Binance, the world’s largest cryptocurrency exchange by trading volume will implement the highly sophisticated consensus mechanism – Delegated Byzantine Fault Tolerance (dBFT) in their upcoming Binance Chain.
Building Products For The Future
As previously reported, Binance is building their very own blockchain dubbed “Binance Chain,” a highly scalable solution that can build new products (blockchains) and issue millions of digital tokens.
The CEO of Binance, Changpeng Zhao, better known by his initials CZ, recently spoke at the “Decrypting Blockchain for Business” seminar at the Forbes Asia event where he revealed Binance’s plans for Binance Chain.
He said the launch of Binance Chain is to push for blockchain adoption and advance the blockchain industry.
#Binance is pushing for blockchain adoption and doing many things to help advancement of the industry. E.g. we will have the Binance chain ready in the coming months, on which millions of projects can easily issue tokens. @cz_binance @ForbesAsia #ForbesBlockchain pic.twitter.com/0pc0r1lXd2
— Binance (@binance) December 4, 2018
Following the announcement of Binance Chain, we learned the proprietary blockchain will utilize a dBFT-based consensus mechanism for the first product deployed on Binance Chain, a decentralized exchange (DEX).
NEO’s Switcheo decentralized exchange has tested this sophisticated consensus mechanism and is using it successfully.
What is Delegated Byzantine Fault Tolerance (DBFT)?
DBFT is a consensus mechanism made popular by the NEO blockchain which implemented it in their DEX.
The DBFT method works similarly to Proof-of-Stake (PoS) rather than Proof-of-Work (PoW). It uses a voting system similar to how cryptocurrencies like EOS and Peercoin achieve consensus by choosing delegates and a speaker.
The term “Byzantine Fault” comes from the famous Game theory called “Byzantine Generals Problem.” The problem it describes is around achieving consensus, in which all actors (network participants) must agree on something to prevent a catastrophic failure.
However, some actors (network participants) are unreliable and untrustworthy.
A DBFT system solves this problem by understanding that as long as two-thirds of the network’s participants remain truthful, it is okay to eliminate the remaining bad actors from the networks consensus.
If the upcoming Binance Chain becomes widely adopted globally, for the network to be successful it will need a viable consensus mechanism to combat bad actors who maliciously attack the network.
The scale of participants involved could be massive, considering Binance is already the world’s largest cryptocurrency exchange by trading volume. That they chose the consensus algorithm pioneered by NEO is a great reassurance for the NEO project and could positively impact its price.
At the time of writing, NEO is trading at $5.73, which is down 97% from its all-time high of $169. As for Binance’s BNB token, it’s trading at $4.51, which is down 80% from its all-time high of $22.
Whether the launch of Binance Chain and the use of NEO’s DBFT consensus mechanism will impact BNB’s and NEO’s price is unknown. However, these are positive developments for both projects.
Will use Binance’s DEX when it launches? Do you think it will be a success? Let us know what you think in the comment section below.