Ethereum’s New Design Could Outshine Bitcoin as the Ultimate Store of Value – VanEck Analysis

Move over, Bitcoin—Ethereum’s latest upgrades might just steal your 'digital gold' crown. VanEck’s research suggests ETH’s revamped design could finally rival BTC’s store-of-value dominance.

Why the shift? Ethereum’s merge to proof-of-stake slashed its inflation rate below Bitcoin’s, while staking yields add a juicy yield component absent in BTC. TradFi analysts are calling it 'gold with dividends'—though let’s be real, Wall Street would charge a 2% management fee for that.

The kicker? Network activity. While Bitcoin remains a pristine vault, Ethereum’s DeFi ecosystem turns ETH into productive collateral—something HODLers can actually use beyond praying for price appreciation.

Of course, maximalists will scoff. Bitcoin’s 14-year head start and simpler narrative aren’t disappearing overnight. But for the first time, there’s a credible challenger to the store-of-value throne. Game on.

ETH treasuries

Initially, bitcoin was the primary choice for digital treasuries due to its fixed supply and perceived stability. However, recent developments have spurred increased interest in Ethereum.

Regulatory changes in the US have highlighted the need for stablecoins and tokenization, which are Core features of Ethereum’s ecosystem.

This has allowed ETH to MOVE beyond its original use case, with several large brokerages and exchanges launching tokenized equities on Ethereum’s blockchain.

Moreover, Ethereum’s increasing flexibility is seen as a significant advantage over Bitcoin.

VanEck analysts pointed out that Ethereum offers more opportunities for sophisticated financial strategies, enabling entities to accumulate ETH more efficiently than BTC.

With Ethereum’s staking capabilities, treasuries can earn additional ETH through network participation, which provides a source of income that Bitcoin does not offer through similar means.

Ethereum and Bitcoin inflation

Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS) has significantly impacted its inflation rate.

According to VanEck, the change has led to a notable reduction in ETH’s supply growth, from around 120.6 million ETH in October 2022 to 120.1 million ETH in April 2024, resulting in a negative inflation rate of -0.25%.

In comparison, Bitcoin’s supply increased by 1.1% during the same period, making Ethereum’s inflation policy more favorable for those holding ETH.

Bitcoin’s inflation rate drops by 50% after each halving, making BTC’s inflation rate more predictable. The challenge lies in the top crypto’s reliance on inflationary issuance to incentivize miners long-term.

Last year, Bitcoin miners earned a substantial amount from inflationary rewards, totaling over $14 billion.

So, as Bitcoin’s inflation decreases with subsequent halvings, its security model will face increasing pressure to rely on transaction fees or price increases. Without these, the blockchain network security could be at risk, potentially forcing a significant economic shift.

Ethereum’s PoS model, on the other hand, gives token holders more control over network governance, ensuring that decisions on network upgrades and economic policies are more directly aligned with their interests.

This contrasts with Bitcoin’s miner-focused governance model, where the miners’ economic incentives often influence decisions.

So, as Ethereum continues to evolve with this more flexible governance structure, it may emerge as a better long-term value store than Bitcoin.