An introduction to Binance Smart Chain
Binance is the leading centralized cryptocurrency exchange in the world. The Binance Chain, which is the native blockchain network of Binance, was launched in 2019. It is optimized for fast transactions, but it does not have the functionality to support smart contracts and dApps like other blockchains.
Binance introduced Binance Smart Chain (BSC) in 2020, which aims to provide the platform for creating smart contracts and infrastructure to develop dApps at a low cost and high speed.
What is Binance Smart Chain (BSC)?
Binance Smart Chain is a blockchain network built to support smart contracts on the Binance platform. Although it runs in parallel with Binance’s native blockchain, BSC is entirely different and independent of the Binance Chain.
Both blockchains have a built-in cross-chain compatibility feature that allows a quick transfer of assets through Binance Chain while using the smart contract functionality of the Binance Smart Chain.
BSC is also compatible with Ethereum Virtual Machine. EVM is Ethereum’s software platform through which developers can create decentralized applications.
Binance Smart Chain uses Proof-of-Staked-Authority (PoSA) consensus algorithm to verify the transactions and maintain the network integrity. PoSA is a hybrid form of Proof-of-Stake (PoS) and Proof-of-Authority (PoA) consensus algorithms.
Binance Smart Chain uses Binance Coin (BNB) for transactions and uses the BEP-20 token standard for creating smart contracts. BEP-20 is similar to the ERC-20 tokens used to create and issue smart contracts on the Ethereum blockchain.
How Does Binance Smart Chain Work?
Binance Smart Chain is a decentralized blockchain that uses the PoSA mechanism to verify transactions.
In PoSA, the nodes participating in the verification process need to stake their BNB in the staking pool. The stakers elect 21 validators who take turns in confirming a transaction and creating blocks on the blockchain network. These validators are elected every 24 hours. The validators receive rewards in the form of transaction fees.
The PoSA model allows Binance Smart Chain to achieve a block time of around 3 seconds. Block time is the time it takes to create a new block on the blockchain.
Malicious nodes that compromise the network’s security and integrity are likewise punished by BSC. It disincentivizes bad actors from approving incorrect transactions or permitting double-spending.
Features of Binance Smart Chain
1. Compatibility with Ethereum
Binance Smart Chain’s compatibility with Ethereum Virtual Machine (EVM) allows blockchain developers to easily import their projects from Ethereum Blockchain to Binance Smart Chain.
The built-in cross-chain compatibility between Binance Chain and Binance Smart Chain allows effortless communication between the networks. As a result, BC and BCS token are swapped seamlessly.
3. Fast transaction while maintaining low fees
Binance Smart Chain can achieve a block time of around 3 seconds due to its PoSA consensus algorithm, while the block time of Ethereum is 15 seconds. The reduced block time results in less network congestion and lower transaction cost on the BSC network.
BSC is bridging blockchain networks by providing a multi-functioning, highly dynamic cross-compatibility ecosystem.
Because of Ethereum’s high gas fees and network congestion, the Binance Smart Chain has become a preferred alternative for developers.
Some popular BSC projects are PancakeSwap, Lendefi Finance, BakerySwap, Defi Yield Protocol, and many more.
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