Friday, December 9, 2022
 

What is Binance Smart Chain (BSC)? A Comprehensive Guide to BNB Chain

Introduction       

If you are reading this, you probably know Binance Chain and its BNB token. The Binance Smart Chain (BSC) is now known as the BNB Chain. As Binance expanded, so did the BSC.

The developers announced a merger of the Binance Chain and Binance Smart Chain to form the BNB Chain – not to be confused with Binance Chain and BNB Chain.

On February 15, 2022, Binance officially announced its merger:

“As of today, Binance Smart Chain (BSC) will become BNB Chain. A transition that highlights BSC’s connection with the BNB token and BNB ecosystem.”

Readers may ask, what is the sole purpose of this merge? What is the motivation behind this? What value does it serve? To answer these questions, let’s start with the history of Binance Chain and Binance Smart Chain.

From Burgers to Cryptocurrency

Changpeng Zhao, also known as CZ, the founder of Binance is a Chinese-born immigrant in Canada. At one point, CZ was working at Macdonald’s. After graduation, CZ received an internship at Tokyo Stock Exchange and Bloomberg Tradebook to develop trading software.

The rest was history…

The Two Best Friends: Binance Smart Chain and Binance Chain

The first blockchain developed by Binance is called the Binance Chain. But since Binance Chain encountered programmability limitations, Binance Smart Chain was designed. As the public showed increased interest in alternative financial solutions, BSC was born.

What is Binance Chain?

Binance Chain was introduced in April 2019, primarily focused on providing a decentralized and seamless trading option. The BNB token, BEP-2 token, was Binance’s original token on the Binance Chain.

Additionally, Binance had proposed plans to provide a decentralized exchange (DEX) to counter poor user experience (UX) provided by other DEXs, but Binance Chain did not receive that functionality; instead just a decentralized trading option as of now.

What is Binance Smart Chain?

After a series of successful progress in Binance Chain, Binance introduced Binance Smart Chain. In the whitepaper, Binance stated the purpose of BSC is to support a friendly smart contract function with the Beacon Chain.

The whitepaper reads:

“Flexibility and usability are often in an inverse relationship with performance. The concentration on providing a convenient digital asset issuing and trading venue also bring limitations.”

Furthermore, the BNB token has continuously changed since its launch, according to Binance. It was first developed in 2017 as an ERC-20 token on the Ethereum network. It eventually shifted to the Binance Chain in 2019 and supported the BSC network’s development, formally introduced in September 2020.

Likewise, Binance now views BNB as the token for a larger ecosystem, encompassing the Binance Chain and BSC, resulting from the token’s rise on BSC. The crypto titan is making this step as part of its aim to expand outside Binance.

Even though BSC is a sibling of Binance Chain, BSC still can perform individually and act as a standalone blockchain; even if Binance Chain is shut down or nonfunctional temporarily, BSC would still work without any interference.

Now that we have covered BSC and Binance Chain, let’s look at BNB Chain in detail.

What is BNB Chain?

The BNB Chain has a dynamic ecosystem of its own. As everyone will eventually own it, the BNB token must be made accessible. Moreover, the formerly known Binance Coin, now the BNB token, acts as a governance token and is used for paying gas fees on the BNB Chain.

BNB Chain’s mission is to build the infrastructure powering the world’s parallel virtual ecosystem. BNB Chain’s commitment to the community would be open, multi-chain, for creators and inventors, public approval, and decentralized, according to Binance.

Additionally, in an announcement, Binance highlighted that “the BNB Chain remains a community-driven, open-source, and decentralized ecosystem.”

Advantages of Binance Smart Chain

It was no surprise that BSC could persuade so many users in such a short time. Ultimately, like any other blockchain, it has its flaws and strengths. But does this make the smart contract less appealing compared to other platforms on the market? Here are some of the advantages:

  • Independence: As discussed above, BSC is an independent blockchain. It can function separately from Binance Chain.
  • Low Gas Fees: Binance understood that gas fees play a huge role in crypto. Low gas fees make Binance Smart Chain a solid choice for developers and users, compared to Ethereum.
  • Cross-chain Compatibility: Binance Smart Chain is compatible with the Ethereum Virtual Machine and supports pegged coins from other blockchains.
  • Reputed Platform: Nowadays, BSC is one of the most popular exchanges. Its credibility runs across all of its platforms.

Drawbacks of Binance Smart Chain

However, BSC has some drawbacks, which may not be considered crucial for specific users.

  • Centralized: Yes, you heard it right. Since BSC is centralized, it relies on its parent company Binance, to control all transactions with cryptocurrencies.
  • Highly Dependent: Since BSC is a hard fork of the GoEthereum (Geth) protocol, it shares similarities with Ethereum. Binance is unable to develop anything that is not present on the Ethereum network.
  • High Scam Potential: Scammers would abuse its advantage due to low transaction costs. This makes it more lucrative for scammers.

Conclusion: The Battle of BSC and Ethereum

Due to Binance Smart Chain’s status as an established player and the fact that it is a component of a sizable trading platform, the conflict between the strong standard Ethereum and its adversary BSC seems unlikely to materialize.

Ethereum will maintain its position at the top for the foreseeable future – thanks to the distance between the pioneer and its successor.

Its high transaction costs could be the reason why most developers and users still rely on Ethereum, which is still one of the fundamental causes. Additionally, another possible reason could be because of BSC’s infrastructure – lack of decentralization.

Introduction       

If you are reading this, you probably know Binance Chain and its BNB token. The Binance Smart Chain (BSC) is now known as the BNB Chain. As Binance expanded, so did the BSC.

The developers announced a merger of the Binance Chain and Binance Smart Chain to form the BNB Chain – not to be confused with Binance Chain and BNB Chain.

On February 15, 2022, Binance officially announced its merger:

“As of today, Binance Smart Chain (BSC) will become BNB Chain. A transition that highlights BSC’s connection with the BNB token and BNB ecosystem.”

Readers may ask, what is the sole purpose of this merge? What is the motivation behind this? What value does it serve? To answer these questions, let’s start with the history of Binance Chain and Binance Smart Chain.

From Burgers to Cryptocurrency

Changpeng Zhao, also known as CZ, the founder of Binance is a Chinese-born immigrant in Canada. At one point, CZ was working at Macdonald’s. After graduation, CZ received an internship at Tokyo Stock Exchange and Bloomberg Tradebook to develop trading software.

The rest was history…

The Two Best Friends: Binance Smart Chain and Binance Chain

The first blockchain developed by Binance is called the Binance Chain. But since Binance Chain encountered programmability limitations, Binance Smart Chain was designed. As the public showed increased interest in alternative financial solutions, BSC was born.

What is Binance Chain?

Binance Chain was introduced in April 2019, primarily focused on providing a decentralized and seamless trading option. The BNB token, BEP-2 token, was Binance’s original token on the Binance Chain.

Additionally, Binance had proposed plans to provide a decentralized exchange (DEX) to counter poor user experience (UX) provided by other DEXs, but Binance Chain did not receive that functionality; instead just a decentralized trading option as of now.

What is Binance Smart Chain?

After a series of successful progress in Binance Chain, Binance introduced Binance Smart Chain. In the whitepaper, Binance stated the purpose of BSC is to support a friendly smart contract function with the Beacon Chain.

The whitepaper reads:

“Flexibility and usability are often in an inverse relationship with performance. The concentration on providing a convenient digital asset issuing and trading venue also bring limitations.”

Furthermore, the BNB token has continuously changed since its launch, according to Binance. It was first developed in 2017 as an ERC-20 token on the Ethereum network. It eventually shifted to the Binance Chain in 2019 and supported the BSC network’s development, formally introduced in September 2020.

Likewise, Binance now views BNB as the token for a larger ecosystem, encompassing the Binance Chain and BSC, resulting from the token’s rise on BSC. The crypto titan is making this step as part of its aim to expand outside Binance.

Even though BSC is a sibling of Binance Chain, BSC still can perform individually and act as a standalone blockchain; even if Binance Chain is shut down or nonfunctional temporarily, BSC would still work without any interference.

Now that we have covered BSC and Binance Chain, let’s look at BNB Chain in detail.

What is BNB Chain?

The BNB Chain has a dynamic ecosystem of its own. As everyone will eventually own it, the BNB token must be made accessible. Moreover, the formerly known Binance Coin, now the BNB token, acts as a governance token and is used for paying gas fees on the BNB Chain.

BNB Chain’s mission is to build the infrastructure powering the world’s parallel virtual ecosystem. BNB Chain’s commitment to the community would be open, multi-chain, for creators and inventors, public approval, and decentralized, according to Binance.

Additionally, in an announcement, Binance highlighted that “the BNB Chain remains a community-driven, open-source, and decentralized ecosystem.”

Advantages of Binance Smart Chain

It was no surprise that BSC could persuade so many users in such a short time. Ultimately, like any other blockchain, it has its flaws and strengths. But does this make the smart contract less appealing compared to other platforms on the market? Here are some of the advantages:

  • Independence: As discussed above, BSC is an independent blockchain. It can function separately from Binance Chain.
  • Low Gas Fees: Binance understood that gas fees play a huge role in crypto. Low gas fees make Binance Smart Chain a solid choice for developers and users, compared to Ethereum.
  • Cross-chain Compatibility: Binance Smart Chain is compatible with the Ethereum Virtual Machine and supports pegged coins from other blockchains.
  • Reputed Platform: Nowadays, BSC is one of the most popular exchanges. Its credibility runs across all of its platforms.

Drawbacks of Binance Smart Chain

However, BSC has some drawbacks, which may not be considered crucial for specific users.

  • Centralized: Yes, you heard it right. Since BSC is centralized, it relies on its parent company Binance, to control all transactions with cryptocurrencies.
  • Highly Dependent: Since BSC is a hard fork of the GoEthereum (Geth) protocol, it shares similarities with Ethereum. Binance is unable to develop anything that is not present on the Ethereum network.
  • High Scam Potential: Scammers would abuse its advantage due to low transaction costs. This makes it more lucrative for scammers.

Conclusion: The Battle of BSC and Ethereum

Due to Binance Smart Chain’s status as an established player and the fact that it is a component of a sizable trading platform, the conflict between the strong standard Ethereum and its adversary BSC seems unlikely to materialize.

Ethereum will maintain its position at the top for the foreseeable future – thanks to the distance between the pioneer and its successor.

Its high transaction costs could be the reason why most developers and users still rely on Ethereum, which is still one of the fundamental causes. Additionally, another possible reason could be because of BSC’s infrastructure – lack of decentralization.

 

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