fixed supply creates an element of scarcity – which be it in currency, precious metals, artwork, wine, Pokemon cards, or even a reliable lifelong partner – can indeed help to provide perceived value if the asset is cherished by those who wish to hold it.
It is this relative scarcity that ETC Core are highlighting in their social media posting and implying ETC, and by association PoW cryptocurrencies in general, can provide certain monetary value when compared to fiat currencies such as the U.S. Federal Reserve Note that is being endlessly created to sustain the current financial system.
Having access to the expanding fiat currency supply has traditionally been a privilege reserved for commercial banks and entities judged to be systemically important but the idea of helicopter money – where central banks issue money directly to the public – has been floated for several years.
However, White House economic adviser Harry Kudlow, recently dismissed the idea of public “macro cash rebates” and stated “We are not looking at giving everybody $1,000.”
The figure he quoted was interesting in that it is in the same ball park as the cash officially confirmed to be handed out to Hong Kong residents in an attempt to stimulate their local economy.
At what level the handout really needs to be in order for it to have the desired effect is anyone’s guess but $1,000 appears to be the established baseline for authorities to trial.
By giving the public access to the currency in this manner though, authorities are walking a thin line between stimulus and awakening them to its perceived scarcity value as investor Mike Maloney covered in depth with his Hidden Secrets of Money series.
As ETC Core have suggested, scarcity is likely to play a part in the new monetary system moving forward but as everyone’s financial awareness grows, it is the general public’s faith and confidence in that system that will ultimately decide the form money will take.