With EIP 1559, Has ETH Become Ultra Sound Money?

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 6 August 2021

⏱️ 17 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode of “The Breakdown,” host NLW discusses: Proposed amendments to the infrastructure bill Notable EIP 1559 changes “Ultra-sound” money meme explained Amendment proposals came from a variety of political figures, including Sen. Ted Cruz’s bid to scrap the crypto provision altogether. A more realistic option, however, came from Sens. Wyden, Toomey and Lummis, who chose to insert a definition excluding non-custodial intermediaries. In the main discussion, the London hard fork to Ethereum took place early this morning. The changes aimed to improve the user experience on the network and included the introduction of a maximum bidding tip, increased block size in times of high demand and the change to burn the base fee. The base fee burning modification has sparked conversation about a potentially powerful side effect. In new EIP-1559 transactions, the protocol will burn the ETH used for to pay the base fee. If more ETH is burned this way than is issued, it will make ETH deflationary. If bitcoin’s fixed supply constitutes “sound money,” does ether’s declining supply “ultra-sound?” Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW The Breakdown is written, produced by and features NLW, with editing by Rob Mitchell and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Only in Time” by Abloom. Image credit: Zoltan Tasi/Unsplash modified by CoinDesk, modified by CoinDesk.

Transcript

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0:00.0	I think it's important to point out that sound money, as a concept applied to Bitcoin, really
0:04.6	has at least two dimensions. The first is this element of fixed supply. Obviously, it's absolutely
0:10.6	essential. But the second is that it has a programmatic money supply that is not tamperable with
0:16.8	by humans. The two key dimensions of people's belief in that inviolable monetary policy are,
0:23.1	one, the true absence of a founder as a force in the protocol, and two, a track record of
0:28.9	conservativeism and non-interference. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:44.0	The breakdown is sponsored by Nidig and produced and distributed by CoinDesk.
0:50.3	What's going on, guys? It is Thursday, August 5th, and today we are talking about EIP 1559 and whether it turns Ethereum, Ether specifically, into ultra-sound money.
1:04.5	First, however, let's do an update on the infrastructure bill.
1:07.8	Where we left off yesterday was that a group of Republican and Democratic senators
1:11.0	were coming together to author an amendment to the crypto tax reporting provision. The goal of the
1:16.5	amendment would be to specifically exclude non-custodial actors like miners from the new IRS
1:21.9	definition of broker as applied to the crypto industry. It's short, so I want to read the whole thing,
1:27.1	but before we do,
1:28.4	I should also note that Senator Ted Cruz also offered an amendment. His amendment would scrap
1:33.9	the provision entirely, which, while I think crypto would love to see, most didn't find especially
1:39.0	politically viable, hence us focusing on the Wyden-Tumee-Lummus amendment. Here's the amendment as written.
1:46.1	Purpose.
1:46.8	To revise the rule of construction with respect to information reporting for brokers and
1:50.7	digital assets and for other purposes.
1:53.2	On page 2437, strike lines 9 through 21 and insert the following.
1:58.0	Definition of broker.
	...

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