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1. What is Coin or token burning and how it is beneficial for
Cryptocurrencies?
Coin burning refers to permanently removing some tokens from circulation by transferring
them into a wallet from which they can never be reclaimed. It's common to say that this
eliminates tokens as the tokens can no longer be used because the wallet is not connected
to the network. The address where the tokens are sent is also called burner addresses.
Because burner addresses lack a private key, the tokens are permanently lost.
Several coins burn tokens to increase the value of the coin. Coins such as
Binance, Ethereum, and Terra use the burning of tokens. Recently, Terra (LUNA) had a
terrible crash earlier this month due to the mass burning of LUNA because of its connection
to the stablecoin TerraUSD (UST). Due to the fall of both tokens, the only option for
TerraUSD (UST) to regain its pegged $1 value is by the mass burning of Terra (LUNA)
tokens, which would raise the value of the linked stablecoin.

2. The demand of traders and investors drives a significant portion of the cryptocurrency
market, and the supply-demand equation is susceptible to swings. Crypto Burning is mainly
used to decrease the circulating supply, and as the demand increases, it leads to an
increase in the value of coins. However, burning coins can occasionally aid in a coin's price
recovery only in certain scenarios.
The explanation for this is rather straightforward: burning coins reduces the quantity in
circulation. Reduced supply creates more scarcity, which raises demand and increases
value.
Burning cryptocurrencies is another way to reward or encourage investors. When a
cryptocurrency's price rises, more people may decide to buy it, which will create demand
and raise the price even higher.
Applications of Coin Burning
In an effort to raise the value of the currencies that are still in use, crypto developers burn
the coins. It resembles a lot of what takes place in the world of oil. If the price of a barrel of
crude oil falls because there is an excess supply and the demand is insufficient, the oil-
producing countries cut back on production to raise prices. The same supply and demand
mechanism is at work when coins are burned.
Proof-Of-Burn(POB)-
Blockchains may employ the consensus mechanism known as "proof of burn" to verify and
add transactions. It is used to stop fraud and make sure that only legitimate transactions are
processed. It is an alternative consensus algorithm to the two most commonly used
consensus algorithms, proof of work and proof of stake.

3. In general, the Proof of Burn is a method that resembles the proof of work algorithm but
uses less energy. PoB-based networks do not depend on or need the utilization of
significant computational resources or mining equipment for the block validation process.
Cryptocurrency miners using proof of burn must burn their tokens to obtain the ability to
mine brand-new blocks of transactions. They may mine more as they burn more tokens.
Participants receive compensation in the cryptocurrency they are mining in exchange.
Candidate miners are not needed to invest in physical assets because cryptocurrency is
purposely burned as a method to "invest" resources in the blockchain.
Intentional Burns to Increase Value
Companies buy their stocks to reduce the supply of shares in circulation. Typically, this
strategy aims to raise the share price while also boosting the business's financial
performance. Unfortunately, it occasionally has the opposite effect and doesn't always work
as intended. This strategy entails purchasing shares to acquire a majority and subsequently
control the company.
It is believed that tokens are burnt to accomplish similar goals. The organizations burning
the coins are trying to restrict the coin supply and keep or raise the value of their holdings
by making the tokens more precious and difficult to get. To carry out these responsibilities,
some developers intentionally burn coins.
Burning to Support Mining Balance
The PoB system contains a mechanism that facilitates the periodic burning of
cryptocurrency tokens to maintain a balance between early investors and new users to
prevent the possibility of unfair benefits for early ones.

4. Project's Duration
The increased coin value is typically one of a project's primary goals since it provides a
compelling use case. In short, coin burning shows a big commitment from the project to this
goal and gives investors trust.
Supply-and-demand theory
According to basic economics, the value will rise as long as there is a decline in the quantity
in circulation and no change in the level of demand. As seen in the illustration below,
burning coins increases the value of tokens. Coin burning contributes to the network's
deflation in a manner comparable to this.
Does Burning Coins Affect Their Value?
A significant number of cryptocurrencies should be burnt to have an impact on the market,
not simply a small number of coins. Additionally, developers should be cautious about
carrying out a significant burn if a currency is getting close to the end of its finite supply.
Since fewer coins are accessible due to burning them, each unit is worth more than it was
before. Although you might not immediately notice any changes, remember that if these
things happen, your investment could be worth more than you think! There is no guarantee
that when the burn occurs, the token's price will rise immediately.
The act of burning coins does not indicate the value of a cryptocurrency as an investment.
There are cryptocurrency token burners that are both good and terrible. Understanding how
coin-burning functions can help you better understand cryptocurrencies that employ it.
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