Tokenomics-The nuts and bolts of cryptocurrency that every investor needs to know. The mechanics of token creation and distribution as it relates to cryptocurrency. "To evaluate the true value and price potential of a new cryptocurrency, investors must understand the tokenomics behind it." In the case of cryptocurrency investing, that means understanding the fundamental elements of how cryptos are designed. In a word,:  tokenomics. "Tokenomics" is such a new term that you won't find it in the dictionary. Even crypto experts disagree on the exact definition, which just goes to show how early we are in the crypto revolution. At the most basic level, tokenomics as a blend of "token" and "economics." Some see the term as encompassing every aspect of a cryptocurrency, while others see it as focusing specifically on the mechanics of token creation and distribution. The later is how we use "tokenomics" here at American Institute of Crypto Investors-It's one of the central 5 T's of crypto investing criteria we use to separate worthy prospects from the junk. Tokenomics is a vital component of assessing a coin's true value-and you'll see, it's also a major factor in determining a token's price.  Method of Creation- 1. Proof-of-work (pow) mining, which was pioneered by Bitcoin (BTC). In POW mining, network security is linked to coin creation. Miners earn a reward of new tokens for solving a math problem and earn the right to process the next block in the blockchain. 2.  The second is Pre-Mining, in which tokens are mined on the blockchain prior to the network's launch. Closely related is insta-mining in which a large number of coins are mined in the first few hours of days of launch.  3.  Finally, there's creation of coins by earning rewards as a proof-of-stake (POS) validator. Anyone can "stake" or lock their tokens on the network in return for a chance of being awarded a block to validate. Whoever is awarded the block earns a reward of newly minted tokens. Cardano (ADA) is an example of a POS crypto. What you want to watch here is the rate at which new coins are created-the rate of inflation. Higher rates of inflation will work against the price of the coin. In the case of pre-mined coins, you also want to look at how much of the total supply was created beforehand and how (orif) new coins are created post-launch. Note that it's not unusual for a project to pre-mint or insta-mine some coins to create startup liquidity, that is, to loan tokens to exchanges so the coin can be traded.  Burning- Just as important as how new tokens are created is weather there's a mechanism for destroying them, called "burning."  This may sound bad, but it's actually great for investors. The burning of tokens is deflationary in that it reduces supply and makes the remaining tokens more valuable. It's somewhat similar to when a company buys back stock to reduce the number of shares outstanding. Not all cryptocurrencies have a burning mechanism. Bitcoin does not, although it's thought that several million bitcoin are lost forever-effectively burning them.