$AMPL is a better Bitcoin. Period.
When Satoshi released the Bitcoin whitepaper to the world he was having a hard time convincing people of his invention. In fact, he’s famously quoted for saying this to one of his naysayers:
“If you don’t believe me or don’t get it, I don’t have time to try to convince you, sorry”.
Even to this day, 13 years later and more than half of the world’s population would call Bitcoin an outright scam. That’s because it’s difficult for people to understand something so novel as there’s nothing to compare it to.
Another example of something being so novel that it’s met with strife and skepticism is Ampleforth’s elastic supply cryptocurrency $AMPL.
Ampleforth’s beginnings, like Bitcoin’s, were met with misunderstanding because just like Satoshi, $AMPL’s founders had nothing to compare it to as both are pioneers of their own asset class.
The Problem With Bitcoin as Digital Money
“Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context.” — Wikipedia
Using the definition of money above as our basis, what’s the problem with Bitcoin as digital money?
While Bitcoin is a verifiable record of money, it is not generally accepted as payment for goods, services, and repayments of debt.
Why is that?
First of all, Bitcoin by itself is not a scalable network for lots of transactions. The Bitcoin blockchain only processes up to 7 transactions per second while payment networks like Visa do around 65k transactions per second.
Fees are another reason Bitcoin isn’t generally accepted for payments, especially for cheaper items like a cup of coffee because Bitcoin transaction fees can average around $5–15.
However, while these arguments against Bitcoin being used as digital money are the most common, they are actually the most irrelevant.
These problems of transaction scalability and fees can be solved with second-layer scaling solutions like the Lightning Network, Wrapped Bitcoin (WBTC) on Ethereum, and even Bitcoin payments powered by Visa.
So, what’s the real issue here? What’s the real problem with Bitcoin as digital money? Because those problems mentioned above can, and are being solved today.
That said, the real issue at hand here is Bitcoin’s monetary policy.
Bitcoin is a fixed supply asset with only 21M $BTC that will ever be mined into existence. Also, Bitcoin is disinflationary; the number of Bitcoin being mined over time is decreasing with every halving (there is a decrease in the rate of inflation every four years).
Why is that a problem?
It’s a problem because these properties of Bitcoin’s monetary policy have an increasing effect on its price and therefore incentivizes people to hoard the currency, rather than spend it. By merely holding $BTC, you will be able to purchase more goods for less money in the future. So, why should anyone use Bitcoin as digital money at all? It makes way more sense for it to be used as a digital store of value, which is why that’s the dominant narrative for Bitcoin today.
To expand on this problem further, it has been shown historically that when a fixed supply asset is used as the underlying reserve-asset for a banking system, the supported economy becomes vulnerable to runaway deflation; which is when the value of a currency, relative to the goods in an economy, increases continually as a result of hoarding.
This is why we left natural-commodity reserve systems (like Gold under the Bretton Woods Agreement) in favor of highly elastic fiat systems. Our economy depends on the money that can adapt its supply/issuance to stimulate or incentivize spending, lending, and the overall flow of money.
For this reason alone, Bitcoin or any other fixed-supply asset for that matter is not a suitable form of digital money. Bitcoin does, however, excel at being a great digital store of value.
Why $AMPL is a Better Bitcoin?
AMPL is an independent financial primitive that does not rely on centralized collateral or lenders of last resort. It’s like Bitcoin, except it can be used in contracts.— Ampleforth
Ampleforth’s $AMPL digital currency addresses the shortcomings of fixed supply currencies like Bitcoin by incorporating supply elasticity into its monetary policy.
$AMPL is an adaptive digital currency that adjusts supply daily based on market conditions. This makes it resistant to runaway deflation and decorrelates the $AMPL token’s movement pattern from the price performance of Bitcoin.
There’s a lot to unpack here on the benefits of $AMPL as digital money and how $AMPL is in fact, better than Bitcoin, so let’s get started:
$AMPL is a Synthetic “Smart” Commodity-Money that can be used to Denominate Stable Contracts
Synthetic commodity monies (cryptocurrencies) are valuable because their monetary qualities make them tradable like currencies and stocks and they are free from market distortions that arise from politics and outside tampering such as innovations in mining and industrial use for natural commodity-monies.
However, unlike Bitcoin, $AMPL is a synthetic “smart” commodity money and it’s considered “smart” for a couple of reasons:
- It’s an adaptive digital currency that automatically and proportionally adjusts the supply of $AMPL across all wallets in response to demand (this alone has a ton of benefits which we’ll discuss further).
- Initially deployed on Ethereum (soon to be extended to Tron, Near, and Polkadot) and can be natively used in smart contracts across the expansive and highly composable DeFi ecosystem.
- The value of 1 $AMPL always tends towards the price target of the 2019 US Dollar ($1.027) and while Ample automatically adjusts supply in response to demand, the debt denominated in $AMPL remains fixed, making $AMPL a safe denomination of debt.
With these “smart” properties, $AMPL is designed to be suitable for use as a “base-money” — a form of collateral that can be used to denominate stable contracts and be used as part of a centralized or decentralized banking system that’s macroeconomically friendly.
$AMPL is Uncorrelated to Bitcoin and Traditional Markets
Most synthetic commodities, again “cryptocurrencies”, are highly correlated with one another and tend to follow the price action of Bitcoin. If Bitcoin experiences major volatility to the upside or downside, other synthetic commodity prices follow. Even Bitcoin, the king himself, is macro-correlated to traditional markets. When the markets are trending, whether it’s up or down, so is Bitcoin.
This is a problem in which a widely adopted digital money cannot have if it’s to become a global monetary standard.
This is where Ampleforth comes in.
$AMPL is an uncorrelated asset because the Ampleforth protocol employs an economic model different from other cryptocurrencies.
Traditionally, a cryptocurrency’s price adjusts in response to shifts in supply and demand (perceived value). Ampleforth, however, adjusts its supply in response to demand, rather than its price.
It does this daily through a supply-based expansion and contraction mechanism (called Rebase that occurs at 2AM UTC) that responds to market changes by changing the supply of $AMPL based on real-time nominal exchange rate info provided by decentralized Chainlink oracles.
Ampleforth’s Supply: rebases in %
In this unique economic system, the value of 1 $AMPL always tends towards the price target of the 2019 US Dollar ($1.027) and the supply of $AMPL is automatically adjusted proportionately across all wallets. In this way, Ampleforth’s elastic supply effectively decorrelates the $AMPL token’s movement pattern from the performance of Bitcoin and traditional markets as a whole.
Therefore, $AMPL fits the narrative of becoming a revolutionary new monetary standard because it’s uncorrelated to Bitcoin and traditional markets. It’s a diversifying asset in a sea of highly correlated synthetic commodities.
$AMPL is a Diversifying Collateral Asset
As described above, $AMPL operates under an entirely different framework than most cryptocurrencies with its supply expansion and contraction mechanism. This makes $AMPL decorrelated from Bitcoin and traditional markets so it can therefore serve as a diversifying asset in cryptocurrency portfolios.
Also, unlike centralized stablecoins like $USDC or decentralized stablecoins like $DAI, $AMPL is 100% non-collateralized, just like Bitcoin. $AMPL’s non-collateralized supply elasticity makes it even more of an uncorrelated asset to macroeconomic shocks and liquidity crunches.
Therefore, since $AMPL is in fact an uncorrelated diversifying asset, it can be a diversifying agent in a basket of collateral used to denominate contracts in the DeFi ecosystem.
For example, lending and borrowing is the biggest use case in DeFi right now and leveraged traders who borrow large sums of money to speculate on, can use $AMPL as a collateral asset to greatly reduce their risk and to protect themselves against liquidation on their loan.
$AMPL is Decentralized and Censorship-Resistant
$AMPL is built on the Ethereum blockchain and inherits the benefits of Ethereum’s decentralization and security. Also, $AMPL is censorship resistant because, on March 5, 2021, the Ampleforth team removed the token upgradeability for its $AMPL token forever, marking the final step to making $AMPL truly decentralized and censorship-resistant, just like Bitcoin.
Taking everything I laid out in this article into account, I hope you can now see how Ampleforth’s $AMPL token is in fact a better Bitcoin in payment means.
Better in the sense that $AMPL is better suited to be used as digital money and that it can become a new and revolutionary monetary standard for the world.
Now, I’d love to hear what you think, so please comment below.