My favourite cryptocurrency for holding just made a big move. They just bought back 500,000 BAT tokens from circulation.

There are many implications to this move, but they are mostly positive.

I'll explain them all here, so after you have tapped that like button, relax and read on. Seriously, go tap it now.

Ok, shameless self promotion aside, here is why this move is a big one. And why it could potentially be a bad one in the long run.

Buying back tokens is the creators way of creating fake scarcity. Usually, like in the case of Binance BNB, they buy back their BNB tokens, and then destroy them completely in a bid to not only increase their value overtime, but also to reduce the correlation with bitcoin due to a reduction in supply without changing demand.

That last part is a story for another day though, so we'd only be looking at the increase in value part.

Imagine if every day before you got to work, you stopped at a donut shop and had two strawberry flavored donuts. And everyday you got there, you saw your two strawberry donuts waiting for you, in all their cholesterol filled, sugary glazed sprinkled glory. Let's not forget the cholesterol.

Then one day, you got there and saw just one. 

One can't be enough for you! You've got to have that daily dose of unhealthy sugar!

But it's only one they've got. And it's also double the price.

Because you've made such a terrible habit and are now addicted to strawberry donuts, you buy the donut for double the price. Then you do it again. And again. And again.

That's the idea here.

Because the supply was artificially decreased: no one came and bought the other, the buyer is willing to pay more for the same product, because he believes that there is less of it and wishes to obtain the product at all costs.

This is what analysts believe will happen to Bitcoin's price after the halving, bit that's a story for another day.

Now, the buying back of those tokens by Brave was an amazing thing. They took supply out of the market.

The more supply is removed, without increasing demand, the more valuable it becomes.(if you were to reduce supply with increasing demand, it would lead to an actual scarcity)

But there's a caveat.

Whatever Brave plans on doing with these tokens afterward.

It hasn't been stated yet, but if they decide to just pump them later at a higher price, it could send the market crashing down faster than a dropped hot potato.

On the other hand, if those tokens are reserved, this creates an artificial scarcity, and that supply can be used in the time when real scarcity comes.

I'm the final turn if events, if the tokens are burnt, this also creates artificial scarcity, and if a large enough amount is bought back, it might actually make BAT go parabolic.

As always, remember that this isn't financial advice. DYOR, and stay safe.

Thanks for reading!

PS: I ventured into sarcasm with this post. Check it out and leave your comments!