Proof-of-Burn
Learn how Counterparty (XCP) used an innovative Proof-of-Burn mechanism to mint its native token ensuring a fair distribution.
Proof-of-Burn is a consensus mechanism and distribution method used by Counterparty (XCP) to create its native token. In this process, participants “burned” an existing cryptocurrency (in this case, Bitcoin) by sending it to an unspendable address, effectively removing it from circulation forever.
The amount of XCP received was proportional to the amount of BTC burned during the initial distribution period. There was no premine. No central issuer. This method ensured a fair and transparent distribution of tokens without the need for mining hardware or a trusted authority.
Counterparty's Proof-of-Burn process took place over a 5-week period in 2014. During this time, participants sent Bitcoin to a designated burn address, and in return, they received newly minted XCP tokens. This innovative approach created a strong foundation for the Counterparty ecosystem.
By using Proof-of-Burn, Counterparty was able to bootstrap its network security, create value for XCP, and demonstrate commitment from early adopters. The spirit of the Counterparty Burn lives on in the present day features of the protocol.Learn how to mint your own token »
- XCP created
- 2.6 million
- BTC burned
- 2,130
- Burn period
- 30 days
- Launch year
- 2014
Benefits of Proof-of-Burn
Proof-of-Burn offers several advantages over traditional token distribution methods, making it an attractive option for cryptocurrency projects.
- Fair Distribution
- Ensures a fair and transparent distribution of tokens without pre-mining or ICO.
- Value Creation
- Creates value for the new token by removing existing coins from circulation.
- Security
- Provides a secure and verifiable way to create a new cryptocurrency.
- Scarcity
- Introduces scarcity to the new token, potentially increasing its value.
- Commitment
- Demonstrates commitment from participants who are willing to burn coins.
- Market Dynamics
- Creates interesting market dynamics and incentives for early adopters.
Learn More About Counterparty
Interested in exploring the Counterparty ecosystem and understanding how Proof-of-Burn has shaped its development? Dive deeper into the world of XCP and discover the innovative applications built on top of this unique platform.