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Another outstanding blockchain is Binance Smart Chain, or BSC for short. This network was established in 2020 by the Binance exchange. In fact, this blockchain can be considered a complement to the Binance Chain network. The main cryptocurrency of both networks is BNB, which is the primary cryptocurrency of the Binance exchange. In recent years, cryptocurrency development teams have updated their blockchains and added features to their networks to attract various DeFi projects. To keep up with its competitors, the Binance development team decided to create these two networks. We will further examine the BSC network and its features.
BSC network
BSC expanded the use of decentralized applications with diverse smart contracts on this blockchain. Before the establishment of BSC, the BC network was used by Binance platforms. The Binance Chain (BC) network was established in 2019, and the largest platform running on this network was Binance Decentralized Exchange (Binance Dex).
BSC enabled the use of smart contracts but had limitations. In some instances, transactions on the platform experienced errors and delays during periods of high network congestion. Furthermore, the network lacked flexibility. Therefore, the Binance development team established BSC, or Binance Smart Chain, in 2020. This network not only addressed the limitations and inflexibility of the BC network but also resolved the issue of scalability.
The BSC network's consensus mechanism is based on Proof of Staked Authority (PoSA). This consensus method combines Proof of Stake and Proof of Authority. (Daily, validators are selected from all active validators/miners on BSC to validate transactions. Notably, revenue generation on this network is also achieved through staking the BNB cryptocurrency on the Binance network.)
Other features of the BSC network
-The BSC network operates in parallel with the BC network. However, even if the BC network becomes inactive, the BSC will continue to function.
-Transactions on BSC are fast, low-cost, and have minimal fees.
-BSC, unlike the BC network, is fully compatible with the Ethereum Virtual Machine (EVM) and has a higher throughput than the BC network, meaning that orders will no longer fail or be delayed during network congestion on the Binance decentralized exchange.
-BSC is an independent blockchain.
-BSC has native staking and cross-chain compatibility.
BSC Tokens
BNB plays a key role in the Binance ecosystem. This cryptocurrency is used on both BSC and BC, as well as across all Binance platforms, such as the Binance DEX. It's primarily used for paying fees, transferring assets, and staking. If you want to enhance the security of BSC and earn rewards in the process, you can do so by depositing BNB or delegating BNB to an active validator on the network.
The two well-known standards defined in the BSC and BC networks are BEP2 and BEP8. All tokens that follow these standards can operate on these networks. Additionally, ERC20 tokens are also supported on BSC.
Tokens pegged to their original tokens, such as Peggy Coins, are also supported on BSC. This allows the development team of these tokens to offer decentralized applications with cross-chain exchange capabilities, like PancakeSwap.
BSC tokens are supported in most available wallets, including Trust Wallet, Binance Chain Wallet, and MetaMask.
How does Binance Smart Chain work?
Binance Smart Chain validates a block every 3 seconds. As mentioned, the selection of systems to become a validator is based on the Proof of Staked Authority consensus mechanism. In essence, BSC network validators receive the transaction fee after validating a correct block. However, it is important to note that the rewards given to miners are not in the form of the BNB cryptocurrency, as this cryptocurrency is not inflationary and the Binance development team periodically engages in token burning.
{ Token burning occurs when the development team of a cryptocurrency decides to reduce the circulating supply of its token. }
BSC Network Projects
As mentioned, the BSC network possesses many features, which is why, from its early years of establishment, the development team made this blockchain available to many decentralized projects. Among the projects that have been implemented on this blockchain from the past to the present, we can mention: Rialto, Chapel, Chainlink (LINK), Band Protocol (BAND), Swipe (SXP), Ankr (ANKR), and Kava (KAVA).
Project Anker
If you want to become a node on the network, Ankr makes your job much easier. Furthermore, Ankr provides the cloud space needed for a node, which greatly simplifies the staking process.
Project Chainlink
Just last year, the Binance development team decided to integrate Binance Smart Chain with Chainlink's decentralized oracle network. Through the collaboration of the largest cryptocurrency exchange and the most widely used decentralized oracle, smart contracts on the BSC network can now also utilize real-world data for their logic.
BSC network competing with ERC20 and TRC20 networks.
Many network users believe that Binance Smart Chain is the main competitor to the popular ERC20 and TRC20 networks. Currently, the Ethereum ERC20 network is operating at maximum capacity, and in some cases, we are seeing slow transactions on the ERC20 platform. Moreover, the network fees are very high, and the main issue is that the Ethereum development team has repeatedly planned to release Ethereum 2 to resolve these problems, but the project has been delayed each time. These events have led to projects migrating from ERC20 to the Cardano and Polkadot blockchains. There are also networks like the Tron TRC20 network, which performs even better than the Ethereum network. However, because the ERC20 network is older and more popular among network users, it hosts the largest number of tokens and DeFi projects.
Even now, Ethereum blockchain is the first choice for projects wanting to launch. However, in practice, the BSC network has proven its technological superiority over the ERC20 network. Therefore, if Ethereum continues in this manner and Ethereum 2.0 continues to be delayed, Binance Smart Chain could overtake the Ethereum blockchain.
Summary: Binance Blockchain was initially established in 2019 as BC, but due to limitations, the development team launched the BSC network in 2020. This network expanded the use of smart contracts on Binance Blockchain, enabling transactions to be processed with minimal time and fees. The consensus mechanism on BSC is based on Proof of Staked Authority. This means that miners are periodically selected from validators holding the highest amount of BNB to validate transactions and earn rewards by staking BNB in the network.
The native digital currency of the Binance network is BNB, but the network supports all ERC20 tokens and all tokens that adhere to BEP2 and BEP standards. Notable projects running on BSC include Ankr (ANKR) and Chainlink (LINK). Considering the high transfer fees on the Ethereum blockchain and the recent issues it has faced, the BSC network can be considered a major competitor to the Ethereum blockchain. Furthermore, BSC has practically proven its superiority over the Ethereum blockchain.
