NFTs are immutable once minted on the blockchain, but does that mean NFTs can’t be destroyed? If you need to get rid of your NFT there is only one way—you have to burn it. So, how do you burn an NFT and why would you want to?
After minting too many of my own NFTs, I learned exactly how to burn NFTs as well as why you might want to burn NFTs you own. Here’s everything you need to know.
What Is Burning an NFT?
Burning an NFT is equal to destroying it. The process involves sending a token to an un-spendable address that no one has access to. Once you burn an NFT, you can’t recover it. When you publish a digital asset on the blockchain, it’s impossible to delete it. Burning it is the next best option.
The burning of an NFT can be accomplished in a variety of ways. The aim is to reduce the number of tokens that are currently available. This might sound odd, but burning tokens does not actually destroy them; rather, it renders them unusable in the future. One of the most common ways is to send the NFTs to a so-called eater address or null address. The tokens sent to a null address are considered unusable since the transaction is irreversible.
Tokens can be burnt to restrict supply and thereby increase value. While the word burning does bring up images of fire and smoke, there are no tokens that are burnt. The tokens are just rendered to be of no use in the future. NFTs are also burned to rectify errors or incentivize the buyers to hold onto their NFTs as they become more valuable.
Once the tokens are found a Proof of Burn or PoB is created.
Proof-of-burn (PoB) is a consensus mechanism that enables users to burn their tokens. However, this not only uses a lot of resources but may also be very costly. PoB regulates this by restricting the number of tokens that can be burned, thus limiting the possibility of mining activity.
Burning an NFT is basically deleting it. Before deleting your NFT, you should carefully think as to why it needs to be removed from the blockchain. Remember, you will never see it again. Although it may seem drastic to burn a digital asset, burning crypto tokens is a fairly normal occurrence when it comes to everyday crypto activity.
This underlying tactic is used to manipulate the market price of a token. When you burn a token, it means you are withdrawing your token from circulation indefinitely. Once you permanently remove your NFTs from circulation, you reduce the total supply. This can increase the scarcity of your existing tokens if thoughtfully executed.
Some NFT creators are also allowing people to combine NFTs so that they can increase the priority of the project. The NFTs that are combined are generally burned in the process to ensure that the new and improved one holds value.
How To Burn Your NFT
Burning an NFT may seem complicated at first, but luckily, burning an NFT is as easy as transferring an NFT. Follow the steps below to quickly and easily burn your NFT.
- Login to the marketplace or wallet where your NFT is stored.
- Select the NFT you’d like to burn and tap “Transfer”.
- Send your NFT to Ethereum’s official burn address: 0x000000000000000000000000000000000000dEaD
- Pay the gas fees required to transfer your NFT and hit “Confirm”.
Remember, once you send an NFT to this burn address there is no way to retrieve it. It will be gone forever. So, make sure you
The Cost To Burn A NFT
Burning your NFT is super simple, but does it come with a cost? After I burned my NFT, I was surprised at just how much it cost me.
Expect to pay between $5 to $100 when burning your non-fungible token. The act of burning a token is considered a transaction, therefore you must pay a transaction (gas) fee. This fee varies and depends on the current supply and demand being placed on the blockchain.
In general, a token burn takes place in the following order:
- An NFT holder can call the burn feature and specify the number of NFTs they want to burn.
- The contract will then check to see if the individual has the gas fees in their wallet and if the specified number of tokens is correct.
- If you do not have enough currency to cover the gas fee, then the transaction is invalidated and the NFT does not get burned. If the required gas fee is available in your wallet, then you must sign the contract approving the transaction before your NFT is gone forever.
- The NFT burn transacts as a public, irreversible, and permanent transaction on the blockchain ledger. The blockchain records this transaction and the NFT is deemed no longer available.
Moreover, the fees charged on transactions do not go to a central authority or a company; instead, in the case of most marketplaces, the fees serve as a burning mechanism.
Why Burn An NFT?
Burning an NFT is most often used for value management purposes. A drop in the supply causes an asset’s price to rise, enticing traders and investors to participate with urgency. Others may burn NFTs simply because the token has an error or flaw, or too many were minted.
Remember that NFTs are valuable only if there is supply and demand. Value and likeability is the reason people purchase non-fungible tokens or anything for that matter. If demand is high but the supply becomes limited, the value may rise as a result.
For example, to make your NFT more limited, maybe you host a limited sale for 5 days, then after the 5 days is up, you burn the remaining tokens ultimately increasing the overall scarcity.
Trust and confidence in the project is a key element for NFT sales. In some cases, you may find the burning process is done once the token is finally launched to provide new NFT owners with trust, ensuring their investment will not be affected by an oversupply of the tokens.
Of course, burning your NFT comes with its own risks. You will never get your NFT or the money spent to mint it back. Remember, burning NFTs does not ensure that the remaining will appreciate in value.
NFT burning is intended to benefit both developers and investors. Burning NFTs in most situations, aids in the increase of NFTs’ value and the reduction of the consequences of increased supply. Due to this inherent reliability, investors are more likely to retain their NFTs and thereby build up value as opposed to scampering to dump their assets at lower prices.
Burning tokens also instills trust and reliability, especially in the early stages of an NFT’s life cycle. Some creators engage in burning unsold tokens after an offering to establish greater accountability and protection to investors. If you are an owner you need to remember that token burning is an expensive affair and can include fairly high gas fees.
If you hear of owners using burning methods to maximize value, you’ll know it has nothing to do with smoke or fire. Rather, it is a way to get rid of unwanted NFTs and minimize the number of tokens available on the blockchain and marketplace. The burn transaction is irreversible and also recorded on the blockchain for anyone to verify.
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