Summary

You may have heard that the native token is Binance Coin (BNB) Binance Chain, which is optimized for fast transactions. In order to achieve speed, it has to make certain trade-offs – from a programmability perspective, it sacrifices the flexibility of other blockchains.

But Binance Smart Chain has changed this. Binance Smart Chain is a new blockchain with a mature environment for developing high-performance decentralized applications. It is designed for cross-chain compatibility with Binance Chain to ensure users get the best of both worlds.

Foreword

Binance Chain was launched by Binance in April 2019 with a primary focus on facilitating fast decentralized (or non-custodial) transactions. Naturally, the largest decentralized application (or DApp) on the chain is Binance DEX, which is also one of the friendliest decentralized exchanges. You can use it through the web interface on binance.org or through the Trust Wallet.

However, due to the inherent limitations of the blockchain system, the chain does not have a lot of flexibility when optimizing the system for fast transactions. Sexuality – Smart contracts can significantly clog the network in systems optimized for fast transactions. Remember the CryptoKitties incident? During peak usage, it brought the Ethereum blockchain to a standstill.

Scalability remains one of the most challenging obstacles in blockchain development. This is Binance Smart Chain’s entry point into the market.

What is Binance Smart Chain?

Binance Smart Chain (BSC) can be described as a blockchain parallel to Binance Chain. Unlike Binance Chain, BSC has smart contract functionality and is compatible with the Ethereum Virtual Machine (EVM). The design goal here is to maintain the high throughput of the full Binance Chain while introducing smart contracts into its ecosystem.

Essentially both blockchains are parallel. It is important to note that BSC is not a so-called second layer or off-chain scalability solution. It is an independent blockchain that can run even after Binance Chain goes offline. From a design perspective, the two chains are very similar.

Since BSC is compatible with EVM, it supports Ethereum tools and DApps. This theoretically allows developers to easily port their projects from Ethereum. For users, this means they can easily configure applications like MetaMask to work with BSC by adjusting a few settings. Check out Binance Smart Chain with MetaMask to get started.

➠Want to get started with cryptocurrency? Buy Bitcoin on Binance!

How Binance Smart Chain works

Consensus

Binance Smart Chain A block time of approximately 3 seconds is achieved through the Proof-of-Possession consensus algorithm. It uses a method called Proof of Holding Authority (or PoSA), where participants stake BNB to become validators. If they propose a valid block, they will collect transaction fees from the included transactions.

Please note that unlike many protocols, there is no block subsidy for newly minted BNB since BNB does not contribute to inflation. Instead, the Binance team conducts token destruction on a regular basis, so the supply of BNB decreases over time.

Cross-chain phase Capacitive

Binance Smart Chain is envisioned as a separate but complementary system to the existing Binance Chain. The dual chain architecture is used in the hope that users can seamlessly transfer assets from one blockchain to another and thus enjoy fast transactions on Binance Chain while powerful decentralized applications Then build on BSC. This interoperability gives users access to a broad ecosystem that caters to a wide range of use cases.

Binance Chain’s BEP-2 and BEP-8 tokens can be exchanged for BEP-, the new standard on Binance Smart Chain 20 tokens. Have you read Introduction to ERC-20 Tokens? If so, you will be familiar with the format of BEP-20, which has the same functionality as Ethereum.

To move a token from one chain to another (i.e. BEP-2 to BEP-20 or vice versa), The easiest way is probably to use the Chrome and Firefox browsers. Check out using Binance Chain Extension Wallet in action.

Decentralized Finance with Binance Smart Chain

You may be aware of the many digital assets – such as BTC, LTC, ETH, EOS or XRP, etc., which are available on Binance Chain under It exists in the form of “anchored tokens”. These are tokens that are pegged to assets currently on the chain. For example you might decide to lock 10 BTC on Binance Chain to receive 10 BTCB. You can exchange 10 BTCB for 10 BTC at any time, which means that the price of BTCB should be anchored 1:1 with the price of local BTC.

By doing this, you can effectively transfer these assets to Binance Chain. Are you interested in how to achieve this? Check out Tokenizing Bitcoin in Ethereum.

Thanks to the flexibility provided by Binance Smart Chain, we can use assets from many different chains in the ever-growing DeFi space. Applications such as PancakeSwap allow users to swap assets in a trustless manner (similar to Uniswap), engage in liquidity mining, and vote on proposals. Similar projects include BurgerSwap and BakerySwap (if you’re new to cryptocurrency, hello! We’re big fans of decentralized exchanges named after food).

Conclusion

Binance Smart Chain significantly expands the functionality of the original Binance Chain, adding a series of cutting-edge protocols designed to bridge the gap between blockchains. While it’s still in its infancy, BNB’s promise of compatibility with the EVM makes the platform an ideal engine for developers to build powerful decentralized applications.