In April Binance has burned over 2M BNB.🔥Let's discuss what is token burning and why it's done.
Token burning is the destruction of any number of coins to reduce their issuance.
It aims to fight inflation and raise the value of that cryptocurrency.
The burning process is like this:
the tokens are sent to the burn address, after which they are permanently excluded from the circulating supply and therefore unavailable for transactions.
It's recorded on the blockchain and anyone can verify that the coins have been destroyed.
Burning tokens doesn't always result in an increase in the price.
Despite the destruction, the price may continue to fall or stand still.
Why is it that something has to be "burned"?
When a coin is created, the developers calculate the value of the asset based on a mathematical model.
However, the coin may not achieve the objectives of the model.
Burning tokens is not the only way to beat inflation.
The Proof-of-Work (PoW) consensus also helps to eliminate the oversupply of new coins, with periodic reductions in the reward to miners, keeping the inflation rate near the target.
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