Proof of Burn (PoB)
PoB, designed by Iain Stewart in 2012, is a good alternative to the PoW consensus algorithm. It reduces energy consumption.
Last updated
PoB, designed by Iain Stewart in 2012, is a good alternative to the PoW consensus algorithm. It reduces energy consumption.
Last updated
In PoB, hardware and energy are not required; instead, cryptocurrency is burned to invest some resources in the network. Miners invest in virtual mining power. By this method, miners can show their commitment toward the network that they are not malicious. The more coins the user burns, the more mining power he gets. The concept of burning coins is to send them to an unidentified address where they cannot be accessed. These addresses are generated randomly, and there is no private key. Similar to PoW, the miners get block rewards, and within a certain time, these rewards will cover the initial investment. The similarity between PoS and PoB is that miners need to invest in the network. In PoS, if forgers decide to leave the network, they can take the coins back and sell them to the market. This will not create market scarcity. However, in PoB, validators need to destroy their coins forever, creating a market scarcity.
Applications: Cryptocurrencies such as Slimcoin, Counterparty, Triggers, and Redcoin use the concept of PoB.
Sustainable: PoB is highly sustainable because it reduces power consumption. It encourages the long-term commitment of the miners and also it reduces market scarcity.
No hardware needed: There is no need for mining hardware as coin burns are basically virtual mining rigs.
Centralization: In PoB, the rich get richer is a big problem. The users who have more coins can burn more coins and get more mining power. This makes the BC centralized as PoW.
Lack of transparency: The burning of coins is not transparent, so a random user cannot verify it.
Not eco-friendly: The coins are generated using PoW mining only, so it requires resources and hence is not eco-friendly and is time-consuming.
