Binance is one of the world’s largest cryptocurrency exchange. Launched in 2017, Binance quickly grew to become an industry leader through its high levels of security and transparency, something rarely seen in the crypto-space. At the heart of the Binance ecosystem is the native Binance token; Binance Coin (also called BNB). Binance Coin started life off as an ERC20 token and then was launched on Binance Chain, created by Binance. In this guide, I’ll be answering all your questions about mining Binance Coin (BNB).
Technically, no, you cannot mine Binance Coin (BNB) since the Binance Blockchain uses the BFT (Byzantine Fault Tolerance) consensus mechanism. You can only mine cryptocurrencies with Proof of Work consensus mechanisms like Bitcoin or Ethereum for example. On the other hand, you can participate in the Binance Coin network by becoming a validator which is similar to the mining process.
To learn more about how Binance Coin reaches consensus, and how you can earn by participating in the network, read on.
PoW vs BFT
To understand a little bit more about why you can’t mine BNB, we need to take a look at how blockchains work. I’ll try to keep this as beginner-friendly as possible, and if you don’t understand what some of the words mean, you can always reference our crypto glossary.
In order to work, Blockchain’s require something called ‘Consensus’. Essentially, this is a way of confirming transactions in a (hopefully) decentralised manner without the need for physical human intervention. A good real-life example of this would be the banks verifying cheques or transactions made from one account to another.
There are several different ways in which a blockchain can achieve consensus, and it’s one of the hot discussions when it comes to the future of crypto, but I won’t get into that too much here – it can be a little mind-boggling. A way of reaching consensus (verifying blocks) in a blockchain is called a ‘Consensus Mechanism‘. The most popular consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).
Proof of Work is what Bitcoin and Ethereum use (for now) and this form of consensus requires miners to support the network. This essentially means that computers are needed to figure out the next block (this is a miner) and whichever gets it correct, gets the reward.
Pioneering organisation, Tendermint, have created a new consensus mechanism called BFT (Byzantine Fault Tolerance) which aims to iron out all the issues experienced with Proof of Work blockchains. This is the technology which Binance have built Binance Chain upon, and consequently, how Binance Coin transactions are verified.
BFT is renowned for being faster and more economically conscious than PoW and therefore forms the backbone of several different cryptocurrencies like Binance Coin and Cosmos.
So if I can’t mine it, how can I get rewarded?
One of the primary reasons, people pick up cryptocurrency mining is so that they can earn a form of passive income. The main secondary reason is people who believe in the network and therefore help in securing it by mining. Anyway, as I mentioned, most people are in it for the cash, which is nothing to be ashamed of!
Just because you can’t mine Binance Coin, it doesn’t mean that you cannot earn from securing the network. In the case of Binance Chain, people who secure the network are known as ‘Validators‘. This means pretty much exactly the same thing as ‘Miners‘ except for no mining equipment is required, therefore they are called Validators as they validate blocks in the chain.
Unfortunately, though, not everyone can participate in the Binance Chain network (at the moment). According to the official Binance Chain docs, only a few trusted members of the Binance community are Validators at the moment, but they are looking to expand this in the future to increase the idea of decentralisation in Binance Chain.
The initial validators are selected from trusted members of the Binance community, and will eventually expand to more members as the Binance blockchain and ecosystem matures, this responsibility will be distributed. The decentralized governance procedure will be introduced and executed. More qualified organization/individual can become Validators.
Binance
Okay, so you’re probably now a little down because you don’t think you can earn from Binance Coin. There is one last method which anyone can do to earn money from Binance Coin’s (BNBs) success. That is simply by purchasing some on Binance.com with Bitcoin or other cryptocurrencies and then holding it in hope of the price of the coin going up.