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Hello Guys,
I am participating to this class of Crypto Academic, and really appreciated to Professor @Wahyunahrul for the valuable course given. Now I am trying to describe homework task below.
Happy Reading..!
1. Explain what is Token Redenomination in your personal opinion? What distinguishes it from currency or other assets redenominations?
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In the economy, money has an important role to use for payments, services and defined to its function for exchange. Recently, in Indonesian especially, development of the economy has improved in positive way, this thing has triggered the increasing of financial transaction. However, it leads to the potential of the inefficiencies in financial transactions, as community will be bothered to bring a large amount of money when carry out financial transactions. Lots of digits in certain money will affect the perception of low value IDR against foreign currencies. As the difference between the Rupiah exchange rate and the US Dollar is very far. $1 is equivalent to approximately IDR 14,000, and $1 is equal to 4.24 Malaysian Ringgit. Therefore, with redenomination give the impression that the Rupiah exchange rate is the same as other foreign currencies. This will have a positive impression in terms of trading as well as market psychology.
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The readiness of the community is an important matter that must be prioritize at the time of redenomination. It is required in order to avoid economic turmoil and panic in the community. In theoretical, redenomination does not have a negative effect on the economy. But also, this redenomination is not 100% rational, the possibility of inflation will lead people to tend to hold goods, especially in which value is resistant to inflation. Another impact that needs to be considered carefully is the potential for rounding up prices for reasons of ease of transactions. The price of the goods previously IDR. 1,930, it will become IDR 1.9. Due to the reasons mentioned above, the price will be rounded up to IDR. 2, and it certainly will lead to increase the level of inflation.
The decision of redenomination of currency or called by fiat based on government decision regarding the national economic situation to avoid inflation and required thorough preparation. While in the decision of redenomination in cryptocurrency is determined by developer to take the announcement to all investor to take vote. Token redenomination will be a bit different compare to fiat redenomination, as token redenomination purpose to have cheap transaction to all investor and get much larger audience. For example the redenomination of
Global Phoenix Token (PHB), the redenomination is set at 100:1 (old:new), meaning that it less the digit of zero (0), 100 to 1. The overall value of PHB holdings will not be impacted by this change, as the token will trade immediately following the redenomination at a 100x price, and thus maintain the same market capitalization.
Before redenomination: 100,000 PHB @ 0.01 cents = $1,000
After redenomination: 1,000 PHB @ $1 = $1,000.
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Another example of Token Redenomination for token NPXS to Pundix (1000:1), there is no change in the value of the new tokens after redenomination.
2. Mention the advantages and disadvantages of Token Redenomination
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The token redenomination is very essential to be prepared and managed, as it would be create big profit or lost, as follows the advantages and disadvantages.
ADVANTAGES:
More investors are coming
Redenomination makes the price affordable for all investor and it will attract many investors participate to invest for this token. Redenomination led to make a strong market demand and lots of investor coming, so that it makes market more liquid and get bigger transaction as investor will be able complete transaction easily. Besides, it allows investors to afford whole of token which would lead to broader participation and engagement.
Increase in overall value
The higher investment of the token, the higher the value of the token itself. Required balancing of supply and demands to make market liquid. As the token has high value, then lots of investor will invested in it.
Improvement of market liquid and token circulation.
Condition of market will be more liquid and it tends to make the price of one token will be increase as more demand in the market. A larger circulating quantity of token would make people more likely to use them as intended in the network versus hoarding them.
DISADVANTAGES:
- Create confusion to lot of investors with the change of price token, especially if they bought the tokens already.
- Create anxiety of the token credibility as this ignorance make lots of investor tend to leave the market.
- After token redenominated, unaware of the new name of the token lead investors confused and tend to leave market and changing invest to the other token which is familiar with them.
3. Do all cryptocurrency projects need to do Token Redenomination? Explain in your personal opinion
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In my point of view, not all projects need to do the token redenomination.
Redenomination is required when the economic situation unstable which may lead to rise the inflation.
The high price of token makes only few of inventor will be invested, as to increase the market liquid and attract many investors come, redenomination needed to cut the nominal but not the value of the token.
Not all cryptocurrency project has high price of token, there are many tokens which is familiar with many people and low cost such as Dogecoin (DOGE), Bitcoin (BTC), Ethereum (ETH) etc. These coins do not need the redenomination anymore.
4. Choose a project that has or is currently doing Token Redenomination and show how to convert old tokens into new tokens. (Screenshot Required)
I would like to describe one of token that has been doing the token redenomination which that I choose is Pundi X. Pundi X, intends to take advantage of the virtual money market, so the developer decide to do the redenomination the coin effectively starting on March 30th, 2021 at 14.00 (Singapore time). The redenomination from NPXS to PUNDIX with the price 1000 NPXS to 1 PUNDIX.
Followed are the way how to convert old token to new token (NPXS to PUDIX):
- All I have to di is to find the official website and simply click the website, it can be googled and it is easier to find, the website: https://pundix.com.
- Then the page of swab is shown, click the button of Swap Now, as shown as the picture below:
3*. Once I click on the button, it is directed to the wallet page as shown picture below. There are some of wallet such as Metamask, Wallet Connect and ledger. They also provide the wallet application that can be used in smartphone which is named by: f(x) wallet. Ensure the wallet has sufficient ETH for the swab transaction gas fee.
4*. I am choosing the f(x) wallet, so I download the application in smartphone, if you use IOS you can find it in Apps store, and if you use android, you can download it in Google Play Store. Then simply click on the button “GET”.
5*. Send NPXS tokens and ETH to f(x)Wallet, so I can find the NPXS and ETH address (they are the same address) by tapping the token icon. Then click the address. The menu of this address will pop up. Simply click on “Receive” to copy the address.
6*. Once I have tokens in the wallet, click the button at tha lower right hand side and visit the CryptoBank page. Then there will be seen the NPXS swap section. Click on “Swap now” to start it.
7*. Then click the “Next” button to process the swap transaction. After the transaction is sent, the PUNDIX token is available in the wallet.
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5. Analyze whether the token from the project you chose in question number 5 is worth investing in. (Screenshot Required)
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The PUNDIX that I chose to analyze is worth to be invested as it works on the Ethereum platform and facilitates using digital currencies and assets. Besides, PundiX has real offices in some countries such as London, Jakarta, Seoul, Sao Paulo, Shenzhen, Singapore, and Tokyo.
The PundiX platform is suitable to the cryptocurrency payment such as XPOS, XPASS, and wallet. XPOS is the first blockchain-based point-of-sale (POS) terminal that allows for simple cryptocurrency payments in retail businesses. It’s a device that’s remarkably similar to the standard card readers seen at every store.
As it is below the description:
- XWallet mobile app – for money storage and transfers
- XPASS card for fast online and offline payments
- XPOS payment terminal for receiving payments at retail
- NPXS utility token to cover fees.
Analysis Market for Pundix
As per-today (September 25th, 2021), the price of PUNDIX token is $1.24, the price is still normal since it launched for its redenomination. Price changing in 24 hours $-0.1074 down to 7.67% and has Ranking: #234. within 24-hours, the trading volume is $ 32.743.746,55 and volume/market cap is 0.1029
After redenomination since March 2021, the price of token has tended to be uptrend. Looking at the graph stated in 3 months, we can see that since beginning of September 2021 it has downtrend but the downtrend still remains relevant today. As its price today is normal at $1.24. It is required more deeply analysis to predict whether the price will be drop or may increase as it just launched the redenomination. Looking at the trends and trading volume, i think this token is worth to invested.
6. Conclusion
Redenomination can be used to revive the value of the token and it also make the investors come to invest. Once the decision is made to redenominated, all preparation and announcement should be made to avoid confusion of investor especially to those who new in cryptocurrency investment. As stated, and discussed earlier, the balance of supply and demand in investment of the token in market should be prioritize. Therefore, redenomination can be valued to improve the liquid market condition.