In This Guide, We Will Take A Look At What does it mean By Crypto Burn
It is the act of sending cryptocurrency tokens to a wallet that does not have an access key. Without the private key, these tokens cannot be accessed by anyone and are lost forever.
Edul Patel, CEO and co-founder of Mudrex, said this is mainly done to control the price of the coin concerned. “Since all transactions are recorded on the blockchain and cannot be changed, everyone can verify that the coins were actually burned.”
Recently, Ethereum co-founder Vitalik Buterin burned more than 90 percent of his Shiba Inu tokens. After the London hard fork update, about $0.5 million worth of Ethereum is burning every hour.
Which crypto can be burned?
All cryptocurrency coins can be burned. The decision to burn a token usually rests with the coin’s developer team. Sometimes, coin-burning initiatives can be taken by the core community as well.
The process is similar to the idea of a publicly-traded company buying back its stock, said Darshan Bathija, co-founder and CEO of Vauld. “Developers of a project buy back tokens from the market or burn part of the supply.”
What is the need to burn crypto?
There are various reasons for burning cryptocurrency coins. It is known to directly incentivize and reward the investor base of a project. Coin burning directly affects supply and demand dynamics. The most notable purpose is to create a deflationary effect. By reducing the total number of coins in circulation, these events make the coin scarce and boost the valuation of the cryptocurrency.