Those following the crypto market for a while now must have heard of the term coin burning. Coin burning is nothing but the deliberate removal of a crypto token from circulation. When this happens, the cryptocurrency token is sent to an unworkable wallet address known as a burn address or eater address. Simply speaking, once you send a crypto token to the burn address, it has permanently gone out of circulation.
Any crypto holder can burn their crypto tokens, but usually, a cryptocurrency’s developers decide to burn a particular amount.
The Coin burn decision is taken by developers when a surplus of cryptocurrency flows into the market. In such circumstances, when the supply exceeds the demand, and the price of that token comes down, burning a portion of the cryptocurrency works as a ‘deflationary’ move.
Coin burning lessens the supply, making tokens of that cryptocurrency scarcer. Investors can benefit from this situation because the scarcity of that specific cryptocurrency resulting from coin burn can increase its price. Besides, developers also burn tokens to hide whales who own significant portions of a cryptocurrency.
