Token burning is the process of permanently removing a certain amount of cryptocurrency or tokens from circulation. This is usually done to achieve economic goals such as reducing the supply of the currency and thus increasing its value, or to create transparency and trust in the system. Here’s how token burning happens when trading:

The purpose of burning coins

Reducing supply: Reducing the number of coins in circulation in the market to increase their scarcity and thus increase their value.

Stabilization: Helping to maintain the stability of the currency price.

Investor Reward: Increase the value of the remaining coins for investors.

Compliance: Implementing pre-defined policies in the project.

How to burn coins

Sending coins to an unrecoverable address: Coins are sent to an unreachable wallet address (such as the address "0x000..."), making them unusable or unrecoverable.

Burn Confirmation: The burn process is recorded on the blockchain, providing transparency and permanent proof that the coins have been removed from circulation.

Reduce Total Supply: The total supply of coins in the system is updated to reflect the amount burned.

Examples of burning coins

Bitcoin ($BTC ): Bitcoins are not burned directly, but coins can be lost if users lose their wallet keys.

Binance Coin ($BNB ): Binance burns a portion of its BNB coins periodically to reduce the supply and increase the value.

Other Coins: Many other projects such as ($ETH ) #Ethereum and Cardano (ADA) may use coin burning as part of their economic policies.

Impact on the market

Increased demand: If the supply of currencies decreases, this may lead to an increase in demand for them and therefore an increase in their price.

Improved trust: Investors may see burning coins as a sign of the team's commitment to their interests.

Reduce inflation: Burning helps reduce inflation caused by excess supply.

Difference between burn and cancel

Burning: Coins are sent to a non-refundable address, making them unusable.

Cancellation: Coins may be removed from circulation without being destroyed, but this is less common.

Coin burning is an important economic tool in the world of cryptocurrencies, and it is used to achieve various goals depending on the project's policies.