Understand Bitgesell Burns

Understanding Bitgesell Burns

Bitgesell has many burning mechanisms, including the Bitgesell wallet, the BGL main core, the inherent burn code for 90% of transaction fees, the dead wallet address, and Bitgesell Burning Day online event. The latter is a public event dedicated to burning Bitgesell coins by the community, especially while the coin is still very cheap.

In the Bitgesell Network, as Emma Wu said in 11th May, 2020, on BitcoinTalk: "Bitgesell burning 90% tax fees is done during block validation by the node. The burn is implemented in the code. It is not by transfer to some burning address, it's in the core logic itself."

Bitgesell has several interconnected burning mechanisms, which produce two types of burn actions:

a) Automatic burns (coded into the blockchain)

b) Voluntary burns (decided by holders or miners)

Coded Burns

Bitgesell differs from Bitcoin and other store-of-value coins by burning 90% of the transaction fees. This is coded into the protocol using the formula: `nFees*0.1 + GetBlockSubsidy()`.

In the context of cryptocurrencies, fees refer to the cost charged on the blockchain for making a transaction. These transaction fees compensate Bitgesell miners or validators for processing and verifying transactions and including them in a block.

Unlike Bitcoin, where all transaction fees go to the miners' pockets, Bitgesell allocates only 10% of each transaction fee to the miner, while the remaining 90% is automatically burned through the coded formula.

For a transaction to be included in a block, the miner pays a tip. The more tips the miner pays, the more will be burned. A small tip will result in a small burn. If a miner sets a very generous tip, it can burn at least 1 million coins in one block. There is no limit.

Voluntary Burns

Voluntary Bitgesell burns are decided by the miner or holder, involving a supplementary amount of coins sent for burning along with the transaction fee. 

Bitgesell burns one coin for every 111,111.1 transactions. The default transaction fee value in the Bitgesell wallet is 0.0001 BGL. However, this minimum fee can be adjusted to as low as 0.00001 BGL, with 10% (0.000001 BGL) going to the miner and 90% (0.000009 BGL) burned.

Considering the total number of transactions recorded on the blockchain to date, totaling 14.6 million as of 04.07.2024, if we took the minimum transaction fee values into account, only 131.9 Bitgesell coins would have been burned.

So, how has the Bitgesell blockchain burned 1.1 million BGL coins in the past four years? This is explained by the automatic burns and the voluntary burns initiated by miners since the genesis block. To understand clearly, for a transaction to be included in a block, the miner pays a "tip." The more tips the miner pays, the more will be burned. A small tip will result in a small burn. A big tip will result in a big burn. If the miner sets a very generous tip, anyone can burn at least 1 million coins in one block.

Miners Operating with Losses

Bitgesell mining has been operating at a loss since the first halving. However, ASIC mining processors can mine at least two or three coins simultaneously, likely making Bitgesell a collateral mining result alongside another cryptocurrency. The processor AmFusionSilicon's X2 Miner, for example, runs on three algorithms: Mygroest (300 Gh/s), Keccak (67 Gh/s), and Blake2s (1.1 Th/s) with a consumption capacity of 980W.

Noble BGL Miner

In fact, Bitgesell miners have been contributing to a higher number of mined Bitgesell coins, despite operating at a loss with every block mined. This has kept the coin accessible to many while programming voluntary burns by setting higher transaction fees, thus facilitating large-scale burns, increasing Bitgesell's scarcity and contributing to deflation. Since the genesis block, more than 1.1 million coins have been burned through the direct actions of Bitgesell miners. Besides systematically selling to realize some profit, they have also contributed to making Bitgesell increasingly rare, playing a crucial role in the medium and long term Bitgesell expected profits.

Voluntary Burns from the Community

Voluntary burns are decided not only by miners to accelerate the scarcity process of the coin! Holders can also contribute significantly by burning coins. These can be executed in each transaction by setting a higher fee parameter in the Bitgesell wallet or by directly sending the amount to be burned to the Bitgesell dead wallet or Null Address at the following address: https://bgl.bitaps.com/bgl1q00000000000000000000000000000tm54qt.

So far, 133,044 BGL have been burned this way. The Bitgesell Burning Day aims to annually promote a voluntary burn fest on the second weekend of October, with the first edition scheduled for October 12-13, 2024. This initiative, conducted by the Bitgesell Community on Telegram about six months after the annual halving, serves to raise market positioning and awareness for Bitgesell adoption, encouraging investors to choose BGL as a premier store of value and actively contribute to the coin's scarcity.

Bitgesell Burning Day

Main reasons to burn Bitgesell coin

Bitgesell Burning coins and valuing the supply are important for several reasons. 

1. Reducing Supply: Bitgesell coin burning decreases the total supply of a cryptocurrency, making the remaining coins scarcer. This scarcity can increase the value of the bgl coins still in circulation, following the basic economic principle of supply and demand.

2. Inflation Control: By regularly burning coins, Bitgesell can control inflation. This helps maintain the purchasing power of the coins, ensuring that their value does not diminish over time due to excessive supply.

3. Increased Trust: Coin burning demonstrates a commitment by the project team to the long-term value and stability of Bitgesell. This can enhance investor confidence and attract more users and investors.

4. Deflationary Mechanisms: A deflationary model as Bitgesell, where the supply decreases over time, can incentivize holding rather than spending. This can lead to reduced selling pressure, potentially leading to price appreciation.

5. Improve Utility: Burning BGL coins can be part of a broader strategy to improve the utility and attractiveness of the cryptocurrency. Bitgesell burns 90% of transaction fees, which can make using the network more appealing and cost-effective for users.

6. Market Perception: Regular coin burns as Bitgesell model can positively influence market perception by signaling active management and ongoing efforts to enhance the value of the cryptocurrency. This can result in increased demand and a stronger market position.

7. Network Security: Burning coins can help improve the security of the network. For instance, burning transaction fees as Bitgesell Network does can prevent spam attacks by making it costly to flood the network with transactions.

Burning coins can significantly raise awareness about Bitgesell and its unique features. This can attract new users and investors, broadening the community and increasing adoption.