What is a BNB Smart Chain Address?
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Blockchains have evolved massively over the last decade. This innovative technology now facilitates a wide range of industries, including healthcare, supply chain, entertainment, and video games. However, these platforms, for a large part, are still primarily used for peer-to-peer transactions.
BNB Smart Chain is among the most popular blockchains used for fintech purposes and daily transactions, thanks to its incredibly quick payment processing and low fees. Another important feature that contributes to its growing popularity with both organizations and private users is its simplicity of use.
All you need is a BNB Smart Chain address, and you’re set to send or receive money anywhere in the world. For developers and users looking for a more scalable and cost-effective blockchain platform, this guide provides a detailed discussion of what a BNB Smart Chain address is and how it works.
What is BNB Smart Chain?
Developed and launched by the Binance crypto exchange company, BNB Smart Chain (BSC) started functioning in September 2020. Originally named Binance Smart Chain, this decentralized ledger is not the first blockchain created by Binance. BSC is actually built on top of another Binance blockchain called BNB Beacon Chain.
The purpose of the BNB Smart Chain is to implement smart contracts. Smart contracts allow developers to build multiple types of decentralized applications (DApps) on it. Moreover, BSC is home to several thousand layer-2 crypto tokens and NFT projects. Besides BEP-20 tokens – crypto coins built using BSC native token standard – the blockchain supports cryptocurrencies developed on BNB Beacon Chain.
The popularity of the BNB Smart Chain is greatly influenced by a number of important factors, including its interoperability with the Ethereum Virtual Machine (EVM). EVM compatibility enables developers and entrepreneurs to seamlessly shift from the Ethereum ecosystem to that of Binance. As a result, the Binance ecosystem has everything, ranging from DEXs, peg coins, play-to-earn games, and DeFi protocols.
The blockchain uses a Proof-of-Stake consensus mechanism to process and validate transactions. The PoS model allows BNB holders to participate in the network by becoming validators after locking up their holdings on the blockchain. In return, they are rewarded with a portion of transaction fees and newly-minted BNB tokens.
As of May 2023, about 600 protocols are running on BNB Smart Chain with almost 1.3 million active users. The total value locked (TVL) on the blockchain is around $6.43 billion, which is the third largest in the DeFi space.
Difference between Binance, BNB Chain, and BNB
Binance has a series of different products and initiatives functioning under its umbrella brand. As a result, newcomers often get confused between the Binance crypto exchange, the BNB chain, and the BNB token. However, moving forward, we will clarify the difference between the three to avoid confusion.
Binance Crypto Exchange
Launched in July 2017, the Binance cryptocurrency exchange is the world’s largest crypto trading platform by trading volume. Interestingly, the platform earned this title within the first six months of being launched and still leads its closest competitor by a huge margin to this date.
The exchange is primarily known for crypto-to-crypto trading, as it provides trading in over a thousand different crypto pairs. It is also popular for accepting the largest number of fiat currencies, including USD, AUD, EUR, TRY, RUB, UAH, PEN, HKD, and more, all of which can be deposited and withdrawn using multiple payment methods.
The Binance exchange charges minimal trading fees, which can further be decreased by holding BNB tokens in your account. Binance uses multi-layered industry-leading security protocols to protect user funds, most of which are stored in cold storage. With a capacity to process 1.4 million orders per second, the exchange also ensures a high throughput for all users worldwide.
Moreover, Binance is well suited for experienced as well as novice traders. The trading interface features almost every tool a professional trader may need. At the same time, the exchange also provides enough educational content for new users.
The Binance network, now known as BNB Chain, commenced operations in 2019 when Binance launched its very first Binance Chain. The primary aim of this blockchain was to support the BNB coin. However, it has grown beyond this initial objective, with the current blockchain network of Binance now consisting of two separate chains, i.e., BNB Beacon Chain and BNB Smart Chain.
BNB Smart Chain, as discussed earlier, appeared on the scene in 2020. It was intended as a completely new blockchain to power Binance’s DeFi aspirations by providing developers with a decentralized and smart contracts-enabled platform. However, this blockchain network is built over and runs parallel to the Binance Chain, which was later rebranded as BNB Beacon Chain. While the BSC facilitates DeFi protocols, the latter is primarily used for governance and staking.
The company also puts a lot of emphasis on the fact that BNB Chain, although developed and launched by Binance, is not owned or governed by Binance. Instead, it is a decentralized platform and functions independently of the company. The network is owned and governed by the network participants themselves, who stake their BNB holdings on the BNB Beacon Chain.
Binance coin, also known as BNB, is the native cryptocurrency of the Binance ecosystem. Introduced in 2017 along with the Binance Exchange, it was originally created to provide discounts on trading fees to users of the platforms.
Interestingly, BNB was built as an ERC-20 token on the Ethereum blockchain. Later on, it was shifted to the BEP-2 token standard after the launch of BNB Chain in 2019. Currently, the crypto token is used for paying transaction fees, staking, governance, and trading in the Binance ecosystem.
Furthermore, BNB is the fourth-largest cryptocurrency in the entire crypto space, with an impressive $48.8 billion market capitalization. It reached its all-time high, i.e., $690, in May 2021. Initially, 200 million BNB tokens were released in the market. However, after multiple burns, the current circulation is about 155.8 million tokens.
How Does BNB Smart Chain Address Work?
Any crypto wallet that stores BNB Smart Chain assets or any other cryptocurrency has two types of keys. The first one is the private cryptographic key that ensures your ownership over the crypto assets you are holding. This key is not meant to be shared with anyone, as anyone with your private keys can easily access your crypto tokens and other assets.
The second type is public keys. These keys are shared with the sender in order to receive transactions in your wallet. Normally, public keys are a very long and complex series of randomly generated numbers and letters. Hence, various crypto wallets use a hashing technique to generate a wallet address, which represents the public keys and is easier to share.
So, when a user wants to perform a transaction and send funds using the BNB Smart Chain, they require the BNB Smart Chain address of the receiver, i.e., the wallet address on the BNB Chain. Similarly, when someone wants to receive funds in their crypto wallet through BNB Smart Chain, they are supposed to share their BNB Smart Chain address with the sender.
In simpler terms, we can say that the BNB Smart Chain address acts as the BNB ecosystem’s equivalent of our traditional bank account number.
How to Get Your BNB Smart Chain Address?
In order to get your BNB Smart Chain address, you first need to set up a crypto wallet. If you don’t have one already, Trust Wallet is a popular option for beginners. Being a cellphone wallet, it can only be operated through your cell phone device with its own dedicated application.
After downloading the application, you need to create a new crypto wallet. The application will show you a seed phrase of 12 randomly generated words. This seed phrase acts as the password to your wallet. Make sure to save it somewhere so you don’t lose it. Losing the seed phrase will mean losing all the crypto assets stored in your wallet.
After the wallet is set up, click on the “Receive” button to fund your wallet. Browse through all the cryptocurrencies or simply search BNB Smart Chain. Once you select it, the interface will show you an alphanumeric key and a QR code. Both these will act as your BNB Smart Chain address, which you can use to send BNB assets to your wallet.
To send crypto assets using the BNB Smart Chain address, you can press the “Send” button on the main interface of the wallet application, then insert the BNB Smart Chain address of the receiving wallet. Select the amount of BNB funds you wish to send and proceed to complete the transaction.
However, always make sure that you use the BNB Smart Chain address only to transfer BNB Smart Chain assets. Otherwise, your assets will be lost and will become impossible to recover. Finally, you can generate your BNB Beacon Chain address using the same process.
As blockchain networks and DeFi technologies continue to evolve, improve, and gain more popularity, more and more people will want to join these decentralized ecosystems to carry out their routine transactional affairs.
And in an age when Web 3.0 is already becoming a reality, a thorough understanding of concepts like BNB Smart Chain address is always helpful. Such innovations will be an integral part of the fintech world in the coming years.
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Please note that the Content may have been generated with the Help of AI. The editorial content of OriginStamp AG does not constitute a recommendation for investment or purchase advice. In principle, an investment can also lead to a total loss. Therefore, please seek advice before making an investment decision.
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