Crypto Academy Week 13- Homework Post For @alphafx || Proof of Burn Algorithm Consensus ||

Hello..!!
My Dear Friends,
This is @ariful1998 from 🇧🇩Bangladesh

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Hello friends, how are you? I hope all is well in the infinite mercy of the Almighty God, the Most Merciful. I would first like to thank @alphafx sir for presenting a nice lecture on "consensus algorithms" this week. In this lecture you have explained the details of consensus algorithms and I have learned a lot from it. Among today's homework tasks, I will talk about proof of burn.

Source

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What is proof of burn?

The short form of Proof of burn is (PoB). Lain Stewart invented the proof of burn. What we easily understand about proof of burn is the effective destruction of coins. The proof of burn concencus algorithm allows miners to burn a portion of a token. It is used by miners to burn virtual coins. It is much more durable than proof of work so it was proposed to use it as a sustainable alternative to proof of work. Proof of burn works like a proof of work, without wasting energy. Proof of work does not have to use mining rings to complete the transaction but proof of burn has to use mining rings to complete the transaction. The more coins miners burn in proof of burning, the more virtual mining rigs will grow. Many times cryptocurrencies use variety methods to validate the data stored in their blockchains, one of which is the "proof of burn" method.

The way proof of burn works

We can say without hesitation that proof of burn works in a very simple way. We know that cryptocurrency coins are burned by miners, and as a result they get the right to create blocks in the blockchain. Those who dig for proof of burn coins will send the coins to an unspecified address. Users are burning cryptocurrency in the hope of long-term gains by taking short-term losses in the concept of proof of burn, and making long-term promises in the currency. Those who use proof of burn coins tend to increase their number of rewards over time. In this way, the more coins that users burn, the more likely they are to successfully mining into the next block, which will result in more rewards.

Difference between proof of burn vs proof of work

• Proof of work is more efficient and security system is strong but proof of burn security system is weak.

• Power of work tends to receive higher electrical energy but proof of burn reduces electricity consumption by consuming less electrical energy.

• Proof of work requires a miner to install hardware to manage the work but proof of burn does not require hardware to operate.

• The cost of capital in proof of work is very high but the cost of capital in proof of burn is very low.

Difference between proof of burn vs proof of stake

• Proof of stake is required to operate mining hardware and it is also very expensive but no mining hardware is required to operate the proof of burn.

• Proof of stake does not reduce circulation supply, but proof of burn reduces circulation supply.

• Proof of burn has a permanent economic shortage but proof of stake has no permanent economic shortage.

Advantages of proof of burn

• Proof of burn more durable compared to other compliant methods, the proof of burn power is less and therefore the power consumption is reduced.

• There is no need to invest / use powerful hardware in Proof of burn.

• A special feature of burning proof is that it reduces the money supply, resulting in a crisis in the money supply in the market.

• Another good quality of this is that in the case of coin distribution and mining is less centralized.

Disadvantages of proof of burn

• According to many people, proof of burn is not environmentally friendly because the way bitcoins are burned, this needs a lot of resources.

• The proof of burn verification process is slow.

• A big problem with this is that there is no guarantee that the value of the burnt currency can be recovered which gives evidence of high risk.

• Another major drawback is that the mining power goes to people who want to burn large amount of money.

Conclusion

I really liked this week's lecture / course. I did my homework with great pleasure. Proof of burn consumes less energy than proof of work and is more efficient. Miners should be careful about proof of burn as it is more likely to be hacked as the security system is not good.

Thanks to all to reading my post and support me