Why are we burning Steem? What is Proof of Burn and what changes can burning steem bring? || #burnsteem25
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Yes yes, I know. You already know about #burnsteem25 as it has already been a week since the idea of burning steem was proposed in this post by rosz and was encouraged by the Steemit team as steemcurator01 commented on this post and mentioned about the possible initiation of a new campaign under the tag of #burnsteem25
As the tag suggests, in this campaign we'll burn 25% of our steem. But but but... Why should be do that? Why are we burning coins? What good will it bring to the Ecosystem or more importantly what good will it be to us? We'll be literally wasting our money. Why should we burn steem for nothing?
Well, that's where you're wrong. I've been in the Crypto for quite a long time now and a big credit goes to the CryptoAcademy. Don't worry, I'll explain each and everything in a clear way so that it gets easy for you to understand why you're what you're doing and not just blindly for rewards. Let's start with understanding what does 'Burning' mean in the Crypto world, how do we do it, what changes does it bring to the Ecosystem of the asset we're burning and what is Proof of Burn.
What is Proof of Burn?
Before I talk about Proof of Burn we need to understand the other consensus algorithms on a Blockchain. These consensus algorithms are basically what the miners carry out on the Blockchain network to create new blocks. One such example is the Proof of Work(PoW) in which a miner has to solve mind boggling puzzles and problems to carry out with transactions and creating new blocks. The first one to do it takes it all kind of work. This process requires a lot of computing power, electricity and energy.
In Proof of burn the energy expenditure is comparatively very low. PoB requires the 'burning' of your already owned cryptocurrency which is termed as an investment. This investment is used as a resource in favour of the miner.
What's the reason behind Burning coins?
A very valid question for anyone out there who doesn't understand the reason of burning coins. Let me explain it to you with an example:
Now the people still want that drug but now when the drug re-enters the market its price will automatically be raised. What just happened? The market availability was reduced, a scarcity was created and the price of the drug increased significantly.
The same phenomenon takes place when you burn coins. It diminishes the market availability of that coin, which causes scarcity and increases its value.
What's the reason of burning Steem and how can we do it?
Right now, steem is not doing good and we are all aware of it. Right now Steem needs us more than we need steem. For that we have a campaign of #clubs in which we powerup our steem to play a part in stabilizing the ecosystem. In case you don't know the process behind it, I'll explain it in a sentence. By powering up we lock our steem temporarily which in turn reduces the supply of the asset and thus having a good affect on it's demand and in turn it's price.
Right now, with the #burnsteem25 we'll 'lock' Steem permanently. How can we do that? We can set 25% beneficiary to @null. It's an account specifically for burning Steem. Let's take a quick look at the process.
When you invest your time and energy in a project, you go through some extra miles to have fruitful results. Right now Steem is not having a good run and the users here are expected to take care of the platform just like the platform took care of all of us when we needed it the most. Right now we need to stop selling Steem and start working towards the strengthening of this coin once again
Apart from that, it's for our own advantage. I mean, we all know how the market crashed recently and it had a drastic affect on Steem as well. So if we want to have good money, for that we'll need a better price of Steem at the moment and it can only be done if we all work as one unit. By burning Steem collectively we can work towards the increment of Steem price.
On the other hand the the Steemit team announced that it will reward the users using the #burnsteem25 tag. But keep in mind, votes are not guaranteed on this platform. You have to post quality content in order to have chances of getting a vote from the steemcurator01/02 or any other community curation accounts. I highly doubt you'll be getting any votes if you're compromising on your content and just using the burnsteem25 tag for the sake of getting votes.
Just like being one of the earliest advocates of #club on steemit, I'll be advocating #burnsteem25 as well. I won't deny, I thought over it a bit but now I'm here, playing my part for the better future of Steem. So let's join hands and start working for a better, brighter future.
Steemon
cc: @pennsif
I think this post has actually explained everything about the burn steem initiative in a very simple way to users who are new to the world of crypto currency.
A simple scenario for user who think this initiative wont help steem is to have a look at the binance coin( popularly known as the BNB ) . Binance themselves make sure to buy back bnb at the end of a period and then burn them, now this initiative has caused the bnb token to have a very strong presence in the market as we can see that when most coins are falling the bnb token always stands strong.
This same thing can be replicated for the steem ecosystem.
The more we power up and burn steem the scarcity of the number of tokens in circulation will reduce causing the price to rise and at the end we will benefit from it.
Thank you for the remarks. Yes indeed, burning is an essential part of different Blockchains. Through burning we can actually attain stability in the steem ecosystem. A very good example provided by you of BNB.