What is a Coin Burn, and how does Coin Burning work?

The term Coin Burn describes the permanent removal of coins from the circulating coin stock. Accordingly, this approach ensures a permanent reduction of the total supply on the market. Basically, Coin Burning is a procedure that is immanent in almost every cryptocurrency and is intended to counteract a decline in value.

An introduction to Coin Burn

With the Coin Burn — in the German Coin Verbrennung — it concerns a singular procedure of cryptocurrencies. Even if this approach sounds almost radical, it is a central mechanism of numerous crypto projects. Especially in an Initial Coin Offering, this procedure can be observed because unsold coins are destroyed at the end of the ICO. Besides, leading trading centers — especially Binance — have a periodic mechanism that creates additional value for investors. Basically, there are numerous motivations for new projects that lead to the implementation of such functionality.

Coin burning basically describes a mechanism for eliminating coins in a blockchain network. In the course of this process, coins are sent to a so-called “eater address.” This is an address without private keys. Accordingly, all tokens, which are located at such an address, are lost irrevocably. Consequently, these tokens are not in circulation anymore. By recording all…