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What is burning an NFT and how do you do it?

NFTs (Non-Fungible Tokens) have taken the world by storm. Like any other new concept, NFTs have received mixed opinions. Many people are dead against the idea, while others participate in transactions with them.

Still, some people are just trying to understand what an NFT is so they can formulate their opinion. Here is some information to help you understand the concept of NFTs better. 

NTFs have officially been around since 2015; however, they have gained popularity more recently with certain celebrities and sports clubs started getting involved in the NFT space. An NFT is a digital asset or a token with information that can be anything from games, music, sports material, or art. NFTs can neither be replaced nor interchanged since it has original properties. 

Most NFTs are on the Ethereum blockchain. A blockchain is a digital ledger where all cryptocurrency transactions take place. The blockchain is managed by cryptocurrency experts. It is a very secure database that prohibits tampering with the content.

When an NFT is bought, the buyer does not receive sole authority or ownership of the content but instead owns a unique version of it. It may sound like an abstract concept; many people won’t even bother to get involved with investing in an NFT, let alone understand what the fuss is all about. 

READ ALSO: Guide to NFT Marketplaces

Why are NFTs so valuable?

nft floor price

NFTs are the digital equivalent of trading valuable works of art; it possesses similar qualities. An artwork is worth more when it has a high demand and a certain level of scarcity.

NFTs work similarly; their value increases as the demand increases. When an NFT is sold, the original creator receives 10 percent of the selling price, the platform the NFT was sold on will get a small percentage and the current owner will get the remainder as a profit.

Therefore, there is potential for continuous earnings as digital content becomes more popular over the internet and more people buy an NFT. The demand for an NFT can increase depending on the seller. If the seller is a celebrity, people are more likely to buy their content; some buyers are able to speak to the celebrity selling the NFT. 

NFTs have opened many doors for aspiring artists to sell their work digitally with the added benefit of assured authenticity. The threat of people copying the piece and using it without permission is eliminated. Gamers have been able to sell their in-game purchases as NFTs when they no longer need the item.

Even the sports industry has benefited from NFTs. Video clips of players have been sold as NFTs; each video clip is unique and extremely valuable. The NBA has already made $230 million in sales. 

NFTs also allow the buyer to have a measure of authority over the art they purchased. One of the many positive aspects of an NFT is that it cannot be manipulated or changed; that right belongs to the creator of the NFT. Since the content has the potential to be an investment, consumers are keen to own unique digital content  

What if you want to get rid of your NFT? How can you stop it from circulating on the blockchain? In this article, we will discuss two main ways to remove, or burn, your NFT. We will also talk about the costs and permanent effects of burning an NFT. 

To Burn or Not to Burn your NFT…

Unlike an image in your gallery or a song on your phone, an NFT can’t be ‘deleted’. Once an NFT is uploaded to the blockchain, it will remain on the blockchain indefinitely. When you buy an NFT, you receive proof of ownership of the digital art. The proof of ownership is also stored on the blockchain.

The blockchain is a peer-to-peer database which means that all users can verify ownership of an NFT. Due to this open-ended database, users can’t manipulate the information or rights of ownership on the blockchain. With that being said, it is not possible for an NFT to be deleted or permanently removed from the blockchain. The NFT would have to be ‘burned’. 

What is ‘burning’ an NFT? 

Before you set your device on fire, you should know that to ‘burn’ an NFT is simply removing it from public circulation. Once you burn an NFT, it is no longer available for users to purchase. The NFT will still exist; however, it will be in an inaccessible account. Once you have burned an NFT, you can never gain access to it again – no one can. 

 Why would anyone want to give up access to their NFT?

You hardly see artists and collectors alike setting their items alight; why would you want to permanently destroy their NFT? It is unlikely that an individual user will burn their NFT; however, many crypto-based businesses frequently burn their NFTs. Recall that at the beginning of this article, we mentioned the supply and demand concept.

To increase the demand for an NFT and the value of the NFT itself, some corporations deliberately burn their NFTs to decrease the supply. You would be surprised at the volume of NFTs that some corporations burn to reduce their supply. 

How do we go about ‘burning’ an NFT token?

There are two main ways to burn an NFT. The first way is to simply use your preferred crypto marketplace where you uploaded your NFT, and the second way is to send the NFT to an address that doesn’t exist. Here’s how:

Using your preferred Crypto Marketplace:

  1. First, check with your exchange to ensure that they allow their users to burn an NFT.
  2. Once you log in to your marketplace, locate the NFT that you want to destroy and select the ‘burn’ option in settings.
  3. Depending on your exchange, you might be required to delist your NFT and then enter your ID to successfully burn your NFT. 

FURTHER:

What happens if you send your NFT to an address that does not exist?

  1. Your exchange may not allow NFT burning; therefore, it might be necessary to use this alternative. 
  2. Send your NFT to a black hole address. A black hole address is an inaccessible digital wallet address; it will render your NFT permanently unavailable since it is an address that doesn’t exist.
  3. Once an NFT is sent to this black hole address, it will still be on the blockchain, but no one can access it again. 
  4. The most commonly used black hole address is the Ethereum genesis address: 0x0000000000000000000000000000000000000000 

The Ethereum address currently holds NFTs worth about $520 million.

Both the above methods are irreversible and permanently remove your NFT from circulation. There will still be proof that the NFT was destroyed since the transactions that took place before the burning will still be on the blockchain forever. Although, it will no longer be visible on your profile. 

What if you accidentally burned your NFT?

Yes, it happens; often, people burn their NFT unintentionally. The owner of the NFT can send the NFT to a black hole address without meaning to. The bad news is that once an NFT is burned, that’s it! No one, not even the founders of the blockchain, can access it, much less help you retrieve it.

As yet, no one has successfully been able to reverse a burned NFT; this would undermine the security of the blockchain, implying the possibility that an NFT could be manipulated without authorization.

It would also allow people to retrieve millions of tokens and release them to a corrupt market. Therefore, no matter how distressing it would be to accidentally lose an NFT, it is the best alternative to maintain the integrity of the blockchain. 

How much does it cost to burn an NFT?

You may have thought that removing an NFT from circulation would be free; after all, it is free to discard other digital items. However, due to the nature of an NFT and its unique properties, it makes sense that there would be costs involved in destroying it. 

Users are charged a gas fee when they burn an NFT. A gas fee is charged to cover the amount of energy that is used to process the transaction. The exact rate of this gas fee is not constant; it depends on two factors:

  1. Time of day. When the network is busier with more users online, you will likely pay more to burn your NFT.
  2. Number of NFTs. The more NFTs you burn, the more energy is expended to transfer them to an inaccessible account. This will incur more costs to burn it. 

On average, it has been noted that the gas fee can be anything between $3 – $80. To be able to burn your NFT, ensure that you have sufficient funds in your account. 

Bottomline…

Before investing in an NFT, you should ensure you understand what an NFT is and that you are buying a part of the content, not the content itself. In addition to knowing how to purchase an NFT, it is vital that you carefully consider your reasons for burning an NFT. As we mentioned in the above paragraphs, this action is irreversible and could result in huge losses. We hope that this article has shed more light on NFTs!

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