Binance Smart Chain
What is Binance Smart Chain (BSC)?
Binance Smart Chain (BSC) is best described as a blockchain that runs in parallel to the Binance Chain. Unlike Binance Chain, BSC boasts smart contract functionality and compatibility with the Ethereum Virtual Machine (EVM). The design goal here was to leave the high throughput of the Binance Chain intact while introducing smart contracts into its ecosystem.
In essence, both blockchains operate side-by-side. It’s worth noting that BSC isn’t a so-called layer two or off-chain scalability solution. It’s an independent blockchain that could run even if Binance Chain went offline. That said, both chains bear a strong resemblance from a design standpoint.
Because BSC is EVM-compatible, it launched with support for the rich universe of Ethereum tools and DApps. In theory, this makes it easy for developers to port their projects over from Ethereum. For users, it means that applications like MetaMask can be easily configured to work with BSC. Seriously – it’s just a matter of tweaking a couple of settings.
How does Binance Smart Chain work?
A] 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.
B] Cross-chain compatibility:
Binance Smart Chain was envisioned as an independent but complementary system to the existing Binance Chain. Dual-chain architecture is used, with the idea being that users can seamlessly transfer assets from one blockchain to another. In this way, rapid trading can be enjoyed on Binance Chain, while powerful decentralized apps can be built on BSC. With this interoperability, users are exposed to a vast ecosystem that can cater to a myriad of use cases.
BEP-2 and BEP-8 tokens from Binance Chain can be swapped for BEP-20 tokens, the new standard introduced for Binance Smart Chain.
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.
Difference between Binance Chain (BC) & Binance Smart Chain (BSC)
You’ve probably heard of Binance Chain, the home of the BNB currency. It is optimized for ultra-fast trading. To achieve this, it had to make certain trade-offs – one being that it wasn’t as flexible from a programmability standpoint as other blockchains.
Well, Binance Smart Chain is here to change that, a new blockchain with a full-fledged environment for developing high-performance decentralized applications. It was built for cross-chain compatibility with Binance Chain to ensure that users get the best of both worlds.
Binance Chain was launched by Binance in April 2019. 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. Due to limitations inherent to blockchain systems, however, the chain doesn’t have much flexibility – smart contracts in a system optimized for fast trading could significantly congest the network.
Scalability remains one of the most challenging hurdles to blockchain development. And that’s where Binance Smart Chain comes in.
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