The most controversial way to create a STABLE TOKEN
BURN VALUE
How does money get value? Given that the notion of money is related exclusively to people and human-centered system, human psychology and belief play a major role in this. That is why there are two quite simple options in circulation, GUARANTEE and CONSENSUS.
So a Guarantee (or a collateral that has its own guarantee) can make money and give him a value out of nothing. Implicitly one value goes to another, and so the object that guarantees transfer his value to the subject-money. Burn value theory, in fact, guarantees that a certain “object value” is spent on creating another “subject value”, but in an explicit manner. This literally means that the value is never lost as the Energy, and that the change of the “aggregate state” shifts from one form to another and allows the creation of the value of new money from the old.
Burn one value and mint another in the same proportion is the basis of the Burn value theory that can serve to create new forms of money or crypto coins.
A possible symbolism that is clearer to the crypt community would look like this:
- The PoW network has operating costs for mains, which are expressed in fixed costs (hardware price) and variable costs (electricity price)
- The cost price of the newly minted crypto coins is therefore equal to the fixed + variable cost of miners.
- The value of the newly created crypto coin should therefore be greater or equal to the cost price, otherwise the costs would be higher than the revenue and the mining would be extinguished.
- So we arrive to the knowledge, where the basic value of the new created crypto coin arises? It comes from the burned value of electricity (consumed and invested)+ hardware price.
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