Binance Chain was launched by Binance in April 2019. Its primary focus is to facilitate fast, decentralized (or non-custodial) trading. However, due to limitations inherent to blockchain systems, the chain doesn’t have much flexibility – smart contracts in a system optimized for fast trading could significantly congest the network.
Scalability remains one of the most challenging hurdles to blockchain development. And that’s where BSC comes in. But, what is the meaning of BSC and how does it work? Let’s find that out in this article:
Meaning Of BSC
Binance Smart Chain, or BSC for short, is best described as a blockchain that runs in parallel to the Binance Chain. Unlike Binance Chain, BSC boasts smart contract functionality and compatibility with the ETHereum Virtual Machine (EVM). The design goal was to leave the high throughput of the Binance Chain intact while introducing smart contracts into its ecosystem.
In essence, both blockchains operate side-by-side. Though, it’s worth noting that BSC isn’t a so-called layer two or off-chain scalability solution. It’s an independent blockchain that could run even if Binance Chain went offline. That said, both chains bear a strong resemblance from a design standpoint.
Because BSC is EVM-compatible, it launched with support for the rich universe of ETHereum tools and DApps. In theory, this makes it easy for developers to port their projects over from Ethereum. For users, it means that applications like Metamask can be easily configured to work with BSC by simply tweaking a couple of settings.
How Does Binance Smart Chain Work?
Consensus
Binance Smart Chain achieves ~3 second block times with a Proof-of-Stake consensus algorithm. Specifically, it uses somETHing called Proof of Staked Authority (or PoSA), where participants stake BNB to become validators. If they propose a valid block, they’ll receive transaction fees from the transactions included in it.
Note that, unlike many protocols, there is no block subsidy of freshly-minted BNB, as BNB is not inflationary. On the contrary, the supply of BNB decreases over time, as the Binance team regularly conducts coin burns.
Cross-chain Compatibility
Binance Smart Chain was envisioned as an independent but complementary system to the existing Binance Chain. Dual-chain architecture is used, with the idea being that users can seamlessly transfer assets from one blockchain to another. In this way, rapid trading can be enjoyed on Binance Chain, while powerful decentralized apps can be built on BSC. With this interoperability, users are exposed to a vast ecosystem that can cater to a myriad of use cases.
BEP-2 and BEP-8 tokens from Binance Chain can be swapped for BEP-20 tokens, the new standard introduced for Binance Smart Chain that uses the same functions as its ETHereum counterpart. To move tokens from one chain to another (i.e., BEP-2 to BEP-20 or vice versa), the simplest method is perhaps to use the Binance Chain Wallet, available on Chrome and Firefox.
Decentralized Finance on the Network
You may know that a number of digital assets – such as BTC, LTC, ETH, EOS, or XRP – already exist on Binance Chain as “Peggy coins.” These are tokens that are pegged to assets on their native chains. For instance, you might decide to lock up 10 BTC in order to receive 10 BTCB on Binance Chain. At any time, you can trade your 10 BTCB for 10 BTC, meaning that the price of BTCB should closely track that of native BTC. By doing this, you effectively port these assets onto the Binance Chain.
Because of the flexibility afforded by Binance Smart Chain, assets from a number of different chains can be used in the growing DeFi space. For instance, applications like PancakeSwap allow users to trustlessly exchange assets (much like Uniswap), engage in yield farming, and vote on proposals. Similar projects include BurgerSwap and BakerySwap.
How To Look Up Transactions On BSC?
BscScan (BscScan.com) is a blockchain explorer (developed by the same team as ETHerscan) that offers an analytics platform for Binance Smart Chain among many other features. It can be a good source of information if you want to keep an eye on projects built on BSC.
Additionally, you can also use BscScan to:
1. Look up transactions and check their progress.
2. See the latest blocks added to the blockchain.
3. Check the balance of wallets and any transactions they have made.
4. Search for, read, and interact with smart contracts deployed to the blockchain.
5. Research the supply of tokens and other cryptocurrencies.
All of this information is available for free and without signing up. A blockchain explorer just displays it all in a simple and easy-to-navigate way.
Closing Thoughts
Binance Smart Chain greatly extends the functionality of the original Binance Chain and joins a range of cutting-edge protocols designed to bridge the gap between various blockchains. Though still considered to be in its infancy, the promise of BNB staking alongside EVM compatibility makes the platform an ideal engine for developers building powerful decentralized applications.
Having learnt the meaning of BSC, if you happen to have further questions, you could head over to Binance’s Ask Academy, where the community will answer them. A deep dive into the technical side of things can also be found in their whitepaper.
