You may have heard about BNB Chain, created by the world’s largest cryptocurrency exchange. The chain, which is the result of a merger of Binance Chain and BNB Smart Chain, has won kudos for its ability to swiftly process transactions while charging low fees. The company, however, currently faces a number of legal and regulatory issues. Read on to learn more about this important player in the world of blockchains.
What is BNB Chain?
BNB Chain is a blockchain created by Binance (BNB +0.26%), the world’s largest cryptocurrency exchange by trading volume. The blockchain is fueled by BNB, formerly known as Binance coin. It’s a decentralized, open-source ecosystem that helps users create, store, and exchange data. It supports smart contracts, or programs on a blockchain that automatically execute when certain conditions are met.
BNB Chain has its roots in the 2017 founding of Binance by Changpeng Zhao, a Chinese-Canadian software developer, and Yi He, a Chinese businesswoman. The BNB Chain was created by the 2022 merger of Binance Chain, which handled staking and governance, and BNB Smart Chain, an Ethereum-compatible smart contract platform. The blockchain uses a proof-of-stake system to validate transactions and govern the network, and it was designed as a high-performance blockchain for smart contracts that would be compatible with the Ethereum Virtual Machine (EVM).
How is BNB Chain used?
BNB Chain claims to be among the most popular blockchains in the world, recording 4 million daily transactions and more than 1.4 million contracts, according to BSCScan and Solidus Labs. It’s thought to be a low-cost, fast alternative to Ethereum (ETH +1.76%).
The BNB Chain’s native cryptocurrency, BNB, has a market cap of almost $50 billion, trailing only Bitcoin (BTC -0.09%), Ethereum, and Tether (USDT +0.01%). There’s a vast array of decentralized applications (dApps) available on the platform; the applications are programs that operate on peer-to-peer networks and blockchains rather than central servers. BNB claimed more than 4,700 dApps on the blockchain as of mid-2023.
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Although decentralized apps are often used for social media and gaming purposes, some of the most attractive uses are made in finance. Investors who loan money on a dApp, for example, generally get higher interest rates than if they loan money to a bank since there aren’t any intermediaries. Borrowers also can negotiate rates with lenders, which isn’t always the case for people shopping for a loan. Finally, a smart contract can allow the transaction to take place immediately since no lawyers or other third parties are involved.
Getting started on the BNB Chain is an easy, three-step process:
- Download a crypto wallet to connect to BNB Chain and manage funds;
- Get BNB, the BNB Chain currency; and
- Find a dApp that you want to use, a game you want to play, or another application that looks interesting.
