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Ethereum creator Vitalik Buterin has so far never addressed the economic management of his cryptocurrency. But now the founder has proposed a 120 million hard cap on the supply of ether (ETH), suggesting the cap could be part of an upcoming hard fork, likely to be in the early stages of the Casper update.

Hard Cap On Coin Supply

Ethereum founder Vitalik Buterin has given a response to one of Ethereum’s most asked questions- if the cryptocurrency’s coin supply should ever be capped. The surprise announcement was made on the developer’s forum Github on Sunday. Even though the date coincided with April 1st, he assured that this was no April fool’s day. In an Ethereum Improvement Proposal (EIP), Buterin explained why he suggested the hard cap:

“In order to ensure the economic sustainability of the platform under the widest possible variety of circumstances, and in light of the fact that issuing new coins to proof of work miners is no longer an effective way of promoting an egalitarian coin distribution or any other significant policy goal, I propose that we agree on a hard cap for the total quantity of ETH.”

More specifically, Buterin proposes:

“I recommend setting MAX_SUPPLY = 120,204,432, or exactly 2x the amount of ETH sold in the original ether sale.”

Implementing a maximum supply of ether coins would definitely make Ethereum more attractive to investors. Buterin predicts that the adoption of the hard cap will take place in the next stages of the Casper update.

Despite being the second biggest cryptocurrency in terms of market capitalization, a lot of questions regarding Ethereum’s long-term investment value have been adding up. By making the supply a finite number, like with Bitcoin, could make these fears go away.

But changes in the Ethereum ecosystem happen at a slow pace. Because of this, Buterin also said that:

“If for some reason this EIP is adopted at a point where it is too late to set a max cap at 120 million, it is also possible to set a higher max cap. I would recommend 144,052,828 ETH, or exactly 2x the total amount released in the genesis block including both the sale and premines.”

The Ethereum founder also talked about the diminishing mining rewards after the switch to a proof-of-stake model which happen with the Casper update. He goes on to explain that if Ethereum stays with a proof-of-work model, rewards will still drop progressively to the same point.

Major Changes to Ensue

Worries concerning the new Bitmain Ethereum ASICs — powerful mining hardware greatly superior to GPUs — have generated a lot of uneasiness within the Ethereum community. Some developers have suggested a hard fork to cope with Bitmain’s mining domination, fearing that the company could successfully centralize what is intended to be a decentralized cryptocurrency.

However, other developers deem a hard fork as being an unnecessary action, should Ethereum shift to proof-of-stake — as this switch would make Bitmain’s ASICs useless. Consequently, some developers intend on taking no measures.

But it is extremely obvious that the Ethereum project just cannot stagnate. No matter what might happen, Ethereum will undoubtedly experience some big changes in the future.

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