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Different ways in which bitcoin can be burnt

Bitcoin Stack Exchange

Bitcoin News / Bitcoin Stack Exchange 160 Views

As already mentioned in other answers, you can burn funds by sending them to an address with an unknown or provable non-existent private key, or by allocating them to an OP_RETURN output, which can never be spent.

I want to talk about the second suggestion from your question:

Send a de minimis amount (e.g. 1 SAT) to an address which already holds coins. These will get 'overwritten' and thence lost

Imagine if someone held β‚Ώ100,000 in a single address. Don't you think that someone would just send a single satoshi to destroy it for giggles? Clearly, this mechanic would be completely unsafe, and luckily, it doesn't exist. Whenever you send a transaction, new Unspent Transaction Outputs (UTXOs) are created. These "pieces of bitcoin" are tracked via their outpoint which is the combination of the transaction that created them and their position in the output list: txid:vout. Addresses are merely a shorthand to encode output scripts that define the spending conditions for funds. There is no issue with multiple outputs sharing the same spending conditions, except the obvious privacy implications.


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