Binance happens to be one of the largest cryptocurrency exchanges across the crypto sphere. But, what is BNB? Let’s explore the technology, the usage, and the functions behind the pioneering Binance Smart Chain token BNB.
Binance was launched as an Ethereum ecosystem exchange along with the BNB token, initially complying with Ethereum’s ERC-20 token standards. The exchange launched in 2017 took two good years to launch the Binance blockchain and the Binance chain testnet moving the BNB token on the chain with a new standard.
The token does not only power the Binance exchange and the ecosystem but also serves as a mode of payment for many across the globe. Binance has constantly been upgrading the network from the point of its inception, from the ERC-20 token to the BEP-2, BEP-8 and now BEP-20 token on Binance smart chain (BSC) standards. While the founder, Chanpgeng Zao (CZ), has become one of the top cryptocurrency sphere authorities.
Binance has also devised a real-time burn mechanism to constantly burn the excessive tokens to keep the total circulating supply limited to 100 million tokens.
The real-time burn mechanism was introduced with the BEP95 standard, where the BSC validators decide the ratio of the gas fee to be burned, translating into the number of BNB tokens. Over the years, Binance Coin or BNB has really transformed into a means to carry out more than one activity or power the Binance cryptocurrency exchange as gas. The first and most fundamental use is as a currency for financial value transfer.
Then come various partnerships, such as one with HTC enabling BNB owners to buy HTC smartphones. Other significant partnerships include Monetha, enabling payments at the Monetha merchants. While several other money transfer partnerships, such as with Coinpayments, CoinGate, and Coinify, extends the Binance Coin reach to several new extents.
In addition, the fact that the Binance Smart Chain also hosts a plethora of other tokens, such as Shiba Inu Wife, makes the platform a contemporary ecosystem establishing a very strong base for the future success and growth of the ecosystem as a whole in the digital economy.
How does Binance Coin blockchain work?
The latest blockchain upgrade, Binance Smart Chain uses a proof-of-stake consensus algorithm for achieving an approximate 3-second block time. It specially uses a Proof of Staked Authority (or PoSA) to allow the participants to stake BNB for becoming validators. They receive transaction fees with the transactions included in it if they propose a valid block. However, as BNB is not inflationary, there is no block subsidy of freshly-minted BNB. On the other hand, the BNB team regularly burns coins; hence the supply decreases with time.
The Binance Chain was built by forking the Cosmos blockchain allowing the cryptocurrency exchange to offer a native currency of its own for its customers. The idea was to diminish the dependability on the Ethereum blockchain and ecosystem and grow the project into a stand-alone ecosystem.
Although Binance Smart Chain is an independent system but is seen as a system complementary to the existing Binance Chain, it uses a dual-chain architecture so that the users can easily transfer assets from one blockchain to another, making it compatible cross-culturally.
This enables fast trading and the building of powerful decentralized apps on the Binance Chain. A wide ecosystem with high interoperability is provided to users giving it a number of use cases. The Smart chain’s flexibility helps in the utility of assets from a number of different chains in the growing DeFi space.
Binance Smart Chain has highly expanded the utility of the original Binance Chain while bridging the gap between many blockchains by joining a range of cutting-edge protocols. The BNB platform is an ideal engine for developers who want to build decentralized applications through BNB staking and EVM compatibility.
What is BNB? BNB Tokenomics
In Binance Chain, BNB acts as the native token. It serves as the gas for paying to network transactions on a highly performing blockchain, i.e., Binance Chain. At the start, it used to operate using a small previously selected validator set.
At the time of the launch, Binance offered 10% coins to the angel investors, 40% coins were allocated to the founding team, and the remaining 50% tokens were put through in an ICO.
However, they are planning to change it to a delegated proof-of-stake (DPoS) consensus mechanism to enable the users to vote with their BNB for delegates. This will validate the blocks and secure the network. A built-in governance module also exists to facilitate the BNB holders in submitting proposals by funding tokens on which they are voting.
What is BNB? BNB Future Plans
The Binance network has outlined three basic goals for the ecosystem in the route map. These plans will serve to increase the size of BSC 2021’s blocks and add more validators to keep its demand even higher. Secondly, the two major changes will boost the BSC environment.
The developers and node operators will also be enabled to make and maintain their blockchain by creating a BSC Application Side Chain (BAS) infrastructure. Layer-2 subspace will get sharded in even smaller sidechains to outsource BSC processing to a smaller level, with different parts of BSC partition chains, that will be a new validator set, a new computer engine, and a new ledger.
The BSC of 2022 will be focused on the crypto-native talent pool of the network’s new developer forum. It will be available for all the community members of BSC.
With the BSC 2022, there are several other plans, such as the Binance NFT platform that has recently been rolled out, giving away free yet in-exchangeable NFTs to existing and new users priming Binance and, in turn, BNB for growth in the following years.
Binance Coin or BNB has been performing rather well on the price prediction charts as well. The currency is one of the most stable assets in the cryptocurrency sphere and is primed for constant growth.