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TOKEN SWAP, TOKEN BURN, EATER ADDRESS & VANITY ADDRESS EXPLAINED - YouTube
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Welcome to Crypto Jargon,
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In this episode we break down the terms:
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Token Swap,
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Token Burn,
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EATER ADDRESS
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and VANITY ADDRESS
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All in connection to cryptocurrencies
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and blockchain technology of course.
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So let's start with what is a Token Swap?
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First, a reminder about tokens
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(in case you missed the episode
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where I explained the difference between coins and tokens)
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these are the cryptocurrencies
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that are built on top of another platform,
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in the form of smart contracts,
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and they don't use their own blockchain.
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They utilize the blockchain of the platform they're built on.
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like Basic Attention Token (BAT)
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or OmiseGO (OMG)
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which are built on the Ethereum platform
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and they use Ethereum addresses and its blockchain.
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So in some cases,
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projects that based their tokens on an existing blockchain
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decide later on to migrate
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to their own main net blockchain
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in order to have more options
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and control over their currency,
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like it happened to TRON and EOS last year.
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After the migration,
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the token becomes separated
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and can be used as a payment unit for certain purposes.
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That token is no longer a token
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but it can be considered a coin
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and the old version of the token
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is not compatible with the new version of the token.
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Therefore, you need to make a swap of those tokens
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and usually, the swap would be at 1:1 ratio
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but it could be different.
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sometimes, you can be rewarded with more tokens
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of the new token
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than you had previously
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because the total supply might be reduced.
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some coins do that in order to
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create more scarcity
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and raise the value of their cryptocurrencies.
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so token swap is literally swapping of the old tokens
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with new tokens.
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When there is a change migration
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from a token being based on a different blockchain
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to the token being based on its own native blockchain.
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Now the next term is Token Burn
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and this is the destruction of a certain number of tokens
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or coins
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in order to reduce their number in circulation
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in order to create scarcity.
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On the whole,
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token burn is a deflationary measure
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helping to increase the token value
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and to retain the confidence of the token holders.
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First of all,
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this strategy allows reducing the total supply
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and thus increasing the market value of tokens.
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Usually when a company burns or locks a number of tokens
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it causes the price to increase
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due to the law of supply and demand.
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Even just the news about upcoming token burn
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can significantly drive up the prices on exchanges.
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Also, this is the way of maintaining stability
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and minimizing possible fall in the prices.
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Examples of token burns are Binance Coin (BNB)
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and Kucoin Shares (KCS)
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both of which have regular token burning
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which is public
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and publicized in order to maintain transparency.
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The public record of this process is known as Proof Of Burn
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and is covered in another episode of Crypto Jargon
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which you will find linked in the description of this one.
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And here comes the next term
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Eater Address
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Well, this is the address used in proof-of-burn algorithms
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to store the coins that can never be spent.
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Eater addresses are valid addresses
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that were generated randomly
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and not from a specific private key.
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Since you cannot backward-calculate a private key from a public address,
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these eater addresses are basically unspendable.
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so, these are the addresses where tokens are being sent to
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during the process of token burning
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Here is an example of an Eater Address
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and the amounts of tokens that were burnt or locked in it.
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And this is another example,
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This is an Eater Address for Bitcoin
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and these are the bitcoins
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that were locked in that eater address they can never be spent.
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so make sure that you do not send bitcoin to that address.
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Lastly, there's also something called Vanity Address.
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it sounds fancy, right?
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It's actually a Bitcoin wallet address
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that contains a number of letters that you can choose yourself.
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Like this one here, that I created.
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and I selected "YourName"
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followed by the rest of the auto-generated alphanumeric characters.
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The address also has to begin with the digit
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or else it will not be associated with the Bitcoin blockchain.
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so I hit to leave that "1" at the beginning of the address.
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If you want to create your own vanity address,
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there is a free service
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and I will drop the link in the description below
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so make sure you check this out
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Enjoying this content?
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Go check out Crypto Jargon : The Ebook
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out now on Kindle.
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It's an Amazon bestseller
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and it's the most up to date cryptodictionary
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with over more than 700 terms, acronyms and trading slang
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related to cryptocurrencies and blockchain tech.
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Just go to OJJORDAN.COM/CRYPTOJARGON
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and grab your digital copy today.
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