Recently, there has been an increasing amount of discussion about cryptocurrency burning. Since the hard fork upgrade in London, Ethereum's burning has gained attention. But in reality, few people truly understand what coin burning is and how it differs from buybacks.

Simply put, token burning involves sending cryptocurrencies to an inaccessible wallet address and completely removing them from circulation. Tokens transferred to a special address called a burn address are lost forever. Theoretically, anyone can do it, but since it's essentially throwing money away, most cases are strategically executed by project developers. The idea is that reducing supply increases scarcity, which could lead to a price increase.

Between 2017 and 2018, several major projects began adopting this method. Large exchange tokens, Bitcoin Cash, Stellar, and others all performed burns to reduce token supply. It also became common for new cryptocurrencies to start with a huge initial supply. Coins starting at a low price point tend to attract investors, so developers began to burn large amounts of tokens afterward to artificially boost value.

However, burning doesn't always lead to a price increase. Many market participants believe it has little to no effect or only limited impact. Additionally, the burn mechanism can be exploited to deceive investors. Developers can send tokens to their own wallets and then claim they have burned them. There are also cases where the burn name is used to hide large holders.

This is where buyback strategies come into play. Companies buy back tokens from the market to reduce supply and increase overall value. This approach has long been used in traditional financial markets as share repurchases and has now been adopted in the crypto world. While buybacks and burns have similar goals, their mechanisms are entirely different. Bought-back tokens are stored in the company's wallet and don't necessarily leave circulation forever. In contrast, burns are truly permanent deletions.

Buyback processes are often automated through pre-programmed smart contracts. In traditional stock markets, investors can't fully predict a company's buyback plans, but in the crypto world, transparency is high. Some major exchanges use 20% of quarterly profits to perform token burns and buybacks. For example, on October 18, 2021, during the 17th burn, over 1.3 million tokens were removed from the market. The Shiba Inu project also conducts regular burns through an official burn wallet.

There is also a consensus mechanism called Proof of Burn (PoB). Miners transfer tokens to a burner address to destroy them, earning the right to generate new blocks. It is more energy-efficient than Proof of Work but carries centralization risks favoring large miners. Many projects introduce decay rates to adjust the process.

The benefits include increased scarcity through supply reduction, price stabilization, and long-term growth promotion. Investors are encouraged to hold tokens, and liquidity can also improve. However, deflationary currencies tend to suppress consumption, and if the burn rate exceeds the fundamental growth rate, it could hinder capitalization.

Ultimately, burn and buyback mechanisms are applications of established price stabilization tools from traditional financial markets to the blockchain world. Major projects and several leading companies have already implemented them. The stronger the development team's conviction, the more actively they tend to pursue such measures to adjust market prices. Cryptocurrency burning is not just a trend; it has become a strategic method for managing project value.