What Is Cryptocurrency Coin Burning? – Motley Fool

What Is Cryptocurrency Coin Burning? – Motley Fool

If you keep up with cryptocurrency at all, it won’t take long to hear about coin burning, a method of cutting a coin’s supply that became popular around 2017. As you often see in cryptocurrency, it has been copied almost endlessly since then.

With coins large and small, there’s news about how the developers burned millions, billions, or even trillions of tokens. In this article, you’ll learn exactly what cryptocurrency burning is and why developers do it.

A small fire and a group of people talking in the background.

Image source: Getty Images.

What is coin burning?

Coin burning happens when a cryptocurrency token is intentionally sent to an unusable wallet address to remove it from circulation. The address, which is called a burn address or eater address, can’t be accessed or assigned to anyone. Once a token is sent to a burn address, it’s gone forever.

Anyone who owns a cryptocurrency can burn it, but it’s not exactly something you’d want to do for no reason since you’d essentially be throwing money away.

Most of the time, it’s the developers of a cryptocurrency who decide to burn a certain amount. Coin burning reduces the supply, making tokens of that cryptocurrency scarcer. That scarcity can lead to an increase in price and benefit investors.

There are a couple of caveats to mention about coin burning. It isn’t guaranteed to increase the crypto’s value. In fact, many see little to no benefit from it.

A cryptocurrency coin burn
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