Coin Burning: Is Coin Burning Good?

Coin burning is the process by which digital currency miners and developers remove tokens or coins from circulation. Coin burning slows the inflation rate and reduces the total supply of coins in circulation. Coin burn is a concept similar to share buyback, and by reducing the number of tokens supplied, developers and miners can create fewer tokens and create value.

How do we burn coins?

Cryptocurrency coin incineration does not destroy its existence by burning it as it was originally meant, but rather sending the cryptocurrency to an address where it cannot be obtained and making it impossible to find any more. These coins or tokens are first purchased from the market and then sent to a specific address where the incineration address or private key is unknown. After this, you cannot cancel or withdraw the coin transaction.

Does burning a coin affect the price of cryptocurrencies?

Coin burning for anti-inflation and data purposes has the advantage of increasing transparency. When you burn a coin, the transaction is made public because its history is posted on the blockchain.

When will the token burn be done?

Token burn occurs in two forms. This is caused by built-in protocol structures such as proof-of-incineration or economic policies. Coin burns are usually caused by economic policy issues and are used to influence the price, inflation and circulation of coins.

In particular, many examples of coin burns can be found in Bitcoin Cash, crypto mining pool Antpool, Binance Coin (BNB), Ripple, Stellar, stablecoins USDT, USDC, etc.

What is the purpose of burning cryptocurrency?

Coin burning is usually done to create new tokens or coins, and is used to reward token or coin holders through toknomics through Proof-of-Burn. In other words, it is done by burning supply to influence price and demand, and destroying unsold tokens or coins after ICO (virtual currency public offering).