What is Binance Coin? Is it worth the investment?

The competitiveness in the field of DeFi (decentralized finance) is relatively high. While Bitcoin was the world’s first programmable money, other projects have tried to make it easier blockchain more and more.

People seeking loans or higher returns can use this service to bypass banks and other institutions They charge high fees and require identification to borrow money.

Binance Smart Chain (BSC) has emerged as a major competitor in the DeFi space. But what is Binance, Binance Coin or BSC, and how does it work?

Some features:

  • One of the The largest cryptocurrency exchanges On this planet is Binance (BNB).
  • In 2017, Binance introduced the Binance coin as the Ethereum ERC-20 token. The token is allowed to exchange Users must use the token for transactions At a lower rate if they use it.
  • When the Binance Smart Chain was launched in September 2020, Binance Coin was transferred to it.
  • With Binance Smart Chain, a Decentralized financial ecosystem (DeFi) will be generated via smart contracts.
  • Binance Smart Chains Work Using One Approach A consensus mechanism called proof of authority.
  • Binance founder Zhao Changpeng called Binance Smart Chain CeFi (Central Finance), or CeDeFi.
  • The Binance platform has such control over the Binance smart chain that it poses a problem in distinguishing between the issued on-chain assets and securities, including BNB.

What is Binance?

Zhao Changping she has He founded Binance, a cryptocurrency exchange for trading cryptocurrencies. Headquartered in China, the company moved to the Cayman Islands after increasing regulations in China threatened its business.

Its large list of trading pairs and relatively low fees have made Binance one of the largest, if not the largest, cryptocurrency exchanges in the world. Initially there were no KYC restrictions on the site; However, Now offering a wide range of KYC sizes.

What is Binance Coin?

With the launch of Binance Coin (BNB), a token based on the Ethereum framework, Binance launched an Early Coin Offering (ICO). Funded investors got 10% of the shares, the founding team got 40%, and the public got the rest.

Coin is a utility token used by Binance, where users can pay trading and transaction fees at a reduced rate compared to other tokens. Binance uses Burns tokens, They use the profits from token sales to buy more BNB and later destroy it.

A new original chain was launched in 2019 to replace the Ethereum network. After the announcement of the Binance Smart Chain, the Ethereum network moved again.

Which Binance Smart Chain?

At the beginning of April this year, Binance Announcing the launch of BSC, its DeFi platform. As an alternative to Ethereum and other popular DeFi platforms, it was intended to provide a more secure alternative.

As Ethereum’s popularity has grown, its infrastructure has become overburdened, causing delays, delays, and such high fees that sending anything under $100 is nearly impossible except on time.

Etheruem was unable to provide a viable platform for those who could not afford it, which led to other smart contract platforms such as BSC. Currently, various applications on the BSC platform contain a file the value 26 billion dollars.

Binance Smart Chain Vs. Ethereum

Binance’s trading volume has reached that of Ethereum. Likewise, both platforms are built using applications such as decentralized exchanges and credit and loan platforms. However, the approval mechanisms for both systems differ greatly.

In a distributed computer system (blockchain), a consensus mechanism allows nodes (participants) to agree on the correct set of data (transactions). Blockchain networks are made secure through this Participants can verify transactions without relying on each other.

Each blockchain shapes this consensus in a different way. Bitcoin’s original consensus mechanism, Proof of Work (PoW), currently supports the Ethereum protocol. The method that Binance uses is called prove power.

Binance

The validators are the ones who create the blocks in PoA. 21 validators are pre-qualified and selected by Binance, according to website.

By design, admission is based on reputation, with candidates ensuring their true identity, investing money to prove their long-term dedication and equality with other candidates. Therefore, the Binance Smart Chain is more like a private blockchain than a united one.

Uniform blockchains are fundamentally different from public blockchains. Ethereum And Bitcoin, for example, are both open public ledgers. Those who choose can participate as node or miners without revealing their identity or purpose.

The Binance Blockchain is under the ultimate control of Binance in this model. The auditor is appointed by them and they can remove the auditor at their discretion. Binance should be trusted to act in the best interest of its users. Binance’s system and chain can be changed if they wish.

According to Changpeng Zhao, CEO and co-founder of Binance, BSC is similar to decentralized DeFi or CeDeFI.

Ethereum

Ethereum currently uses the same Proof of Work mechanism as Bitcoin. Computers compete to validate transactions using this system. Computers must answer complex math problems to win.

Once the computer determines the winner, a block of transactions is added to the blockchain. Mining is the process of completing transactions on the Ethereum block using computers. Energy is consumed during this process which helps to secure the network.

There is no central authority involved in a decentralized network that has a sufficient number of geographically dispersed miners, which is very different from BSC.

Ethereum is expected to turn into a consensus model Proof of Stake (PoS) In order to reduce commissions. In this model, an algorithm is used to determine which node wins a set of transactions. The next block of transactions in the chain will be produced by the chosen node. In general, stock pools are referred to as nodes.

The betting pools are determined by the number of coins they own or by their stakes. The bet combination with more coins has a better chance of being selected to create a block and win the rewards. There may be a level of randomization and other criteria, such as how often the coins have been wagered, to ensure this The richest pools don’t always win. It’s almost like trying to compare this process to something like a credit score, where the same score (number of coins) doesn’t mean much without a long repayment history (bet history).

Hence, in PoS, mining is replaced by coin holders who share their coins. Like miners who join the mining pool to earn more rewards, individuals can place their coins with different stock combinations. PoS, unlike PoA, does not depend on a central authority to approve or select the participating pools and nodes.

Is Binance Coin a good investment?

It can be difficult to evaluate cryptocurrencies for their investment potential. When considering decentralization, it is easier to value something like Bitcoin or Ethereum.

It has more than 11 years of ups and downs and has a large number of geographically distributed nodes and miners. A Bitcoin transaction offers certainty that no single company, government, organization or individual is under control. The open and free market only sets its price; A group of users determines its future.

Although there are only half Bitcoin contracts, Ethereum has an order of magnitude larger than Binance Coin. Since Binance’s PoA model gives it complete control over the coin, this is likely to be true.

The question is, why is it important? Ethereum fees are lower than Binance which is faster, right? What if it was centralized?

Individuals vary in the answers to these questions depending on the reasons for investing. Are you interested in speculating on cryptocurrency? Do you prefer a decentralized ecosystem that provides real solutions?

It’s not just about making money with speculation that cryptocurrency, and especially Bitcoin, aims to solve it, but it’s also about control and freedom.

Writer and editor.
I have a BA in English literature from Abdul Malik Assadi University In Morocco. After learning to read and writeI never stopped. I started building my writing career when I was still in high school; I was collaborating with newspapers and writing on various topics, which helped me shape my writing and editing personality. After I graduated, I became Professional writer for several international websitesAnd in 2021, I joined the online trend team as a writer/editor.
I have a strong passion for writing, and my dream is to publish a novel (or ten novels) and become one of my novels The New York Times Best seller.
Dream big or go home, right?

My motto is? “All you want is on the other side of fear.”

Leave a Comment