Memes are extremely important in the crypto market. Dogecoin (DOGE) may be the best recent illustration of the power of memes in a market powered by a combination of scarcity and user demand (note: some memes are more sustainable than others), but every cryptocurrency has their own memes that proliferate around Crypto Twitter and other hot spots of cryptocurrency discussions on the internet. And of course, bitcoin (BTC) has the original cryptocurrency meme in the form of “digital gold”.
Recently, a popular meme that has popped up in Ethereum (ETH) circles is the concept of ETH as “ultrasound money”. Due to an upcoming change to ETH’s monetary policy, some ETH holders believe that the crypto asset can become even better than bitcoin at being money.
Let’s dissect this Ethereum meme and see if it holds any basis in reality.
The ultrasound money meme around ETH originated as a reaction to an upcoming change to the Ethereum network, known as EIP-1559.
So, do the upcoming changes to ETH’s monetary policy mean that the crypto asset will become ultrasound money? No. Sure, with all things being equal and only comparing ETH to itself, these changes to the monetary policy can be seen as a positive move for the cryptocurrency. However, ETH does not exist in isolation.
The key reason that bitcoin has become increasingly trusted as a global, apolitical store of value over the years is not necessarily the specific inflation rate on the cryptocurrency network but rather the credibility of that monetary policy.
Bitcoin users trust that the monetary policy has been “set in stone” and will not be changed for any reason in the future. The failure of the parties behind the New York Agreement to push through a hard-forking) change to Bitcoin’s consensus rules is often cited as a key source of this credibility.
The volatility of the Ethereum platform as a whole also trickles down to ETH as an asset, which weakens the utility of ETH as money.