BINANCE SMART CHAIN
Launched in September 2020, Binance Smart Chain is a blockchain service that allows developers to build their own decentralized apps using smart contracts. The original Binance Chain wasn’t built to allow such functionality, but the Binance Smart Chain has been designed to provide the same kind of speedy transactions while also greatly expanding the available features and capabilities. It's also compatible with the Ethereum Virtual Machine (EVM), which means it’s capable of running dapps ported over from Ethereum.
How does Binance Smart Chain work?
The development of the Binance Smart Chain network began in 2017 when the Binance coin (BNB) was launched as an ERC-20 token on the Ethereum blockchain. In 2019 the developers of BNB created a streamlined blockchain called Binance Chain (BC).
The Binance Chain was designed to provide lightning-fast transaction speeds by utilising a distributed consensus model, optimal for a fast yet secure digital asset exchange. BNB was migrated from the Ethereum network to become the native crypto on Binance Chain.
While the Binance Chain quickly became one of the largest digital asset exchanges, its model lacked the functional capability for smart contract execution as this would congest and slow down the network.
In response to the demand for DeFi and dApp functionality, the Binance Smart Chain was created as a parallel blockchain with smart contract capabilities.
The Binance Smart Chain network runs in parallel, but independent from the Binance Chain, meaning that in the event BC ever went offline BSC would continue to operate. BSC’s proof-of-staked-authority (PoSA) consensus model combines aspects of both the proof-of-stake (PoS) and proof-of-authority (PoA) configurations.
The battle between the powerful standard Ethereum and its opponent BSC will probably not materialize because Binance Smart Chain isn’t an underdog, but also because it’s part of a huge trading platform. The gap between the pioneer and its successor also ensures that Ethereum will maintain its place at the top for the foreseeable future. The vast majority of developers and users still rely on Ethereum, which ultimately is and remains one of the main reasons for its high transaction fees. Binance Smart Chain’s lack of decentralization probably also plays a major role in this.
Nevertheless, the rapid and steady rise of Binance Smart Chain is remarkable and probably not yet at its end. Although Ethereum is working under high pressure on its pressing problems and can score points with its established and large network, some users will still remain loyal to BSC, especially because of the significantly lower transaction costs. If Ethereum fixes its scalability issues, its status as the market leader won’t change. However, BSC will then cement itself as a serious alternative.