30 March 2020
A token in the crypto world can be called a currency unit that is programmable and is chained to the protocol of blockchain, they can also be stated as part of the ecosystem. While economics, on the other hand, can be defined as a branch of social science that helps to study the production, consumption, and distribution of goods and services.
Tokenomics, as the name suggests, is term combined from Tokens and Economics meaning it consists of all the aspects of economic’s study with reference to the tokens, basically, anything and everything of tokens affect and effects.
It can be stated to be a concept of understanding the ecosystem and role of a token that will convince and enable the investors or the users to adopt and help to build the environment of the token and its projects.
In the traditional fiat world, one learns and understands the economics while investing their money such as money supply, inflation and so forth. In the same manner, it is also important to understand the economical background of the cryptocurrencies that you have invested or intend to invest in.
Thus it can be defined as the understanding and learning the specifications of the distribution of the tokens, just like the basic fundamental factors of the subject economics.
Once when the company has laid out a token, people or the users would want to learn about it and therein the demand for the token will head start for the use cases such as the fees, the ownership, value exchange, currency and so forth. Such factors also add ups to the utility of its respective tokenomics.
In Bitcoins, this platform is a payment source and the user’s reason to purchase it. While with Ethereum one needs to run the smart contracts and utilize the network. For the buying and selling of the products or the services, the platform utilizes value exchange tokens. And at the end of it, the voting and rights are enabled to the righteous owners while any use case might end with gaining value.
It is also stated that till the time there are quality tokenomics the value will be apparent.
It is thus pretty evident that the companies need to make a viable business model that would strive long term even if a cryptocurrency is well-structured and the token’s utility role plays a key role in the success and leads to profits for the investor.
To conclude with anyone can fall for fallacy with the overall outwardly description of the cryptocurrency but anything you invest in, “diligence” is the key important component to make your experience a winning long run!