Why is it important that the production of cryptomoney is finite?
In the previous post I talked about what halving is, what it consists of and mentioned some special characteristics of cryptomonies, which are the ones I want to talk about in this post.
Get ready to clarify these specific aspects, and learn a little more about cryptomoney every day.
If we consider that so much time has passed since the emergence of Bitcoin in 2009 to the present day, only 11 years have passed, which in terms of history is very little time.
However, it is an area of the economy that is in full growth, and that promises much more. It brings with it a set of characteristics that are in part what makes it so highly valued.
I want to address two specific aspects of them, let's go with the first one:
Why is there a finite number of tokens to be generated?
This is one of the main differences compared to Fiat money, which can have an infinite output.
This is a very important aspect of most crypto currencies, they have a maximum number of units that can be created. The emblematic case is the bitcoin, which can only generate 21 million, I said it previously, but, what is the impact of the fact that this is so?
"If something is naturally scarce it is most logical that it has value. "
In theory, the goal of this finite number measure is not to devalue it because of the large amount that could exist. That is to say, if it is something that is going to be produced indefinitely, as a consequence it can bring a loss of value because its existence will not end, and there will always be a lot of this. Being a limited amount, the possibility of this devaluation occurring is less.
The above mentioned has something that particularly got me thinking, this number in circulation (21 million) is surely much lower, considering that there are many people who have lost their wallets, keys, etc. A lot happened when the bitcoin came out, that people did not understand how important this would be in the future. I don't think it's possible for everyone to lose their passwords but there are certainly a large number of BTCs that cannot be moved.
What is the purpose of halving the production of cryptomonies for each block that is formed?
This point is related to the previous one. But it is created with the intention that as the last BTC to be mined approaches, the amount produced will be less and less, which should allow the currency not to devalue, but rather to maintain or increase its price, in view of the fact that there is less and less production of it.
I hope I have been able to make clear or at least give a good idea of what is being pursued with each of these features.
Thank you very much for reading me.
Until a future publication.
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@josevas217 less number of coin more number of demand , this is the only way to a currency valuable. thats why 21M coin created.
In theory, yes, it should work that way, but predicting actual market behavior is a difficult task. Only time will tell.
You have provided a detailed explanation to the topic, halving has been a topic for a while now and not everyone can claim to have a good understanding of the topic including me, so I decided to read topics related to it, I am glad I read this.
I am happy to know that I am collaborating in the process of understanding these issues. I am not an expert, but I have read trying to understand this crypto world. And I try to explain it simply.
Thank you for your comment @ajewa
You are welcome friend.
It is like everything in life, when you generate a service that is "limited" you give exclusivity to the same what generates in a sense of belonging to an "elite", and this is one more form of merxadeo very smart indeed.As a result of thinking this, the curious idea of creating an exclusive blog that only Go to publish a certain amount of publications in your existence. It would be very interesting and I'm sure that as it will be published (if it's good content), the amount of rewards can become very large. An interesting idea to consider, and perhaps some people who read this start it
A blog with a limited amount of publishing capacity. I never thought of that. But, you're right, if I handled a finite number, I'm sure you'd be much more careful about what you publish. Quality would dominate over quantity.
Yes, it was one of those crazy ideas that occurs to me. Also, since you have a limited amount of posts (let's say 200 posts in the lifetime of the post), people He will know that you are striving to publish quality content and you will surely receive support and sponsorship from important people.
This post has been rewarded by the Steem Community Curation Project. #communitycuration06
Thanks for the support.