Beginners Guide

What is Coin Burn In Cryptocurrency? Why Are Coins Burnt?

Written by: Qadir AK

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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Jun 13, 2019

What if I tell you that you can earn more while holding the cryptocurrencies that are burnt?

Will you believe me? I’m sure you will not believe or might be you’re confused.

Before coming to any such conclusion, let’s get cleared with the whole concept of Coin Burn...

A wide range of coins and tokens have adopted the unique concept of Coin burn. Usually the Initial Coin Offerings (ICOs) integrate a coin burn mechanism for the unsold tokens at the end of the token sale. Also, major cryptocurrency exchanges like Binance has also adopted the coin burning mechanism to add value to those who hold BNB.

What Is Coin Burn?

As the name suggests, Coin Burn is a process of intentionally burning or eliminating the coins rendering them to be unusable. Coin burn also means sending the crypto coins to such a public address where private keys are unknown or unobtainable. Hence, making the coins sent on that address unusable or inaccessible.

Basically, this is done by transferring a portion of coins to an ‘eater address’. This is often referred to as ‘black hole’ because no one can obtain the private keys to that address. Hence, the coins sent to an eater address are unrecoverable and can never be used again.

How Does Coin Burn Work?

Well, when you have known what coin burn actually means, now is the time to know how this Coin Burn mechanism works. The Coin burn process is carried out in the following order:

  • Initially, the coin holder will call a burn function, claiming to burn a certain number of coins.
  • Later, the contract verifies whether the person has the specified number of coins in his wallet. Also note only positive numbers work.
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