Burn crypto meaning (or coin burning) is the process of permanently removing cryptocurrencies from circulation, reducing the total supply. When the Binance Coin was still part of the ETHereum network, Binance performed periodic Coin Burn events using a smart contract function known as burn function. The BNB burning events are scheduled to occur every quarter until 100,000,000 BNB are finally destroyed, which represents 50% of the total BNB ever issued (200,000,000 BNB).
The amount of BNB coins to be burned is based on the number of trades performed on the exchange within a 3-months period. So after each quarter, Binance burns BNB according to the overall trading volume.
How does it work?
Essentially, a token burn event happens in the following order:
1. A cryptocurrency holder will call the burn function, stating that they want to burn a nominated amount of coins.
2. The smart contract will then verify that the person has the coins in their wallet and that the number of coins stated is valid. The burning mechanism only allows positive numbers.
3. If the person doesn’t have enough coins, or if the stated number is invalid (e.g., 0 or -5), the burn function won’t be executed.
4. If they do have enough, then the coins will be subtracted from that wallet. The total supply of that coin will then be updated, meaning that the coins were permanently burned.
If you execute the burn function to burn your coins, they will be destroyed forever. It's impossible to recover coins after they are burned, and thanks to blockchain technology, the proof of burn can be easily verified on a blockchain explorer.
To sum things up, the Binance Coin contract has a function known as burn function, which is available to anyone at any time. By calling this function, you can permanently remove a nominated amount of coins from the circulating supply of a blockchain network. As mentioned, every token burning event is recorded as a transaction on the blockchain. The burning mechanism is transparent, and anyone is able to verify that the coins have been destroyed.
As soon as a quarterly Coin Burn takes place, Binance makes an official announcement that specifies the amount of BNB coins that were burned (based on the trading volume for that quarter). You can verify all BNB ERC-20 Coin Burn transactions on an ETHereum blockchain explorer, such as Etherscan. The burning transactions are public, irreversible, and permanently recorded on the blockchain.
In Conclusion
Burn crypto meaning is the process of permanently removing token or coins from the blockchain, reducing its total supply. This is made possible by an in-built function in the smart contract.
