How Ethereum beats Bitcoin
Ethereum is gunning to outshine one of Bitcoin's most attractive features, and become 'ultra sound money.'
But what the hell does that mean?
Any form of money that has a capped maximum supply, is considered 'sound money.'
Bitcoin is a great example of sound money, because it has a max supply of 21M coins. Once they're all mined, no more can be created - which means Bitcoin's value can't be diluted by the endless creation of coins.
One Bitcoin will always be 1 of 21M.
But Ethereum doesn't have a max supply, the network can technically print as many ETH tokens as it wants - so how can it be ultra sound money?
The Ethereum developers made an update to the protocol (aka the 'Ethereum rule set') that made it so a little bit of ETH is destroyed every time a transaction is made.
This means as Ethereum grows in popularity and ETH transactions increase, it could reach a tipping point and see the total supply start decrease year over year.
Making it scarcer and more valuable, the more people use it. Taking it from un-sound money, to ultra sound money.
Don't get too excited! Ethereum isn't 'ultra sound' yet - there's currently more ETH being created per year than there is being destroyed.
But now that The Merge update has enabled Ethereum to run 100,000 transactions per second (compared to its previous max of 30), that is starting to change.
Post Merge, Ethereum went from creating ~4.9M new tokens per year, to just 603K, in a matter of days...
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