BNB Chain is a blockchain platform associated with Binance, but how does it work, what unique features does it have and what will the future price of BNB be? Learn more about the history and vibrant ecosystem surrounding BNB Chain.
What is BNB Chain (BNB)?
BNB Chain is a blockchain platform that supports the development and deployment of decentralised applications (dApps). It is an evolution of Binance Chain and Binance Smart Chain, and it has become one of the most popular blockchains in the world.
How does BNB Chain (BNB) work?
BNB Chain is a community-first, open-source and permissionless blockchain, meaning that anyone can participate in the network, and all records are public and transparent. BNB Chain’s developers aim to deliver the core infrastructure necessary for the mainstream adoption of cryptocurrency and blockchain technology.
BNB Chain is compatible with the Ethereum Virtual Machine (EVM), allowing developers to take advantage of the same programming languages used to build decentralised applications on the Ethereum (ETH) network.
The network offers high performance and low fees, while utilising the Binance Bridge to connect to other blockchains. BNB Chain has a strong ecosystem of dApps, wallets and blockchain explorers, while also offering significant grants to help support new and existing projects.
What elements make up BNB Chain?
BNB Chain is comprised of four key components:
- BNB Beacon Chain — the staking and governance layer of the BNB ecosystem
- BNB Smart Chain (BSC) — an EVM-compatible blockchain that helps to increase interoperability and connect BNB Chain to other networks
- ZkBNB — infrastructure built on zkRollup technology (the ability to bundle transactions together and execute them off-chain), allowing developers to build dApps with higher throughput and lower transaction fees
- BNB Greenfield — a decentralised data storage network
What makes BNB Chain different?
There are two key features that help to differentiate BNB Chain from other projects:
- The Proof of Staked Authority (PoSA) consensus mechanism
- The connection to Binance and the Binance community
BNB Chain consensus mechanism
BNB Chain adopts a consensus mechanism called PoSA, which combines Proof of Stake (PoS) and Proof of Authority (PoA) to achieve faster block times and lower costs.
PoSA relies on a limited set of validators, elected by BNB stakers, who are responsible for producing and validating blocks on the BNB Chain, receiving BNB transaction fees as a reward. PoSA allows for instant finality, meaning that transactions are confirmed as soon as they are included in a block.
Binance
BNB Chain has a large and active community of developers, users, and supporters, who contribute to the growth and innovation of the network. Much of this activity is funded by the crypto exchange Binance, whose significant user base also gives BNB Chain a huge advantage in terms of creating an on-ramp for new users.
This has led to the development of a vibrant decentralised finance (DeFi) ecosystem, with over 1,000 dApps and protocols running on the network, offering services such as lending, borrowing, swapping, farming, gaming, non-fungible tokens (NFTs), and more.
What is the BNB Chain price and forecast for the future?
BNB, BNB Chain’s native cryptocurrency, underperformed in its first year, although this performance was reflective of the wider crypto market, especially for ICO tokens launched in 2017. The price of BNB more than doubled in 2019 and 2020, before seeing a significant increase in 2021, following the excitement surrounding DeFi.
Year | Start Price | Mid-Year Price | End Price | Percentage Change |
---|---|---|---|---|
2017 | – | – | $8.64 | – |
2018 | $8.63 | $14.68 | $6.16 | -29% |
2019 | $6.19 | $32.44 | $13.73 | +122% |
2020 | $13.73 | $15.41 | $37.38 | +172% |
2021 | $37.37 | $303.53 | $511.71 | +1270% |
2022 | $511.91 | $219.53 | $246.35 | -52% |
Past performance is not an indication of future results.
Source: Yahoo! Finance
When attempting to predict the future BNB price, it is important to consider the critical role that Binance plays in the BNB Chain ecosystem. While BNB Chain can operate independently, Binance significantly influences BNB’s tokenomics, development and community expansion.
“Holding BNB gives you the right to make your voice heard and is necessary for participation in BNB Chain’s decentralized on-chain governance.”
BNB Chain Documentation
Who created BNB Chain?
In 2017, Binance was founded as a new, global crypto exchange, and with it came its own proprietary token, BNB. As Binance’s various products and services gained traction, the intention was for BNB to grow in value. BNB was originally launched as an ERC-20 token on top of Ethereum.
Eventually, Binance created its own, customised blockchain, known as Binance Chain. However, Ethereum’s success, and the thriving development community surrounding its network, prompted the creation of Binance Smart Chain in 2019. Binance Smart Chain was essentially a clone of Ethereum, enabling easier app development and ensuring compatibility with Ethereum’s tools and software.
In early 2022, Binance Beacon Chain and Binance Smart Chain were merged to create BNB Chain and simplify Binance’s crypto ecosystem.
Tip: Binance’s CEO Changpeng Zhao, also known as CZ, once stated that 90% of Binance employees choose to receive their income in BNB.
Final thoughts on investing in BNB Chain
Although BNB Chain has faced criticism for its perceived dependence on Binance, it has still managed to become one of Ethereum’s biggest competitors. In fact, BNB Chain has surpassed the activity levels seen on Ethereum in a variety of metrics, on more than one occasion, suggesting that the network, and its native cryptocurrency, could have a strong future.
Remember, there are no guarantees when investing in cryptocurrency, so investors should do their own research before buying BNB.
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FAQ
- What is BNB used for?
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BNB is the native currency of BNB Chain, where it is used for staking, governance and gas payments. BNB can also be used to access discounted trading fees on Binance. In addition, it is important to note that Binance uses an auto-burn system to burn a certain number of BNB tokens depending on the price of BNB and the number of blocks produced during the quarter.
- Can BNB Chain exist without Binance?
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Yes, BNB Chain is an independent crypto network that can technically exist without the help of Binance. However, it is important to understand that much of the current value, development and activity around BNB Chain can be traced back to Binance.
- What is BNB Greenfield?
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BNB Greenfield is an essential part of the BNB Chain ecosystem, alongside BNB Beacon Chain and BNB Smart Chain. It plays a vital role by offering decentralised data storage for dApps on BNB Chain. This feature enhances the overall infrastructure, providing developers with reliable and secure data storage solutions for their decentralised applications.
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