- Ethereum Beacon chain introduced Proof of Stake consensus mechanism to Ethereum blockchain and enabled "Staking".
- The term sound money is used in the context of Bitcoin because it has a capped supply that is going to be only 21 Million BTC which will ever be mined.
- According to EIP-1559 proposal a certain amount of ETH called the base fee will be burned and be lost forever.
- So if this burning rate exceeds the issuance rate of ETH then this will result in the decreasing supply of ETH which some believe will give it more value than BTC as 'Ultrasound money'.
Table of Contents
- Ethereum Beacon Chain
- Ultrasound Money
- Why Ether is called Ultrasound Money?
- Explaining the Meme and the Burn
Ethereum Beacon Chain
Ethereum Beacon chain introduced Proof of Stake consensus mechanism to Ethereum blockchain and enabled "Staking". Validators can participate in the security of the network. PoS will replace the Proof of Work consensus for block inclusion of the Ethereum Mainnet after "The Merge".
The Merge refers to the merging of Ethereum Mainnet with The Beacon Chain to convert Ethereum fully from PoW to PoS.
ETH 2 also known as beacon chain will allow staking as it will use Proof of Stake system so if the user stakes his/her crypto then that crypto will be used for verifying and securing the transactions and the staker will earn some reward.
This video explains Proof of stake in a short but elaborative manner.
To understand ultrasound money let us first learn what sound money is.
The term sound money is used in the context of Bitcoin because it has a capped supply that is going to be only 21 Million BTC which will ever be mined and this is also the reason why BTC is referred to as digital gold because of its distinct value and limited supply. This means that the money that has an upper limit for supply is called the sound money.
Why Ether is called Ultrasound Money?
Now lets discuss about the ultrasound money and WHY ETHER IS CALLED ULTRASOUND MONEY, there is a meme popularised by Justin Drake, a researcher from the Ethereum Foundation, which mocks Bitcoiners who describe Bitcoin (BTC) as "sound money" due to its capped supply of 21 million.
if capped-supply BTC is sound money 📢— Justin Ðrake 🦇🔊 (@drakefjustin) September 10, 2020
decreasing-supply ETH is ultrasound money 🦇 pic.twitter.com/Y9N8HBmHBr
Explaining the Meme and the Burn
This meme arose after the deploying of EIP-1559 (issued for improving transaction process) proposal with the London Upgrade, as we know that miners charge a transaction fees to validate each transaction happening on the network but the thing is that miners are getting paid a bit too much for the service they provide due to the auction system (the address which pays more transaction fees will have its transaction validated first) but according to EIP-1559 proposal a certain amount of ETH called the base fee will be burned and be lost forever so if this burning rate exceeds the issuance rate of ETH then this will result in the decreasing supply of ETH which some believe will give it more value than BTC as 'Ultrasound money'. This makes Ethereum deflationary with time .
There is approximately 3.18 ETH burnt per min and 1.7 M per year in 2022, these websites Ultrasound money and Watch the Burn show the exact data of issuance of ETH and burning rate in the form of numbers and graphs .
Ethereum burned $200M of ETH in 24 hours— ultra sound money 🦇🔊 (@ultrasoundmoney) May 1, 2022
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