Ethereum co-founder Joseph Lubin said in a post that ETH could serve as a store of value during a period of high inflation and economic instability. He argued that the asset combines advantages associated with gold and bitcoin while offering additional capabilities through the Ethereum blockchain.

Lubin said the world was approaching a period of high inflation and significant economic and social volatility. Under those conditions, fiat currencies and other assets risk losing purchasing power, increasing the importance of instruments that can preserve or increase value, he said.

Ethereum’s monetary properties

Lubin described gold and bitcoin as high-quality monetary assets that do not depend on debt obligations. He said Ethereum has additional properties, including censorship resistance, programmability and broad use within its ecosystem.

According to Lubin, transactions on Ethereum’s base layer, or L1, cannot be censored. He said that applies to standard transfers as well as the execution of complex programs using smart contracts.

Lubin also described ETH as relatively inexpensive to hold and safe to store. Ethereum can support transactions ranging in value from $1 to billions of dollars, he said.

When network activity is high, Ethereum can become deflationary because part of its transaction fees is burned, Lubin said. He expects demand for ETH to grow as finance and other industries move on-chain, expanding the asset’s use in financial applications, smart contracts and other parts of the Ethereum ecosystem.

ETH can also serve as collateral for financial operations, Lubin said. In his view, an asset that increases in value over time is particularly effective collateral.

Lubin identified stablecoins as another important part of Ethereum’s role. Ethereum remains one of the main environments for stablecoins, which are used as payment instruments and units of account, he said.

Smart contracts allow users to add logic to transactions and create financial instruments and business processes on the blockchain, according to Lubin. He also said Ethereum can support both public and private financial operations, with users able to disclose information selectively and verify it through audit tools. He cited Railgun, stealth addresses, Kohaku and zero-knowledge proofs as examples.

Lubin forecast that ETH would gain protection against quantum threats and artificial intelligence by the end of 2027 or during the first half of 2028.

Role in a future digital economy

Lubin considers ETH the base monetary asset of the Ethereum ecosystem, which he expects to grow over the coming decades. As blockchain adoption spreads among retail users, companies and governments, those participants will need to hold some ETH, he said.

He acknowledged that part of ETH’s current monetary premium is speculative. Although Ethereum leads among smart-contract blockchains, Lubin said its ecosystem has not yet achieved its full potential for mass adoption.

Lubin also linked Ethereum’s future to the development of artificial intelligence. He said machine intelligence would accelerate scientific and technological progress and drive global economic growth.

Under that model, Ethereum’s base layer and modular layer-2 networks could provide infrastructure for a significant share of financial transactions, payments and complex business processes in a digital economy where humans and artificial intelligence interact, Lubin said.

Ethereum co-founder Vitalik Buterin has also previously said that ETH should be viewed as a store of value.

Source: Incrypted