Consensus Mechanism: Proof of Burn

Gepubliceerd op 5 juni 2022 om 12:05

The Proof of Work (PoW) consensus mechanism used by the bitcoin blockchain consumes a lot of energy. This is because miners compete with each other to verify a transaction. In response to the PoW, the Proof of Burn (PoB) was developed. What is the PoB? And what are the pros and cons of the PoB?

What is the PoB?

The PoB is similar to the PoW, but the PoB consumes a lot less energy than the PoW. The PoB is also called the consensus protocol without energy consumption. The PoB is also called the sustainable or ''green'' PoW. In the PoB, miners burn digital / virtual crypto. Also, these miners are allowed to create and verify blocks if they burn crypto.

If a miner/participant wants to validate/verify a block, they must first burn coins. A participant does this by sending this crypto to a certain wallet address (''eater address''). After the crypto is sent to a certain wallet address, the crypto is burned. In exchange for burning the crypto, the participants/miners obtain a reward in the form of the blockchain's own native crypto. The more crypto a miner burns (sending crypto to the eater address), the greater the chance of verifying new blocks.

Thus, when miners burn crypto, they send this crypto to a wallet address that can no longer issue this crypto. This energy usage is very low. The only energy consumed is sending the crypto to this wallet. This allows the network to remain active. So it is not that miners have to burn crypto that the blockchain uses (like bitcoin), but miners can also burn other crypto. Each blockchain has different rules for this. Miners get a reward from the same crypto that the blockchain runs on.

Iain Stewart, the inventor of the POB algorithm, uses an analogy to describe the algorithm: burnt coins are like mining rigs. In this analogy, a miner burns their coins to buy a virtual mining rig that gives them the power to mine blocks. The more coins burned by the miner, the bigger their virtual mining "rig" will be (and more rewards the miner can receive).

Pros and cons of PoB


  • Energy consumption is low
    This is the main advantage of the PoB. At the PoB, miners are constantly burning crypto of their own or others'. This process consumes energy but it is actually used for something. It is therefore not lost energy. In the PoW, the miners are continuously mining the same block with which there is one winner. The other miners do not get a reward, but they have consumed energy that is now wasted.
  • No hardware required
    In the PoW it is essential that you have equipment that can mine. So you need hardware. The better the hardware a miner has, the bigger the chance that this miner can add a block to the blockchain. So at the PoB, these crypto are not actually burned. So you don't lose these coins. The PoB burns virtual crypto. So you don't need a lot of hardware to mine.


  • Does the PoB work on a large scale?
    The PoB is a yet unknown consensus mechanism. It is still used on a small scale. Therefore, it is a big question whether the PoB can be deployed and used on a large scale. For this, the PoB needs further development. It should also become clear in the future how secure and efficient this PoB actually is. The PoB is surrounded with many uncertainties and questions.
  • Not transparent
    The PoB is anything but transparent. Namely, you cannot see the process of how virtual crypto is burned. This is not visible anywhere. This therefore clashes with the core values of blockchain, namely that the blockchain is transparent in the sense that the transactions are visible to anyone. If the PoB is not transparent, then I am of the opinion that the PoB will not be used much in the future. Users demand that transactions are public and visible to everyone.
  • Is the PoB really that energy efficient?
    According to some, the PoB is not that energy efficient at all. This is because miners can also burn other virtual crypto than just bitcoin or Ethereum. In practice, bitcoin is the most burned crypto. And bitcoin is using the Proof of Work (Proof of Work uses a lot of energy). So with PoB, you can actually maintain energy consumption but it is - according to some - not a better alternative than the PoW. 

Find an explanation of the PoB below:

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