What is Bitcoin BEP2?

Bitcoin BEP2 is a BNB Chain-issued Bitcoin clone. Its price is always similar to that of the underlying asset: Bitcoin, and each BTCB is backed by one real BTC. As a result, the pegged BTCB tokens are fully backed by their own reserve asset, Bitcoin.

A brief history of Bitcoin BEP2

On 17 June 2019, Binance decided to introduce leading cryptocurrencies pegged tokens. So, in this lot, Bitcoin BEP2 was also launched.

To understand the concept of Bitcoin BEP2, it is necessary to be familiar with the concept of BEP2, an abbreviation for Binance Chain Evolution Proposal 2. BEP2 is a technical standard for producing and deploying new BNB Chain tokens. It establishes a set of rules and technical specifications that tokens must adhere to in order to operate inside the BNB Chain ecosystem. In the same way that ERC20 is a token standard on the Ethereum blockchain, BEP2 is the token standard for BNB Chain.

BEP2 is a collection of technical specifications rather than a piece of software. These rules guarantee that tokens in the BNB Chain ecosystem may smoothly interact with one another. BEP2 tokens may be used to represent a variety of digital assets and marketable items. The standard assures that they can all live peacefully with one another and with the surrounding ecology.

The BEP2 standard also outlines some of the most fundamental and important characteristics of tokens created on the Binance Chain. Even if the standard states the rules, various tokens will have different implementations for the particular use cases designed for them. Nonetheless, having a standard like this reduces the amount of work needed from developers to issue tokens significantly.

How Bitcoin BEP2 works

BNB Chain, which hosts the Bitcoin BEP2, is based on the Tendermint BFT consensus and delegated proof of stake (DPoS) consensus with a specialised application layer. These two consensus algorithms have proven to be a more efficient and dependable alternative to proof of work (PoW).

BTCB are 100% backed by the native currency in reserve, which in BTCB's case is Bitcoin (BTC). The reserve addresses are public and may be published by anybody. The blockchain makes auditing a crypto reserve much simpler than it would be with a typical bank balance tether. On Binance.com, a trading pair is established between the pegged token and the native currency, for example, BTCB/BTC.

With a price differential of roughly 0.1%, large purchase orders will be maintained on the trading pair on Binance. This allows anybody to easily change from the pegged token to the native currency. If this purchase order is filled, a new order will be made, and an equivalent amount of cash will be put into Binance from the reserved address. The entire amount of the purchase order and cash on the published reserve address will be more than the total supply of the pegged token, guaranteeing that there is always 100% support.

It is worth noting that Binance provided further details about Bitcoin BEP2 in official announcements, without the use of a white paper.

What is Bitcoin BEP2 used for?

Bitcoin BEP2 may be used to represent a variety of digital assets and marketable items. The standard assures that they can all live peacefully with one another and with the surrounding ecology. BEP2 stablecoins such as BUSD, BEP2 pegged Bitcoin BEP2, and many more multichain projects are using the features of BEP2.

BNB Chain's original asset is BNB, which is used to pay fees (similar to gas). This implies that in order to transfer your BEP2 tokens, you must also have a modest quantity of BNB in your wallet. This offers an incentive for validators to include the transactions on the blockchain since they will be paid in BNB as a reward for their efforts.