SCALLOP LEARN: TOKEN BURNING
I will be discussing on an interesting topic in the crypto space today. When you first heard of 'token burning' what came into your thoughts? You can drop your feedbacks in the comment section.
WHAT IS TOKEN BURNING
In crypto, Burning simply means permanently removing a specific amount of tokens from circulation. This is achieved by transferring the tokens to an address(burn address) that can never be accessed. The burn address is usually a digital wallet address with no private keys for retrieving.
The main purpose of burning tokens is to reduce its overall supply therefore increasing the value of the remaining tokens. Most projects tokens are deflationary meaning that the market supply reduces with time.
RECENT CRYPTO NEWS ON BURNING
Binance announced the completion of their 21st BNB burn event (burned 2,065,152.42 BNB) worth $574,800,583.92 USD. BNB was launched in 2017 and the team is committed to removing 100 million BNB which is half of the total supply.
For the official blog and details, click HERE.
PROOF OF BURN
Proof of Burn(PoB) is a consensus algorithm that blockchains can use to validate and add transactions. PoB miners initiate coin burns as a way to show their involvement in the network and be allowed to mine.
For Proof-of-Burn (PoB) networks, the coin burn process involves sending the coins to an “eater address.” This address is publicly verifiable but inaccessible. Note that eater addresses are randomized and they don’t have private keys.
Advantages of Coin Burning
Here are the advantages for coin burning:
- Burning helps the cryptocurrency rise in value.
- Reduces inflation rate.
- Help in adding new blocks of transactions to a blockchain with proof-of-burn cryptos.
Scallop Chain is a Byzantine fault tolerance blockchain with a core KYC & AML module included in the consensus mechanism at a protocol level. Its regulated, licensed interoperable infrastructure provides a suite of banking products built to empower millions of retail & business customers worldwide.
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