I was discussing Binance with a friend and she asked me what Binance Smart Chain is all about.
I quickly researched and found that Binance Smart Chain(BSC) is the Smart Contract version of the Binance Chain that runs parallel to it.
Don’t worry so much about what I mean by that. I did a great job of breaking it down in subsequent subheadings.
I dug further and I discovered a whole lot about BSC that I have come to share with you today.
Let’s get to it at once.
I broke down my findings under the following subheadings:
- What is Binance Smart Chain (BSC)?
- Why Was BSC Created?
- How Binance Smart Chain Works: The Highlights of BSC
- Supported Tokens, DApps, and Wallets on BSC
- How To Start Up With Binance Smart Chain
- BSC vs. Ethereum: Which Is Better?
- Frequently Asked Questions (FAQs)
A click on any of the listed subheadings opens up its details.
Let’s begin post haste.
What is Binance Smart Chain(BSC)?
BSC was launched in 2020 (September 1st) and runs parallel to the Binance Chain.
It is worthy to note that BSC is not a layer 2 or an offchain scalability solution.
Rather, it is an independent blockchain that keeps running even if the Binance Chain goes offline.
But both chains bear a strong semblance from the design point of view.
Some of the highlights of the Binance Smart chain include:
BSC adopted the Proof of Staked Authority(PoSA) consensus mechanism.
PoSA is a combination of Proof of Authority and Proof of Stake.
Here, blocks are produced by a limited set of validators that are elected in and out based on staking-based governance.
Validators then take turns to produce blocks in a Proof of Authority manner.
Here, the users stake their BNB for them to become among the 21 validators needed.
The validators are then picked judging from the number of BNB that they have staked.
When they validate a block, they earn a reward from the transaction fees of the transactions within the block.
Validators can also spur users to delegate their coins to them and in return, share the transaction fees with them.
This reward is paid in BNB which is the native token of BSC.
Though the BSC is seen as an independent chain, it is complementing the existing Binance Chain.
Dual architecture is employed with the idea of users seamlessly transferring their assets from one blockchain to another.
As such, fast trading can be enjoyed on Binance Chain while great apps can be built on the BSC.
A pure win-win case!
Decentralized Finance (DeFi)
Tokens from several different chains can be used within the growing DeFi ecosystem on BSC.
They allow users to exchange assets, engage in yield farming, and vote on proposals.
That’s an overview of what BSC is.
You might ask: But what’s the point of creating BSC since we already have the Binance Chain?
I explained why BSC is needed below.
Why Was BSC Created?
Back in 2019, the Binance exchange decided to create its own blockchain – the Binance Chain.
It was just perfect for the platform until DeFi, Smart Contracts, and NFTs started gaining traction.
Since the Binance Chain is not designed to run Smart Contracts, the team sought to create something that can do that.
Now instead of taking off the Binance Chain entirely, the team decided to create another chain.
The whole idea here is to leave the high throughput of the Binance Chain as it is while introducing smart contracts into its ecosystem.
Ethereum has been the hub for all these DeFi and Smart Contracts so they decided to create an Ethereum-like chain.
The team cloned the Ethereum blockchain while optimizing it for faster transactions and lower fees.
It did this by using the Proof of Staked Authority consensus mechanism which combines the Proof of Stake and the Proof of authority.
This makes it a better alternative for developers to build their DeFi apps.
BSC boasts of possessing the smart contract functionality and compatibility with the Ethereum Virtual Machine (EVM).
This will make it easier for developers to import their projects from Ethereum to BSC.
It has BscScan as its blockchain explorer and analytic platform; just like EtherScan.
Since its launch, BSC has been booming with on-chain activity and usage.
Moving on now, we will look at the tokens, DApps, and wallets that are supported on Binance Smart Chain (BSC).
Supported Tokens, DApps, and Wallets on Binance Smart Chain
There are about 54 tokens supported on BSC. They include:
- Binance Coin (BNB)
- The Graph (GRT)
- Pancake (CAKE)
- LTO Network (LTO)
- 1inch (1INCH)
- Reef (REEF)
- DODO (DODO)
- Venus (XVS)
- Alpha Finance Lab (ALPHA)
- Ankr (ANKR)
- Swipe (SXP)
- Trust Wallet Token (TWT)
- Linear (LINA)
- Vai (VAI), and about 38 more
Binance Smart Chain also allows you to create pegged coins.
PeggedTokens are just like Wrapped Tokens.
They are tokens wrapped for usage on other blockchains. In this case, the coins are wrapped for use on the Binance Smart Chain(BEP-20 tokens) and Binance Chain(BEP-2).
The conversion of coins from different blockchains to function on the BSC and Binance Chain is done with the Binance Bridge.
These pegged coins are pegged 100% to the native coins in reserve. For example, 1 Bitcoin BEP2 (BTCB) = 1 BTC.
The pegged tokens on BSC include:
- Binance USD(BUSD)
- Tether (USDT)
- Bitcoin (BTC)
- Ethereum (ETH)
- Dai (DAI)
- Polkadot (DOT)
- Ripple (XRP)
- Chainlink (LINK)
- Band (BAND)
- Litecoin (LTC)
- Eos (EOS)
- Bitcoin Cash (BCH)
- Tezos (XTZ)
- Ontology (ONT)
- Cardano (ADA)
- DFI.money (YFII)
- Zcash (ZEC)
You will find DApps in various categories ranging from games, DeFi, gambling, exchanges, collectibles, social, highrisk, etc.
As of the time of this post(9th March 2021), we have a total of 174 Dapps on dappradar.com.
Some of the DApps include:
- Pancake Swap
- Goose Finance
- Pancake Bunny
- Kebab Finance
- Bakery Swap
- NFTBox, etc
The supported wallets are as follows:
|Binance Chain Extension Wallet||https://binance.org/||Link|
Moving on now, we will see how you can start up using the Binance Smart Chain.
How To Start Up With Binance Smart Chain
The first thing to do is to connect your wallet.
To explain how this works, I will be working with the MetaMask wallet. The steps involved include:
Download and install MetaMask on your device. It is available for Chrome, Firefox, iOS, and Android.
You will find steps on how to download and install MetaMask here.
After downloading and installing your MetaMask, you will see something like this (image below).
Now, you will notice it is still an Ethereum wallet at this point. So to get it to become a BSC wallet, you will click on the image at the top right hand corner.
From the drop down menu, click on ‘ Settings’ and select ‘ Networks’.
From the ‘Networks’ menu, click on the ‘Add Network’ button and fill in the details required on the form. Click ‘Save’ when done.
Smart Chain Testnet then appears as one of your networks.
Now there are 2 types of networks you can create here: Mainnet or Testnet.
Find details for each one in the table below.
|Network Name||Smart Chain||Smart Chain – Testnet|
|New RPC URL||https://bsc-dataseed.binance.org/||https://data-seed-prebsc-1-s1.binance.org:8545/|
|Block Explorer URL||https://bscscan.com||https://testnet.bscscan.com|
Now when you save the network and return to the main view, you will notice that:
- the network added (Smart Chain Testnet) has been set as the default network
- the currency is now in BNB (disregard the ETH logo)
It’s getting really interesting, right? Let’s continue to see how it plays out.
At this point, you will need to fund your wallet with BNB to continue. To do that, copy the wallet address (under Account 1).
Go to Binance Smart Chain Faucet and paste the address into the form.
Notice the Peggy tokens?
Yeah… You can check them out if you are using a BEP-20 supported application.
As I explained earlier, Peggy tokens are simply tokens that are issued on BSC which are “pegged” to assets on other blockchains.
For now, let’s work with BNB.
Select the number of BNB that you want and the faucet will fund your wallet at once.
Okay… Now that I have the funds in my wallet, what next?
See what to do in the next step.
The next thing to do is to send the funds off somewhere to show how it works.
To do that, you will pick an address off BscScan Testnet to work with.
Then you will get back to your wallet. Click on ‘ Send’ and paste the address.
Fill in the details of the transaction and click ‘Next’. Cross check the details of your transaction and click on ‘Confirm’.
You will be notified when your transaction goes through.
That’s it on how to start up using BSC.
NOTE: The explanation above was done using the Testnet. Just as the name implies, Testnet is just for you to see how it works; more like demo trading platforms for exchanges. So is also the tokens gotten from the faucet. They are just test tokens, not real ones. To carry out the real transaction, you have to work with the Mainnet.
I compared BSC with Ethereum below. Check out their differences.
Binance Smart Chain vs. Ethereum: Which Is Better?
|Parameters||Binance Smart Chain||Ethereum|
|Founder||Binance Team||Vitalik Buterin|
|Consensus Mechanism||Proof of Staked|
|Proof of Work (migrating|
to Proof of Stake soon)
|Transactions Per Second||~ 100,000||30 tps|
|Block Time||~ 5 secs||20 secs|
|Transaction Fees||$0.15||Up to $155|
|Number of DApps|
@30th March 2021
(ATH March 2021)
(ATH September 2020)
The table above contains some of the differences between BSC and Ethereum.
From the info in the table, one can see that BSC leveraged on the shortcomings of the Ethereum blockchain.
While expanding into the crypto space, Ethereum overlooked the aspect of scalability on its network.
This led to a massive increase in the transaction fees thus discouraging its users and developers.
The creation of BSC in 2020 gave developers a better option with lower fees and faster transaction time.
Again, the fact that it is EVM compatible is a big plus. So, one can easily transfer a project on the Ethereum blockchain to BSC seamlessly.
Considering the number of users Binance has garnered, Binance’s many users moved over to BSC immediately.
In February 2021, BSC saw a massive increase in the number of users (from 12,700 – >50,000).
In trade volume ( still in February 2021), BSC recorded $6.84bln as against $5.42bln gotten by Ethereum (according to the industry overview from DappRadar).
That’s a whooping $1.42bln difference!
Weeks following the launch brought in a ton of users.
With the huge influx of users, we saw PanCakeSwap briefly flippen over Uniswap sometime in February 2021.
So answering which blockchain is better should not be so hard since the cards are all out on the table.
I mean, since I can get the same value of what I used to at a better rate and faster time, why will I opt to spend more?
Nevertheless, many users still prefer Ethereum even with the crazy fees because it is decentralized.
And again, Ethereum has been in this game for a good number of years before BSC came aboard.
Don’t worry, I am rounding up already. I will just answer some FAQs and we will be done with this post.
Let’s get right to it.
Frequently Asked Questions (FAQs) About Binance Smart Chain
Binance Chain(BC) and Binance Smart Chain(BSC) are different blockchains that are run by the Binance exchange.
The former was launched in 2019 and is optimized for fast transactions and to handle large loads on its chain.
BSC came aboard in 2020 and runs parallel to the Binance Chain. It is optimized for developing and distributing DApps that can use smart contracts.
Despite their differences, Binance Chain and Binance Smart Chain can natively communicate with each other.
Again, withdrawals from both chains are supported on Binance.
A Validator on the BSC is equivalent to a miner on the Bitcoin blockchain. Validators are the ones that confirm(validate) blocks. In return, they are rewarded with transaction fees and commission fees.
To become one, check out this page for the requirements.
It is special because of its unique innovations:
– PoSA consensus mechanism
– Dual chain functionality
– More use cases for BNB as you can now stake it (find out how here)
On Binance.com, you can withdraw BNB to BSC.
If you don’t have an existing address of Binance Smart Chain, use any of the wallets listed above to create one.
The do the following:
– On your Binance account, open your BNB wallet then tap on Withdraw. Select BEP20 as the Network.
– Indicate the amount and paste your BSC address.
– Complete the steps to withdraw
– Wait for the exchange to process your request.
– Once it is confirmed, you will immediately receive BNB to your Smart Chain address
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Here is the last subheading of this post.
So far, I hope you have been having fun learning about BSC?
Okay then, let’s hear your thoughts on these questions:
Do you use BSC? What has been your experience thus far?
In the nearest future, do you see BSC becoming a major competitor of Ethereum, the DApps headquarter?
What other wallet(s) will you want the team at BSC to list?
Or perhaps, you are unclear about something I said. You can ask for clarification too.
Leave me your replies in the comment box below.
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