The Binance Chain, the location of the BNB currency, is certainly familiar to you. It is set up for speedy trading. It had to make certain compromises in order to perform this, among this it wasn’t as programmably flexible like other blockchains.
Binance Smart Chain, an updated blockchain with the secure ecosystem for making highly capable decentralized apps, is arriving to alter that. For providing customers the most of both platform, Binance Chain cross-chain interoperability was implemented into the system. In this article, we will discuss on the BSC and its features.
What is Binance Chain or BC?
In April 2019, Binance introduced the Binance Chain blockchain to serve its decentralized exchange goals. The Binance Decentralized Exchange (DEX), built for high operation throughput, was concurrently introduced with the blockchain.
Its main goal is to make quick, decentralized (or non-custodial) trading possible. However, due to the inherent restrictions of blockchain systems, the chain is not very flexible. Smart contracts in a system designed for quick trade might severely clog the network.
One of the most difficult barriers to blockchain development is still scalability. And Binance Smart Chain steps in to help with that.
What is Binance Smart Chain or BSC Network?
In September 2020, around one and a half years after the debut of its more established sister BC. Binance Smart Chain (BSC) became live. It is a platform for smart contracts that imitates the features of Ethereum and other decentralized app platforms like Tron and EOS.
BSC offers support for the ETH Virtual Machine and smart contract capability (EVM). The intention with this design was to integrate smart contracts into the Binance Chain ecosystem while maintaining the high throughput of Binance Chain.
In essence, two blockchains run concurrently. It’s important to note that BSC is not a “off-chain” or “layer two” scaling solution. It is a unique blockchain that would continue to work even if the Chain went down. Despite this, the designs of the two chains are quite similar.
How Does BSC Network Work?
Let’s look into Binance Smart Chain’s operation now that we have clarified what it is.
Proof-of-Staked Authority, a consensus technique used by Binance Smart Chain, combines aspects of proof-of-stake and proof-of-authority consensus techniques (PoSA). Binance has cross-chain interoperability built-in and both of its systems, Binance Chain and Binance Smart Chain, are designed to work together.
By integrating the quick trade elements of the first blockchain with the smart contract features of the second, assets may be transferred between both in an instant. For instance, it is possible to swap the BEP-2 and BEP-8 tokens from the Binance Chain for the BEP-20 tokens from the Smart Chain.
In addition, programmers of dApps on certain blockchains may simply move them to Binance Smart Chain due to Ethereum Virtual Machine compatibility.
While Ethereum’s planned switch to a PoS paradigm in Ethereum 2.0 may resolve some of its current scaling issues, dApp operators may find this to be especially alluring as Ethereum develops and gas costs increase.
Advantages and Disadvantages of BSC
Like any other blockchain network, BSC has benefits and disadvantages. It makes various compromises in order to be a better alternative for hosting blockchain apps, but these decisions may not be popular with other cryptocurrency users.
Advantages of BSC Network
- Transaction speed: BSC is presently one of the quickest platforms for smart contracts, which helps explain its rapid expansion. It is at least four times quicker than Ethereum, with blocks created every three seconds compared to every 13 seconds for Ethereum.
- Low gas prices – Currently, processing a transaction on BSC costs an average of 5 Gwei, which is a significant savings over the 40 Gwei paid on Ethereum. Operating a dApp on BSC costs 8 times less than running the identical app on Ethereum.
- Cross-chain adaptibility – In addition to being able to run on the Ethereum virtual machine (EVM), BSC also supports pegged money from a number of various blockchains, enabling users to build a variety of tokens that may be used on the network. Cross-chain consistency raises the tokens’ value, usefulness, and liquidity.
- EVM compatibility – by opting to fork the Geth ETH client, the Binance ecosystem is given easier access to a development and user forum that is currently thriving. BSC is more known to Solidity developers as a result. Additionally, as dApps are less costly to operate on BSC, this is easy to move programs over from ETH, which has a quicker and more affordable execution time.
- Credible platform – Binance is among the most well-known exchanges, and the BSC benefits from this credibility as well. The exchange also plays a key part in the PoSA consensus by validating all validators on the network, ensuring that the blockchain is safe and dependable.
Disadvantages of BSC Network
- Centralized: The main complaint leveled about BSC network is its degree of centralization. The Binance exchange is unduly engaged in the efficient operation and upkeep of the blockchain due to the PoSA consensus method, creating a significant central point of failure. Both BSC and BC rely too much on the Binance exchange.
- Having an excessive reliance on Ethereum — Binance started to sizable measures to mimic the ETH network, making it simple to migrate ETH-based platform to BSC. Because of this, there has not been such innovation in BSC beyond what is already available on ETH. Binance will remain in the shadow of ETH until it makes investments in regional modification on the Binance Chain network.
- Deflationary tokens: BNB tokens frequently burn coins, reducing the amount of outstanding balances. Reducing the supply may seem to be a good thing since this often results in a rising token price, but there might also be drawbacks. For instance, a supply squeeze caused by rising demand and falling supply might result in runaway prices and greater transaction costs.
These are only a few of the larger issues BSC is dealing with. They do not, however, seem to stop its expansion, which can only be seen favorably.
Final Thoughts
Since it just began at the beginning of September 2020 after the idea was first introduced earlier in the year, Binance Smart Chain is still in its infancy. Even said, Binance is investing heavily in the platform, with a $100 million support fund for DeFi applications and an emphasis on the dual-chain approach.
