While cryptocurrencies have only been around for a short time – a blink of an eye by historical standards – they’re not immune to the effects of inflation. That’s why, in any conversation about crypto or blockchain, you’ve probably come across the term “coin burning” and wondered what that could possibly mean in the context of cryptocurrency. Coin burning? Surely that can’t refer to the destruction of a digital asset credit?
Token Burning 🔥 (Explained by animation)
You can't just delete a cryptocurrency, can you?
Related: What is Proof of Stake? | What is Proof of Work?
Coin burning, as the name suggests, involves effectively wiping out a certain amount of cryptocurrency to reduce the total available supply. This process can be used for a variety of reasons, ranging from inflation control to serving as the centerpiece of a Paul consensus algorithm designed to secure a blockchain. It doesn’t so much involve wiping out the coins as it does removing them from circulation.
