What is Binance Smart Chain?
- Binance Smart Chain is a blockchain platform for developers that enables smart contracts.
- It runs in parallel with the original Binance chain, which is optimized for fast transactions.
- Binance Smart Chain is also compatible with apps that were originally coded for Ethereum.
Launched in 2019, Binance chain is a blockchain platform developed to support the popular centralized cryptocurrency exchange Binance DEX, a decentralized exchange through which users can trade directly with one another. It also powers Binance Coin (BNB), which started on Ethereum but was converted via a token swap.
Binance Chain was launched relatively quickly and optimized for fast trading, but it didn’t have the extensive features required to support a large number of decentralized apps (dapps).
There is the new Binance Smart Chain As the name suggests, it’s a more advanced blockchain than the original, but it’s a parallel platform – not a replacement.
What is Binance Smart Chain?
Launched in September 2020, Binance Smart Chain is a blockchain service that allows developers to create their own decentralized apps using smart contracts. The original Binance chain was not designed for such functionality, but the Binance smart chain was designed to enable the same fast transactions while significantly expanding the functionality and capabilities available. It is also compatible with the Ethereum Virtual Machine (EVM), which means that it is capable of running dapps ported from Ethereum.
However, Binance Smart Chain is not a renamed version of the original Binance chain, nor is it a layer two or sidechain platform designed solely to expand the original Binance chain. It is a completely separate, standalone blockchain that can continue even if the Binance chain is taken offline. However, the two blockchains are ultimately designed to work in parallel.
How does Binance Smart Chain work?
Binance Smart Chain uses a so-called PoSA consensus algorithm (Proof-of-Staked Authority), a mixture of Proof-of-Stake and Proof-of-Authority models. Validators in the network are those who have staked a certain amount of BNB and then receive transaction fees for validating approved blocks in the network.
As mentioned earlier, Binance Chain and Binance Smart Chain are designed to work together, and Binance has built-in easy cross-chain compatibility between them. Assets can be quickly transferred between the blockchains, combining the fast trading skills of the former with the smart contract features of the latter. The BEP-2 and BEP-8 tokens from Binance Chain can also be exchanged for the BEP-20 tokens from the Smart Chain.
In addition, compatibility with Ethereum Virtual Machine means that developers of Dapps on other blockchains can relatively easily port them to Binance Smart Chain. This could be especially attractive to Dapp operators as Ethereum continues to grow and gas fees rise, although the proposed move from Ethereum to a proof-of-stake model in Ethereum 2.0 could alleviate some of its current scaling issues.
What is special about Binance Smart Chain?
The cross-chain compatibility between Binance Chain and Binance Smart Chain offers developers a fascinating tandem of possibilities so that they can leverage the respective strengths of both blockchains to maximize the functionality and performance of their Dapps.
In addition, EVM compatibility means that Dapps can be taken over by Ethereum and then possibly expanded and expanded in the Binance Smart Chain. There are many up and coming blockchains out there designed to steal some of the thunder from Ethereum thanks to EVM support including Avalanche and Telos, and Binance is adding its name to that list with Smart Chain.
Binance has the benefit of immense notoriety in space, not to mention the substantial funding and liquidity due to its thriving exchanges and ecosystem.
What can you do with Binance Smart Chain?
Binance Smart Chain is primarily aimed at developers of decentralized apps, regardless of whether they are looking for a platform on which a new app can be created or whether they want to port a project from Ethereum. Between the dual-chain system, EVM support, and Binance’s own support, the company hopes to involve developers in its ecosystem, thereby creating value for everyone involved.
As Binance founder Changpeng “CZ” explained, Zhao explained Decrypt In October 2020, the company sees Binance Smart Chain as a way to close the gap between centralized and decentralized financing. Binance has one $ 100 million fund Support for DeFi (decentralized finance) projects launched on the blockchain, including up to USD 100,000 for certain individual projects.
Did you know already?
In Chinese, Binance is 币 安, where 币 means “crypto” and 安 means “security”.
It’s still early for Binance Smart Chain, which wasn’t launched until early September 2020 after the concept was unveiled earlier this year. Still, thanks to its $ 100 million support fund for DeFi apps, Binance is putting a big push behind the platform and emphasizing the benefits of the dual-chain approach.
Interestingly, the introduction of Binance Smart Chain and strong attempts to attract DeFi developers contradict Binance’s core business of being a centralized exchange. According to the company, people are constantly trying to “disturb” themselves.
“For some people, the advent of DeFi means a move away from centralized blockchain platforms.” reads a blog post on the launch of Binance Smart Chain. “This could be interpreted as a threat to services like Binance. We disagree. For us, DeFi is an opportunity to offer better solutions to the blockchain world. “
We’ll see if the blockchain world agrees and makes Binance Smart Chain a leading blockchain platform for decentralized apps in the coming years.