Binance Chain- the starting point of the BNB coin. And it has been optimized for super-fast transactions. To achieve this, Binance Chain has had to make trade-offs, and one of them is that it is not as programmable as other blockchains. And that is also the reason why Binance Smart Chain appeared. It changes this and becomes a new blockchain with a fully qualified environment for developing high-performance decentralized applications.
What is Binance Smart Chain?
- In April 2019 Binance appeared. Its primary focus is to facilitate fast, decentralized (or non-custodial) trading. Perhaps unsurprisingly, the biggest decentralized application (or DApp) on it is Binance DEX, one of the friendliest decentralized exchanges out there. You can use it via a web interface at binance.org or through its native integration with Trust Wallet.
- BSC is a parallel blockchain with the Binance Chain, develop to implement smart contract-based applications.
- One of the most important features of BSC is the use of Ethereum EVM; which provides its users with support for applications such as Metamask wallet. The main goal of the developers is to increase the speed; and reduce the cost of transactions for users and applications based on this blockchain.
Alt: BSC
Benefits of Binance Smart Chain
- Firstly, Being a blockchain will provide security and safety for all users and developers.
- Secondly, Compatible with EVM and will support all existing Ethereum tools along with faster and cheaper transactions.
- Thirdly, Its native dual-chain interoperability will enable cross-chain communication and scaling of high-performance applications that require fast and smooth user experience.
- Next, Online administration along with the Proof of Staked Authority consensus algorithm, built on 21 transaction validators, will provide decentralization and allow significant community participation.
- Finally, BSC is a much cheaper and faster alternative in 2021 due to the congestion of the Ethereum blockchain and its problems for users. After the migration of a large number of users and the admirable performance of Binance Smart Chain, the popularity of this platform increased, as a result of which the price of the BNB token, which is the native token of this platform, rose above $300.
Alt: Cheaper and faster
How does Binance Smart Chain work?
Consensus
- Binance Smart Chain achieves ~3 second block times with a Proof-of-Stake consensus algorithm. Specifically, it uses something called Proof of Staked Authority (or PoSA), where participants stake BNB to become validators. If they propose a valid block, they’ll receive transaction fees from the transactions included in it.
- Note that, unlike many protocols, there is no block subsidy of freshly-minted BNB, as BNB is not inflationary. On the contrary, the supply of BNB decreases over time, as the Binance team regularly conducts coin burns.
Cross-chain compatibility
- BEP-2 and BEP-8 tokens from Binance Chain can be swapped for BEP-20 tokens, the new standard introduced for BSC. Have you read An Introduction to ERC-20 Tokens? Then you’ll already be familiar with the format of BEP-20. It uses the same functions as its Ethereum counterpart.
- To move tokens from one chain to another (i.e., BEP-2 to BEP-20 or vice versa), the simplest method is perhaps to use the Binance Chain Wallet, available on Chrome and Firefox. Check out Use Binance Chain Extension Wallet for a guide to this.
Binance Smart Chain – Is it really decentralized?
- Critics argue that Binance Smart Chain achieves low costs and speeds by sacrificing decentralization. This violates the core principle of many blockchain projects; the whole point is to have a ledger that is verified by anonymous people from all over the world.
- There are just 21 validators on Binance Smart Chain. Binance Chian determine these validators everyday, which has just 11 validators. In comparison, there are 223,624 Ethereum validators.
- What’s more, several public Binance Smart Chain validators have close ties to Binance itself. Of the remaining anonymous validators on Binance Chain, Messari analyst Wilson Withiam wrote on April 12, “It’s hard not to presume that each Binance Chain validator is in some way connected or tied to Binance.”
- Wilson presumes that Binance manages and influences all Binance Chain validators.. He continued: “They each take turns producing blocks in a seemingly predefined order. There doesn’t appear to be any stake-weighted mechanism to determine which one produces the next block.”
- So, while BSC is cheap and fast, it likely accomplishes this by giving up one of the foundational principles of blockchain technology: decentralization. However, lots of blockchain companies sacrifice decentralization to speed things up. Binance’s cryptocurrency exchange, as well as companies such as Wealthsimple and Coinbase, are entirely centralized. They control your funds and manage them on your behalf.
- This is because popular blockchains like Ethereum and Bitcoin are slow and expensive to use, and all blockchains are unwieldy for people unfamiliar with the technology. Some purists consider such centralized companies a scourge on the technology, while others are thankful that they make crypto trading convenient and introduce it to non-technical customers.
Alt: Decentralized
