As reported by Internet portals, one of the global cryptocurrency exchanges burned more than a million BNB tokens. Their value is about 640 million dollars. What implications does this have for the platform? Perhaps it's $3.15 billion in total, quarterly revenue for the platform. Burning cryptocurrency tokens is nothing more than withdrawing them from circulation. This serves to control inflation and get rid of unsold units. Binance's official announcement says that 1,335,888 BNB tokens have been burned.
Is the seventeenth burning of BNB tokens stand out?
In this burning, more coins were removed than during the sixteenth burning. Looking at it in terms of value in USD, it is the largest. Thanks to him, the market capitalization of BNB has increased. One institution claims that the market capitalization of all cryptocurrencies has exceeded the value of $ 2.5 trillion.
What is BSC?
This is its own chain in which one of the popular platforms decided to invest funds. It launched a $1 billion development fund to support projects based on the Binance Smart Chain. A blog post describing this action specifies that most of the funds will be used to support the development of gaming, virtual reality and financial services based on blockchain technology. However, this is not all, other projects related to the blockchain are also to be supported. Several major industry organizations were involved in the collaboration.
Additional deflationary mechanism.
To increase the price of the BNB token, the company decided to introduce a new real-time token burning protocol. This is quite an important proposal, accelerating combustion and causing greater decentralization of the network. The purpose of burning tokens is to leave 100 million of them in circulation. Since their current supply is 168 million, this process can take up to 8 years.
According to the latest update, it was found that burning will bring an increase in the intrinsic value of the BNB token. However, I do not know when the network will decide to implement a new project.
The cryptocurrency burning mechanism is already being used by some of the blockchains. This is to create a shortage of tokens and an increase in their price. Such an example cryptocurrency is Ethereum.
Why is token burning used?
The goals of burning tokens are not the same. One of them is proof-of-burn. It involves burning tokens in order to gain access to mining and saving cryptocurrency at reduced energy costs. Admittedly, the proof-of-burn system consumes much less energy than proof-of-work.
Burning cryptocurrencies allows you to control prices,stopping its inflation or deflation. Another use of burning is to initiate network update transactions,as in the case of Ethereum, which is moving to a proof-of-stakealgorithm.
What impact does the burning of tokens have on investors?
Investors involved in "hodling" can gain quite a lot. Simply, the value of stored cryptocurrencies will increase,thanks to the burning of some tokens. Besides, the mechanism itself rewards investors for persistently keeping cryptocurrencies in their wallets.