image:tokocrypto
In the world of cryptocurrencies, there is a term called "coin burn". Have you ever heard of this term? In the world of cryptocurrency, the term refers to a concept that has been embraced by many coins and tokens. In this article, we will discuss coin burning and how it works.
Come check out this article for full details!
What coin burns?
Coins or coin burning is the intentional burning of coins (by programmers) with the intention of removing coins from circulation or reducing the supply of available coins. To prevent the reuse of these coins, market economy principles are used to calculate prices based on supply and demand.
Although it sounds hard to understand, coin burning is a key mechanism that is universally proven and a feature that is often used by coin developers.
How It Works Coin Burn
Coin Burn is made by burning functions that anyone can do. Burning coins is as follows:
The owner of the coin calls the burning function or "burn function" and then declares the nominal amount of coins you want to burn.
A smart contract ensures that a person's wallet has coins and a nominal amount to burn. Note that only positive numbers can be entered.
If the person does not have enough coins or the nominal amount to burn is incorrect (for example 0 or -3), then the function of burning coins will not be performed.
When a person has enough coins, they are taken from the purse. All funding is renewed and coins are burned.
Coins that have gone through the burning process cannot be recovered or recycled. These coins are effectively removed from circulation and held publicly and are certainly verifiable on the blockchain.
Purpose of Burning Coins
Removing multiple coins from circulation can be done for a variety of purposes, but is most often done by deflating the value of the coin or token.
Simply put, this burning can cause a shortage of coins and tokens to burn. When a resource (coins and tokens) is limited, the value of that resource is high.
In general, coin burning is the most effective way to increase and stabilize the value of coins and tokens. Stability, gives investors a greater incentive to hold the coin and keeps the price at a more profitable level. Burning the token also becomes an advantage, especially in the early stages of coin development.
Besides that, another reason why developers burn unsold coins after an ICO is to provide more transparency to investors and reward their tokens with a fairer price.
Source:tokocrypto
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