This tweet from Cameron Winklevoss really surprised me today because even just a few months ago I would never have imagined a “mainstream” crypto influencer to be tweeting about ETH being money in the same sentence as something like BTC. This just shows how far ETH as an asset has come in the eyes of the wider market.
#Bitcoin and Ether are emergent money. They haven’t been forced upon anyone, their adoption is peaceful and organic. Fiat money is violent money, its adoption always requires force.
September 9th 2020
364 Retweets1,798 Likes
If you’ve been around in Ethereum from the early days, you’ll know that ETH was never really talked about as a financial asset – let alone money. The dominant narrative was that it was “oil” or “gas” for the Ethereum network – that is, you only use it to pay network fees. Obviously this was a very naive view and ETH has since evolved to become much more than that.
I’ve long argued that ETH is indeed money because people actively use it as money on the Ethereum network (just like you would use gold in World of Warcraft or RuneScape). ETH also has most of the properties of money in that it is used as a medium of exchange, unit of account, and store of value. It’s also portable, durable, divisible, fungible and has an established history. Though the one critical thing that ETH is missing to be considered good money is stability and that’s something that ETH will probably never have given that it may one day be net deflationary.
This is where the triple point asset thesis for ETH comes in. This thesis was originally coined by Ryan Sean Adams and David Hoffman. The thesis essentially states that ETH is 3 different types of assets at once:
A capital asset (staked ETH)
Consumable/transformable asset (consumed ETH/used for gas)
Store-of-Value ETH or collateral ETH (ETH held as a SoV/ETH used in DeFi)
Now, we obviously don’t have staking yet on Ethereum and ETH isn’t really a consumable asset just yet (yes we use it for gas but it’s not burned like it would be if EIP-1559 was implemented). These things are coming but what we do have now is the explosive growth of ETH being used as trust-less collateral in DeFi (up to almost 7 million ETH now). I think one of the main reasons for this is because people are indeed using ETH as a store of value and still want to retain upside exposure to ETH while taking a loan out against it to either go leverage long or yield farm.
The beautiful thing about ETH is that it’s such a versatile asset that it can be used for so many different things on Ethereum and the best part is that you can do these things in a non-custodial and permission-less way. You don’t need to be tied down to one narrative such as “ETH is money” or “ETH is gas” – ETH is whatever you want it to be.
Have a great day everyone,
All information presented above is for educational purposes only and should not be taken as investment advice.