Tokenomics goes beyond cryptocurrencies. It underpins the crypto ecosystem. Complex digital asset economics are examined beyond technicalities.
Digital asset engagement guidelines are included. Without effective tokenomics, cutting-edge enterprises may fail.
Coin distribution and number may effect success. Due to its 21 million coins, Bitcoin is a digital store of value. Some projects routinely produce tokens, altering scarcity and value.
Distribution equality matters. Centralization, when one entity controls most tokens, may compromise network security. Fair and accessible token distribution boosts confidence and decentralization. It must be considered while creating crypto coins.
Economics involves money supply and demand. Both factors suggest currency desirability. Tokenomics uses the same premise to show supply and demand.
Start with supply. Determine whether a token’s value will grow in real terms or be inflated by supply. Less tokens mean higher value, according to economic theory. This is deflation. But more tokens imply less value. This is inflation.
Utility and potential to produce money for holders or others are not considered when analyzing supply. Supply change is the sole factor. You compare the amount of tokens in circulation to the algorithmically stated number to be mined or distributed upon release.
Understanding Bitcoin’s supply helps. Only 21,000,000 Bitcoin are given at a halved rate every four years until 2140. More than 19,000,000 Bitcoin were mined by June 2022, leaving 2,000,000 for 120 years. This means just 10% of Bitcoin will be mined for 100 years from 2022, limiting inflation.