Regarding cryptocurrency burns and buybacks, I've been asked about this frequently lately, but in fact, many people misunderstand it. To put it simply, these are two different approaches aimed at reducing supply and increasing scarcity.

First, what is a cryptocurrency burn? It involves sending tokens to an inaccessible wallet address (called a burn address) and permanently removing them from circulation. Once burned, those tokens can never return. On the other hand, buybacks are when a company purchases tokens at market price and holds them in its own wallet. This doesn't completely eliminate the tokens but reduces the circulating supply, which is the key difference.

To understand the mechanism of cryptocurrency burns, it's helpful to know about the consensus mechanism called Proof of Burn (PoB). Miners burn coins to earn mining rights proportional to the amount burned. It's characterized by energy efficiency because, unlike Proof of Work (PoW), it doesn't require enormous computational power.

Looking at real examples, several mainstream projects adopted this strategy between 2017 and 2018. A notable case is a major exchange allocating 20% of its quarterly revenue to token burns. During the 17th burn on October 18, 2021, 1,335,888 tokens were removed from the market. Such regular burn plans serve as signals to investors of the project’s commitment to price support.

The reason why cryptocurrency burns have gained popularity is simple. New projects start with a large supply of low-priced tokens—say, one trillion—and then burn several billion tokens to artificially boost value. When supply decreases, according to the law of supply and demand, prices tend to stabilize over the long term. However, it's important to note that this doesn't always work perfectly.

Regarding the difference between buybacks and burns, another point to mention is that buybacks are often automated through programmed smart contracts. Unlike traditional stock markets, where companies may pay dividends or buy back shares somewhat unpredictably, on blockchain, these actions are executed according to predefined rules. This provides a high level of transparency and predictability.

There are also criticisms. Deflationary currencies can suppress consumption, and if the burn rate exceeds the basic growth rate, liquidity might decrease, potentially harming value. Additionally, there have been reports of scams where developers send tokens to their own wallets and claim they've burned them. Some cases involve abusing burns to hide large holders (whales).

Ultimately, cryptocurrency burns and buybacks are strategies similar in essence to those used by companies in traditional financial markets. However, thanks to blockchain transparency and programmability, they are executed in more sophisticated ways. For projects aiming for long-term value appreciation, strategies should go beyond mere price manipulation and consider actual supply and demand dynamics.