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The latest news from Ultrasound Money, the social network for people who are into cryptocurrency, is that the 5 millionth block has been mined. This means that now, the current difficulty has fallen below 1 billion. Obviously, this is a big deal for Ultrasound Money, which is the world’s fastest growing cryptocurrency, bar none.

The IRS has taken an aggressive stance against crytocurrency transactions. US citizens have to report any monetary gains from crytocurrency transactions, even if they use the cryptocurrency for non-taxable transactions. This requires people to report transactions that they would not otherwise report, such as buying a cup of coffee with bitcoin. This is a problem because most people do not keep track of a large number of their cryptocurrency transactions and, thus, would have a hard time reporting them accurately.  The IRS believes that many people understate these transactions and are trying to collect taxes that people have not properly reported. The IRS is already beginning to track down people who do not report these transactions. The IRS has audited Coinbase, a popular crytocurrency exchange

Ultrasound Money

The supersonic money meme has been circulating in Ethereum-based circles for some time, gaining momentum as the asset rises and rises in value during this bull market. While many believe it to be a hoax, like many memes, there is a very complex set of factors behind it that contribute to Ethereum’s new status. Bitcoin is not without its critics, however.

Meme Ultrasonic Silver Explanation

If you move in the inner circles of Ethereum crypto-currency, you’ve probably heard the words ultrasonic currency used as a meme to explain what the Ethereum network will become when it transitions to Proof-of-Stake (PoS). But memes, for what they are, are a complete simplification of the subject and cannot describe the whole mechanism behind it. Essentially, supersonic money memes are used to mock bitcoin (BTC) by describing it as a sound monetary asset, meaning it is not subject to a sudden drop in value.

Created by Justin Drake, a researcher at the Ethereum Foundation, the meme appeared on the 10th. September last year on Twitter. He compared the bitcoin problem to the new Ethereum problem after the Ethereum blockchain enabled EIP1559 (improving the way transactions are loaded on the network) and moved to a proof-of-share based consensus. Since then, the meme has gained momentum and is often mentioned on social media. But what does that mean?

Is BTC a safe currency with a limited supply?

ETH’s stock dwindles – ultras currency pic.twitter.com/Y9N8HBmHBr

– Justin Rake (@drakefjustin) September 10, 2020

At first glance, the meme only shows that Ethereum issuance is likely to be deflationary in the long run, but does not explain how this will be achieved or what elements will be used to achieve it.

EIP-1559 : Ethereum will (most likely) become a deflation

The first item contributing to the supersonic money synthesis is EIP-1559, a proposed Ethereum enhancement that completely changes the way miners are paid and affects the issuance of Ether over time. It works by standardizing payments, so to speak, with a base rate based on the demand of the system to be burned. This means that in the future more air will be consumed when the network is used intensively. Additionally, a new element called Tip to Miners will be added to this table, allowing users to prioritize their transactions and compete for space on the blockchain.

This proposal was not popular with the miners because it affected the value of their rewards. Some miners even tried to make a statement against the proposal, but this protest was not supported by the majority. Drake believes this is one of the important actions needed to prepare the network for the Ethereum 2.0 PoS upgrade, moving away from a policy of directly subsidizing miners to potentially increase costs for all Ether holders on the network by increasing scarcity.

With EIP-1559, Ethereum issuance is likely to decline over time. This will happen because when the network is heavily used (as has been the case with Ethereum over the past year), the network burns more Ether than it releases, creating a deflationary trend.

Ethereum consensus changes improve efficiency and security

Another element of the echo memorandum concerns the transition from a consensus algorithm to a proof-of-stake algorithm, which gives the protocol many improvements in terms of efficiency and security. However, the downside of this upgrade is that it will force miners to turn to other circuits, such as ETC. According to Drake, the main improvement of switching to Share Proof is that the network is better protected. According to his thesis, PoS for network security is actually more effective than PoW. He thinks so because only the underlying assets are needed, apart from external factors such as mine operators who also put pressure on the sale of the underlying mined assets as they have to pay for the cost and upgrade of equipment over time.

He also blames bitcoin (BTC) for not being able to sustain the network without incurring expenses and for depending only on long-term fees. When the value of bitcoin gets too high and the cost of the hardware that provides the network’s hash rate drops, the bitcoin network becomes the target of attacks by governments and individuals who have the economic power to do so.

Ultrasound memo on criticized money

The ultrasonic coin proposal has been criticized by proponents of the Proof of Work (PoW) consensus, who claim it has two fundamental flaws: Unpredictability and centralization. First, it is impossible to know exactly how many shipments will be produced in a given period, as this depends on the load on the network. A currency whose issuance is unpredictable cannot be a reliable currency, let alone a supersonic one.

The latter describes that these new measures governing the issuance of tokens can be modified as needed to achieve a different goal than what Ethereum is trying to achieve today. Increasing or decreasing production would be trivial and would exhaust the current supply in a short time.

However, the ultrasonic meme and the deflationary thesis it describes seem to have some basis in reality: The price of Ether has shot up over the past month, reaching the ATH of $4,100, and experts say it will likely continue to rise.

What do you think of the ultrasonic money meme and its meaning? Let us know your comments in the section below.

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