I have seen many crypto enthusiasts getting confused about the differences between BNB and wrapped BNB. Hopefully, this article will help you out if you still feel uncertain about why Binance has created BNB and wrapped BNB.
The basic difference between BNB and Wrapped BNB is that BNB is not associated with the BEP-20 standard, while wrapped BNB conforms to this standard. Consequently, you can use wrapped BNB on the Binance smart chain, but not BNB.
Let’s get into the details of what they are, how they work, and we there are two BNB tokens:
Why Binance Created BNB and Wrapped BNB:
You will easily comprehend the difference between BNB and Wrapped BNB when you learn how The Binance blockchain works and why Wrapped BNB was released in the first place.
Binance Coin (BNB) technically came out right after the release of Binance Chain. The Binance Chain project allows users to exchange, utilize, and issue digital currencies on the blockchain with ease. It has one native currency – BNB.
However, Binance operates on a dual-chain system after the release of the Binance Smart Chain:
It is another blockchain, launched parallel into the Binance ecosystem to introduce the ability to program on the Binance Chain.
Owing to the Binance Smart Chain, now the Binance blockchain can support various smart contracts and the Ethereum Virtual Machine in addition to performing its old tasks.
Basically, Wrapped BNB is like BNB on steroids – It can do much more.
Applications of the Dual-Chain System of Binance
Even though these two blockchains might seem identical to users, they are quite different:
Binance Chain has a simple and primitive design whose main objective is to execute fast trading and handle many orders from several million Binance users.
On the other hand, Binance Smart Chain is a much more advanced blockchain.
Its function is to create complex decentralized applications and run smart contracts to extend Binance Chain’s functionality.
Binance Smart Chain was created as an open-source and community-based project. Both of these blockchains can easily communicate with each other natively.
Wrapped Binance Coin vs Binance Coin
The differences between BNB and wBNB lie in their applications. As mentioned earlier, Binance Coin does not follow the BEP-20 standard, and therefore you cannot exchange it with many other tokens.
You can think of BEP-20 as an extension of the ERC-20 standard. This standard allows any token on the Binance Smart Chain to be utilized by other applications like DEX and wallets.
For this reason, people need a wrapped version of Binance Coin based on BEP-20 which can easily be used for exchanging with any other tokens available on the chain.
Users need wBNB to achieve purposes different from BNB without devaluing the latter and expanding the Binance ecosystem further.
Without wBNB, one cannot trade directly with altcoins available on the Binance exchange platform.
Note: Binance has shared a lot of ways for users to wrap their Binance Coins safely. Users are advised to attempt wrapping a small amount of Binance Coin at first and avoid a larger amount. Making mistakes might result in loss of tokens.
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