I definitely agree that bitcoin is hard money, probably the hardest money we have had in the history of mankind. Bitcoin like Ethereum needs security and this security comes from miners that are incentivized by fees. Right now there are two types of fees: issuance and transaction fees. Currently, we see that the majority of fees on the Bitcoin blockchain come from issuance of new BTC since the majority of people are HODLing it and not transacting with it. On Ethereum we see that twice as many fees are generated from transactions, then from issuance. Although, issuance is considered a better source of fees because it is more predictable.
But I see a disadvantage with the 21 million supply cap. Due to the fact that the vast majority of BTC has already been mined, issuance will decrease with every halving and after about 10-15 years those issuance rewards might not incentivize miners to do the work, especially if there is a bear market. And once we mine all the BTC, there wouldn’t be any issuance rewards, only transaction fees. So I am not sure if this will be a security threat to Bitcoin the blockchain.
As far as ETHs supply goes, you are right that there is always more to be made, but this also means that issuance rewards will continue forever. As far as ETH being easy to make, I guess that is true. But how much ETH is made per year is capped, because the reward per block is fixed and the block time is 13 seconds, I think. So you can’t increase or decrease issuance rewards unless the community votes for a change in issuance reward, which I think is also the case for Bitcoin.
So basically, we know how much ETH will be created in a given year, but we don’t know how high the burning rate will get. The more the network is used the more ETH is being burned. But also we have to think about the ETH that is being staked is pretty much frozen and it is taken out of the circulating supply and we also have to consider ETH locked in DeFi because that is also not part of the circulating supply.
So we have 3 things that limit ETH supply:
More ETH being frozen in staking because companies are chasing rewards
More ETH being locked up as collateral because more people will be taking
out loans for various reasons
This will increase the amount of transactions and with every single transaction
ETH is burned. Busier the network = higher the fees = supply decreases
I think these three forces will make ETH deflationary over time, but maybe I am wrong because I am still learning and I will be happy to see all perspectives on this