Well, I am not a crypto expert but one thing I have noticed that when a thing or a commodity gets scared, it's value also increases. Like take for example, Gold. Gold is something that is not easily availalbe to everybody.
And it's not only applicable to gold but other commodities or services etc as well.
This philosophy of bringing value to something by creating scarcity also is being applied by different crypto projects. Crypto projects burn their tokens in order to create scarcity. That according to them help drives the value of the token.
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Burning crypto refers to a deflationary process that permanently removes cryptocurrency tokens from circulation. This is done to decrease the total supply of a digital asset as an attempt to boost demand and increase market value.
Talking of the poineer of crytocurrency, Bitcoin, as far as I know, Bitcoin is not been burned so far but the for the purpose of creating value for Bitcoin, they have this Bitcoin halving event.
A Bitcoin halving event occurs when the reward for mining Bitcoin transactions is cut in half. Halvings reduce the rate at which new coins are created and thus lower the available amount of new supply.
The last Bitcoin halving occured on May 11, 2020 and the block reward were decreased to 6.25 BTC. The next Bitcoin halving is expected to happen in less than a year.
This principal of burning that is being applied by different crypto projects burning a bunch of their tokens is deemed to be helping with the crypto prices. Now, it might help the crypto projects in creating value for its tokens but is it really something enough in creating value?
I guess the next thing crypto projects should also be focusing on is to create real world use cases.
According to Builtin.com, blockchain applications go far beyond cryptocurrency and Bitcoin. With its ability to create more transparency and fairness while also saving businesses time and money, the technology is impacting a variety of sectors in ways that range from how contracts are enforced to making government work more efficiently.
With that being mentioned, the need for the crypto projects in creating value for itself is not only to limit or burn its tokens but also look into ways how it can give value to people, businesses, governments etc.
These are just some thoughts on the matter. What do you think about this?
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I don't think scarcity creates value by itself. Sure, if there were a trillion bitcoin and everyone had 20 million it wouldn't be worth 40k per bitcoin. So in that sense price*supply had to be a low enough value. But scarcity itself is not what makes bitcoin valuable. Fixed scarcity maintains value. I'd say what "gives" value is not what "maintains" value, but what people do that make value increase. Market adoption, promotion, value "creation" in terms of improving the software and the environment in which it moves. Ecosystemic maintenance and improvement gives value. Value is also perceived, not objective, so marketing gives value.
Hmm