Proof-of-Burn (PoB) is a consensus algorithm used by some cryptocurrency networks to secure their blockchains. It is an alternative to the more commonly used Proof-of-Work (PoW) and Proof of Stake (PoS). PoB works by burning coins from one blockchain in order to mint new coins on another blockchain.
In this system, miners sacrifice part of their own stake in order to obtain the right to mine blocks on the network and earn rewards for doing so. This creates a form of “burning” effect as those coins are removed from circulation, making them unavailable for any other use than mining new blocks. The idea behind it is that miners have an incentive not only to secure the network but also minimize their costs at the same time since they need fewer resources overall when using PoB versus PoW or PoS.
The process begins with miners sending a portion of their holdings into what is known as a burn address, which has no private key associated with it, meaning that once sent there those funds cannot be recovered again. Those burned funds are then permanently destroyed and taken out of circulation forever; however, at this point nothing else happens yet until someone else wants to join the network and create new tokens/coins on top of it. In response, these newly created tokens will be distributed among all existing holders proportional to how much each holder has burnt previously; hence providing an incentive for everyone who participated in burning earlier since now they may receive additional rewards for taking such risk initially!
At its core conceptually speaking, PoB can be thought as simply burning money in exchange for digital assets – something which might sound crazy but actually makes sense due both economic & security reasons: On one hand economically speaking it serves as disincentive mechanism discouraging attackers from trying disrupt or manipulate network consensus while simultaneously creating opportunity people benefit financially if decide participate early before anyone else does!. On other hand security wise having fixed amount tokens available means that supply remains constant over time thus guaranteeing stability long run even if demand fluctuates drastically short term perspective..
