Proof of burn is a protocol in which users send cryptocurrency coins to an address which no one has the ability to recover thereby reducing the supply of coins in circulation. PoB is supposed to address problems involving energy consumption in Proof of Work systems.
Burned coins are coins that were sent to an 'unspendable' address, an eater address, which have no private keys. Anybody can view the amount of coins in the address, but they are not accessible.
The online peer to peer marketplace OpenBazaar also used proof of burn to enable users to perform Reputation Pledges. These pledges represent a commitment to an identity on the platform as they have expended resources on it. Thus they are incentivized to maintain a positive reputation with that identity or risk wasting the value of the coins burned for that profile.
A Peer-to-Peer Crypto-Currency with Proof-of-Burn
Proof of burn
Proof-of-burn and Reputation Pledges
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- CryptocurrencyA cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies are a subset of alternative currencies, or specifically of digital currencies.
- BlockchainA blockchain is an append-only digital ledger storing a set of time-ordered transactions grouped in blocks that are linked together using cryptographic hashes.
- Counterparty (cryptocurrency)Counterparty is digital currency used for peer-to-peer financial trading based on the bitcoin blockchain.
- OpenBazaarOpenBazaar is an open source decentralize marketplace that is run by the company OB1.
- SiacoinSiaCoin is a cryptocurrency for distributed file storage.