In the crypto world, there are two types of cryptocurrencies. One is the pure cryptocurrency backed by a pure blockchain and another is an app currency that is backed by a blockchain. There are a few differences between both. The value of a cryptocurrency is purely dependent on demand and supply. There are a few factors like adoption, popularity, inflation, use case, etc that determines the price of a cryptocurrency.
Till today Bitcoin is considered to be the leader among all cryptocurrencies. It is not only because it was the first-ever cryptocurrency but it is also because of the core concepts the chain has. In the last decade, the BTC adoption rate has been really great pumping the price of the tokens. Imagine if many people wanted to purchase bitcoins and hold them. There is no wonder if BTC touches more than 100k this year itself. Some people might think that BTC already had enough this year but the actual rally isn't over yet.
Balance between faucet and sink
The importance of where the money comes from and where the money goes is not only crucial for FIAT economy but also in the Cryptocurrency economy. Here in the crypto world, it is called a faucet and sink. Faucet is the way through which the supply is created and sink is the way through which the demand is increased by reducing the supply. I might project it as if the concept is very simple but it is actually a bit complicated to understand.
A good balance between faucet and sink is what makes the coin bloom. For example when the demand increased and the price or value of some is always high. When there are more buyers or investors but when there are very few people willing to sell the tokens, the price pumps.
People lose their passwords
This may not be a valid sink for a cryptocurrency but still, it can be considered as a good one. Imagine someone purchasing two pizzas for 1500 BTC. Today look at the value. Imagine if the person had held Bitcoin to date. Today may be for one bitcoin someone can purchase 6 times of 1500 Pizzas.
People easily lose their passwords, when something like that happens the cryptocurrency locked in those wallets is removed out of supply. Nobody will have access to those wallet treasures and there are so many such accounts residing in all popular blockchains. It is important to keep the credentials very safe and it is also recommended to keep them updated frequently or whenever it is necessary.
People die with the passwords
It is very unfortunate that many people have already died without disclosing their wallet passwords. The cryptocurrency account passwords are not easily accessible or understandable and that is one of we have enough security for our funds inside the chain. It is very hard to tamper with the code and make some benefit out of it.
Many people who die with their passwords gone along with them are actually contributing to the tokens economy. Not by creating any use case out of it but by removing some of the tokens from supply. It is better to keep it written somewhere. I know a few people who have tattooed it on their body especially in parts where nobody can steal it.
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