Definition ∞ Ultrasound Money is a term used to describe a cryptocurrency that exhibits a deflationary supply mechanism, meaning its total circulating supply decreases over time. This reduction occurs when more tokens are permanently removed from circulation than are newly issued. The concept implies that the asset becomes increasingly scarce, potentially leading to long-term value appreciation. It suggests a strong economic property beyond mere scarcity.
Context ∞ The term “ultrasound money” gained prominence in discussions surrounding Ethereum after its transition to Proof-of-Stake and the implementation of EIP-1559, which introduced a fee-burning mechanism. News articles frequently debate whether Ethereum’s tokenomics will consistently result in deflation, thereby solidifying its status as ultrasound money. This concept is central to understanding the long-term economic model and value proposition of Ether. It represents a significant shift in the narrative around programmable scarcity in digital assets.
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