Back to Course

1. Beginner Course

0% Complete
0/0 Steps
  1. 1. What are these cryptocurrencies?
  2. 2. Bitcoin - the story of a technological revolution
  3. 3. Satoshi Nakamoto, who is the creator of Bitcoin?
  4. 4. Vitaly Buterin – the creator of Ethereum
  5. 5. What is Blockchain, and how does it work?
  6. 6. What is an NFT token?
  7. 7. What is money?
  8. 8. Cryptocurrencies vs fiat money, which will win?
  9. 9. What is DeFi (Decentralized Finance)?
  10. 10. DeFi: opportunities, advantages and disadvantages of decentralized finance
  11. 11. What is an altcoin?
  12. 12. Stablecoins - What are they?
  13. 13. Cryptocurrency wallet - what is it?
  14. 14. Why do we talk about bull and bear markets?
  15. 15. Security in the crypto market - what rules are worth following?
  16. 16. What is the seed phrase in cryptocurrencies?
  17. 17. Dogecoin and memecoin - what are they?
  18. 18. What is a Ponzi scheme?
  19. 19. What is Ethereum? 
  20. 20. What is a soft and hard fork?
  21. 21. Blockchain - examples of use
  22. 22. Is blockchain safe?
  23. 23. Smart Contracts - what are they?
  24. 24. Liquidity pools in the cryptocurrency market
  25. 25. What is cryptocurrency mining?
  26. 26. What is the mining difficulty?
  27. 27. Inflation and its effects on financial markets
  28. 28. What is compound interest, and how does it work?
  29. 29. Cryptocurrency wallet diversification
  30. 30. Blockchain and NFT games - how to make money on them?
  31. 31. Decentralized Apps – what are they?
  32. 32. What is Proof of Work (PoW) and what is Proof of Stake (PoS)?
  33. 33. What is the Proof of Authority (PoA) consensus mechanism?
  34. 34. What is Proof of Burn (PoB)?
  35. 35. What is CBDC - central bank digital money?
  36. 36. What is Cryptocurrency Airdrop all about?
  37. 37. What are the types of blockchain networks?
  38. 38. Key differences between ICO, IEO and STO
  39. 39. What is IoT - the Internet of Things?
  40. 40. What is the difference between Circulating Supply and Total Supply?
  41. 41. Everything you need to know about gas fees in Ethereum!
  42. 42. The most important cryptocurrency acronyms/slang you need to know!
  43. 43. Halving Bitcoin - what is it, and how does it affect the price?
  44. 44. What is the Fear and Greed index for cryptocurrencies?
  45. 45. APR versus APY: what is the difference?
  46. 46. Snapshot from the world of cryptocurrencies - what is it?
  47. 47. Know your customer (KYC) and Anti-money laundering (AML) what are they in the cryptocurrency industry?
  48. 48. What is a whitepaper? What is its purpose, and how do you write it?
  49. 49. How do you transfer cryptocurrencies?
  50. 50. What is EURT? How does it work?
  51. 51. What is Regenerative Finance (ReFi)?
  52. 52. Bitcoin Pizza Day
  53. 53. What Is Stagflation and Why Does It Have a Negative Impact on the Market?
  54. 54. What are decentralized DAO organizations, and how do they work? What are DAO tokens?
  55. 55. CyberPunks - the story of the most popular NFT collection in the crypto industry!
  56. 56. AI blockchain - a new look into the future?
  57. 57. The Bored Ape Yacht Club (BAYC) - the story of the popular NFT collection!
  58. 58. Who is Changpeng Zhao, CEO of Binance?
  59. 59. What is blockchain network congestion, and how does it work?
  60. 60. Azuki NFT collection guide: everything you need to know about it!
  61. 61. Who Is Craig Wright, the Alleged Creator of Bitcoin?
  62. 62. What Is Bitcoin (BTC.D) Dominance?
  63. 63. What Are Privacy Coins and Are They Legal?
  64. 64. What is an Initial Farming Offer (IFO)?
  65. 65. Michael Saylor, Self-Proclaimed Bitcoin Maximalist
Lesson 34 of 65
In Progress

34. What is Proof of Burn (PoB)?

At our academy we have already discussed some consensus mechanisms: Proof of Stake and Proof of Work and Proof of Authority (PoA). Today we take a look at another one of them – Proof of Burn (PoB). Blockchain networks use consensus mechanisms to get users to agree to new updates. Therefore, to ensure continuity in network algorithms, it must first be established.

What is Proof of Burn (PoB)?

As the name suggests, Proof of Burn is proof of burning. Miners, thus, gain consensus by burning coins. Coin burning is a process in which a certain number of coins are permanently eliminated from circulation. In this way, the Proof of Burn is used to validate a given transaction. Therefore, the more coins the miner burns, the higher his chances of adding a block to the network.

Compared to the consensus mechanisms we have been discussing – Proof of Stake, or Proof of Work, the Proof-of-Burn mechanism reduces energy consumption. It also does not require miners to stake coins to add a new block to the network.

In the blockchain network, there are several versions of the Proof of Burn consensus mechanism. The most popular is Iain Stewart’s version. As you have already guessed, he is also its inventor.

The very concept of coin burning also means investing the native tokens of a given ecosystem in virtual mining platforms (mining powers). This allows miners who own multiple mining platforms or invest the most coins to add a new block to the network.  

Remember also that the number of coins burned by a miner shows his commitment to the network.

How does the Proof of Burn consensus mechanism work?

Miners, involved in the network, send a certain number of coins to a wallet address that has no return.  Such “unreturnable” accounts are created randomly and have no associated private keys.

Once the coins hit the burn wallet, they are burned. In turn, the wallet itself is already useless and inaccessible. Ultimately, the coins transferred in this way are used to strengthen the security of the network in question.

For you to better understand the operation of the mechanism Proof of Burn, let’s use an example.

In a given blockchain network, we have 5 miners, and each miner has its block of transactions. According to the consensus mechanism, these miners must burn a certain number of coins to attach their block to the network.  The one who sends the maximum number of coins – wins. Thus, he got his chance to add his block to the network.

Interestingly, the block of a a miner that burned the most coins will be added to the network and then verified by validators of the ecosystem in question. If, according to the validators, something is wrong and the block is deemed invalid, then the miner’s block that was second best – burned more coins – will be added to the network.

It would seem that the consensus mechanism Proof of Burn is unfair. However, we would disagree. The Proof of Burn algorithm in the blockchain network strongly promotes periodic coin burning. This avoids bias among both new and old participants in a given ecosystem.

Moreover, this means that the mining power of a given network decreases every time a miner mines a new block. In addition, the consensus mechanism Proof of Burn motivates miners to burn their coins regularly, rather than treating it as a one-time investment.

Advantages of proof-of-burn mechanism in blockchain

  1. Proof of Burn uses far less computing power and electricity.
  2. It is a kind of motivator for miners tominers, to make regular transactions instead of a one-time investment.
  3. It does not need heavy and expensive equipment for calculations.
  4. The consensus mechanism Proof of Burn is generally used for long-term commitments.

Disadvantages of proof-of-burn mechanism in blockchain

  1. For its operation, it requires wealthy miners who can burn quite many coins.
  2. To date, there has been no testing or research on whether PoB will work in large, global blockchain ecosystems.
  3. It is a slightly slower consensus mechanism because it takes time to validate a block in a transaction.

Consensus Proof of Burn – examples of use

The consensus mechanism Proof of Burn is a relatively young algorithm. So, it is not as well-known and refined as proof of work or proof of stake. There are also not many coins suitable for burning in circulation.

So, what do we count among the coins that can be burned? BitShares, Counterparty or Slimcoin, for example.

What is also interesting is that the implementation of the Proof of Burn mechanism can be customized according to the current needs of the customer.


Our lesson discussed in detail the mechanism of Proof of Burn. You can see that it is not extremely complicated. Like any algorithm, it has its pros and cons. At your discretion, you can compare it with the consensus algorithms you already know.