Binance Coin (BNB) is the native cryptocurrency of the Binance platform, one of the world’s largest and most popular cryptocurrency exchanges. BNB was launched in July 2017 through an Initial Coin Offering (ICO), which raised approximately $15 million. The ICO provided 50% (100 million BNB tokens) to investors, 40% (80 million) to the Binance founding team, and 10% (20 million) to angel investors.
Binance Coin was founded by Changpeng Zhao, popularly known as CZ, and He Yi. Zhao was the CEO of Binance until he stepped down in November 2023 due to legal issues. Zhao has earlier worked at Blockchain.info as the Head of Development and served as CTO at OKCoin before he founded Binance. He Yi, co-founder of Binance, played an instrumental role in the company’s early days in marketing and community-building efforts.
Binance Coin operates on the Binance Smart Chain (BSC), a blockchain platform built by Binance to provide full support for smart contracts and decentralized applications. Thus, BSC runs alongside Binance Chain and can offer high throughput for the emerging DeFi applications.
Binance Smart Chain is designed to handle up to 100 transactions per second (TPS), though actual performance can vary based on network conditions, but its generally faster than many other blockchain networks. This high transaction throughput is important for supporting and maintaining the growing number of dApps and DeFi projects on the Binance ecosystem.
Binance Smart Chain uses a different consensus algorithm called Proof of Staked Authority (PoSA). PoSA is the combination of the Proof of Stake (PoS) and Proof of Authority (PoA) mechanisms. This consensus mechanism selects validators depending on the number of BNB they stake and their reputation. Using this hybrid approach ensures network security and scalability while maintaining decentralization.
Binance Coin doesn’t use the same mining process as Bitcoin and Ethereum. Instead, BNB works on the PoSA mechanism, where validators stake their BNB to participate in the network. Validators are compensated with transaction fees for their work in maintaining the blockchain. This system is much more energy-efficient and sustainable compared to the traditional Proof of Work style of mining.
Due to integrations within the Binance ecosystem and utilities across multiple use cases, Binance Coin has had tremendous growth and adoption. With some important partnerships, developments, and recent news.
BNB Chain recently entered into a series of strategic partnerships that aimed to increase its ecosystem threshold. A key partnership is when Binance Labs and BNB Chain came together to create the BNB Incubation Alliance. This initiative was targeted at nurturing early-stage Web3 projects, providing mentorship and capital. Kernel DAO got support from Binance Labs in building restaking infrastructure on the BNB Chain, catalyzing innovation in staking.
Hana Network has also launched on the BNB Smart Chain after going through incubation by Binance Labs, promising further action in the decentralized social platform space. The integration of BNC Chain and Binance Futures on projects such as InWhyWeTrust and LordCheems shows how tokens of the BNB Chain are increasingly useful within the larger Binance ecosystem. In addition, ThenaFi, a fast-growing decentralized trading and liquidity platform, has cemented its position through partnerships such as Reverse Agency and a listing on Binance. This is a sign of the rising importance of BNB Chain in DeFi. Furthermore, the partnership between BobChillonbsc and CryptoMiners_Co uses the BNB Chain for community engagement to expand further.
The BNB Chain includes several significant updates, including that the BNB Beacon Chain was merged with the BNB Smart Chain in the BNB Chain Fusion, consolidating governance and staking, with historical data preserved in BNB Greenfield. Reason being for efficiency and security reductions, with historical data retained in BNB Greenfield. The BNB Chain also continued with its “Meme Coin Innovation” contests. The contest awards the third round with quite decent prizes to incentivize community creativity.
BNB Chain recently partnered with Brickken to further asset tokenization. A move that enables the management of real-world assets on-chain and research into AI applications on data tagging. Also, the BNB Chain Gas-Free Carnival: Extended was a promotional event aimed at boosting user engagement by zeroing withdrawal fees, specifics of which should be checked for current status.
On April 23, 2019, Binance launched its DEX on Binance Chain. This decentralized system exchange allows users to directly trade cryptocurrencies from their wallets against the native token of the exchange, BNB, when it comes to transaction fees. Apart from this, Binance also introduced Binance Charity, which is a blockchain-based donation platform that uses BNB to support different charitable causes by leveraging the transparency and immutability of blockchain technology in ensuring that donations are put to effective use.
Binance performs quarterly BNB coin burns, where it buys back and permanently destroys millions of tokens. In November 2024, Binance conducted its regular burn; a total of 1,772,712.363 BNB, which is worth approximately $1.07 billion, were burned. This move also increases the value of the remaining tokens. In addition, Binance has implemented Binance Pay, a contactless and borderless payments system that facilitates the exchange of BNB and other cryptocurrencies with ease, increasing its utility in day-to-day transactions.
Recently, BNB Chain has made some big moves: it once shut down the BNB Beacon Chain for its merge with BNB Smart Chain for seamless and safer integration. In addition, BNB has kept the meme coin contests running, which was great for the community. And also extended their Gas-Free Carnival—no withdrawal fee for now—awesome for users. The new BNB Hack Workshop for Q4 gets developers innovating, teaming up with Brickken for the tokenization of assets and with @din_lol_ for some AI action in data tagging.
BNB has become the cornerstone in the Binance ecosystem for anything from paying transaction fees to participating in token sales and charitable activities. The coin has seen quite a price fluctuation since its conception. From an all-time high of around $793.35 in December 2024, the BNB price has continued a market-driven trend based on sentiment, regulatory news, and events within the Binance ecosystem. As of December 7, 2024, BNB trades at approximately $730.48, which reflects continued interest and investments in the cryptocurrency.
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FAQs
Q1: How does BNB compare to other cryptocurrencies in terms of use cases within its ecosystem?
- A: BNB has unique use cases within the Binance ecosystem, including reduced trading fees on the Binance exchange, governance voting in the BNB Chain, and utility across various dApps on the Binance Smart Chain. Unlike many cryptocurrencies, BNB’s use is tightly integrated into Binance’s services, enhancing its utility within that specific ecosystem.
Q2: What are the risks associated with staking BNB on the Binance Smart Chain?
- A: Staking BNB involves risks like slashing (where staked tokens can be penalized for validator misbehavior), smart contract vulnerabilities, and the general market risk associated with the price volatility of BNB. Additionally, there’s the risk of centralization if only a few validators control most of the staked BNB.
Q3: How does BNB’s supply reduction mechanism impact its long-term value?
- A: BNB’s supply reduction through burns can lead to an increase in value if demand remains constant or grows, due to the basic economic principle of supply and demand. However, the impact on long-term value also depends on broader market conditions, adoption rates, and the utility of BNB within and outside of Binance’s ecosystem.
Q4: What are the security measures in place for transactions on the BNB Smart Chain?
- A: BNB Smart Chain employs Proof of Staked Authority (PoSA) for consensus, which combines elements of PoS and PoA to enhance security. It also uses a network of validators to ensure transactions are processed securely. However, like all blockchains, it’s subject to risks like 51% attacks if a majority of staking power is concentrated.
Q5: Can BNB be used for purposes outside the Binance ecosystem?
- A: While BNB is primarily used within the Binance ecosystem, it has gained some acceptance outside for payments, particularly in places where Binance has partnerships or where crypto payments are popular. However, its utility is less widespread compared to more universally accepted cryptocurrencies like Bitcoin or Ethereum.
Q6: How does the governance of BNB Chain work, and how can BNB holders participate?
- A: Governance of the BNB Chain involves community proposals where BNB holders can vote on changes to the network. This includes protocol upgrades, changes in validator rewards, or new features. BNB holders can participate by staking their BNB to vote on governance proposals, influencing the direction of the blockchain’s development.
Q7: What are the implications of the BNB Chain Fusion for dApp developers and users?
A: The Fusion, merging the BNB Beacon Chain with the BNB Smart Chain, simplifies the ecosystem for developers by consolidating governance and staking, potentially reducing complexity in development. For users, it might mean a more streamlined experience, better security, and possibly reduced gas fees or faster transaction times, though users need to adapt to the new unified chain structure.