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Dragon’s Blood is actually a resin, which is harvested from a variety of different plant species. The bright red pigment is what lends it the name Dragon’s Blood. The products which are currently marketed and sold to modern Pagans are not precisely the same as what ancient cultures referred to as Dragon’s Blood.
The Romans, Greeks, and others used a byproduct of Dracaena cinnabari, the cinnabar tree, found on an island in the Indian Ocean. The tree’s gum resin has a number of uses, including as dye — it’s even found as a colorant in lipstick.
Some practitioners use a powdered version of Dragon’s Blood as incense. If you'd like to try this, it tends to work best if you mix it in with other dried items, and then burn it on a charcoal disc.
Depending on which magical path you may follow, there are a variety of uses for Dragon’s Blood. Cat Yronwoode of Luckymojo points out that in many Hoodoo and folk traditions, this item is used for protection, power and good fortune. It may even be turned into an ink to write out spells.
5 Ways to Use Dragon's Blood in Magic (thanks to www.learnreligions.com)
How to Burn Resins: If necessary, crush the crystals to get them to manageable size/condition (often a powder). Light the charcoal with matches or lighter for about 20 seconds until it self-ignites. Use tongs to hold it up (never hold it with your fingers alone or you might get burned). Place the lit charcoal in a bowl or any incense burner. The bowl or incense burner should be filled with sand or dirt. Let the charcoal warm for a few minutes. It turns gray around the edges when it is ready. Now you are ready! Add a small amount of resin on top of the charcoal. The resin will burn and soon release essential, aromatic oils through the smoke. Continue to place resins or powder on charcoal as they burn out and smoke decreases for a continuous burn.