The NFT market has expanded rapidly in recent years and is expected to continue expanding in the future. Various works such as art, games, and collections are coming out, but I often hear the word burn. I will explain what that burn is.
What is NFT burn?
Burning an NFT is an act aimed at destroying an NFT and thereby increasing its rarity. In other words, by adjusting the amount supplied, the aim is to maintain scarcity and avoid a price crash. NFT owners can increase the value of their collections. Burned NFTs are permanently deleted from the blockchain and cannot be traded again. Also, this may be the same thing in virtual currency, but it will be the same reason.
The main reasons for burning are as follows.
Remove unnecessary NFTs
In addition to the NFTs you purchased yourself, you may be sent unwanted NFTs from others. NFTs cannot be deleted on the NFT Marketplace. Therefore, unnecessary NFTs may be burned, lost or organized.
Supply volume adjustment
The value of NFT fluctuates depending on the balance between supply and demand. If there is too much supply, the value will inevitably fall. Naturally, the lower the supply, the higher the value. The aim is to reduce the supply and improve the collection value.
Exchange with new NFT
Depending on the NFT, we may solicit burn applicants and distribute new NFTs as a benefit. Burning is often used to hold some sort of event.
Advantages of burn
NFT burn has the following advantages.
Increase NFT value
As explained above, a decrease in the distribution volume of NFTs will lead to an increase in value, and burns are expected to increase scarcity and increase the market value. For investors, it is an important strategy to increase the value of the NFTs they hold.
Barn stimulates discussion and interaction within the community, which leads to excitement for the project. By holding events, it becomes possible to attract the interest of investors. It also helps in attracting new users.
Differentiation from other NFTs
Through Burn, you can build your own NFT collection. It is expected that it will become more attractive and will be appreciated by other collectors and investors.
Disadvantages of barn
Burns also have disadvantages.
NFT cannot be restored after burn
Burned NFTs are permanently deleted from the blockchain and cannot be restored. You can’t restore after you’ve done it, so you need to think about the effects after burning before deciding whether to do it or not.
When burning NFTs, there is a fee on the blockchain network. You need to consider whether the value of burning exceeds the cost of gas. Transactions may fail due to insufficient gas or incorrect operation.
Bybit’s NFT Marketplace
Bybit has an NFT Marketplace. If you open an account, you can actually enter and trade, so let’s try it.