BNB is a crucial fuel for the gigantic Binance ecosystem. But what does BNB do and how does Binance’s flagship blockchain work? Previously, it was known as Binance Coin.
In this guide, we’ll show you how to buy BNB (or how to buy Binance Coin) and everything you need to know.
What is BNB?
Launched in 2019, Binance Chain is the blockchain of the centralized exchange (CEX) Binance , whose native token is BNB. It should not be confused with Binance Smart Chain (BSC), a blockchain launched in 2020 to support smart contracts and decentralized applications (dApps).
BNB was built using the Cosmos SDK, while BSC is a fork of the Go Ethereum (GETH) client. In February 2022, BNB and BSC merged to form the BNB Chain we know today.
How to buy BNB?
You can buy BNB directly on Binance, but if you are trading from a Spanish-speaking country, you can use one of the safest and most regulated CEXs: Bit2Me. Let’s see the process in just four steps: enter the website, register on the platform, pass the KYC and buy with BNB.
Step 1. Register on Bit2Me with an email and a phone number.
Step 2. Choose the wallet with euros and make a deposit.
Step 3. Choose BNB, click “Buy” and choose the payment method.
Step 4. Review the transaction and click “Buy” to complete the purchase.
Binance Ecosystem
Unlike many other L1 altcoins, BNB has a robust ecosystem. This includes decentralized exchanges, yield farms, NFTS, and more. Here is a list of just some of the DApps on the BNB Chain.
- PancakeSwap – DEX
- DODO – DEX
- Travala – Hotel
- OpenOcean – DeFi
- BlockGames – GameFi
Why is BNB so popular?
BNB is popular, largely due to the clout that the Binance name carries in the industry. However, the blockchain also offers low gas fees compared to Ethereum, making it attractive for developers and users to buy BNB and use it in decentralized applications (DApps) .
How does BNB work?
Following its merger, BNB Chain became the beacon chain that runs in parallel to BSC (BNB Smart Chain), while serving as a governance or consensus layer 1. BSC is the smart contract or execution layer.
BNB is short for “Build and Build.” The BNB cryptocurrency serves as a governance token, as well as powering transactions on the BNB Chain (much like gas on Ethereum).
It is important to note before purchasing BNB or Binance Coin that when you are using the BNB Chain, you are most likely using the BNB Smarth Chain. Additionally, there are two versions of the BNB coin: BNB Beacon Chain (BNB) and BNB Smart Chain (BNB).
What is Binance Smart Chain (BSC)?
Binance launched Binance Smart Chain (BSC) in September 2020 as a solution to the limitations of Binance Chain, which it had originally deployed in April 2019. While Binance Chain prioritized ultra-fast trading, it lacked smart contract functionality due to the high computational power required for these contracts.
In contrast, BSC was designed as a sidechain of Binance Chain , specifically to support smart contract programmability while maintaining high transaction speed.
This development came in response to congestion issues seen on other networks, such as Ethereum, particularly highlighted during events such as the CryptoKitties phenomenon in December 2017.
Yield farms on Binance Smart Chain
There are a number of yield farming platforms on Binance Smart Chain, which you can use after purchasing BNB or Binance Coin. These include:
- PancakeSwap – #1 leading AMM and yield farm on Binance Smart Chain; forked from UniSwap . Offers token swapping, liquidity farming , high yields and rewards; stands out for its user-friendly interface with bunnies and pancakes themes.
- Venus Protocol: Enables the use of collateral for asset lending and the minting of synthetic stablecoins, improving investment opportunities in its financial products.
- Pancake Bunny: A yield aggregator and optimizer specific to Binance Smart Chain, often paired with PancakeSwap.
- Autofarm: Features products such as Vaults for strategic yield optimization and AutoSwap for the best trading prices on decentralized exchanges (DEX).
- BakerySwap: An all-in-one DeFi platform offering AMM, DEX and NFT Marketplace.
BNB Wallets
Because the coin runs on a popular blockchain , BNB is widely supported by many wallets. It is important to select one before purchasing BNB or Binance Coin. Here is a list of several of the best BNB wallets.
- Binance Wallet: As the official Binance wallet, it offers seamless integration to manage and trade BNB directly on the Binance platform.
- Trust Wallet: An easy-to-use mobile wallet, Trust Wallet offers robust security features for storing BNB and other cryptocurrencies.
- SafePal: Known for its hardware and software wallet solutions, SafePal offers secure and convenient options for storing BNB.
- MetaMask: Primarily known for Ethereum, MetaMask also supports BNB, allowing users to manage their assets within a familiar interface.
- Ledger Hardware Wallet: A hardware wallet, Ledger provides high-level security for BNB, making it ideal for those who prioritize asset security.
BNB Staking
Since the BNB Chain is a proof-of-stake blockchain , it is possible to stake BNB. However, while staking is possible, it is more accurate to say that BNB is being delegated, as only a set of privileged validators can actually validate the chain.
Ethereum: Alternative to BNB?
Ethereum and BNB are very similar in many ways. For example, BSC is a fork of Ethereum. In addition, Eth 2.0 has a beacoin chain and a smart contract layer, and BNB also has a beacoin chain and a smart contract layer.
In other words, both had a merge event and have somewhat similar architectures . However, the difference lies in the architecture of the beacon chains.
Lastly, BNB uses a proof-of-stake authority (PoSA) consensus algorithm, while Ethereum uses proof-of-stake . Simply put, BNB uses a centralized governance mechanism, and Ethereum’s governance is more decentralized.
CZ resignation and BNB price
On November 21st (UTC), the cryptocurrency world was shaken by big news: Changpeng Zhao, better known as CZ, stepped down from his position as CEO at Binance. This was no small move, given that Binance is the largest cryptocurrency exchange in the world by trading volume.
The exit was part of a $4.3 billion settlement with the SEC after Binance admitted to allowing some dubious Hamas-related payments to flow through its platform.
Richard Teng replaces CZ and comes from regulating financial markets in Abu Dhabi. Between his work in Singapore and the UAE, Teng brings a strong background in regulatory compliance, crucial for Binance as regulatory pressure mounts.
Understandably, the cryptocurrency community, especially traders, did not take CZ’s exit well. The price of BNB or Binance Coin, which powers the exchange ‘s ecosystem , plummeted by 10% immediately to $240.
Data shows that over $3 million worth of bullish bets on BNB were liquidated in one hour. This is the highest figure in recent months, so skepticism is high. Some are worried that the situation will snowball into a prolonged squeeze, where people continue to sell and push the price down even further.
So, uncertainty reigned in the crypto land ahead of the announcement. Some saw BNB’s drop as a buying opportunity, others stayed on the sidelines until tempers cooled down. Regulatory issues and a change in leadership continue to drive market sentiment . So if you’re still looking to buy BNB, make sure to keep a close eye on how this volatile story develops.
BNB: Pros and Cons
Now that you know what BNB is and how it works, is it worth buying? Here is a quick list of pros and cons.
Advantages
- Low commissions and high transaction yield
- Diverse DApps ecosystem
- Active developer community
- It uses the best parts of the Cosmos and Ethereum blockchains
- Allows you to buy cryptocurrencies at a discount on Binance
Disadvantages
- Uses the PoSA mechanism
- Accusations of manipulation of its blockchain
- Binance’s regulatory issues may affect prices
Is BNB a good investment for you?
Whether or not BNB is a good investment for you depends largely on your personal financial goals. However, there are a few things you should keep in mind before purchasing BNB or Binance Coin.
Primarily, BNB is a proof-of-authority blockchain operated by Binance-approved validators. This brings counterparty risk to every DApp, smart contract, and user in BNB.
On the other hand, the BNB Chain also has accusations of not being a “ blockchain ” at all. While the BNB coin has an impressive price performance, the Binance name attached to the cryptocurrency is not enough to overlook the high-risk concerns of the blockchain.
Buy BNB with caution
BNB is one of the few EVM-compatible Layer 1 alternatives to Ethereum that has achieved significant adoption. It has stood the test of time. But as they say in finance, past performance is not indicative of future results .
If you are interested in buying BNB or Binance Coin, choose a reputable exchange, practice good cryptocurrency wallet security, and never invest more than you can afford to lose.
How to buy BNB in 2024 Details
