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Joseph Lubin, the founder of a leading software engineering company in the blockchain space ConsenSys, believes Ethereum (ETH/USD) is morphing into ultrasound money. Lubin, who is also an Ethereum co-founder, shared his thoughts during an interview on August 4. He believes that the digital asset is inching closer to achieving this feat ahead of the London hard fork, which goes live at 12:30 PM UTC today.
In the interview, Lubin said the EIP-1559 upgrade, which will help Ethereum shift from a bidding-based market fee to a fixed price and burn mechanism, is a part of a broader global movement. Delving on this, Lubin added that the first step will be the democratization of Earth. The second step will be democratizing the decentralized finance (DeFi) space, which is the introduction of ultrasound money.
Is Ethereum really ultra-sound money? @emilychangtv and @thestalwart talk to Ethereum co-founder Joe Lubin ahead of the "London Fork."
— Bloomberg TV (@BloombergTV) August 4, 2021
Lubin says Ethereum will be "orders of magnitude" bigger than Bitcoin https://t.co/7UdrI2Gt6c pic.twitter.com/D8W06Kbs32
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He pointed out that there is a fixed amount of gold and a fixed amount of BTC, which to some people means sound money. However, there is £13 billion (£9.34 billion) worth of ETH locked in ETH 2.0 and $70 billion (£50.26 billion) worth of token in DeFi. With the demand for ETH rising and the introduction of burning through the London hard fork, ETH’s value is set to rise.
A Long, But Fruitful Journey Ahead
Ethereum enthusiasts coined the term ultrasound money to mock Bitcoin (BTC/USD) proponents, who claim the leading cryptocurrency is sound money due to its capped supply of 21 million coins. With EIP-1559, Ethereum will start its journey towards becoming a deflationary supply system, wherein the amount of minted ETH is smaller than the amount of ETH burned.
Through this system, each transaction will feature a base burn fee. As a result, the supply of ETH will diminish over time. With this in mind, ETH adopters believe that the coin will soon have a higher theoretical value than BTC. Thus, the term ultrasound money.
Nonetheless, the London hard fork alone does not guarantee ETH will become a deflationary asset as soon as the upgrade happens. According to a Twitter user going by Korpi, the amount of ETH burned must be higher than the ETH issued in blocks for the digital asset to be considered a deflationary asset. To this end, Korpi believes ETH will likely achieve this feat after completing its migration from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) one.
This news comes as ETH continues showing bullish performance as the London hard fork inches closer. At the time of writing, ETH is changing hands at $2,638.61 (£1,895.30) after gaining 5.27% over the past 24 hours and 13.92% over the last seven days.