Recently, I've been receiving many questions about cryptocurrency burn, so I want to clarify it here. Since the Ethereum London Hard Fork, this topic has been spreading rapidly.

First, the basics. Coin burning essentially means sending tokens to an inaccessible wallet address (also called a burn address) to permanently remove them from circulation. This reduces the supply, which theoretically increases scarcity. However, an important point is that burning cryptocurrency does not necessarily lead to a price increase. Many people believe that it has little to no practical effect.

On the other hand, buybacks work a bit differently. The project purchases tokens from the market at current prices and holds them in the development team's wallet. Unlike burning, the tokens bought back are not completely destroyed. Between 2017 and 2018, many projects like BNB, BCH, and XLM adopted this strategy to adjust supply and boost prices.

The Binance case is a good example. They use 20% of their revenue to buy back and burn BNB tokens quarterly. In October 2021, during the 17th burn, over 1.33 million tokens were removed from the market. Unlike share buybacks in the stock market, cryptocurrency buybacks are programmed via smart contracts, ensuring automation and execution.

From a technical perspective, there is also a consensus mechanism called Proof of Burn (PoB). Miners transfer tokens to a burn address to destroy them, earning mining rights in the process. PoB is more energy-efficient than Proof of Work (PoW), but it carries risks of centralization among large-scale miners.

The benefits include potential long-term price stability through reduced supply and maintaining investor interest. The drawbacks are that deflationary currencies can suppress consumption, and rapid burning might reduce liquidity. Additionally, some projects use cryptocurrency burns as a pretext to deceive investors. Developers may send tokens to their own wallets and claim they have burned them.

In conclusion, buybacks and burns are techniques used in traditional financial markets as well. They serve as standard tools to adjust circulating assets. However, it’s important to discern the true motivation behind them—whether they are merely price manipulations or genuine strategies to enhance project value. Market participants should always maintain a critical eye.