This serves the purpose to explain in non-technical terms, the most basic kind of coin burn in cryptocurrency.
Coin burn is when you send a portion of altcoins to a wallet address without a known private key. Which means they will be “burned “and go to waste. This process also gets recorded in the blockchain, and because of its immutable records, it serves as proof it would never be able to be used again without a private key, meaning no access to the coin.
Some altcoin developers, due to their high supply, have done this to reduce the amount of coins in circulation. And also, because by doing that they reward their token holders, as it raises their coin value.
You see, the law of supply and demand is a basic principle around economic government. The increase in supply means the price goes down, and when it decreases price tends to go up.
“If the market cap is 1 mil, and there are 1 mil coins, that means each coin is worth $1. If you burn 33% of the coins, you then have 666,666 coins worth $1 mil. Each coin is now worth $1.50.” – Rahul Behera from Criptosmaniac.
You might be wondering if this is even legal, yes absolutely is, and there are many fans of coin burning, including many well-known developers like BINANCE (BNB) and TRON (TRX), which are famous for burning their coins to reward their coin holders.
So, it is all gooood….