Looks like crypto is moving forward. Hi everyone. I hope you're all doing well. As I just said, crypto is moving for wood from me and speculation and the hype. Towards a more sustainable model. Let's explain this. In the traditional markets, we see big companies such as Apple, Google and other big companies do something called stock buybacks. What this means is that suppose company x has 1,000 shares in the market which are currently bought up by different investors both institutional and individual. And now at a certain point company x decides that it would buy off 100 shares from the market and hold it within itself, leaving only 900 shares. This will inevitably shrink the amount of shares in the market. And we all understand the most basic economics, when something is lowered in supply, it is heightened in demand. No crypto projects are also exploring the idea of buying back their own coins.
There are multiple projects which are exploring this idea of crypto buybacks. Obviously these buybacks are done with the company revenue. So projects exploring the buyback ideas also indicate that they are profitable and they have a substantial amount of revenue to actually fund this venture. This will obviously lower the amount of coins in circulation in the market. But let's be honest, there are way too much coins in the markets and we are seeing a direct consequence of that. The form of altcoins simply not performing well. So I have read a few strategies which they can use to go about their business. One is the parent company using a portion of the transaction fee which is gained from trading coins of the said company to buy back coins from supply. And in the future, burn them. This permanently decreases the amount of coin supply, driving up prices as the coin has just become more scarce. Another strategy is the parent company deciding that they will only pull revenue into buying back coins when it hits a certain amount in both price and revenue, but they do not intend to burn the coins which they buy. This is also a very good process and it is basically how stock market BuyBacks work but at the same time there is risk of the held coins being dumped back into the market someday and causing a downturn. Which is less of a possibility with company shares.
Both of these systems can drive up prices. And this is a very welcome scenario as we are discussing the increase of cryptocurrency prices but not based on speculation and hype. Rather actual revenue gained from actual transactions. Although if I had to pick one between the two, I would pick the option of burning the coins because the inevitability of someday dumping the coins which you are holding on to will drive people away from it
