What are Cryptocurrency Burning and the importance of Burning Cryptocurrencies
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Assalam-o-Alaikum Steemians !
I'm @moneyster, a professional level Cryptocurrency investor and an analyser. As usual, today I thought to share another Crypto-related experience with you. I hope this article will be considerably beneficial for all the Steemians in this community
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Before understanding Cryptocurrency Burning, we should have a bit of knowledge about a Circulation supply of a coin. Because Cryptocurrency Burning is directly linked with its circulation supply. Simply, Cryptocurrency Burning can be defined as the process of removing a portion of its circulation supply permanently.
Basically, most Crypto projects are using dead wallets to burn Cryptocurrencies. Dead Wallet means some kind of address that can only receive coins and there is no way to get these tokens or coins back after sending. This process should be accomplished publicly in a transparent way. Therefore, they have to send those tokens from their main address to that dead address through a blockchain transaction.
As a result of this, the circulation supply should be reduced and the price of that assets should be increased or protected at a certain level. Because we already know that those coins which have a less circulation supply coins can get a good gain with a relatively low market cap.
According to my research, 1st Crypto burning has happened with Binance Coin and some other major coins such as Bitcoin Cash in the year 2017. Here the relevant Crypto Team can burn those coins they have allocated as their personal funding amount of the Crypto asset. If not, they have to buy some coins or tokens from the open circulation supply and burn them publicly. This process can be taken as good news for the relevant project.
Cryptocurrency Burning is a positive impact on the relevant Crypto project. Therefore, the price of that asset can go a bit high as compared to the last time. However, sometimes still the price can go below due to panic selling. But at that time, it is quite easier to protect that price from a lower Market cap as the circulation supply has been reduced. Cryptocurrency Burning can be taken as good news for the entire Crypto project and it attracts more investors to the relevant Market. As a result of Cryptocurrency Burning, the value of a single coin or token can be increased even with a relatively lower Market cap. So, now we can understand the importance of Burning Cryptocurrencies very easily with the help of these benefits.
This is a very important factor when we select Cryptocurrency for trading. As a social opinion, there is a bit of concern that those Cryptocurrencies consisting of a max supply are relatively very safe than other Cryptocurrencies. Because these Cryptocurrencies can't be printed or mined more than the maximum allocated supply. It means, there is a specific limit for that token for its circulation. As an example, Bitcoin is the first Cryptocurrency which consists of a max supply. (21 Million). This is the basic idea of the Max Supply of a coin.
Circulation Supply is the open Coin or Token circulation which have already been listed with exchanges or users. So, these coins can be used to trade with other currency pairs. Basically, we can use those Coins or Tokens for Buying or Selling.
At the same time, total Supply is the present total distributed coin or token amount to the market. To identify the burned amount of the Coin or Token, we should reduce the circulation supply from the total supply.
I have studied the below-sourced articles to further study these topics and I have explained all the above facts in my own words and experience.
10% benificiary set for @tron-fan-club
Twitter Shared
https://twitter.com/moneyster12/status/1524805553733750785?s=20&t=6G7-sgdUIyIBy91wp3JrXw
Crypto burning is very important in the ecosystem, this is used to reduce the supply of the token, it will also help to increase the price of the token
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Crypto burning or coin burn. Not manying people know abiu5 this but is highly relevant in the ecosystem.
Of course. Most of the people don't know about that. If we are able to understand it, It is better to get an idea of all the cryptos at a certain level.
These are some interesting topics in crypto, and you have done justice to them.
Keep it up, bro.
Thank you very much for your valuable comment. Yeah these are kind of interesting. Also, important for all the crypto fans
You are welcome.
Nice effort. Keep on sharing.
Thank you very much for your motivation and guidance. I'm always trying to do my best in this community.
You have a very good idea about the current cryptocurrency market. We learned a lot from this. You have presented very nicely. Good luck to you.
Thank you very much for your detailed comment. It's really a pleasure to hear that. In fact, I'm always trying to deliver something very important to others.