A lot of factors together contribute towards Bitcoin’s valuation. The most talked about factor is the Scarcity index. There can only be 21 million Bitcoins in the world, and ardent BTC supporters and developers of the space have defended their beloved virtual asset on the basis of this scarcity argument.
Peter Todd, a Bitcoin developer, is the latest person in the community to defend Bitcoin’s honor through this index.
Andrew Miller, ZCash proponent, recently indicated criticized this principle and explained that cryptocurrency scarcity was not really relevant in the market and that it was a “joke”.
Peter Todd responded to the same and said,
“Funny how Miller is pushing the ridiculous narrative that Bitcoin’s scarcity is a joke when he’s involved with Zcash: a crypto currency run by a single team funded directly by a dev tax that’s expires soon. Sure enough, Zcash is discussing breaking scarcity to keep the tax.”
Todd also defended the scarcity principle and said that the collective scarcity value is mostly protected by users who possess the ability to fully validate their cryptos, meaning its easy to run full node software and difficult for other devs to alter the software. On the contrary, he stated, ZCashs’s full nodes had mandatory time-based kill switched that forced updates on its mainnet.
Keeping up with the “constructive criticism” of Zcash, the developer added,
“Bitcoin’s upgrade model with respect to inflation is default resistance. Zcash’s use of hard forks even when soft forks would be easy forces users to update, making the default action to be compliance.”
In recent reports, the S2F ratio of a commodity came closest to give out factual reasoning to Bitcoin’s Scarcity. At press time, Gold had the highest S2F value, but Bitcoin was close behind and it was stated that by August 2020, Bitcoins S2F’s value would be 55.2 to Gold’s 62.