The most significant difference between Bitcoin and Fiat currency is the fact that Bitcoin is deflationary. Bitcoin is deflationary because of its limited decreasing supply. This means it’s purchasing power or value should keep going up as the supply dries up.
Deflationary currencies are seen as a hedge against Quantitative Easing and currency debasement. In an uncertain world, investors prefer to store their wealth in assets that are deflationary. Traditionally, Gold has been the instrument of choice in bleak times. Bitcoin turned out to be a promising replacement and hence saw a meteoric rise in its value in the last decade.
The new wave of such assets are hyper-deflationary. Bitcoin network goes through a halving every four years. This means the miner reward reduces by half every four years. Bitcoin’s supply is fixed at 21 million coins. However, the existing coins are never burned.
With hyper-deflationary tokens, some coins are burned with every transaction. This means with every transaction, the overall value of each remaining tokens keeps going up.
Just like most modern tokens, hyper-deflationary tokens are also decentralized, work on a public ledger, and can be sent to anyone across the globe. But these tokens have some unique advantages. Let us discuss these advantages here:
Store of Value
Hyper-deflationary tokens of this era are not just limited in supply but also experience token burn at a high frequency. This makes the existing tokens more valuable and hence a good option to store one’s wealth in.
Inflationary currency like Fiat is one of the major causes of an unequal distribution of wealth in every major democracy in the world today. When new money is minted, it is distributed through central banks. These banks are controlled by the powerful few and usually lend this money at an extremely low rate to big businesses that hire lobbyists and have a mammoth balance sheet.
This wealth was supposed to trickle down to the common people by way of wages and infrastructure. But this never happened because the wealthy got very efficient at distributing moderate amounts of wealth through wages or even through shareholders’ dividends.
This is why we need a deflationary currency with a fixed supply. A Store of Value that is transparent and not rigged by the elite. It will help in redistributing wealth to the common folks.
Deflationary tokens are created with the sole purpose of storing one’s wealth. They can, however, be used for transactions and trading as much as any other token. This makes them more lucrative to investors as well as those who want to use them for utility and payments.
Super Black Hole
For example, Super Black Hole is a crypto company that has created a token ($HOLE) which is the most deflationary currency ever created. Created on Ethereum’s decentralized blockchain, run on a transparent ledger, this token is burned at the rate of 20%.
With the initial supply of only 2.5 million tokens and a burn rate of 20%, $HOLE is rarer and more deflationary than Bitcoin and the most popular coins out there in the market.
Launched in 2019, Super Black Hole has a tight roadmap for 2020 including CoinMarketCap listing, a gaming partnership, and integrations for social media gaming. The team is also vying for more exchange listings. Currently listed on over 6 exchanges, the token is up for grabs.
Deflationary tokens as new Stores of Value will be the future. Tokens like $HOLE, once listed on top exchanges, will attract investors who wish to store their wealth in cryptocurrencies. This will not just be a trend but a potential investment in the long run.