What is Proof of Burn? Can someone explain me:


What is Proof of Burn
What is the difference between Proof of Burn and Proof of Work
How Proof of burn works
Which virtual currency uses Proof of burn technology instead of Proof of Work


Can someone explain these things to me in a understandable manner? I can't understand anything in the (Wiki article on it). Highly appreciate if someone can explain this to me.
Proof of burn simply means you have provably destroyed coins. The only way to destroy coins in a proven way is to send them to an address which is improbable to have been generated from a private key, and thus can not be spent.

Chancecoin is the first I've seen to use this way to generate their coins. The announcement for Chancecoin can be found here: https://bitcointalk.org/index.php?topic=528023.0

In here, they instruct people can burn bitcoins for a certain period by sending them to 1ChancecoinXXXXXXXXXXXXXXXXXZELUFD. The reason why we believe that this is a burn address and not a vanity address is that all but 6 characters seem to have been predetermined. The way you would find an address like this which you could send coins to is by running a loop.


Start with 1ChancecoinXXXXXXXXXXXXXXXXXXXXXXX
Ask bitcoin if that's a valid address
If it's not valid, increment the last character by one and try again


After a billion or so tries (not too much in terms of 'mining') address 1ChancecoinXXXXXXXXXXXXXXXXXZELUFD is found which passes the validity check. For more info on address validity see: https://bitcointalk.org/index.php?topic=1026.0

This address is very unlikely to have been generated with a private key, or if so, it would show a big weakness in bitcoin and many other security practices. So we assume that the nobody has access to this private key.