Proof of Burn

Definition ∞ Proof of Burn is a consensus mechanism in blockchain networks where participants demonstrate their commitment by intentionally destroying or “burning” a certain amount of cryptocurrency. By sending coins to an unspendable address, participants prove they have sacrificed resources, which grants them the right to validate transactions and add new blocks. This process simulates the energy consumption of Proof of Work without requiring computational power for mining. It aims to secure the network and distribute new tokens.
Context ∞ The discussion surrounding Proof of Burn often involves its energy efficiency compared to Proof of Work and its potential for fair token distribution. A key debate concerns the economic incentives for burning tokens and the long-term sustainability of such a mechanism for network security. Critical future developments include exploring hybrid consensus models that integrate Proof of Burn with other validation methods to enhance network resilience and decentralization.