Coinburn: What You Need To Know

Coin Burn is a new concept in the world of cryptocurrency and is gradually gaining popularity. It utilizes a centralized mechanism to raise the value of a coin or token. Some exchanges with their own coins are offering a period mechanism to raise the value of their own coins for their investors. Before understanding how Coin Burn is useful, let us understand the concept of Coin Burn.

What exactly is Coinburn ?

Simply speaking one can understand Coinburn as the procedure of eliminating the coins from the entire flow thereby reducing the supplies of the coins. This can be done by transferring a native cryptocurrency or another type of currency to a public place without any type of the private key, thereby they will get burned and get wasted.

For example, Binance coin contract owns a function known as the burn function which one can avail from anywhere at any time. By calling this function anyone can permanently eliminate n amount of coins from the flow.

The best part of this process is that since it is entirely based on blockchain hence, one can clearly see how and when exactly this burning process took place and be 100% sure that the coins have been eliminated.

How Coinburn takes place?

The burning of the coins totally depends on the fact that how much trades are performed on the exchange in the span of 3 months. It won’t be wrong to say that coinbunring is directly proportional to the trading. The more trading is completed the more coins are burned.

Also, one point to keep in mind while dealing with the coin burn is that it is an irreversible act.

Following are the step by step methods to execute coinburn:

1. First of all the coin holder calls for the “coin burn function” willingly and with consent
2. Then a smart contract will analyze two of the following:

a.) if the no. of coins to burn are even present in the wallet or not.

b.) If the no. of coins to burn which are stated are even valid or not.

1. After that, if the smart contract fails to analyze either one, the coinburn statement is nullified.
2. But if every factor is found legit then the amount which was set for coinburn gets subtracted from the wallet for the coinburn process after informing the coin holder.

Binance organizes one such event of burning its coins after every quarter so that 50% of the coins i.e. 100,000K Binance Coins can eliminate from the flow.

Why do Coinburn ?

Coin burn is usually done for purposes such as:

1. For creating new tokens or coins (proof of burn)
2. For rewarding the token or coin holders (as it raises their coin value)
3. For eliminating coins after an ICO or token sale

So to sum up we can say that Coinburn is a serious task to perform which follows a certain protocol of commands to execute & once it is executed successfully the burn is permanent and hence one must not perform it without any proper guidance or suggestion. Once you have burned your no. Of the coins, there is no coming back from there.

Although you can be carefree about the assurance because it is public and easily accessible, again thanks to the blockchain technology which allows you to see your whole transactions in the form of ledger.