Blockchain has become a hot topic, but it can be difficult to understand. This article provides all the information you need to get started on Binance’s new blockchain platform, Binance Smart Chain.
There are tons of articles out there that promise instant millionaire status! But not many focus on what is actually important and valuable about this technology—in fact, most miss the point entirely by focusing only on price fluctuations alone rather than long-term value creation with cryptocurrencies and tokenization.
This article is your reference guide to the Binance Smart Chain and a primer on smart contracts, which are self-executing computer programs that run as immutable distributed applications (DApps).
What is Binance Smart Chain (BSC)?
The Binance Smart Chain is a blockchain that was launched on November 30th, 2017. The BSC is a hybrid blockchain that allows users to transfer tokens between chains. Binance is a cryptocurrency exchange that is one of the largest in the world and the BSC will allow users to transfer tokens between Binance and the Binance chain. Binance Smart Chain (BSC) is a smart contract platform that mimics the functionality of Ethereum and other dApp platforms such as Tron and EOS.
BSC was launched after the launch of Binance Chain, which was deemed more efficient due to the added smart functionality. Smart contracts have a history of bogging down their host networks, so introducing them onto a separate blockchain may have been easier for Binance.
What you should know about BSC
Design principles
The standalone blockchain principle – Binance required the BSC to stand alone from the Binance Chain. The staking model – BSC uses a staking model to ensure participation in governance and block creation from the BSC community.
Ethereum compatibility – Ethereum, the most popular smart contract platform, did the heavy work for Binance. It had a large user base, miners, and a development community. The network has beaten the competition despite problems including high gas prices and security vulnerabilities.
Native cross-chain communication – even though Binance opted to create BSC as a parallel chain to BC, it made sure to design native cross-chain compatibility between the two blockchains
Proof of Staked Authority (PoSA) Consensus mechanism
BSC uses the PoSA consensus mechanism to achieve consensus within the network. PoSA, as applied by the network, is a combination of Delegated Proof of stake (DPoS) and Proof of Authority (PoA).
The DPoS is a form of staking model whereby validators put up a stake of the network’s native tokens to get a chance to validate transactions and create blocks. Technically, anyone with a minimum stake of the required tokens can become a validator, but the network would become sluggish if this were allowed. DPoS networks allow token holders to vote in a specified number of delegates to become validators. In the case of BSC and EOS, that number is 21 validators.
PoA, as it applies to Binance Smart Chain, represents a model in which validators are chosen or picked by a central party, in this case, Binance. The exchange vets all validators before they can be voted on by the delegators (token holders.)
Even though merging the PoA with the DPoS consensus models increases network centralization, it would seem that Binance was willing to make the trade-off to attain high network throughput. BSC can achieve a block generation time of 3 seconds compared to 13 for Ethereum and 10 minutes for Bitcoin.
Binance Smart Chain Ecosystem
BSC is an Ethereum-based blockchain that supports decentralized applications. Binance created two versions of the BNB token – BEP-2 and BSC – to serve as the native tokens on the two blockchains.
Wallets that support BSC include Metamask and Brave Browser. There are several decentralized apps available for use on BSC, including Brave Browser and Ethereum-based dApps such as Spells of Genesis. The Binance Bridge is a project that allows tokens minted and issued on other non-compatible blockchains to be traded on the Binance DEX and Smart Chain ecosystems.
To use Eth on the BSC network, you must first convert them to BEP-20 compliant tokens using the Bridge. Cross-chain compatibility wrapping non-native tokens give them value in new blockchains, increasing their utility.
How does (BSC) work?
Delegated Proof-of-Stake
Delegated Proof-of-Stake is a consensus protocol used in blockchains. It relies on voting and delegation mechanisms to secure the network. PoS networks are popular because they remove miners as such and rely on an incentives structure to secure the network
Proof-of-Authority
Proof-of-Authority replaces the monetary value with the validator’s identity. Binance Smart Chain has 21 validators in charge of processing transactions and securing the network, making it a highly centralized smart contract platform.
For comparison, Ethereum, on its way to ETH 2.0 upgrade, has over 200,000 validators. Lastly, when BSC needs an upgrade or a patch, it enters an epoch period consisting of 240 blocks (about 20min).
Advantages and Disadvantages of BSC
Advantages
- Transaction speed is faster on BSC than Ethereum
- Gas fees are cheaper on BSC
- Cross-chain compatibility allows tokens to be traded between different blockchains
- Credible platform with a strong community
Disadvantages
- Centralization
- Over-reliance in Ethereum
- Regular coin burn
The primary complaint leveled with BSC is its high degree of centralization. Due to the Proof of Staked Authority (PoSA) consensus process, the Binance exchange is excessively involved in the proper operation and maintenance of the blockchain, resulting in a massive single point of failure. Both BSC and BC rely excessively on the Binance exchange.
Binance went to considerable measures to replicate the Ethereum network, making it simple to migrate Ethereum-based decentralized applications to BSC. As a result, no innovation has occurred in BSC beyond what is currently accessible on Ethereum. Binance will always live in the shadow of Ethereum unless it invests in local innovation on the BSC network.
BNB tokens undergo a coin burn on a regular basis, resulting in less outstanding balances. While reducing the supply may appear to be a beneficial thing, since it frequently results in a rising token price, several unfavorable circumstances may develop. For example, increased demand combined with limited supply might result in a supply squeeze, resulting in runaway prices and subsequently higher transaction costs.
Popular DeFi on BSC
PancakeSwap
PancakeSwap is a DEX that uses automated market maker (AMM) to facilitate token swapping without centralized oversight. After its launch in September 2020, CAKE’s value skyrocketed as traders opted for Binance Smart Chain over Ethereum due to high gas fees.
PancakeSwap is the number one automated market maker on Binance Smart Chain, and you can do token swaps for BEP-20 tokens on it. You can also earn passive income by providing liquidity to one of the liquidity pools on PancakeSwap.
BakerySwap
BakerySwap is an AMM with a unique twist – staking NFTs to earn more BAKE tokens. BakerySwap crossed a milestone in July by hitting 500,000 NFT transactions.
Venus
Venus introduces decentralized stablecoin liquidity into the blockchain space. Venus allows you to tokenize assets and create a money market for lending and borrowing. Venus is a borrow-lending protocol similar to Compound or Aave on Ethereum, with algorithmically set interest rates.
What is The future of the BSC?
The Binance Smart Chain offers better stability, security and performance than traditional exchanges. It will allow users to make more efficient transactions and access new platforms and dApps quickly and easily.
The Binance team is committed to continually improving the Smart Chain’s functionality in order to meet the needs of its users. Binance plans to build a “smart chain” that will allow for more efficient and customized trading.
The Binance smart chain will use blockchain technology and be based on the ERC20 standard. Users of the Binance smart chain will be able to access a variety of features, including instant trading and margin lending.
The Binance Smart Chain project is designed to improve the user experience of the exchange by allowing for more complex smart contracts and dApps to be built on it. The Binance team has already released a proof of concept for their Smart Chain platform, which uses the NEO blockchain. The Binance team is also in talks with other blockchains such as Ethereum and Qtum regarding their potential use on the project.
The ultimate goal of the Binance Smart Chain project is to provide an easy-to-use platform for users worldwide to conduct transactions in a secure and efficient manner. Although nothing is set in stone, it seems that the Binance Smart Chain project has a lot of potential and could revolutionize the way we currently use cryptocurrencies.
What are the best crypto wallets for (BSC)?
Here are some of the best crypto wallets and most easy methods to access the robust BSC decentralized application ecosystem, which has been made popular by the absence of gas prices.
MetaMask
The industry-leading non-custodial wallet that interacts with your web browser and connects to any dApp. Utilize MetaMask effectively by following this comprehensive tutorial. Concentrating on its widespread popularity, MetaMask also supports the most popular Trezor and Ledger hardware wallets.
Trust Wallet
Acquired by Binance in April 2019, Trust Wallet introduced staking in addition to Tezos (XTZ) functionality. It is accessible on both iOS and Android as an integrated dApp browser. At the moment, it supports more than 40 blockchains and 160,000 tokens.
SafePal
For an added layer of protection, it is not only a mobile wallet but also a hardware wallet called the SafePal S1. At roughly $50, this is an excellent option to employ cold storage to protect your cryptocurrency cash from hackers. SafePal supports a total of twenty blockchains and 10,000 tokens.
Math Wallet
Math Wallet, like MetaMask, is a browser plugin for the three most popular browsers: Chrome, Brave, and Edge. However, Math Wallet was created with the goal of serving as a global blockchain wallet, enabling multichain decentralized applications. If you’re familiar with the concept of a public blockchain, Math Wallet is compatible with it. Additionally, it includes a staking aggregator in the form of MathVault and MathChain as a layer 2 scalability solution based on Substrate.
FAQ
How is BSC different from Ethereum?
Binance Smart Chain is a new blockchain that is being created by Binance it is built in the Ethereum blockchain so there is not much difference. However, BSC uses PoSA consensus instead of PoW and it is more centralized than Ethereum. It is being created to enable faster transactions, lower fees and improved scalability. The Binance chain will have its own native cryptocurrency called Binance Coin. Binance Coin is the first coin to be launched on the Binance Chain.
Is Binance Smart Chain worth investing in?
The Binance Smart Chain is based on Ethereum and shares many of the features of the Ethereum blockchain, such as smart contracts and support for a range of DeFi protocols. therefore, it is worth investing in.
The Binance Smart Chain was released in 2020 to complement Binance Chain which runs the Binance Decentralized Exchange (DEX). To support a low-cost, high speed DeFi ecosystem, Binance launched the Binance Smart Chain (BSC) in September 2020.
The BSC essentially merges the high throughput of the Binance Chain with smart contracts, allowing users to manage their digital assets cross-chain, including support for Ethereum. Since it runs in parallel to Binance Chain (BC), it utilizes a dual-chain architecture, whereby users can transfer their digital assets from one chain to the other without any hassle by using Binance Bridge.
What tokens are on Binance Smart Chain?
On Binance Smart Chain, there are two distinct types of tokens: BEP-20 tokens and BEP-721 tokens. The tokens on this list are all BEP-20 tokens, which correspond to the bulk of currencies on the Binance Smart Chain. On Binance’s network, BEP-721 tokens are non-fungible, but BEP-20 tokens are fungible.
Binance Smart Chain is a blockchain-based platform that allows users to create smart contracts and exchange between different cryptocurrencies at a lower cost. Tokens are the key mechanism by which Binance Smart Chain operates. The Binance Smart Chain Wallet is a plugin that allows you to access DApps built on the Binance Smart Chain network. The Binance Smart Chain Wallet is available for Chrome, Firefox, and Brave browsers.
The Binance Smart Chain Wallet allows you to connect with thousands of other DApps built across different blockchains. Binance Smart Chain is a platform that allows users to store and use custom tokens. Tokens on Binance Smart Chain can be traded and used just like any other token.
How do I get a Binance Smart Chain wallet address?
After creating and storing your seed phrase, you will have produced a wallet address. Then, using the “Receive” option, you may access it. This will take you to a screen where you may copy and paste your wallet address into any other platform/sender from which you wish to accept crypto cash.
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