In the world of crypto assets, there is the term “coin burning”. You hear the term? The term refers to a concept in the world of crypto assets adopted by various coins and tokens. In this article, we will discuss coin burning and how it works. Check out this article for complete information! What is Coin Burning? Coin burning is a burning process carried out by coin makers (developers) to remove coins from circulation or to reduce the supply of available coins. So that the coin cannot be reused, it is based on following the principles of a market economy in calculating the price of supply and demand. Although it sounds difficult to understand, this coin burning is a common proven central mechanism and a feature that will often be used by coin developers.
How Coin Burning Works Coin burning is done with a function called “function burn” which can be done by anyone. The following is the sequence of how coin burning works, namely: A coin owner will call the burn function or "function burn", then provide a nominal amount of coins to be burned. The Smart Contract will verify that the person has coins in his wallet along with the nominal amount of coins to be burned. Note that only positive numbers can be entered. If the person does not have enough coins, or the nominal amount to be burned is incorrect (eg 0 or -3), then the coin burning function will not be executed. If the person has enough coins, the coins will be deducted from his wallet. The total supply of these coins will be updated and the coins will be burned. Coins that have gone through the burning process cannot be recovered and cannot be reused. The coins will then be effectively removed from circulation and publicly recorded and certainly verifiable on the blockchain.
Purpose of Burning Coin Removing a number of coins from circulation can be done for different purposes, but is most often done with the aim of deflation the value of a coin or token. In simple terms, this burning can create a shortage of coins and tokens that are burned. When a resource (coins and tokens) is limited, then the value of the resource will have a high value. Generally, coin burning is the most effective method of increasing and stabilizing the value of coins and tokens. Stability, gives investors a greater incentive to hold the coin and keeps the price at a more favorable level. Token burning also projects an edge, especially in the early stages of coin development.
Moreover, another reason why developers burn unsold coins after the ICO is to provide investors with greater transparency and also to value their tokens at a fairer price. Tokocrypto as a Digital Exchanger that has been officially registered with BAPPEBTI will burn coins which periodically every quarter is 10% of the total supply of TKO Tokens. This is done in order to increase and stabilize the value of TKO in the market, and is expected to reduce the potential for inflation from TKO itself. Coin burning carried out by developers is of course to provide transparency and to increase the token price for its customers, as will be done by Tokocrypto. What are you waiting for? Come on, start investing in Tokocrypto!