What is Crypto Coin Burn And How Does It Work? : Friends, in today’s time, that is, in this era of technology, people who invest in Cryptocurrency or have information about it must have heard about Coin Burn at one time or the other. Also, those who keep every update regarding investment in Crypto currency, they are fully aware that today so many millions or billions of Coins were burnt. But there some people do not have any information about what is Coin Burn, so let’s know what is Coin Burn?
What is Crypto Coin Burn?
Cryptocurrency Burning is a process in which you can take Coins or Tokens out of circulation. Due to which there is a decrease in the total supply of any Crypto Token.
These types of Coins are sent over such Wallet Address on which those Coins can reach but cannot come back. Which means that those coins cannot be used in transactions again.
History of Coin Burn
Like the developers of Binance burn Coin 3-4 times in a year. Who has done Coin Burn 18 times in the last few years. Which is a very good thing for the company and its investors.
Binance does this process every quarter of the year. They have also made their own Auto Bnb Burn system which is very good. And since Binance has started the burning process, they have asked to continue until their total circulating supply is halved. Recently Indian Crypto Exchange, WaxirX has also completed its fifth Token Burn. Whose native token is WRX.
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If we look at the history of Crypto Coin Burning, then till date no burning as big as Shiba Inu Token has happened. Because when Shiba Inu was launched, he sent half of his Tokens to Vitalik Buterin, the founder of Ethereum. After which Vitalik sent Shib 90% of his total holding to Dead Wallet which was worth $6.7 billion.
How does Coin Burn work?
The process of Coin Burn is mostly adopted by developers and minors of Crypto currency. This happens because they want to reduce the total circulating supply of a token and keep its value under control.
This is mainly done to benefit its long-term investors. Because Coin Burn can see a lot of growth in the values of that Token. And this process is repeated from time to time by the developers. So that the value of that project keeps on increasing in the future. In this, they send a certain number of tokens to the Dead Wallet. Due to which the total supply decreases.
This is a very positive process for any project. Due to which both the consumer and the value of the company keep on increasing. If anyone wants to see the proof of Coin Burn, they can go to the top of Blockchain and see. Because all these processes are absolutely fair, whose entire record remains on the blockchain.
What is Proof of Burn?
Coin Burn includes another term called Proof of Burn. It is the Consensus Mechanism Algorithm implemented by the Blockchain Network which ensures that the transaction is accurate or not. In this, Coins or Tokens are sent to burner address or Dead Wallet by Validator.
In this way, the process is completed by spending less resources. This process is called Proof of Burn. The entire record of Burning Transaction will be recorded forever on the blockchain. This is the least expensive process.
Why is coin burning done?
Coins are burnt to increase the price of the coin and reduce the supply. After the process of burning coins, there is a decrease in supply, due to which their demand in the market increases. The price of these coins increases as the demand increases.
The thing to remember is that the feature of burning Coin is not available in every Crypto currency. We cannot apply the process of burning Coin in every Crypto currency. Ethereum and Bitcoin are the only cryptocurrencies that do not have the feature of burning coins. They have different features to reduce the supply and increase the value.
Bitcoin has a halving process that automatically halves the total supply every 4 years. Thus in 4 years the supply will be halved and there will be an increase in the price. In this way, by burning Coin in other Cryptocurrency, the supply of Coins is reduced and its value increases and the demand also does not decrease. The task of burning Coin is mainly done by developers and minuses.
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