This is expensive from an individual point of view, just like proof-of-work, but it consumes no resources other than the burnt underlying asset. The idea is that miners/participants should show proof that they burnt some coins i.e., sent them to a verifiably unspendable address. It can also be used to bootstrap one cryptocurrency off of another. Proof-of-burn is a method for distributed consensus and an alternative to proof-of-work and proof-of-stake. Also, there are many types of proof-of-burn but here I will provide just one simple explanation. I am going to explain both one by one with the help of an example that you can very well relate to. But before that, I need to explain the proof-of-burn mechanism using which the coins are burnt.
For making new tokens or coins (proof of burn).This public address should be available on the blockchain for anyone to review such a transaction.Ĭoin burn is typically done for purposes such as: What is Proof-Of-Work & Proof-Of-Stake?Ĭoin burn in cryptocurrencies means sending some of the coins of native cryptocurrency or some other currency to a public address from which those particular coins can never be spent because the private keys of such an address are unobtainable.It will help you understand why do we burn coins in cryptocurrencies. However, if you don’t understand proof-of-work and proof-of-stake, consider going through the link below.
‘Burning’ in another novel way of earning from cryptocurrencies.įor those of you who are aware of proof-of-work and proof-of-stake, coin burn as something similar to proof-of-burn about which I am going to talk later in the article. Of course! Well then, buy some cryptocurrencies that keep burning themselves. Do you want to earn money from cryptocurrencies?