A "burn" refers to the mechanism by which the units of a cryptocurrency are burned, that is to say destroyed, in an intentional and permanent manner. Therefore, a burn reduces the circulating supply of the cryptocurrency since the total number of tokens available decreases. It is a deflationary process, as opposed to the issuance of tokens (mint), which occurs as a reward for mining or validation of a block depending on the blockchain on which a cryptocurrency operates.

A burn does not literally involve the destruction of tokens, it is only figuratively. Indeed, concretely, the process by which the tokens are burned consists in sending them to a “dead wallet”. The particularity of such a wallet lies in the absence of a private key, which means that it is impossible to have access to it and that it will therefore be forever inactive. Once the tokens have been sent to a dead wallet, it is impossible to recover them If a comparison is needed, just imagine locking cash in a safe that didn't have an access code by design, making it impossible to unlock.

There is another way in which tokens can be lost forever, and this is not to be confused with a burn. Why is it interesting to burn tokens?

The most common reason behind a token burn is the increased scarcity of the asset in question. This has its origin in the law of supply and demand. The more the supply of an asset is reduced, the more it has value due to its rarity, and all the more so if combined with a consequent demand.

Burning tokens is a common practice in the cryptocurrency industry. Having the effect of reducing the supply in circulation, it is important to understand the ins and outs of this and we hope that this article has helped you to see more clearly.

The main objective behind a token burn is to influence its value by making it rare. However, this does not mean that this mechanism is necessarily a good thing since it is far from being the only factor influencing the valuation of a cryptocurrency.

In general, investors appreciate this practice

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