Just the other day, I was scrolling through Twitter and stumbled upon this shortcut from this interview where Vitalik Buterin, the creator of Ethereum, was clearly speaking about Ampleforth and its elastic supply cryptocurrency $AMPL:
The original interview is from March 2020, during which time $AMPL was one of, if not the only, elastic supply cryptocurrency that automatically adjusts its supply in response to demand on a daily basis.
Therefore, Vitalik was clearly talking about $AMPL and highlighted its critical characteristic of being an adaptive money built on sound economics, where price shocks are transformed into a supply-increase.
Here’s what he had to say:
“I think for cryptocurrencies, being a form of value that works well, they need to have some form/much more price stability than they have today.”
Explaining why we need a stable form of value, and why fixed supply cryptocurrencies don’t work well, he said:
“The demand for currency is volatile, right? Because of like recessions, booms, changes to technology, lots of things, and if people’s demand for how much currency they want to hold changes.”
“And… If you have a currency that has a fixed supply, then the change in demand has to be entirely expressed as the change of the value of the currency. And so, what that means is that kind of the volatility of demand becomes entirely translated into the volatility of the price of things denominated in that currency.”
He then explained why an elastic supply cryptocurrency like $AMPL would be a better form of value that works:
“But if you have a currency where instead the supply can change, and so the supply can go up when there’s more demand, then you have the supply absorbing more of that volatility, so the price of the currency would absorb the loss of the volatility.”
Think about that for a second…
Vitalik sees the value in something like $AMPL and believes that a cryptocurrency with an elastic supply that adjusts its supply in response to demand is a better money.
Satoshi Spoke About $AMPL Mechanism Before it Existed
Not only do we have the creator of Ethereum speaking about a cryptocurrency like $AMPL, but we also have Satoshi Nakamoto, the creator of Bitcoin, explaining the concept of an elastic supply cryptocurrency like $AMPL all the way back in 2009:
Screenshot from a forum post on Bitcointalk.org
Back in the very early days, the only place to talk about Bitcoin/the idea of cryptocurrency was a forum called Bitcointalk.org. This is where Satoshi communicated with Bitcoiners and where people shared and expressed ideas for the future of money.
In the forum post showcased above, Satoshi replied to a question about adjusting the money supply as the population of users grows.
He explained that if he knew some clever way that software could actively manage the money supply to peg it to something, the rules for Bitcoin could have been programmed for that. However, he didn’t know how to do this without using a trusted party to determine the value.
Therefore, Satoshi clearly thought about the concept of an asset with an elastic supply but had no idea how to put it together.
So there you have it, two of the greatest and most influential minds in cryptocurrency understand the need for an elastic supply cryptocurrency like $AMPL.