BLOCKCHAIN IS SOOO EASY
Explained Easily: What exactly is Tokenomics?
NB: Blockchain, Strictly for Lazy Beginners
TABLE OF CONTENT
- What is the Term Tokenomics?
- Brief History of Tokenomics
- Importance of Tokenomics
OUR PERSONAL INTRODUCTION TO TOKENOMICS
Our first encounter with tokenomics:
You would not believe this the first time we engaged in the use of tokenomics was on Shitcoins. Back then, we were not even aware that what we were looking at was the tokenomics of these shitcoins. What we knew were those factors contributed to these coins pump.
It seemed like a detective job then, taking note of a token distribution across address holders, the coin maximum supply, the Market cap of the token, and sometimes the token website.
The days of shitcoins are gone for now, but what we learned during those days has stuck with us.
Without further ado, let us define TOKENOMICS.
WHAT IS THE TERM TOKENOMICS?
You could be a newbie, an expert, or a passerby, and you must have definitely heard this phrase: DO YOUR OWN RESEARCH (DYOR). This advice is splashed on almost all news articles and tweets concerning cryptocurrencies.
Doing your own research is another way of saying check the tokenomics of the token you are interested in before and after buying it.
Tokenomics is made up of two words: Token and Economics. This is rephrased as the economies or policies surrounding a token. Tokenomics are characteristic of tokens that determine their economic success with users and potential investors.
For example: Mr. A, an adult applying for a job in company B, the Curriculum Vitae (CV) he submits would contain his job experiences, skills, and probably links to his previous works. In this instance, Mr. A is a token, and the facts in his CV are his tokenomics.
This is what tokenomics is: The total characteristics that make up a token. These characteristics could either lead to the success or downfall of the token in the Crypto Space.
When did tokenomics become a big deal in the crypto space? Let us take a step further and look at the
BRIEF HISTORY OF TOKENOMICS
Tokens can mean many things depending on the angle you view them from.
Examples of physical tokens may include stickers, stones, sticks, crayons, artwork, and so much more.
Examples of digital tokens are Bitcoins (BTC), Ethereum (ETH), litecoins (LTC), Non-fungible Tokens (NFTs), and so much more.
The history of tokenomics in the crypto space begins with the almighty Bitcoin. King of all cryptocurrencies.
The tokenomics of Bitcoin is simple, brilliant, and rewarding.
Bitcoin is the first-ever cryptocurrency. It was created in 2008 under the pseudonym Satoshi Nakatoma. One of the successes of blockchain technology and the crypto world is attributed to the tokenomics of BTC.
One of these features is the Mining for rewards: Computers who assist in processing transactions through the running of mining algorithms on the Bitcoin network get rewarded in Bitcoin. This shows that new Bitcoins are not printed out of thin air but mined.
After Bitcoin, various tokens have sprung up, and with them, different tokenomics. These tokenomics ranges from staking to getting rewards, coin burning, pre-mined coins, and many others
Okay, rest for a few seconds before we move to the next.
THE IMPORTANCE OF TOKENOMICS
Listed below are the importance of tokenomics in the blockchain and crypto space.
- Tokenomics creates a safe environment for investors, researchers, and traders by aiding them in identifying worthy projects from scam projects in the blockchain space.
- A project’s success rests on its tokenomics. Any project that can introduce and implement good tokenomics into its structure would have a high probability of sustenance in the blockchain space.
- The price of a token relies heavily on its market cap (capitalization). From a coin/token market cap, a person should be able to tell how much a coin/token is worth. This would assist investors in gauging risk levels before investing in any projects.
- Tokenomics can also act as trend watchers; in the sense that new projects provide clues about the various changes in the blockchain space. For example, during the NFT boom, numerous projects added NFTs opportunities as part of their tokenomics.
Phew, we hope the term tokenomics does not seem so daunting anymore.
If you gained knowledge reading this article don’t forget to tap the follow button to see more of these simple blockchain related articles.
Comment below if you have something more to add or have a question for us.
Clap if you learned something new.
Please don’t be stingy and do well by sharing with your loved ones.
