Craig Wright Says Crypto Token Burning is Negatively Affecting the Industry, Needs to Stop
Craig Wright: Digital Token Burning Negatively Affecting The Crypto Industry and Needs to Be ‘Stopped’
In a Medium post, Craig Wright weighed in on the issue of burning digital tokens, claiming that they negatively affect the cryptocurrency industry and need to be stopped. He explained that destroyed keys for addresses are never lost forever; further adding that if wallets utilized a better technology, then the issue would not be there in the first place.
Usefulness of a Cryptocurrency is Diminished Through Burning
As per Craig, burning tokens is simply sending the cryptocurrency to an address that cannot be accessed, and this is done in the belief that the value of the coin will increase. This is not the case, though, according to him. Burning tokens will in the long run decrease the usefulness of the cryptocurrency. He noted that:
“If a bitcoin was truly burned (such as through the use of an OP_FALSE script that is forever gone), the future usefulness of bitcoin will diminish.”
Burning is Not Backing!
Using gold as an example, Craig explained that it’s not true that burning a token is equated to backing it, further noting that one backs a security using an item that can be redeemed. To make his point clear, he stated that:
“If you have a gold-backed note, you have the gold in a safe to be redeemed on demand. You cannot create a gold note by taking gold and throwing it into an active volcano to be consumed, or by using energy to atomically convert that gold to lead.”
Craig continues to state that burning bitcoins, systems like Wormhole (WHC) simple takes the btc and deceives users, calling it ‘bait and switch.’ Explaining it further, Craig noted that:
“In burning Bitcoins, a system such as WHC (Wormhole) takes Bitcoin, and uses this to mislead users who think they are being backed to receive a token that is on a separate chain that is completely unrelated to Bitcoin. This is a SHAM or a common ‘bait and switch’. The purchaser of a WHC is misled into believing they receive a WHC that is ‘backed’ by a BCH token. The truth is that WHC is a one-way function. It is not backed at all.”
Bitcoin Maintains Value Through Undiluted Limited Scarcity
According to Craig Wright, many are led to believe that bitcoin becomes valuable just because it’s scarce, which he stated isn’t the case. Instead, he believes that bitcoin maintains value through undiluted, limited scarcity. Explaining this, he wrote that:
“It was true that value comes from scarcity alone, we could all destroy most of our bitcoins, leaving only one 100,000,000th of the initial, and expect that the value will increase, but, it will not. There is no increased demand. In removing the number of tokens, altering these from Satoshi to bitcoin without decimals, you have not increased value, but diminished it.”