Is it possible to set coins to fire?
You may be surprised (or not), but Coin Burn is kinda a thing in the crypto market.
Actually, it means the following: a portion of some coins is sent to the “black hole” – an address with private keys not obtained by anyone. As there’re no keys, coins once sent there cannot be used ever again. So, they’re taken out of circulation and publicly recorded and verifiable on blockchain.
Why do this?
There are 3 main reasons:
Proof-of-burn: This algorithm may be implemented in order to create new native currencies. Investors send some amount of other crypto to the black hole (or to the eater address) and get the new currency instead. The new cryptocurrency has some value, as a certain portion of the other currency was destroyed to create it.
To award the token/coin holders: In some countries, the law restricts cryptocurrencies from paying “dividends” to the holders, so they figured out another way: creating a demand deficit, which reflects the value of the tokens held by investors.
To destroy coins left after ICO: This was to make things fair. ICO’s over, tokens/coins grow, and if something’s left after ICO, the company may sell it at a higher price later, getting an amount of free money. To prevent this, all that’s left after ICO is sent to the black hole.