Image Source: Unsplash
In any new technology, the question of adoption is always a big challenge. The blockchain industry is no different, but it has its own set of unique challenges. Scalability, high transaction fees and long processing times are just some of the problems that have to be solved by any serious blockchain project if it wants to see mass adoption in the future. In order to thrive, a blockchain must have capacity to scale on demand while also maintaining security and decentralization. The ability of a network to store data and expand in response to increased usage is known as scalability. To understand how Ankr’s solution transformed the scalability of BNB Chain Cryptocurrency, read on .
What is BNB Chain?
BNB Chain is a new blockchain platform focused on designing and building the next generation of decentralized exchange on the blockchain. When BNB Chain was first founded, they were called Binance Decentralized Exchange (DEX). However, due to the transformation of the scope of their project and the legal implications of using the BNB name, they had to change the name of their product. BNB Chain has been under development for over a year and they are scheduled to launch their mainnet in the first quarter of 2020.
BNB Chain aims to be a decentralized exchange where you can trade any type of digital asset, including cryptocurrencies and tokenized assets such as gold and stocks. BNB Chain will represent a comprehensive transformation of how blockchain exchanges operate, including how users access and utilize the technology. The team behind the project believes that a decentralized exchange will help eliminate many of the operational and security issues that have plagued the industry to date. BNB Chain plans to be more than just a decentralized exchange. The project’s stated goal is to create a “utility network.” This network will provide users with a range of different tools, including a decentralized exchange, payment network, and a marketplace for tokenized assets.
Why is Scalability Important in Blockchain?
The blockchain is a decentralized, trustless and distributed ledger that is maintained by a network of computers. There are many different types of blockchains, but they all have a few things in common: they are a shared distributed ledger, they are immutable (unchangeable), they are pseudononymous (uses a “digital identity” instead of real names) and they have a complete transparency of their transactions. The blockchain is the technology behind cryptocurrencies such as Bitcoin, Ethereum, Litecoin and many other altcoins. It is a distributed ledger (a decentralized database) that records transactions. The network that maintains the blockchain is made up of “nodes” (machines connected to the network). There is no central server that holds the blockchain, just a large network of nodes.
What is Ankr’s Solution to solve scalability?
The scalability problem in blockchain can be solved by using a hybrid consensus protocol. A hybrid consensus protocol is a combination of two or more consensus algorithms. The most common consensus algorithms are Proof-of-Work (PoW) and Proof-of-Stake (PoS). The hybrid consensus protocol that Ankr used for the BNB Chain project is a combination of PoW, PoS and a modified version of Delegated Proof-of-Stake (DPoS). This hybrid protocol allows for more scalability by combining the PoW and PoS consensus algorithms. This means that BNB Chain will use PoW for the initial confirmation of blocks, and then switch to PoS to maintain the blockchain with low transaction fees. DPoS is a modified version of PoS, which is more centralized than PoS and relies on one-person-one-vote as opposed to one-coin-one-vote.
There are various challenges to be overcome in the blockchain industry. A blockchain must have scalability, security and decentralization. The ability of a network to store data and expand in response to increased usage is known as scalability. Hybrid consensus protocols are a great way of solving the scalability problem. The project’s stated goal is to create a “utility network.” This network will provide users with a range of different tools, including a decentralized exchange, payment network, and a marketplace for tokenized assets.