Binance Smart Chain (BNB): Everything You Need To Know

Binance Smart in Crypto

Crypto Rishi

2 months ago|6 min read

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The very first defy application that I ever invested in was on something called the binance smart chain, where I staked some BnB coins to earn some money. The next day I woke up – and I checked my account – and I realized I did – make money and that’s where the defy rabbit hole started for me about a month later, I invested one thousand dollars into a BnB token and it shot up to around Ten thousand dollars – and that was a phenomenal experience, but I think I got lucky. My point is that BnB and the binance smart chain hold a special place in my heart.

In this article, we are going to explain what the BnB coin is, how it relates to Binance's smart chain, and what it means for you as an investor.

1.  Binance

First off, let me explain what binance is, and then we’ll get into the b and b coin that you can buy and sell to understand the b and b coin. We must first learn about the history of binance. Now binance is one of the largest cryptocurrency exchanges out there rivaling other exchanges like coinbase, Gemini, and recently FTX.

2.  Binance Blockchain

One day a while ago, binance decided to create their blockchain, aiming to create one that was fast and could handle a lot of data at first, their binance chain, a blockchain focused only on the binance exchange, but after a little bit, they saw Ethereum booming and realized. They needed something called smart contracts, at least if they wanted other people to use their blockchain. If you don’t know already, smart contracts are a big part of the crypto space that allows people to create applications that run on the blockchain.

3.  Smart Contracts

Smart contracts also allow the creation of new tokens on the blockchain. Anything defy-related is due to the use of smart contracts. They allow us to run decentralized applications, create new tokens on the blockchain, mint nfts, and even do more complicated things that you can learn about in our specific smart contracts, article well around two years after they started that blockchain binance finally got around to it and created A second blockchain that had smart contracts and they called this one, the binance smart chain.

4.  Two Chains

Now, this is a big misunderstanding for new users, including me that there are two binance chains, the original binance chain, and the new binance smart chain. And if you accidentally send your crypto on one chain to another chain, not knowing this, you can easily lose your funds, oh and by the way, instead of starting from scratch and setting up new smart contracts, binance just forked Ethereum's code, so that they could have the same features, but with a few changes that made it faster and cheaper. If you don’t know in the developer, world fort is a term that means they copy and pasted Ethereum's code and then made their changes so to achieve faster speeds and cheaper transactions.

5.  Transition

They had to give up some of their decentralization, which we’ll get to later copying. Most of Ethereum's code also meant that developers could easily move their projects from the Ethereum network to the binance smart chain network, without rewriting much of their code. Next, let’s get into the BnB consensus model for the rest of this article, we will only be talking about the binance smart chain and the consensus model that this smart chain uses is delegated proof of stake.

6.  BnB Coins

Essentially, the top 21 people staking the most BnB coins get to decide which transactions get approved and which ones get blocked. Now, if you don’t want to be one of those top 21 people holding millions of dollars of BnB, you can earn staking rewards without owning that much BnB. All you have to do is delegate your coins to a top validator and they’ll share their rewards with you.

7.  Centralized

Overall, this method is quite centralized, but it does allow for those cheaper fees that I mentioned earlier and more transactions per. Second, if you have no idea what staking is, you can also watch our article on the proof of stake method. It seems to clear up a lot of misunderstandings for many people.

8.  More Cheaper

Now the binance smart chain is so much cheaper than Ethereum that practically anyone can make hundreds of transactions without spending much more than a dollar on Ethereum. The average transaction can cost three dollars up to over fifty dollars and much higher than that for complex smart contract usages. To put this more simply, what I’m trying to say is that anyone can create their token, very affordably on the binance smart chain and because of this malicious developers and scams started to pop up all over the place on the binance smart chain network.

9.  Fake Duplicates

Pancake swap was the first popular decentralized exchange that allowed people to swap one token for another, and early users were able to create their tokens from scratch and then advertise them on websites like Reddit, I’m going, to be honest with you. Most of these new tokens were scams, and since this is a decentralized world, nobody was held accountable other than that. Bnb still has many unique use cases as it is faster and cheaper than Ethereum, but many other copycat blockchains have come along as competition polygon, for example, is very similar, but many early users of polygon learned from their mistakes from binance smart chains like me. So now that you know how the binance smart chain kinda works and what bnb is, let’s get into the specific tokenomics of the BnB coin, there were initially 200 million bnb coins. Minted half of them were sold through an ICO in July of 2017 for 15 cents.

10. Tokenomics of BnB

Each raising around 15 million dollars – this means those early investors got a decent chunk of change, as the price is around four hundred dollars now another forty percent of all the coins were given to the founding team with around twenty percent vested each year. This means they don’t get all the coins at once only so much per year. The final ten percent of all the coins were given to angel investors.

11. BuyBack

One thing that is very interesting about the BnB coin is that the binance company buys them back each quarter. Every three months they take 20 of all the profit of binance and use it to buy back tokens, and then they take those tokens and they burn them forever. This decreases the total supply, which theoretically, should raise the price, and I think this is a cool idea – passing profits from the company through the blockchain to their coin and they’ll continue to do this until the supply goes from 200 million to 100 million total coins.

12.  Binance Exchange

There are also many other uses of the BnB coin. The best one is probably that you can save on trading fees when you use the binance exchange. They also have other marketplaces where you can get discounts on monthly services and even electronics.

13.  Canvas

If you pay with BnB, notably one service that I have heard before of – is canvas, which is a design mock-up website that I have personally used before. But I didn’t know you could use BnB to pay for that. There are even travel benefits to owning BnB, which I won’t get into here, but I thought was kind of interesting.

14.  Location

One last thing: binance is incorporated in the cayman islands and they also have a binance.com and a binance.us website which offers different services to us users and international users. I am excited for the day when it doesn’t matter what your geolocation is, and everyone can use crypto fairly. Hopefully, this day comes soon.

Thank you guys for reading. We hope you enjoyed this article.

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Crypto Rishi

Hi, I am an anonymous crypto guy. I am trying to exchange knowledge and build a community around crypto and blockchain. Find all the informational content about crypto and blockchain on my Feeding Trends blog here. If you like the content follow me to get a regular updates.

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