Why developers burn tokens

One of the most common methods for combating inflation is the destruction of a certain number of digital coins. High demand triggers the price increase on the price of the cryptocurrency.


Buyback is a unique concept, which means redemption by the Issuer of its own shares. The scheme is simple: the company withdraws from circulation by their own assets, buying shares from private investors on the open market. Such manipulations stimulate the growth in the market value of securities (which were on the market) and increase earnings per share.


Followers of this topic a lot:

  • IBM company since 1995 annually buys back its shares for 10 billion USD.
  • Apple in the spring of 2018 launched the plan of buyback of 100 billion USD, which allowed the company to increase dividends by 16 %;
  • Microsoft from 2006 to 2013 were able to purchase their own assets in the amount of 118 billion USD and stated the plan of the perpetual buyback program by another 40 billion USD;
  • The Russian company Norilsk Nickel bought back own shares in the amount of 48.4 billion RUB;
  • The company “LUKOIL” in 2018 launched the program of buyback of shares worth up to 3 billion USD, expiry date of which is planned in 2022

The movement of demand for the cryptocurrency market is an important aspect and despite the fact that the industry there is no “Buyback”, there is the concept of “combustion token”.


In practice, there are many programs, applications, and methods that allow you to burn tokens. Below we will report on that.


Methods of burning tokens:


1. Change the code in the blockchain. This method is the most used in practice. The implementation is simple: the developers make hardwork network, resulting in a new network where and leave the necessary amount of tokens.


2. Commission burning. This is a situation when the user puts the digital coins will be charged Commission in the amount of incinerated amount. The point is that the coins sent are stored and the fees charged burned. This procedure allows to eliminate transaction spam and reduce the turnover of digital currency.


3. The opening of new wallets. The essence of the method is that developers open a new wallet, send tokens, and then destroying the private keys from the wallet.


What the developers burn tokens


The answer is simple - an artificial increase in the value of cryptocurrencies. The cost of the token begins to grow, when in a short time a large amount of digital coins out of their market. The developers claim that due to the many hands and Andropov happened overabundance of asmosia and that is what was burning coins.

20 December, 2019

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