Understanding Proof-of-Burn
Proof-of-Burn (PoB) is a different consensus mechanism utilized in specific blockchain systems. Instead of relying on proof-of-work (PoW) or proof-of-stake (PoS), PoB aims to prevent fraudulent transactions and improve the efficiency of the blockchain.
Within a blockchain, all transaction-related data is stored in blocks within a shared database. These blocks are added to the blockchain only when all participant nodes agree on the validity of a set of transactions.
Due to the decentralized nature of blockchain networks, an automated mechanism is necessary to ensure consensus among nodes. This is typically accomplished through consensus mechanism algorithms.
Proof-of-Burn addresses the energy consumption concerns associated with PoW-based blockchains. It enables miners to burn digital currency in exchange for the privilege of writing blocks. To burn coins, miners send them to an unspendable wallet address, effectively removing them from circulation.
This process is efficient in terms of resources and ensures the network remains active and flexible. Miners have the option to burn either the blockchain’s native currency or an alternative chain’s currency. In the latter scenario, they receive a reward in the blockchain’s native currency.
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