Proof of Burn (PoB)

The network of a blockchain is kept running by the consensus algorithm. Without this algorithm, a blockchain could not work properly. Consider a company consisting of 10,000 employees that has no protocol, rules, managers, or team leaders. This is what a blockchain network would look like without a consensus algorithm.

Proof of Burn (PoB) is a consensus algorithm used by very few blockchains. As such, it is considered an alternative algorithm because it works in a completely different way than most other algorithms. Nevertheless, there are several blockchain projects that use certain aspects from this algorithm, and therefore it is certainly of value to understand how Proof of Burn works.

What is Proof of Burn (PoB)?

Years ago, Iain Stewart devised the Proof of Burn mechanism as a counterpart to the energy-guzzling Proof of Work (PoW) algorithm. The PoW algorithm consumes a lot of energy because miners are working with the same blocks. Subsequently, there is only one miner who delivers an addition to the blockchain. The work, and therefore the energy used, of the other miners is not used.

This is the reason Proof of Burn is also called the PoW algorithm without energy waste. Miners who are active within a PoB network are in fact allowed to burn tokens. They are then allowed to create blocks for the blockchain based on the number of tokens they have burned.

How does Proof of Burn work?

The moment a miner wants to add blocks, they will first need to buy a virtual mining rig. These are like the rights to mine. Without these rights, a miner cannot add blocks to the blockchain. Burning the tokens gives the miner energy to be able to mine, and thus use his virtual mining rig.

The tokens are not actually set on fire by the miners. In fact, the miner sends the tokens to a verified address that nothing can happen to. Think of it as a wallet address that doesn't exist and could never and could never come into the hands of a person. When the tokens are sent to this address, they are lost forever.

It takes virtually no energy to successfully carry out this process. The only thing the miner must do is send tokens to another address. Therefore, Proof of Burn is considered a more sustainable algorithm than Proof of Work.

It depends a bit on the implementation of this algorithm and the type of blockchain, but in general it does not matter which tokens are burned. Thus, a miner may burn the native tokens of the blockchain, but is also allowed to burn other cryptocurrencies, such as Bitcoin (BTC). Miners, of course, also receive a reward for the work they do. This reward is always the native token of the blockchain they are operating for.

When you have burned tokens, you can add a new block to the blockchain. Other miners can then add a new block to your block. It is also possible that you add the transactions of other miners to your block. In this way, the entire network works together to keep the blockchain running.

What about security?

You may be wondering about security. When a miner is active early on, he can earn many tokens which he can then burn. In this way a miner can quickly become the biggest, simply by being there early. This would of course be unfair and harm the decentralized nature of the blockchain.

As time provides, the power of the burned tokens decreases. This happens on a per miner basis, meaning that an individual miner's tokens become worth less and less. This also allows the miner to receive fewer new tokens for adding new blocks.

In this way the network is stimulated to continuously renew itself with miners who have not been active before. Miners will also have to invest in better hardware in the long run, so that they can continue to participate within the network.

What are the pros and cons of Proof of Burn?

Below are listed the main advantages and disadvantages of the Proof of Burn algorithm.

The PoB algorithm requires less energy than Proof of Work.
Because there will be fewer and fewer tokens and coins, the price of cryptocurrency will start to rise according to the classic economic model.
There is no need to purchase special hardware because miners are not competing with each other for who is the first to finish a block.
There is a method built in that ensures that new miners are attracted, and miners who are working for a long time earn less. This makes the blockchain network fair.

The Proof of Burn algorithm is not yet in widespread use. It is mainly the smaller blockchain networks that use this algorithm. Therefore, we do not yet know much about how this algorithm would work for large blockchains.
The burning of tokens is not always transparent, and often just difficult to understand.
Burning tokens can work in favor of the value of the cryptocurrency being burned, but the fact is that there will be fewer tokens and coins left in the end.

Which blockchains are using Proof of Burn?

Proof of Burn is currently only used by Slimcoin. This is an altcoin which is based on the blockchain of Peercoin. In this network, miners can not only burn the native token, but it is also possible to burn Bitcoins.

There are several blockchains that use certain aspects from Proof of Burn, but initially use a different algorithm than Proof of Burn. In most cases, this is the Proof of Stake algorithm.


Proof of Burn is a lesser-known consensus algorithm, while it works in an interesting way. It was once conceived as a counterpart to the Proof of Work algorithm, which requires a lot of energy to work.

Miners active in a Proof of Burn network must burn their tokens to be allowed to add a new block to the blockchain. The tokens are not actually "burned," but are sent to an address that will cause the tokens to be lost forever. Burning tokens causes miners to be energized to be allowed to add new blocks to the blockchain.

So, it is an interesting algorithm that works in a completely different way than most other consensus algorithms. Yet the algorithm is used by almost no blockchain, as Slimcoin is so far the only blockchain that uses Proof of Burn as its main consensus algorithm. However, there are several blockchain projects that use certain aspects from this algorithm.