Tokenization is an aspect of blockchain technology that is enabling the effective transfer of value across the internet. The fluidity and liquidity created by this concept helps to connect products and services while defying the restrictions of location and continually breaking the barriers of compatibility. A class of token that is growing in popularity and proving to be very essential within the blockchain ecosystem are ‘Utility Tokens’. These class of tokens primarily exist as accessibility elements on the blockchains that they represent. A more interesting concept about these tokens is the versatility that they offer by revolutionizing existing concepts, creating new ecosystems that empower the participants therein. The CEO of Never Stop Marketing, Jeremy Epstein explains to CCN that Utility tokens confer a right on the holder to participate in the network in some way. Such tokens may give holders a right to use the network and take advantage of its services to vote on the governance of the network and its upgrade. For example, a decentralized Uber token might give you the right to take a ride whereas an ARK token gives you the right to vote on the direction of the protocol via its delegated proof-of-stake model (DPos). This is different than a security token where you earn income just by holding.
According to the terms agreed by all parties on the 2014 presale, issuance of ether is capped at 18 million ether per year (this number equals 25% of the initial supply). This means that while the absolute issuance is fixed, the relative inflation is decreased every year. In theory, if this issuance was kept indefinitely then at some point the rate of new tokens created every year would reach the average amount lost yearly (by misuse, accidental key lost, the death of holders etc) and there would reach an equilibrium.
But the rate is not expected to be kept: sometime in 2018-2019 Ethereum will be switched from Proof of Work to a new consensus algorithm under development, called Casper that is expected to be more efficient and require less mining subsidy. The exact method of issuance and which function it will serve is an area of active research, but what can be guaranteed now is that (1) the current maximum is considered a ceiling and the new issuance under casper will not exceed it (and is expected to be much less) and (2) whatever method is ultimately picked to issue, it will be a decentralized smart contract that will not give preferential treatment to any particular group of people and whose purpose is to benefit the overall health and security of the network.
Who needs ether?
Developers who intend to build apps that will use the ethereum blockchain. Users who want to access and interact with smart contracts on the ethereum blockchain.