What is BNB? Features, Future Prospects, and How to Buy

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What is the cryptocurrency BNB? A thorough explanation of its features, mechanisms, and future prospects that even beginners can understand!

"There are so many types of virtual currency, I don't know which one is best..." "I've heard of BNB, but what kind of coin is it?" This article is for those of you who have such questions! In this article, we will thoroughly explain the notable virtual currency "BNB" in an easy-to-understand manner even for beginners, from basic information to its future prospects and concerns about risks. BNB is a unique cryptocurrency issued by Binance, one of the world's largest cryptocurrency exchanges, and plays various roles within the ecosystem. Come and explore the world of BNB together!

Eye-catching visual of BNB BNB and cryptocurrency vibes

BNB Basics: A Simple Overview

First, let's start with the basics of BNB. There will be some technical terms, but don't worry, we'll explain them one by one.

Quick Overview

BNB was originally issued in 2017 as "Binance Coin". As the name suggests, it is a native token (a unique coin used on a specific platform) issued by the major cryptocurrency exchange "Binance". It was originally created as an ERC-20 token (a token that complies with the Ethereum standard) on the Ethereum blockchain, but later moved to its own blockchain, "BNB Chain". Today, BNB stands for "Build and Build" and aims to become the foundation for a wider range of decentralized applications (DApps) beyond the Binance ecosystem.

The problem BNB solves

BNB, and the BNB Chain it runs on, are attempting to address several key challenges.

High transaction fees and slow processing speeds: Major blockchains such as Ethereum have had problems with fees (gas fees) rising and transactions taking a long time to be confirmed when transactions become congested. BNB Chain aims to provide faster and cheaper transactions.
Scalability issues: The problem of system-wide performance deteriorating when many users use it simultaneously (the scalability problem) is a major barrier to the widespread use of blockchain technology. BNB Chain employs an architecture to mitigate this problem.
Ecosystem fragmentation: The existence of various services and applications in isolation reduces convenience for users. BNB BNB acts as a common currency within the vast ecosystem centered on Binance, facilitating seamless integration.

Unique Features of BNB

BNB has several distinguishing features compared to other cryptocurrencies.

Utility in the Binance Ecosystem: It can be used for a wide range of purposes, including discounts on trading fees on Binance Exchange, participating in Binance Launchpad (a funding platform for new projects), and making payments with Binance Pay (a payment service).
Periodic Burn: Every quarter, Binance uses a portion of its profits to buy back BNB from the market and burn it (making it permanently unusable). This reduces the total supply of BNB, and increases its scarcity, which is expected to stabilize and increase its value. This mechanism is called "Auto-Burn".
BNB Chain’s Dual Chain Structure: BNB Chain is made up of two chains: "BNB Beacon Chain" and "BNB Smart Chain (BSC)". BNB Beacon Chain is mainly responsible for governance (determining operating policies) and staking (a mechanism for earning rewards by holding and contributing to the network), while BNB Smart Chain provides smart contract (automatic contract execution program) functionality, enabling the development of applications such as DeFi (decentralized finance), NFT (non-fungible tokens), and GameFi (the fusion of games and finance). This structure allows for both high speed and multi-functionality.

BNB Supply Details: What is the Impact on Price?

When considering the value of a cryptocurrency, information about its supply is very important. Let's take a look at BNB's supply.

Max Supply and Circulating Supply

BNBThe maximum supply (maximum number of coins issued) will initially be set at 2 million BNB.However, due to the aforementioned burning mechanism, the total supply will gradually decrease, eventually reaching 1 million BNB.

Circulating supply (the number of coins actually in circulation on the market)is the maximum supply minus the amount that has been burned or has not yet been released to the market. These figures can be found in near real time on cryptocurrency information sites such as CoinMarketCap and CoinGecko.

How does this affect the price?

The effect of supply on price is based on the basic laws of supply and demand in economics.

Supply Reduction: Burning BNB reduces supply, which, if demand remains constant, increases scarcity and can drive up prices. This is one of the key price maintenance strategies in BNB's design.
Circulating Supply Change: When new BNB is released onto the market (e.g. when it is released from a lockup), it can temporarily increase selling pressure and affect the price. Conversely, when large investors buy and hold (HODL) large amounts, it can reduce the amount available in the market, which can help push up the price.

Therefore, when predicting the future of BNB, it is important to keep a close eye on these supply trends.

BNB’s technical mechanism: Blockchain and proprietary technology

We will explain how BNB works, the blockchain technology at its heart and how BNB Chain works, while avoiding technical jargon as much as possible.

How blockchain works (easy to understand explanation)

In simple terms, blockchain is"A technology that links blocks (similar to a page in a ledger) that are compilations of transaction records in a chronological order, like a chain."This data is stored in a distributed manner across many computers around the world, making it extremely difficult to tamper with and highly transparent.

For example, a transaction in which person A sends BNB to person B is first verified and recorded in a block along with many other transactions. Then, that block is securely linked to the end of the existing chain using cryptography. Once connected, it is nearly impossible to tamper with the contents later. This is the core technology that supports the reliability of virtual currencies.

BNB's Special Technology: How BNB Chain Works

BNB operates on its own blockchain called BNB Chain, which employs several distinctive technologies to specifically enhance its performance and versatility.

BNB Smart Chain (BSC): This is the main battlefield for application development. Because it is compatible with the Ethereum Virtual Machine (EVM), many decentralized applications (DApps) developed on Ethereum can be ported to BSC relatively easily. This has led to the rapid development of DeFi, NFT marketplaces, blockchain games, and more on BSC.
BNB Beacon Chain: This role supports the basic operations of BNB Chain, including BNB staking and governance voting.
Consensus algorithm "Proof of Staked Authority (PoSA)": BSC uses a consensus algorithm called PoSA (Proof of Staken Authority) (rules for verifying the validity of transactions and forming a consensus). This is more energy efficient and enables faster transaction processing than Bitcoin's Proof of Work (deciding approvers through a computational race). Efficiency is increased by having a limited number of validators (transaction verifiers) generate blocks. These validators stake (deposit) BNB and receive rewards for contributing to the security and operation of the network.
Cross-Chain Bridge: BNB Chain also provides and supports a "bridge" functionality to move assets to and from other blockchains (e.g. Ethereum and Bitcoin), improving interoperability between different blockchains and allowing users to leverage more assets within the BNB Chain ecosystem.

These technical features make BNB Chain an attractive platform for developers and users alike.

BNB BNB technology and blockchain network illustration

Development team and community: reliability and activity

The people behind any project are key to its success, so let's take a look at BNB's development team and community.

Development team reliability

Behind BNB and BNB Chain is one of the world's largest cryptocurrency exchanges.BinanceSince its founding in 2017, Binance has been known as an industry leader for its technological capabilities, financial strength, and huge user base. Its founder, Changpeng Zhao (known as CZ), is one of the most influential figures in the cryptocurrency industry (although he will step down as CEO in 2023).

Since development has been led by Binance, the project has a certain reputation for its reliability and continuity. However, because Binance is a centralized company, there are some concerns that its influence is too strong. In recent years, efforts have been made to further decentralize the operation of BNB Chain.

Community Activity

BNB Chain will spread across the worldVery large and active communityDevelopers, users, investors, influencers, etc. actively exchange information and discuss through social media (Twitter, Telegram, Discord, etc.), forums, and offline events.

Developer Community: Many developers are building new DApps on BNB Chain, and hackathons (development contests) and grant programs are frequently held to help grow the ecosystem.
User Community: A diverse user base including DeFi project developers, NFT collectors, blockchain gamers and more use BNB Chain's services every day, and their feedback helps improve the project.

Community activity is one of the key indicators of a project's health and future growth potential, and BNB Chain's community is one of the largest in the industry in terms of size and engagement.

BNB Use Cases and Future Outlook

BNB is not just a speculative coin. It is actually used in a variety of situations, and its uses are expected to continue to expand in the future.

Main use cases

Some of the main uses for BNB include:

Payment of transaction fees: Using BNB on the Binance exchange will give you discounts on trading fees, which will be the primary use case early on.
Gas Fees on BNB Chain: When using DApps or sending and receiving tokens on the BNB Smart Chain, BNB is required as gas fees (network fees).
Use in DeFi (Decentralized Finance):
- Liquidity Provider: You can pair BNB with other tokens on decentralized exchanges (DEX) like PancakeSwap to provide liquidity and earn fees and rewards (yield farming).
- Lending: You can lend your BNB to earn interest, or use it as collateral to borrow other cryptocurrencies.
- Staking: By staking BNB, you contribute to the network security of BNB Chain and earn rewards.
NFT Marketplace Payments: There are many NFT marketplaces on the BNB Smart Chain where BNB can be used to buy and sell NFTs.
GameFi: In blockchain games, BNB can be used to purchase items and receive rewards.
Joining Binance Launchpad/Launchpool: You may need BNB to participate in token sales (Launchpad) for new projects run by Binance, or in the system (Launchpool) where you can deposit tokens and earn new tokens.
As a payment method: Some online shops and services accept BNB as a form of payment, and there is also a payment system called Binance Pay.

Future prospects

The future of BNB and BNB Chain depends on several key factors.

Continued growth of the ecosystem: It is important that more high-quality DApps are developed on BNB Chain and the number of users increases, especially in the areas of DeFi, GameFi, NFT, and Web3 (the next generation of the decentralized internet).
Improved scalability and performance: To accommodate the growing number of users and transaction volumes, BNB Chain will need to continually undergo technical upgrades (e.g. introducing Layer 2 solutions).
Promoting decentralization: A shift away from reliance on Binance and towards more community-driven decentralized governance is required for long-term reliability and sustainability.
Regulatory Compliance: As regulations regarding cryptocurrencies are being established in countries around the world, it is essential for stable growth that BNB Chain and Binance respond appropriately to these regulations.
Role of Web3 infrastructure: BNB Chain aims to be the foundation for new Web3 applications such as the metaverse and decentralized social media, and its success in this area will determine its future value.

Many experts believe that BNB will continue to play a key role in the cryptocurrency industry due to its strong ecosystem and technological developments, but challenges remain, including increasing competition and regulatory uncertainty.

Comparison with competitors: What makes BNB strong?

BNB and BNB Chain are in competition with many other smart contract platforms (Ethereum, Solana, Cardano, etc.) What are BNB's strengths among them?

Strengths of BNB

The main strengths of BNB and BNB Chain are:

Fast and low-cost transactions: Especially compared to Ethereum, BNB Smart Chain generally has lower transaction fees and faster processing speeds, which is a big advantage for many users and developers.
Huge Ecosystem and User Base: With the world's largest platform, Binance Exchange, as its backing, it has a huge number of users and liquidity, which makes it relatively easy for new projects to gain users.
EVM compatibility: Because it is compatible with the Ethereum Virtual Machine (EVM), successful projects on Ethereum can easily be deployed on BNB Smart Chain, and it has a thriving developer community.
Diverse use cases: From trading fee discounts to DeFi, NFTs, and gaming, BNB has a huge range of uses.
Financial and development capabilities: With the strong backing of Binance, we are able to make large-scale development investments and establish an ecosystem support fund.
Burn Mechanism: Periodic BNB burning may help stabilize and increase the token price by reducing supply and increasing scarcity.

Comparison with other similar coins

vs Ethereum (ETH):
- Advantages of BNB: Generally, transaction fees are low and processing is fast.
- Ethereum Advantages: It has the longest history and is highly decentralized. It has the largest developer community and the most DApps. It has a very high level of security.
vs Solana (SOL):
- Advantages of BNB: More mature ecosystem and strong support from Binance. Ease of development due to EVM compatibility (Solana is not EVM compatible).
- Solana Advantages: The theoretical transaction processing capacity is very high. Actively pursuing original technological innovation.
vs Cardano (ADA):
- Advantages of BNB: A large ecosystem of practical DApps has already developed, with fast time to market.
- Cardano Advantages: Rigorous development process based on academic approach. Designed for high security and sustainability.

Compared to these competitors, BNB Chain:"Practicality, speed, and integration with the huge Binance ecosystem."However, some have pointed out that the degree of decentralization is more centralized than other major public blockchains.

Risks and Precautions: To trade safely

Although BNB is an attractive cryptocurrency, there are risks associated with investing in and using it, so be sure to understand the precautions you should take.

Price fluctuation risk (volatility)

This is true not only for BNB but for all cryptocurrencies.The price fluctuations (volatility) are very largeThere is a risk that prices may rise or fall sharply due to market news, regulatory trends, technical issues, or even a comment by a famous person. If you are going to invest, you should always do so with surplus funds and be prepared to take on the possibility of large losses.

Fraud and security

The BNB Chain ecosystem is vast and open, so unfortunately there is also the risk of fraudulent projects and hacks.

Phishing scams:A method of attempting to steal personal information and private keys (access keys to virtual currency) using fake websites and emails.
Rug Pull:A scam where project developers collect funds and then run off with the money. This is seen in DeFi projects and other such projects.
Smart contract vulnerabilities:There have been cases where flaws in DApps' programs (smart contracts) have been exploited to result in the theft of funds.

As a countermeasure, it is important to take self-protection measures such as not blindly trusting information from sources other than official websites, strictly managing private keys and passwords, not getting involved in suspicious projects, and checking the audit status and reputation of the DApps you use.

Regulatory Trends

Legal regulations for virtual currencies are being established in various countries around the world, but the content varies from country to country and is changing rapidly. In particular, since Binance operates globally, it is subject to scrutiny and guidance from regulatory authorities in each country. These regulatory trends may have a significant impact on the price of BNB and the development of the BNB Chain ecosystem. For example, the provision of services in certain countries may be restricted, or new costs may be incurred to comply with regulations. It is important to always pay attention to the latest regulatory news.

Expert opinion and analysis: What is BNB viewed as?

Although experts and market analysts have differing views on BNB and BNB Chain, there are some common evaluation criteria.

Expert opinion (general trends)

Many industry analysts and specialist media have assessed the future prospects of BNB, including:

Ecosystem strength: The strong backbone of Binance, its vast user base, and the wealth of DApps it has formed are considered to be major factors supporting the value of BNB.
Technical evolution: BNB Chain is continually updating its blockchain to improve scalability and add new features to stay competitive. In particular, it is attracting attention for its deployment as a Web3 infrastructure.
Deflationary effects of burn: Periodic BNB burning is expected to have a positive impact on price in the medium to long term as it reduces supply and increases scarcity.

On the other hand, some concerns and challenges are listed below:

Concerns about centralization: The continued influence of Binance has led to debate as to whether it is a truly decentralized network, which could lead to scrutiny from regulators.
Increasing competition: With major updates to Ethereum (e.g., developments since The Merge) and the rise of new high-performance blockchains such as Solana and Avalanche, competition among smart contract platforms is becoming increasingly fierce.
Regulatory risks: As Binance operates globally, friction can arise with regulatory authorities in various countries, which could affect the price of BNB and the ecosystem.

Some prominent cryptocurrency analysts and investors recommend BNB as an important part of your portfolio, while others highlight the risks and urge caution.(Source: Various cryptocurrency media, market analysis reports, etc.) It is important to gather information from multiple sources and make your own judgment.

Latest News and Roadmap Highlights

BNB and BNB Chain are constantly evolving. Here are some of the notable recent developments and future plans. (Please check the official website for specific dates and the latest information.)

Latest News Trends

Recent news about BNB Chain has highlighted the following topics:

Ecosystem Fund Project Support: BNB Chain operates a fund to support promising DApps and infrastructure projects and regularly announces new projects, promoting diversity and growth of the ecosystem.
Focus on Web3, GameFi, and SocialFi: In particular, they appear to be focusing on nurturing projects in new fields such as GameFi, which combines games and finance, and SocialFi, a decentralized social media platform.
Security enhancement initiatives: In order to protect user assets and increase the safety of the ecosystem, Ethereum is promoting partnerships with security companies, strengthening its audit program, and implementing a bug bounty program.
Progress on zkBNB and Layer 2 solutions: To further improve scalability, Layer 2 solutions like zkBNB, which utilize Zero-Knowledge Proofs, are being developed and tested.

Roadmap highlights

The official roadmap for BNB Chain generally lists the following goals (specific details are subject to change):

Further decentralization: The plan is to reduce the centralization of the network by increasing the number of validators (block approvers) and moving governance mechanisms to be more community-driven.
Improved performance and scalability: A technological upgrade aimed at significantly improving transactions per second (TPS), further reducing gas fees, and shortening block finality (the time until a transaction is confirmed).
Cross-chain feature enhancements: Improved bridging technology and support for standardized protocols to increase interoperability with other blockchains.
Improved developer experience: Creating an environment that makes it easier for developers to build applications on BNB Chain through improving development tools and SDKs (software development kits), improving documentation, and strengthening technical support.
Opening up new use cases: Expanding into new application areas of blockchain technology, including decentralized identity, decentralized storage, and DePIN (Decentralized Physical Infrastructure Networks).

If these plans go smoothly, BNB Chain will evolve into an even more attractive and competitive platform. The roadmap is an important clue to determining the future potential of the project, so we recommend that you check it regularly.

Future potential of BNB BNB represented visually

BNB FAQ: Frequently Asked Questions

Here we will answer some common questions that beginners may have about BNB.

Q1: Where can I buy BNB?

A1: BNB can be purchased at many major cryptocurrency exchanges, both domestic and overseas, as well as at Binance, the issuer. Some Japanese exchanges also handle BNB, so please check the official website of each exchange. When purchasing, first open an account with an exchange, deposit Japanese yen, select BNB, and proceed with the purchase.

Q2: How can I store my BNB?

A2: There are several ways to store BNB. You can keep it on the exchange, but if you want to increase security, we recommend transferring it to a wallet that you manage yourself. There are software wallets (e.g. MetaMask, Trust Wallet, etc., which are compatible with BNB Chain) and more secure hardware wallets (e.g. Ledger, Trezor, etc.). Choose the one that best suits your purpose and security concerns.

Q3: Will the price of BNB increase in the future?

A3: No one can accurately predict the future price of BNB. The price is influenced by many factors, including the growth of the BNB Chain ecosystem, progress in technological development, overall market sentiment, regulatory trends, and the competitive situation. It is important to analyze and make your own judgment from various aspects based on the information explained in this article. Please remember that investment involves risk.

Q5: BNB Chain is sometimes called the Ethereum killer, is this true?

A4: "Ethereum killer" is a nickname for a blockchain project that is more powerful than Ethereum and is expected to eventually take over Ethereum's market share. BNB Chain has been mentioned as one of them. In fact, BNB Chain has achieved faster and lower cost transactions than Ethereum, and has gained many users and DApps. However, Ethereum is also continuing to evolve, and each has its own strengths and challenges. Rather than a simple "killer," it may be more realistic to think of them as each having different characteristics and coexisting or competing to develop the entire ecosystem.

Complete guide to BNB: How it works, what's in store, and how to buy it