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BNB is fundamentally a token facilitating product offered by a for-profit company, Binance. The crypto community regularly accuses Binance, and its founder, CZ, of using centralization to dominate the crypto space rather than encouraging decentralized creativity and growth.
For example, the initial validators of the Binance Chain were “trusted members of the Binance community,” likely team members, and were not selected through a decentralized consensus mechanism.
CZ published his beliefs regarding centralization, stating security, ease of use, and freedom as the ultimate goal, with potential solutions reasonably distributed on a gradient between centralization and decentralization.
Binance’s announcement of the decentralized Binance Smart Chain has been challenged as a centralized replication of an “already crowded” smart contract space.
The Binance Smart Chain uses a Proof of Staked Authority consensus mechanism, a Delegated Proof of Stake and Proof of Authority crossover. A limited quantity of validators will produce blocks, with validators taking turns, similarly to Ethereum’s Clique. Stake sizes will be the basis for validator elections. 21 total node operators elected by BNB holders will govern the blockchain similar to the EOS’s notorious Delegated Proof of Stake system, which has been plagued by cartel-like behavior, vote-buying scandals, censorship, and centralization.
The Binance Smart Chain is intended as an Ethereum-like dApps marketplace with incorporated Ethereum dApp compatibility. However, BSC is in no way designed for an open, permissionless, decentralized blockchain network akin to Ethereum but instead has created a closed sandbox environment that is compatible with Ethereum dApps.
Binance has not proven a meaningful commitment to decentralization, and users/investors should not expect otherwise. BNB’s path will be determined by what is best for the profit-driven greater Binance ecosystem.
