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What is BNB? A Guide to Binance Coin and BNB Chain.

admin December 13, 2024

0 1 4 minutes read

BNB (Binance Coin) and BNB Chain are some of the key pillars of the Binance ecosystem, which has established itself as a leader in the cryptocurrency world. With its flexibility, functionality, and constantly evolving solutions, BNB has become one of the most important tools in the global financial system based on blockchain. In this guide, we will cover all aspects related to BNB and the BNB Chain network.

History and evolution of BNB and BNB Chain

It all started in 2017, when Binance — a young cryptocurrency exchange at the time — launched its native token, Binance Coin (BNB). The token was designed as an ERC-20 token on the Ethereum blockchain, meaning it used the Ethereum infrastructure. At the time, the main goal was to reduce transaction fees for Binance users. The initial coin offering (ICO) of BNB was a huge success, raising $15 million in Bitcoin and Ethereum. These funds were used for platform development, marketing, and reserves.

Binance Chain Launch (2019)

Binance’s growing popularity required a more efficient infrastructure. In April 2019, Binance launched its own blockchain, Binance Chain. As a result, Binance Coin was migrated from the Ethereum network to the new network and became the native token of Binance Chain.

Binance Chain focused on speed and simplicity, allowing for the issuance of digital assets and fast transactions. However, it did not support smart contracts, which limited its use.

Binance Smart Chain Creation (2020)

September 2020 marked another breakthrough. Binance launched Binance Smart Chain (BSC) , a blockchain that runs in parallel to Binance Chain. BSC provided smart contract support and compatibility with the Ethereum Virtual Machine (EVM). This allowed developers to migrate their decentralized applications (DApps) from Ethereum to Binance Smart Chain without having to modify their code.

BNB Chain Merger (2022)

In February 2022, Binance merged Binance Chain and Binance Smart Chain into a single ecosystem — BNB Chain . It was divided into two main layers:

BNB Beacon Chain: Responsible for network governance (staking and voting).
BNB Smart Chain: Supports smart contracts, DApps and DeFi services.

This merger has created a more comprehensive ecosystem with expanded functionality.

Structure and Functioning of BNB Chain

BNB Chain is a modern blockchain ecosystem that combines speed, flexibility, and interoperability with other networks. Its structure includes two main components.

BNB Beacon Chain

The BNB Beacon Chain, formerly known as the Binance Chain, is responsible for managing the network and ensuring its operational efficiency.

Main functions:

Staking: Users can lock their BNB tokens to participate in the consensus mechanism and earn rewards;
governance: the network allows voting on key issues of its development;
token issuance: The BEP-2 standard allows for the issuance of digital assets.

BNB Beacon Chain is based on the Proof of Stake (PoS) mechanism , which is more energy efficient than traditional methods such as Proof of Work used in Bitcoin.

BNB Smart Chain

BNB Smart Chain is a parallel network that added smart contract features and Ethereum compatibility to the ecosystem.

Features of BNB Smart Chain:

Proof of Staked Authority (PoSA): a consensus mechanism that combines features of PoS and Proof of Authority (PoA), ensuring fast transaction processing;
EVM compatibility: allows developers to create DApps without changing technologies;
low transaction fees: they are significantly lower than in Ethereum, which attracts DeFi and NFT projects;
block generation time: about 5 seconds.

BNB Token – Uses and Meaning

BNB serves many functions in the Binance ecosystem. As a utility token, it is used to:

payment of transaction fees on Binance Smart Chain and Binance Beacon Chain;
staking to receive rewards;
payment for goods and services from merchants who accept BNB.

DeFi и yield farming

BNB plays a key role in decentralized finance (DeFi). Users can stake their BNB tokens, participate in yield farming, and use platforms such as PancakeSwap and Venus.

Token burning mechanism

A unique feature of BNB is its automatic token burning mechanism. Binance regularly removes a portion of BNB from circulation to control the supply and potentially increase the token’s value in the long term.

The Future of BNB Chain and Planned Changes

The BNB Chain team announced plans to migrate BNB Beacon Chain features to BNB Smart Chain to simplify the infrastructure and improve network efficiency. This process, known as BNB Chain Fusion , began in April 2024 and was completed in June of the same year.

The Development of Web3 and Decentralized Data Storage

BNB Chain develops solutions for Web3 such as:

opBNB: Layer-2 to improve network scalability;
BNB Greenfield: a platform for decentralized data storage.

Advantages and Disadvantages of Using BNB Chain

Advantages:

Speed: Short transaction times compared to other blockchains.
Low costs: transaction fees are among the lowest on the market.
EVM compatibility: Easily migrate applications from Ethereum.
Community support: Rich documentation and an active developer community.

Flaws:

Less decentralization: The PoSA mechanism requires trust in validators.
Regulatory Issues: Binance faces legal challenges in various countries.
Competition: Other blockchains, such as Ethereum, offer more advanced functionality.

How to start using BNB Chain?

Step 1: Create a wallet

Sign up for a platform that supports BNB, such as Trust Wallet or MetaMask. The wallet will allow you to manage your tokens and use DApps.

Step 2: Buy BNB

Purchase BNB tokens from an exchange like Binance and transfer them to your wallet. Make sure you use a secure connection.

Step 3: Explore DApps

Use DeFi platforms like PancakeSwap, stake BNB tokens, or explore NFTs.

Conclusion

BNB Chain is a comprehensive blockchain ecosystem that offers low fees, fast transactions, and ample development opportunities. Binance Coin (BNB) is a key element of this system, supporting transactions, staking, and DeFi applications. If you’re looking to invest in BNB, our Bitcoin Quark exchange guarantees fast, secure trades, and the lowest fees on the market. Start your crypto adventure today!