Ethereum, the future can be expected

Recently, a reader mentioned the following question in the message:

Does the current 5% annual inflation rate of Ethereum violate the value storage law of anti-inflation and risk aversion?

This question was mentioned by readers in 2019, and two years have passed in a flash. I remember that the price of Ethereum was only a few hundred dollars back then, but now the price of Ethereum is close to $2,000.

From the most intuitive point of view of the price trend, this 5% annual inflation rate seems to have not affected the price of Ethereum in the past two years. Of course, this is just the appearance, so what is the underlying reason?

I think whether the inflation rate will affect the price of Ethereum or its value storage is fundamentally not whether its total amount is constant or whether there is an inflation rate, but whether its supply is greater than or less than demand even if it has an inflation rate .

If the total output of Ethereum plus inflation cannot meet the demand, its price will inevitably rise in the long run. On the contrary, even if it has zero inflation, its price will fall if there is no demand.

I am very optimistic about the future ecology of Ethereum. I believe that this ecology will only grow exponentially on the current basis. Therefore, the demand for Ethereum as a fuel will also increase exponentially, so its price will grow exponentially in the long run. Look it will go up.

Because of this, the expansion of Ethereum, including various second-layer expansion technologies and the ultimate sharding scheme, is in full swing. The implementation of these plans will, on the one hand, restrain the price increase of Ethereum to a certain extent, and on the other hand, it is more important to let the price increase of Ethereum affect the ecological development of Ethereum as little as possible.

Now more and more second-layer extensions have been implemented. If users with practical experience have actually experienced second-layer extensions such as Polygon (Matic), they will find that the handling fee for operations there is almost zero.

This already gives us a picture of the future:In a mature second-layer expansion ecology, the handling fee of various transactions is almost zero, and users can freely conduct transactions and experience various services.

At that time, Ethereum is almost like a playground. After entering the gate, users can play various games in it almost for free forever, and only need to pay an entrance fee when entering and exiting. In this case, no matter how high the price of Ethereum is, it has limited impact on us --- we don't have to pay expensive ticket fees every day, but only occasionally. As long as the games inside are fun, no matter how expensive the entrance fee is, you will not feel wrong if you pay occasionally.

This is to see whether its inflation will affect its long-term value from the perspective of Ethereum itself. And if we raise our heads and look at the financial environment of the entire world, I think that under the current and future macro environment, the long-term dollar price of Ethereum and the entire digital currency will still rise.

Recently, various media have been discussing the new talk of the Federal Reserve. This conversation almost gave the market great confidence: that is, even if the Fed proposes to raise interest rates, it may not be until 2023. In other words, the interest rate of the U.S. dollar will still be 0 interest rate this year and next.

On the other hand, after spending $1.9 trillion in money, the new president of the United States has proposed infrastructure plans worth several trillion dollars.

Looking at the monstrous flood, I can see the water flooding as soon as I close my eyes.In this case, the prices of various assets are afraid that the upward trend will be difficult to stop.

I even have a feeling that even if the Fed really wants to raise interest rates after 2023, it will soon cut rates again. Why? Because once the interest rate hike causes a sharp drop in the stock market or a financial disaster, the old trick of releasing water will be used again. It's like taking drugs. Even addicts know that they are on the road to no return, but how can they quit such a big addiction? Therefore, it is still necessary to continue to inhale, to satisfy the present moment first.

I am afraid that the world will never return to the previous normal financial order. No matter the United States, Europe or Japan, they are all running wildly on the road of printing money. This ending is bound to be a historic global reshuffle of the financial order.And back in our cryptocurrency world, the bright future is only now beginning.