Understanding the economics of the blockchain.
The value of a cryptocurrency is derived from what has been coined, its ‘Tokenomics’. A portmanteau of the words ‘Token’ and ‘Economics’.
The tokenomics of a cryptocurrency consists of a large range of inputs, all of which impact its value in the decentralised market place. Inputs with respect to the characteristics of Good Money include:
- Number of tokens in existence – Scarcity.
- Energy inputs into token creation – Difficult to create.
- Number of users / transaction frequency / future use potential – General Acceptability.
- Security of chain and code – Indestructibility.
- Level of annual token inflation – Scarcity.
- Level of decentralisation – Trustless (level of third party risk).
- Wallets and associated infrastructure – Portability / General Acceptability.
- Quality of the development team who are driving the use cases and chain growth – General Acceptability.
For various reasons blockchain will change their tokenomics and in these cases, you, the Financially Awakened – will sit down and work through the changes.
Increasing inflation will place downward pressure on token prices. Burning tokens on the other hand, (permanently removing tokens from circulation), will have the effect of increasing the price of the remaining tokens.
Let’s take a look at a current scenario – the Taurion Burn Sale.
Last night we examined the proposed tokenomics changes for the XAYA blockchain in a Goldsmith Money YouTube review. Embed below.
Whilst it is not possible to put an exact price on a token, now or in the future – it is possible to get an understanding on how different stakeholders will be impacted and the possible directions the token prices might take – ceteris paribus (all other things being equal).
Enjoy the video. And if you feel you would like to discuss the matter of blockchain tokenomicsl or, the XAYA Taurion Burn Sale – please drop a comment below. You can also read more about the Taurion Burn Sale here.
Otherwise, warm up those gaming chairs, because things are about to get rather hectic in the blockchain gaming space. Final testing on Taurion and Soccer Manager Elite is merely days away – and then human mining will begin.