Ethereum Co-founder Proposes Fixed Supply

On 1 April, Vitalik Buterin published an Ethereum Improvement Proposal that limits ether issuance to 120 million coins. The post carried the date as a wink, yet the numbers, the code along with the rationale were literal. Buterin now asks the community to debate the plan. He offers a fallback cap of 144 million ether if the lower limit proves impossible to retrofit.

Ethereum presently issues ether without a ceiling or formal monetary rule. The 2014 presale document set an annual ceiling of 18 million ether. The absence of a lifetime cap invites yearly expansion that dilutes every existing unit.

A fixed supply counters two risks. The first risk is centralization. Miners who receive block rewards sell the coins to cover power and hardware costs. Over time, large operations accumulate a disproportionate share of the total float. A capped supply removes future rewards, removes the incentive for larger farms, and levels the distribution curve.

The second risk is economic drift. In a 2018 essay, Buterin warned that an inflationary token encourages hoarding and discourages daily use. Ethereum promotes itself as a platform for programmable contracts that settle payments for coffee, freight in addition to insurance. A predictable, scarce unit aligns user behavior with that purpose.

Trading cryptocurrencies or tokens issued through initial coin offerings carries high risk. The author owns 0.01 bitcoin as of the article date. Consult a qualified professional before any financial decision.