Quick Take
• Binance Smart Chain is rebranding to BNB chain which stands for “Build and Build" is a blockchain by Binance
• The BNB chain is one of the fastest in the ecosystem with lower gas fees as compared to others. The blockchain allows developers to build decentralised projects on chain with multi-functionality features.
History Of Binance
Now Binance is one of the largest cryptocurrency exchanges out there rivaling other exchanges like Coinbase, Gemini and recently FTX.
One day a while ago Binance decided to create their own blockchain aiming to create one that was fast and could handle a lot of data.
At first their BNB Beacon chain focused only on the Binance exchange but after a little bit they saw Ethereum booming and realised 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 their own applications that run on the blockchain. Smart Contracts also allow the creation of new tokens on the blockchain. Really anything DeFi related is due to the use of smart contracts. They allow us to run decentralised applications, create new tokens on the blockchain, mint NFTs and even do more complicated things.
BNB Chain
Binance finally got around and created a second blockchain that had smart contracts and they called this one BNB chain.
Now this is a big misunderstanding for new users that there are actually two Binance chains. The original one BNB Beacon chain and the new BNB chain, and if you accidentally send your crypto on one chain to another chain not knowing this you can easily lose your funds.
Instead of starting from the scratch and setting up new smart contracts Binanace 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 “Fork" is a term that means they copy and pasted Ethereum's code and then make their own changes to achieve faster speed and cheaper transactions. Copying most of Ethereum's most of the code also meant that developers could easily move their projects from Ethereum network to BNB chain network without rewriting much of their code.
Also one thing to pay attention to is that the BNB chain is an independent blockchain that could run even if the BNB Beacon goes offline. Both blockchains hold a strong resemblance from a design standpoint.
Consensus Model
BNB chain uses delegated proof of stake essentially the top 21 people staking the most BNB coins to decide which transactions get approved and which one gets blocked.
Now if you don't want to be one of those top 21 people holding millions of dollars of BNB. You can actually earn staking rewards without owning that much BNB.
All you have to do is delegate your coins to top validators and they will share their rewards with you. Overall this method is quite centralised but it does allow for those cheaper fees that I mentioned earlier and more transactions per second.
BNB chain is 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 all the way up to fifty dollars, and much higher than that for the complex smart contracts usage.
Tokenomics
There were initially 200Million BNB coins minted.
Half of them sold through an ICO in july of 2017 for 15cents each. Raising around 15million dollars.
This means those early investors got a decent chunk of change as the price was up to $400.
Another 40% of all the coins were given to the founding team with around 20% vested each year.
This means they don't get all the coins at once only so much per year.
The final 10% of all of the coins are given to angle Investors.
One thing that is very interesting about the BNB coin is that the Binance company actually 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 burn them forever.
This decreases the total supply which theoretically should raise the price, and I think this is a really cool idea. Passing profits from the company through the blockchain to their coin, and they will continue to do this until the supply goes from 200 million to 100million total coins.
Other benefits of BNB Chain include the following:
1) Low transaction fees that reach as low as 1 cent
2) High performance with a network capable of producing a block every 3 seconds
3) Cross-chain DeFi mechanisms that increase DeFi interoperability
4) A network of major crypto projects already collaborating with BNB chain
Final Thought 💭
So in conclusion and straight term, the BNB is the cryptocurrency coin that powers the BNB chain ecosystem. While the BNB Chain is a smart contract-enabled blockchain network which is created with the goal of creating a decentralized financial (DeFi) ecosystem.