Token Burning Doesn't Always Equal Value

Hey Jesstoken holders

The world of tokenomics is a brand new arena, programmatic money has opened up all sorts of modern monetary policies, and with thousands of chains and even more tokens available, we have all these experiments currently in play. At the moment Bitcoin is still our best chance at achieving sound money with its protocal while the rest play catch up and over the next few years/decades we'll see which implementation of programmable money wins.

The truth is no one knows which monetary policy is best, and we have to do this to try and find what works best in what situation. Coming from an inflationary monetary policy, Bitcoin offers a deflationary policy, and altcoins are doing anything in between.

Inflation isn't the enemy

Inflation has been misused in the inflationary monetary policy of fiat currency, and I can understand why it gets a bad reputation. Still, it doesn't mean inflation by definition is wrong. If inflation is used correctly to drive the production of goods and services, then it contributes to the overall prosperity of the economy.

The problem is when we use inflation as our only way to drive production; it gets less and less effective due to the theory of diminishing returns.

It takes more and more inflation to get the job done it did before, and instead of trying something new, we tend to throw more inflation at the problem, until hyperinflation.

This is the situation with fiat currencies, and why many tokens are looking at ways of reducing inflation to maintain or drive value.

Reducing inflation isn't a silver bullet

Reducing inflation is one part of the economy, to take capital that is not used for productive gain, just sitting on the market and removing it to drive value and hopefully attract investors but this doesn't work if you're not also actively bringing new users into the platform to provide demand for the token elsewhere. Token burns are cryptos version of stock buybacks, and while they can drive shareholder value, they don't drive user base growth and user retention as much as we may think.

I am all for token burning, but it cannot just be a top-down approach, but the use of the token actively drives one. While I think BLURT is a little extreme with every use of the chain being microtransactions where BLURT is burned, I do think its an interesting take on high volume chain use.

I think there needs to be a balance, yes we can see users can burn tokens to advertise, but we should also look at other digital products that could use burning.

Current burning

The current state of inflation burning either comes from the alturistic burning of post rewards, while that is cool, it's not a big enough use case to drive real adoption of wanting to burn.

Next, we have ads; Peaked has its native advertising that burns HIVE, while tribes have something similar with their native token.

Tribe income and tribe taxes, so tribe sites are taxing users who aren't using their front end to post and also using income from their ads to burn their token and provide more value for users by taking inflation off the market.

Finally, we have tipped, probably one of the best use cases so far, not made that much of a significant impact but people are getting used to it, and I think it will grow as the user base grows and content flows on the various sites.

Customisation

• The blockchain is nothing but a database but the front ends is where the user magic happens. We could create digital products that require burning with things like adding custom emojis to your chats in comments and IMS hopefully in future.

• You should have a closed IM system that charges people to message you if they are not in your friend's list.

• We could have the adding of custom features like adding a newsletter sign up to my community and blog, and we pay to have the service available to collect email and send them out when new posts go live.

• Burning tokens for a quick return of your RC would be a cool one too

• Burning for a faster power down

• Burning to send a confidential message that is encrypted on the chain

• Burning to make your text disappear after a specific period

• Burning to send a reminder to all your followers of your latest post

These could all be new ways to add value and use the token burning to not only remove inflation but give people new tools that they might find helpful and enjoy using.

Burn with a purpose

Burning tokens is a great idea, but it also needs to be made part of the ecosystem, so everyone has an incentive to burn the token and get something out of it. Not just using up unwanted inflation or driving up the price but getting your "money's worth" This is what is going to drive deflation and production at the same time.

The sites that crack this will see their token economics work far better than the ones we currently have in play.

Have your say

What do you good people of HIVE think? What other use cases for burning would you like to see?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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