Ultrasound Money

The concept of "ultrasound money" refers to Ethereum's potential to achieve negative issuance of ETH per year, making it superior to traditional "sound money" like Bitcoin. This notion was introduced by Justin Drake, discussing the significant changes that Ethereum would undergo, specifically the transition from proof of work to proof of stake and the implementation of EIP-1559, which includes a fee-burning mechanism. This would lead to an increase in buy pressure and a significant reduction in ETH's circulating supply, potentially making ETH a deflationary asset 1 2.

The term "ultrasound money" originated as a jest, a play on words contrasting Bitcoin's representation as "sound money" due to its capped supply. The idea suggests that if a currency has a decreasing supply, it could be considered even more "sound," hence "ultrasound" 2.

Discussing further, the meme of "ultrasound money" represents a major narrative shift for Ethereum, impacting how the asset is perceived. It indicates a transition from seeing ETH merely as fuel for transactions (gas) to recognizing its potential as a scarce, valuable asset integral to the Ethereum economy's functioning. This has been further supported by community engagement and recognition, significantly shaping Ethereum's monetary policy and its future 3.

The progression of this concept has been fueled by factors like increased economic security on Ethereum compared to Bitcoin and the ability of Ethereum to generate income through transaction fee burns, enhancing its attractiveness as both a stock and a store of value 2. EIP 1559 plays a crucial role by creating an inherent scarcity in ETH by burning a portion of transaction fees, which ties the economic activity on the Ethereum block space directly to the scarcity of ETH 4.

This concept is not only a technical evolution but also enjoys robust support from the Ethereum community, enhancing its legitimacy and potential permanence as a monetary system 5.