The Proof of Burn (PoB) consensus mechanism is very similar to Proof of Work (PoW), and was founded by Iain Stewart. However, it consumes a lot less energy than PoW. That is why it is also known as the PoW system without energy consumption. With PoW, but miners are allowed to “burn” the digital currency tokens. They are allowed to create blocks, if they burn cryptocurrency in return.
According to Stewart miners burn their crypto coins to get a virtual tool with which they can then mine blocks. The bigger the investment, the bigger the virtual tool they get in return.
When miners start burning cryptocurrencies, they send the coins to an address that cannot issue those coins. This doesn’t take much energy at all. The only energy that is used is sending the cryptocurrency. As a result, the network remains active. Miners don’t always have to burn cryptoc of the same currency. They may also be allowed to burn cryptocurrencies of another currency. Every blockchain has its own rules for this. However, one thing is the same: the miners always receive a reward in the form of a crypto coin of their own cryptocurrency.
Miners can also send transactions to the network themselves, after which they are burned. Then other participants can burn their coins on the miner’s block, creating a chain. However, this can also be done with blocks of other participants. Because everyone is busy burning and mining blocks, the network is constantly in motion. Participants are all rewarded for the work they perform. This will of course only benefit the functioning of the network.
As mentioned earlier, miners can buy a bigger tool when you can bet more crypto coins. This can put newcomers well behind experienced miners. A system has been devised for this, with which it rewards the periodic burning more than the continuous burning of cryptocurrencies. When a new block is added, the value of the burned currency decreases. The more coins are burned, the lower the reward becomes. This ensures that miners are rewarded more when they mine regularly, than when they do it continuously or once.
In addition, miners must also periodically invest in better hardware as technology advances. In this way, the network wants to ensure that the quality of the work is always as high as possible. The better the hardware, the faster miners can do their job. In addition, modern hardware generally consumes less energy than old hardware.