You have probably heard of Economics. This ancient Greek word describes the set of rules that define the financial, monetary, and realistic rules that govern the basic exchange, supply, and demand functions of the world.
The crypto world is similar. Some people issue a new currency and a set of rules that define the price, fluctuations, distribution to its different members, and supply and demand at any given time. Cryptocurrencies have their own economic theory, their own economic scientists, and—of course—their own word to describe all the above: tokenomics!
This set of rules and principles will define the entire life of a cryptocurrency. In a White Paper, the founding members will describe how the currency will be mined, allocated, and staked (if on the proof of stake consensus mechanism). Those interested in the life of such coins need to dig deep into this information. Even for simple reasons like crypto gambling, such knowledge is extremely important to safeguard you from fluctuations, halves or anything that can impact the balance you keep in your wallets.
Understanding Tokenomics
Regardless of the main purpose you use cryptocurrencies for, whether trading to generate profits or changing your betting dynamics with crypto, you ought to understand tokenomics.
Who decides how many coins will be in circulation? What can affect the price in the short, mid and long term? What are the halving events? Is it worth staking or mining a certain coin?
While the concepts of coin circulation, price fluctuations, halving events, and coin staking or mining may seem daunting, they're all part of a complex system governed by numbers, algorithms, and mathematics. Each cryptocurrency has its own unique set of rules that dictate its life cycle, from its inception to the maximum number of tokens it can produce.
Even if you're not aiming to become a tokenomics expert and want to enjoy a
game of Bitcoin roulette, understanding the basics is essential. For instance, in crypto gambling, your tokens will be converted into a regular currency in your account balance. This balance is subject to fluctuations based on the crypto price, which can present both risks and opportunities. Being prepared for these scenarios can significantly impact your gaming experience.
The Impact of Supply Mechanisms on Casino Winnings
As with everything in the economy, where supply and demand will define the price of goods and services, cryptocurrencies are subject to the same rules exactly. Crypto gambling will be affected by the price of cryptocurrencies, mainly because most
crypto casinos will convert your Bitcoin, Ethereum or other currency into a FIAT currency (usually dollars). This happens primarily because keeping track of your balance is hard when the amount reads something like 0.00045BTC. Players in such gambling sites are used to playing in USD, EUR, GBP, and other fixed global currencies. That sort of conversion can be tricky, though.
Let's assume that you win $100
playing blackjack. If you leave this money in the account and don't transfer it to your crypto wallet, you will see that the account balance will change every few seconds. Currently, with the price of most cryptocurrencies reaching an all-time high, most casino players saw their winnings increasing overnight. What will happen in a few days? When will the next Bitcoin halving occur? Will the new block reward price be reduced to 3.125 BTC? In recent history, that boosted the price to new highs. Will this be the case again? If yes, keeping your casino winnings intact in the account makes sense.
Demand Factors Influencing Cryptocurrency Value
Just like with other assets, tokenomics can lead to a change in crypto prices based on demand. When demand is high, and supply is low, this can result in a price increase. Conversely, when there is no demand for a certain level of supply, the price may decrease. This dynamic presents opportunities for potential profit.
Several reasons affect the demand for such virtual products. First, as a currency that is not backed by any physical assets, the price is driven by factors such as:
Market trends: people tend to follow the trend of a rising price by boosting it even further
Understanding the utility of a currency is crucial. Some currencies are designed for specific purposes, and those who grasp this concept can strategically position themselves to benefit from potential price fluctuations, whether they rise or fall. Its basic economic mentality (Tokenomics). Only some people will bother reading the scope written when a currency goes public. These people have more chances to make a profit (or incur smaller losses when the price will fluctuate)
Liquidity, or what we would call in actual financial terms, market cap. In brief, the more currency is available to the public, the less valuable it is in drastic price changes following the actions of a few holders.
We guarantee that if you study all the above carefully, you will have a better chance of benefiting in every sector where you use digital currency. From trading and staking to gambling away in some crypto casino.
Conclusion
The crypto world might be a strange place to navigate in, especially if one has no exprience with blockchain and its philosophy. Studying Tokenomics is your one-way road to understanding the ins and outs of this new world, how to use crypto to generate profits and leverage your position against other investments you have.
There are basic principles of real-life economics that also apply here. However, some terms and definitions can be new, even to the most experienced investors. Halving, staking and ledger are only a few of the worlds you need to consider before entering the virtual currency world. Once you have a basic understanding of all these, areas like crypto casinos, making money from staking currencies and making short position investments will be clearer. And it's easier to have them work in your favour.
by CryptoCasino
