Beginning with the context of the statement first, Ultrasound money has come as a response to the Bitcoin community calling the asset ” sound money ” because BTC has a limited supply of 21 million. It is supposedly mocking the Bitcoin community as the statement has come from ConsenSys founder and Ethereum co-creator Joe Lubin.
Ethereum got its much-awaited London fork today that has already propelled the asset to over $2700 with a 50% increase in price in the last couple of weeks. Talking to Bloomberg ahead of EIP 1559 upgrade, Lubin said that the world’s largest altcoin and second-largest cryptocurrency was transitioning itself into ultrasound money status with the upgrade that went live today.
After the EIP 1559 upgrade, more Ether will be burnt than created. Therefore, the supply of Ether will be limited and it will have a deflationary value in the process. Some experts believe it will give Ethereum a stronger proposition than Bitcoin and hence Joe Lubin mocked BTC by calling Ether ultrasound money.
“Ultra-sound money is a disingenuous use of language. It implies that Ethereum is better money than Bitcoin. While directionally centralizing and operating with a flexible monetary policy.”
Joe Lubin further took a dig at Bitcoin maximalists. According to him, only when an asset has a limited supply, it is considered sound money. One can take the example of Bitcoin and Gold. However, now with $13 billion of Ether locked in Ethereum 2.0 and $70 billion locked in decentralized finance, ETH has enormous demand but a limited supply makes it ultrasound money.
However, Ethereum becoming a deflationary asset right after the London fork is not true. It is going to take some time and the EIP 1559 upgrade doesn’t ensure this by default. That can only happen when more Ethereum is burned in comparison to Ethereum issued in block rewards and proof-of-stake migration is probably going to ensure it but we will have to wait a bit for that to happen.