I wonder why they named this act “burning” when you are literally not setting your tokens on fire. You might not relate if you don’t have a mind like mine that thinks about everything literally. When I heard about burning for the first time I thought of literal setting coins ablaze, I felt there was a program that acts like an incinerator with a 3D Burning fire illustration. All you have to do is send your coin to the program and you start hearing burning sounds and voila!!! Your coins are burnt and you will never get them again.
😂 I am just kidding, I didn’t see token burns like that obviously. So let’s talk about token burns. You must have been seeing updates from coin developers giving details of how many token burns they just had and how much they are worth. Well, there are so many reasons tokens get burnt and I will share some of the reasons I know.
Crypto burning is obviously not literally burning your tokens, but “burning” sounds way cooler when saying it. Token burning is sending your tokens to a crypto wallet address where there is no access keys. This means that this wallet address can only get token received in it but can never send out these tokens. The wallet address is designed in a way that it’s outside the network making it impossible to be spent.
🤔 Are you thinking what am thinking? Imagine hacking into the system and getting access to send tokens out of the address. 😂 nah that’s not possible, the blockchain and the smart contract have made it almost impossible.
Token burn is possible with all tokens, any token can get burnt, all you have to do is send it to the address without access and it’s gone. It goes out of circulation, and can’t be recovered.
Most times these token burns are decided by the community or the developers. The developers most times have a periodic time of token burn.
Why Do Tokens Get Burnt
Tokens get burnt for so many reasons but one of the most important reasons tokens get burnt is to reduce the supply of tokens. When the supply of tokens get reduced, it makes the coin valued much more because the more people want it, the lesser it’s availability the more valued it will get.
Nobody wants to have excess coin that has too much supply, less demand and less value. So token burn activity is done to make the token valued, thereby driving investment value of investors high and making people want to have more.
You know human psychology with scarcity and value, people tend to always want what is scarce because it makes them feel special.
