Introduction
Burning an NFT is a term used to describe the process of permanently destroying a non-fungible token (NFT) on a blockchain. This is typically done to reduce the overall supply of a particular NFT, which can increase its value and scarcity. In this article, we will explore what it means to burn an NFT, why it is done, and how it is accomplished.
What does it mean to burn an NFT?
Burning an NFT, also known as "destroying" an NFT, is the process of permanently removing an NFT from circulation by irreversibly deleting it from the blockchain. This is typically done by sending the NFT to a smart contract that is programmed to destroy it (i.e. send the NFT to a burn address so it’s no longer in your wallet), and the token is then permanently removed from circulation. This burn address is inaccessible, which means that any NFT sent to this wallet address is considered to be removed from circulation.
But remember that this only makes the NFT permanently inaccessible since it’s not possible to delete NFTs from the blockchain because of its immutable nature (i.e. all transactions are permanently recorded and can’t be changed).
Why do people burn NFTs?
There are a few reasons why people may choose to burn an NFT. The first reason is to reduce the overall supply of a particular NFT. This can increase the value and scarcity of the NFT, as there are fewer available for purchase. Sometimes there may be too many NFTs in a large collection and the creator can burn some of this supply to support the floor price.
For example, let’s say an artist creates a limited-edition series of 100 digital art pieces and sells them as NFTs. Once all 100 pieces have been sold, the artist may choose to burn some of the NFTs to reduce the supply and increase their value. NFTs can be burned to retire them from circulation, such as if a creator or owner decides that the NFTs have served their purpose and are no longer needed but they also don’t want to continue to have these NFTs circulating on the blockchain.
Another reason people may burn NFTs is to show commitment and dedication to a project or community. For example, some artists may choose to burn a portion of their own NFTs as a way of showing their support for a particular cause or project. This can help to build trust and credibility within the community, as it shows that the artist is willing to sacrifice their own assets for the greater good.
Companies may also burn NFTs as a marketing activity to promote their collections. Holders of a specific NFT might be asked to burn a set number of that NFT to obtain another item. Companies might also offer a physical collectible to any NFT holders who burn their NFTs.
Finally, some people may burn NFTs as a form of protest or to make a statement. For example, an artist may choose to burn their own NFTs as a way of expressing dissatisfaction with the current state of the NFT market or to call attention to a particular issue. Other artists might burn their NFTs as part of their artwork or performance.
How do you burn an NFT?
To burn an NFT as a developer, follow these steps:
- Identify the NFT you want to burn: to burn an NFT, you will need to know the exact NFT you want to burn and also have ownership over this NFT in order to complete the next steps in this process.
- Create a smart contract designed to burn this NFT: there are a few different ways to do this, including searching for relevant smart contracts on a blockchain explorer or looking for smart contracts that have been created by community members.
- Execute the smart contract and send the NFT to a “burn address” on the blockchain. This address is typically a public place that’s designed specifically for the purpose of destroying NFTs. Burning an NFT is irreversible, so it is important to carefully consider your decision before proceeding.
To burn an NFT as an end user, follow these steps:
- Identify the NFT you want to burn: to burn an NFT, you will need to know the exact NFT you want to burn and also have ownership over this NFT in order to complete the next steps in this process.
- Connect your wallet to a platform like OpenSea that will allow you to transfer NFTs to other wallet addresses. OpenSea is only one example that’s widely used by NFT holders. Other options include web-based tools for specific blockchains.
- Go to your account and select the “transfer” option. Choose the NFT(s) that you want to burn and transfer them to the NFT burn address (0x000000000000000000000000000000000000dEaD).
- Confirm payment of gas fees for the transaction, which can range between $1-20 per transaction. Your NFT should now be sent to the burn address and will no longer be visible in your wallet.
- Alternatively, you can choose to hide NFTs that you don’t want to be visible on OpenSea, which will not cost any gas fees. The NFT will still be visible on a blockchain explorer though.
Remember that burning an NFT is irrevocable. Make sure that you really want to burn this NFT(s) and that alternative methods do not meet your needs (ex. Hiding the NFT).
What happens after you burn an NFT?
Creators of NFTs that are burned are not notified automatically of the burn. They can monitor the total supply of that NFT collection to determine how many, if any, NFTs were burned by their holders. Some creators use burn trackers to keep track of NFTs burned (ex. VeeFriends).
Burning an NFT will make it permanently inaccessible and is an irreversible transaction. Be sure that you really want to burn that NFT because there is no method to reverse the transaction. Alternatives to burning NFTs include retaining ownership (i.e. holding onto the NFT but not using it), gifting or donating the NFT to an organization or person, selling the NFT or hiding the NFT. Some artists or creators might want to buy back their NFTs instead of letting it be burned.
Making a decision to burn NFTs
Below are some questions that you can ask yourself before making the decision to burn an NFT:
- Is burning this NFT the only option available to achieve your goal? Alternatives include donating, selling or hiding the NFT. These alternatives may also cost less gas fees.
- Do I fully understand the consequences of burning this NFT? This is a permanent action and it can’t be undone.
- Have I considered the potential financial impact of burning this NFT? If the NFT has substantial value or the potential to grow dramatically in value, burning the NFT can cause financial loss.
- Have I considered the potential emotional impact of burning this NFT? It’s not a good idea to make decisions rashly, especially if the action is irrevocable. If this NFT has sentimental value, it may cause negative emotions if you burn it.
- Do I have the technical knowledge and resources to burn the NFT correctly?
While this is not an exhaustive list of questions to consider before making a decision to burn an NFT, it can be a starting point to confirm your decision and to think through the consequences in advance.
Conclusion
Burning an NFT is the process of permanently destroying a non-fungible token (NFT) on a blockchain. This is typically done to reduce the overall supply of a particular NFT, which can increase its value and scarcity. Burning an NFT can also be used as a way of showing commitment to a project or community, or as a form of protest. To burn an NFT, the token is typically sent to a burn address that is inaccessible, making it unusable. Because burning an NFT is irrevocable, make sure that this is what you really want to do and consider your alternatives before making this decision.
