You likely already know about Binance Smart Chain (BSC) and its widely-used BNB token since you’re here reading about it.
A lot of people know who the biggest cryptocurrency exchange is. After its introduction in April 2019, Binance Chain has demonstrated its high speed and scalable design for enormous throughput.
Those behind Binance Smart Chain (BSC) promoted it as a blockchain alternative to Binance Chain.
So, why do we need BSC, exactly? For what reason was a second blockchain created? If it’s not useful, why bother with it? In the next post, we’ll examine BSC’s origins and answer these issues.
What is Binance Chain (BC)?
In April 2019, the exchange launched the Binance Chain to the cryptocurrency market to provide a decentralized and ultra-fast trading solution. In addition to introducing the Binance Chain, they also introduced the DEX to increase efficiency.
Binance introduced the Binance chain to improve upon the subpar service offered by competing decentralized exchanges.
Binance aimed to provide a seamless platform for its customers to conduct business and provide them with a first-rate experience. However, the most recent version of Binance Chain has not yet been released.
For the time being, Binance Chain only offers a decentralized trading alternative. However, this is not all that Binance Chain offers; some of its other services are below.
- Binance is a cryptocurrency exchange where users may buy and sell BNB, the company’s cryptocurrency.
- Tokens can be controlled in circulation by minting, burning, locking, and unlocking them and freezing and thawing them.
- Tokens built to the BEP-2 specification will be made available. One such token is the BNB token, which is a BEP-2 token built on the BC network.
Even more notably, one of the most widely adopted blockchains in the cosmos, BFT (Byzantine Fault Tolerance) Tendermint, is utilized by the Binance chain.
Binance Smart Chain: What Is It?
Binance introduced BSC, or Binance Smart Chain, in 2020, after the Binance chain had been operational for a full year and a half without incident. It was a surprise that Binance didn’t simply improve its existing blockchain platform instead of creating a brand new one.
When asked why, they stated that enhancing the original Binance chain would have slowed it down in the long run; therefore, starting over with a fresh chain was the best option.
To compete with Ethereum and other blockchains like Tron and EOS, Binance launched a new chain with similar capabilities (dApp platforms).
Binance took a risk and paid off when it built an extremely compatible blockchain with Ethereum, which is currently one of the most widely used decentralized applications (dApps). Since Binance Smart Chain was forked off from Go Ethereum (Geth), it required significant modifications to set it apart from Ethereum (dApp).
They opted for a Proof of Staked Authority consensus technique rather than Ethereum’s existing Proof of Work (PoW). As a result of using PoSA, both the duration of each transaction and its associated fees can be decreased.
Attribute of BSC
Despite being related to Binance Chain as a sibling blockchain, Binance Smart Chain is not affiliated with Binance Chain in any way. Innovative Chain by Binance is a separate blockchain with no ties to Binance Chain other than sharing the same parent company. Therefore, Binance Chain will continue to function normally if the Binance chain is either disabled or shut down.
Smart contracts on the Binance Smart Chain are compatible with and support Ethereum dApps. Consequently, the BSC network makes it simple for programmers to build and move DApps, tools, and other ecosystem components.
While Binance smart chain is not a layer two solution, it does not impose communication limitations on BC and BSC. Since Binance smart chain is a separate blockchain system from Binance Chain, it is not subject to the same restrictions. Users can move their crypto assets freely between the Binance and the Binance smart chains.
Supports Staking and Community-Based Governance
The platform is based on a PoSA consensus model, a variant of the proof-of-stake consensus model. Binance (BNB), the native token of BSC, can be staked to participate in network security and vote on community governance procedures. Proof-of-Stakes (PoS) networks are more competitive with those that still employ complete proof-of-work techniques because they can process transactions more quickly.
A validator quorum is required for the safety of the Binance smart chain’s network. There are 21 validators on the blockchain, and they are rotated in and out of service every 24 hours based on the BNB stakes they receive. No special qualifications are required of a validator; anyone can be one. However, only those who score in the top 21 will be accepted into the group. This pattern will continue once every 24 hours.
During the “epoch” time (consisting of 240 blocks and taking roughly 20 minutes in total), platform validators will be able to update the BSC network. For the same reason, BSC has incorporated “slashing” to discourage bad actors from approving or re-signing fraudulent transactions. Slashing attacks leave the attacker wide open and force them to spend a lot of energy and resources to succeed.
BSC is a hybrid consensus mechanism that combines delegated Proof-of-Stake (PoS) and Proof-of-Authority (PoA) to ensure the integrity of the blockchain and reach a consensus among nodes in the network. In addition to being resistant to 51% of attacks, PoA is well-known for being vulnerable to Byzantine attacks. For added security, elected validators will review each transferred transaction and confirm it after the fact. The validators contribute to the production of the block in a Proof-of-Authority (PoA) fashion. If you want to join the validator network, you’ll need to stake BNB. If the block they propose is added to the chain, the validator gets a cut of the transaction fees generated by the block.
Working of the Binance Smart Chain
Test network tokens that are Bep-20 compliant can be used to represent a wide variety of assets. The term token describes distributed block assets, including digital and physical goods. BEP-20 tokens are the BSC equivalent of the ERC-20 token standard announced by Ethereum (ETH) in 2017. The Binance smart chain includes several useful functions. We’ve selected a few of the finest components from among these many options.
Parallel to the Binance chain, the Binance smart chain was developed. While the Binance smart chain is decentralized from the Binance chain itself, it utilizes a dual-chain design. The double-chain capability makes it possible to safely transfer assets between blockchains. The Binance chain’s ability to move assets more quickly than competing blockchains is partially due to its cross-chain compatibility. Strong decentralized apps can also run on Binance’s smart chain. Binance Chain Wallet, which is compatible with browsers like Chrome and Firefox, is one example of a chain-agnostic wallet that makes it easy to exchange tokens (e.g., BEP-2 to BEP-20 or vice versa).
A three-second block time is possible using the Proof-of-Stake consensus process. Proof of Staked Authority (PoSA) is the underlying premise here; users stake their Bitcoins to validate transactions. Once a valid block proposal is accepted, the associated transaction fees will be distributed to the proposer.
In recent years, pegged coins have received a lot of attention from Defi experts. Coins gain value when combined with other assets, multi-chain currencies, or cryptocurrencies. They can be attached to valuables such as gold or fiat currency.
Token holders of BNB (Build & Build), formerly Binance Coin, could initially wager their tokens for rewards. The binance smart chain provides native support for cross-chain wallets. Regarding current market trends, staking is one of the most sought-after and utilized DeFi and Metaverse choices available.
Staking one’s Build and Build (BNB) will result in a more rapid rate of prize distribution. Staking has been simplified, especially with the lightning-fast asset and bitcoin transfers available through Binance Smart Chain. One of the main reasons binance smart chain is growing in popularity is this.
NFT Design and Support
For the NFT market, BSC is a formidable competitor. The NFTs are a part of the blockchain systems that are gaining traction due to their capacity to provide digital assets with a scarcity element. Some NFTs can cost hundreds of thousands of dollars, if not more.
The comprehensive summary of Binance Smart Chain demonstrates its potential as a viable DEX replacement. The advantages of programmability and interoperability make it a potential game-changer in the DeFi industry. Most importantly, BSC’s independence as a blockchain compatible with Ethereum allows for maintaining Binance Chain’s high-performance standards.
BSC is a blockchain platform that operates with Binance Chain and has advancements like cross-chain communication and staking-based consensus. BSC has, even in its infancy, generated considerable anticipation. Read up on BSC and its applications via reputable sources to learn more.