Proof of Burn (PoB)

Proof of Burn (PoB) is a consensus mechanism in which participants “burn” cryptocurrency by sending it to an unusable address. This process symbolizes the investment of resources to maintain the network and earn rewards in the form of new cryptocurrency or other assets. Unlike Proof of Work (PoW), which requires energy-intensive computations, Proof of Burn involves the “sacrifice” of coins, thus reducing their available supply.

Key features:

• Reward Mechanism: Users receive new coins in the network in exchange for the burned assets.
• Sustainability: PoB is considered more environmentally friendly compared to PoW, as it does not require significant energy expenditure.
• Usage: It is used in some blockchains to encourage participation and facilitate the issuance of new tokens.

An example of Proof of Burn implementation is the cryptocurrency system Counterparty (XCP), where users burned Bitcoin to receive XCP.