In the Proof of Burn (PoB) consensus mechanism, miners earn the right to mint the next block by burning some value in the blockchain.
All proof systems are based on the principle that minting a block must incurr in some cost, otherwise fraudsters could inject invalid transactions into the blockchain.
Bitcoin achieves this by making the block generation process very costly. Miners must invest large sums into mining equipment and electrical energy.
In a Proof of Burn (PoB) system, this cost comes from spending cryptocurrency directly on the blockchain being mined. Instead of buying mining equipment and paying for electricity consumption, the miners burn up some cryptocurrency to prove their commitment to honest mining.
To burn tokens, miners simply generate a transaction whereby some cryptocurrency is sent to a special address.
Once the network verifies the receipt of cryptocurrency from address X to this special burn address, the sender (owner of address X) is then authorized to mint a block.
Since every minted block requires some amount to be burned, Proof of Burn (PoB) cryptocurrencies tend to gain value with time.
The deflationary nature of PoB tend to make these cryptos attractive to long term investors.
There are alternative ways to burn tokens during mining.
In AVAX, for example, transaction fees are burned.
TGC – a “third generation coin“, planned on using PoB, but never became an actively traded digital asset. Slimcoin was also a PoB project.
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Proof of Burn Investopedia Entry