Proof-of-Burn PoB Alexandria

There are several examples of coins using proof-of-burn, and it is becoming increasingly popular as a choice of a consensus protocol. Probably the best known example of a PoB coin is Counterparty , which uses PoB to seed its tokens. Bitcoin are sent to an unspendable address and users receive Counterparty tokens in return. The idea of proof-of-burn consensus is that the user burning the cryptocurrency is showing a long-term commitment to the coin by burning as they are taking a short-term loss in exchange for a long-term gain. Burning coins is also viewed as less resource intensive by some, in fact the resource being used is the person’s willingness to delay their profits. One critical part of any blockchain, required if it is to function properly, is some sort of consensus algorithm that both secures the blockchain and ensures it works efficiently.


The proof of burn protocol does not require a huge amount of energy or processing power. As a result, it is expected that this technique, which does not rely on 100% renewable energy, will be considerably more ecologically friendly and sustainable. The primary purpose of the proof of burn protocol was to develop a consensus technology that required significant investment and was more efficient than proof of work. To eliminate the prospect of early adopters gaining an unfair advantage, the proof of burn method has incorporated a mechanism that encourages miners to destroy their crypto assets on a regular basis. They should all be on the same page about the valid and true state of the blockchain network.

This makes it more difficult to create new tokens, as it requires investing real resources (i.e., burning coins). This helps to protect the value of the new tokens and prevent them from being devalued by excessive inflation. Newly mined coins will go into an unspendable address for 512 blocks and become spendable again.

Proof of Burn Token Price

This is the conventional way to explain the concept, although nothing is technically destroyed. The actual implementation requires sending coins in circulation to an unspendable address, known as an eater address. Often referred to as a PoW system without energy waste, Proof of Burn is a consensus mechanism that operates on the principle of coin burning. Miners who participate in such a system burn virtual currency tokens and, in turn, gain the right to write blocks in proportion to the coins they burned. To burn the coins, miners send them to a verifiably un-spendable address.

Essentially, all of this burning activity keeps the network agile, and participants are rewarded for their activities (both burning their own coins and burning other people’s coins). There are so many consensus mechanisms enabled on the blockchain. This guide is based on the one called Proof of Replication (PoRe… Proof-of-Stake is a system where new coins are created by holding a certain amount of an existing coin. This is done by sending the coins to a special address that can only stake them. Once the coins have been staked, they are locked up and cannot be used again.


As long as they have enough computing power, they can continue creating new blocks and earning rewards. This means that there is a finite amount of rewards available for miners, which helps to prevent inflation. On proof-of-burn 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. An automated procedure is required to guarantee that the network’s participating nodes only validate valid transactions due to the blockchain’s autonomous and decentralized nature.

Technical sketch of proof of burn: “Burnt coins are mining rigs!”

There are alternative consensus mechanisms being explored and one of these is called Proof-of-Burn . In the proof-of-burn mechanism users are required to “burn” or make permanently unavailable some mined PoW cryptocurrency. Proof-of-Stake is a cryptocurrency consensus mechanism used to confirm transactions and create new blocks through randomly selected validators. Another issue with many alternative currencies is that their early adopters can own a disproportionately high percentage of coins. Proof-of-Burn helps to prevent this by ensuring the distribution of new coins only to those who are willing to put their resources (i.e., computing power) towards the network.


CryptoDefinitions is one of the most comprehensive blockchain and cryptocurrency dictionaries on the web. We do our best to explain crypto-related words and phrases in a way that can be easily understood by casual readers. More than just a glossary, each definition goes into detail while avoiding the use of overly technical and confusing jargon. Although proof-of-work may not be the most scalable model, it has since been adopted by many cryptocurrencies to allow for a secure decentralized consensus. By committing the coins to an unreachable address, validators earn a privilege to mine on the system based on a random selection process.

Example of Proof of Burn

Another significant distinction between delegated proof of stake and both proof of stake and proof of work is that validators collaborate rather than compete for the next block. This makes delegated proof of stake extremely energy efficient because no resources are wasted attempting to outcompete your competitors. One potential issue with proof-of-stake is that parties with large crypto holdings may have too much power, which is not a problem with proof-of-work.

  • The first miner to solve the problem is rewarded with a certain number of new coins.
  • In a typical proof-of-burn scheme, a public key is created upon which satoshis are sent.
  • None of the content on CoinCentral is investment advice nor is it a replacement for advice from a certified financial planner.
  • This consensus mechanism rids the blockchain of fraudulent activities like double-spending while keeping the network active and efficient.
  • Often, proof of burn is called a proof of work system, without energy waste.
  • In the end, a validator is chosen based on their economic stake in the network to generate a new block.
  • I plan to say more about this soon – but this quick teaser description should already be food for thought.

The new coins are then created by taking the total number of staked coins and dividing it by the total number of coins in circulation. Although the complexity of mining these PoW or PoS algorithms isn’t particularly crypto burn meaning difficult , their existence provides us a security start for the system. In addition to this, PoB uses various security mechanisms to ensure that coin burning is not tampered with throughout its operation.

Iain Stewart’s version of proof of burn

It encourages long-term involvement in a project as a consumer is displaying a big commitment to the currency by foregoing a narrow profit in exchange for a long-term profit. In the end, a validator is chosen based on their economic stake in the network to generate a new block. Based on the actual blocks added in the Blockchain, all the validators get a reward proportionate to their bets, and their stake increase accordingly. The more coins validators burn, the better are their chances of being selected to mine the next block.


Proof of burn is an alternative consensus algorithm that tries to address the high energy consumption issue of a POW system. Proof of work and proof of stake are also methods for preventing fraudulent activity on a blockchain; proof of work is the system employed by the original and most popular cryptocurrency, Bitcoin. Cryptocurrencies use several methods to validate the data stored on their blockchains, including a method called “proof of burn.” The act of burning coins can be risky, as it can lead to a loss of funds if the cryptocurrency is not worth the amount that was burned. In addition, there is always a risk of accidental or fraudulent destruction of coins.

This consensus mechanism rids the blockchain of fraudulent activities like double-spending while keeping the network active and efficient. Decentralized protocols should essentially feature an automated consensus method that enables all nodes to agree on valid or invalid transactions. It reduces energy consumption by wasting insignificant resources when coins are burned. While PoB is an interesting alternative to PoW, the protocol still wastes resources needlessly.

What Is Proof of Burn?

The spending process requires sending a special type of transaction called an OP_RETURN transaction which includes the block header’s hash. Once the transaction is sent, some coins will automatically be burned, and a new block will be created. There are key differences between traditional Proof-of-Work mining and Proof-of-Burn . In PoW mining, the number of coins that a miner can create is unlimited.

Proof of Burn Advantages

Miners are permitted to incinerate their own currency or the currency of an alternative chain, such as Bitcoin, in accordance with the protocol. In return, they receive a native currency token-based incentive for completing the operation. Proof of burn is said to encourage long term investment in a project, and miners who burn a lot of coins have a better chance of solving the next block in the chain, thus earning even more coins. Some blockchain systems use proof-of-work or proof-of-stake as their consensus mechanism; however, there is an alternative known as proof-of-burn .

There’s no denying that blockchain technology is an invention that could be destined to change the world in ways we haven’t even begun to imagine. Because the POW method is so resource-intensive, it’s not very efficient. Consequently, POW currencies, including Bitcoin, aren’t very useful as a fungible instrument. The verification procedure for each miner’s work is considerably more time-consuming than that in proof of work . Although the concepts and opinions about this protocol vary greatly according to the user, we can summarize the main advantages and drawbacks of its use. The information on this website and the links provided are for general information only and should not constitute any financial or investment advice.

We strongly recommend you to conduct your own research or consult a qualified investment advisor before making any financial decisions. We are not responsible for any loss caused by any information provided directly or indirectly on this website. Top cryptos using this method of validation include Ethereum , Binance Coin , and Cardano , among others. In this article, we will explain what Proof of Burn is and how it works.

In the Factom ecosystem, tokens are constantly being created through the project’s monetary policy. On the flip side, tokens are burned as data is committed to the blockchain. Essentially, the more the Factom network grows the more tokens are burned, and ultimately the coin supply should decrease. To implement this method, miners can burn either the local currency or the currency of another blockchain, such as Bitcoin.

When a Bitcoin transaction occurs, it is subjected to security verification before being grouped into a block for mining. The hash for the block is then generated using Bitcoin’s proof-of-work process. Bitcoin employs the SHA-256 algorithm, which always creates hashes totaling 64 characters. Because finding the target hash is difficult, but verifying it is not, the proof of work concept works well in cryptocurrency. The process is difficult enough to prevent transaction records from being manipulated. At the same time, once a target hash is discovered, it is rather easy for other miners to verify it.

Coin-burning as a tool for transition between cryptocurrencies

Other people can add variant versions that still belong to the broad proof of burn idea. Account abstraction is the process of making it easier for users to interact with blockchain by customizing… Some projects have already utilized some coin burning simply as a way to help stabilize and increase the price of their tokens, making them more attractive to investors. Proof-of-Burn is also said to be better than proof-of-work at ensuring coins are distributed in a fair, decentralized manner.

In order to avoid manipulation, the ledger is distributed on a whole network of machines and is publicly available. That means ever more powerful hardware and soaring electricity costs which, when put together in the context of the major networks like bitcoin can bowed pretty poorly For the environment. Down below, we’ll run you through exactly what Proof of Burn is, how it works, and why some are suggesting it as a better alternative to Proof of Work than the widely supported Proof of Stake protocol.