Token burning is the process of reducing the total number of cryptocurrencies in circulation by permanently removing a portion of them. This is usually done by the project team or entity responsible for the coin in order to create scarcity and increase the market value of the remaining token.
---
How does the coin burning process work?
1. Create a Burn Address:
The coins are sent to an address that is not accessible or retrievable. This address does not have a private key, so the coins sent to it are lost forever.
2. Smart burning mechanism:
Some projects use smart contracts to automatically burn a certain portion of coins with each transaction, ensuring that the supply continues to decrease over time.
---
Reasons behind burning coins
1. Increased scarcity:
Reducing the circulating supply creates scarcity, which increases demand and theoretically causes the price to rise (according to the law of supply and demand).
2. Increase investor value:
As the supply decreases, the value of the remaining coins is expected to rise, boosting the investment of coin holders.
3. Controlling inflation:
In some projects, coins are burned to prevent inflation caused by oversupply.
4. Boost confidence:
The burning process shows the project's commitment to improving the currency's economy, which may attract more investors.
---
Examples of cryptocurrency burning
Binance Coin (BNB):
Binance burns coins periodically by buying a portion of the coins in circulation and then burning them, which helps reduce the supply and increase the value.
Shiba Inu (SHIB):
A portion of the coins are burned as part of strategies to support the price and increase scarcity.
Ethereum (ETH):
After the latest updates, part of the paid fees is burned into the network (under the EIP-1559 mechanism).
---
Does burning coins always raise the price?
Not necessarily. Although a decrease in supply may lead to an increase in price, there are other factors that affect the price of a currency, such as:
Actual demand for currency.
General market condition.
The use of the currency and its utility in its ecosystem.
Trust in the project.
Therefore, burning the coin is a tool, but it is not a guarantee of a price increase.
------------------
*******Advice::
------------------
Buy BNB for big capital owners and buy SHIB for small capital owners!!!
A little glimpse into the future of SHIB
The future of Shiba Inu (SHIB) depends on several factors related to technical developments, widespread adoption, and the general conditions of the cryptocurrency market. Here are the most important points related to the future of the currency:
1. Technical developments and projects:
The launch of the Shibarium Layer 2 network improves transaction efficiency and reduces fees, supporting the long-term value of SHIB.
The Shibverse project, which aims to provide an integrated virtual environment, may have a significant impact on the price in the future.
2. Moving towards burning coins:
The continuous burning of tokens reduces the total supply in the market, which may lead to price increases if demand for the currency increases.
3. Price expectations:
In 2024, the coin is expected to reach $0.000075 if the current developments continue and market conditions improve.
By 2030, it could reach $0.00016 as ambitious projects continue and SHIB technologies become more widely adopted.
4. Challenges and risks:
High market volatility and lack of strong institutional support may hinder the currency's sustainable growth.
Conclusion: SHIB has promising growth potential, but it depends heavily on the success of its technical projects and the improvement of the general market situation. If you are considering investing, it is advisable to study the market well and manage risks carefully.