At the time of writing, the author holds IOTA and XLM.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
Ether (ETH) is the native token of Ethereum, a blockchain-based platform designed to help developers build and distribute decentralized applications. The world's second largest cryptocurrency by market cap after bitcoin (BTC) at the time of this writing, ETH can be used to pay transaction fees and for computational services when using the Ethereum network. ETH can also be bought and sold on cryptocurrency exchanges; however, before buying any ETH, you should make sure you're aware of all the factors that could potentially affect its value. One of those factors is its rate of inflation, also known as the ETH issuance rate.
Unlike BTC, which has a maximum supply capped at 21,000,000 BTC, ETH does not have an overall cap. The total supply of ETH and its rate of issuance was instead determined in the cryptocurrency’s 2014 pre-sale. That sale saw 60,000,000 ETH created for contributors to the pre-sale, 12,000,000 ETH created as a development fund, and the annual issuance capped at 18,000,000 ETH per year.
This annual issuance of new ETH represents roughly one-quarter of the initial supply. Whenever a block is mined, which occurs approximately every 15 seconds, that miner receives an award in ETH. This was originally set at 5 ETH, but was reduced to 3 ETH following the Ethereum network’s Byzantium update in October 2017. The Byzantium update is one half of the larger Metropolis update to the Ethereum network, which concludes with Constantinople sometime in 2018. At the time of writing it is unknown whether the Constantinople upgrade will affect the inflation rate.
Miners can also access what’s known as an uncle/aunt reward, which sees a specified amount of ETH sent to a miner who was also able to find a solution but whose block wasn’t included. This reward was originally 2–3 ETH, but was reduced to 0.625–2.625 following the Byzantium update.
While the total annual issuance of ETH is fixed at 18,000,000, this means relative inflation decreases every year. For example, let’s say there were hypothetically 75,000,000 ETH in existence, then an annual issuance of 18,000,000 ETH would see the supply increase by 24%. However, in one year’s time the total supply would be 93,000,000 ETH, so issuing another 18,000,000 over the next year would only represent an increase of 19.35%.
As outlined in the Ethereum white paper, this will see the ETH supply growth rate tend towards zero over time.
In the white paper, Ethereum’s creators also theorised that because coins are always lost over time due to carelessness, death and a number of other reasons, and due to the fact that coin loss can be modeled as a percentage of the total supply per year, the total ETH supply in circulation will eventually stabilise and reach an equilibrium.
At the time of this writing (Dec 18, 2020), CoinMarketCap listed the circulating supply of Ether at 113,888,129 ETH. The chart below shows the growth in the ETH supply over the past couple of years and is a useful tool when examining the ETH inflation rate.
Now that we've run through the current ETH inflation rate, it's time to look to the future and realize that the goalposts will soon change. Ethereum will switch from a proof-of-work platform to a proof-of-stake algorithm, which is still in development. This update is known as Casper and is designed to make transactions on the Ethereum network faster and cheaper.
It’s not yet clear what the issuance rate will be after the Casper update, but it is expected to be much less than the current maximum cap. Ethereum co-founder Vitalik Buterin posted the following on Twitter on June 27, 2017, in response to a question about ETH inflation:
Once Casper comes out, ~0.5-2% annual seems feasible. Once we add partial tx fee burning and if fees go up, may go to 0 or lower.
It’s a good idea to monitor news reports and announcements for further information about when Casper will be launched and the effect it will have on the issuance rate. This will in turn help you form a clearer picture of the influence supply will have on the value of ETH in coming times.
Experts believe Ether can easily scale up beyond the $5,000 mark by the end of 2021.
Ether's value continues to slide despite widening mainstream recognition, as competitor chains like Solana look to ramp up growth.
Planned changes to Ethereum that will reduce the supply over time appear to have excited markets in the short term.
Over the course of the last month, Ether has delivered handsome gains of around 40%.
The latest dip comes straight after Ether futures contracts went live on CME today, but it may be short lived.
As Ether continues to rise, profit-taking and corrections may potentially send it back to the $1,500 region.
Ether has showcased an average drop of -6% over the last 7-days. Near-term surge seems increasingly unlikely.
SPONSORED: Could Bitcoin really hit $100,000? What are the economics of the halving, and what do they say about Bitcoin prices?
A beginner’s guide to your cryptocurrency tax obligations and how the ATO is targeting digital currency holdings in 2019.
finder.com.au is one of Australia's leading comparison websites. We compare from a wide set of banks, insurers and product issuers. We value our editorial independence and follow editorial guidelines.
finder.com.au has access to track details from the product issuers listed on our sites. Although we provide information on the products offered by a wide range of issuers, we don't cover every available product or service.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan.
Products marked as 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money here.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labelling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.