Introduction to Binance Smart Chain
If you have been a part of the crypto community, chances are that you are familiar with the word Binance and might know it as one of the easiest, safest and cheapest marketplace for difference cryptocurrencies and tokens.
But in case, you are a beginner in the crypto space and are familiar with it, we are here to give you a detailed insight into what it is, how it is changing the crypto landscape and why it should be your go to for listing, purchasing, selling and trading cryptocurrencies and tokens.
What is Binance Smart Chain?
Binance Smart Chain is a blockchain network built in order to run smart contract based applications. Binance Smart Chain has been running in parallel with the native Binance Chain. The difference between the two is that the native Binance Chain offers the best of both worlds i.e. a very high transaction capacity and the functionality of Binance Smart Chain, which is to offer smart contracts.
So the question might arise as to why Binance Smart Chain was created, if Binance Chain does everything already. The answer is that Binance Smart Chain was originally created as an extension of the Binance Chain. However, with time the creators and developers decided to shift its focus on decentralized application and smart contracts. The main reason behind this shift of focus was to not congest the Binance Chain.
However, the important thing to note is that both the chains were created with very similar architecture and the creators have always focused on cross compatibility between the two chains. One of the reason why cross compatibility is maintained between the two is to make the tokens exchangeable i.e. BEP2 tokens can be easily exchanged for BEP20 tokens.
An important concept with Binance Smart Chain is smart contracts, so let us look into that;
Simply put, smart contracts are just pieces of code that run on a blockchain network and are designed for particular applications of a service. For example, if you were to create a decentralized application for voting on the Binance Smart Chain, your smart contract would be a piece of code that would run the voting logic on the blockchain.
Attributes of Binance Smart Chain
Now that we have understood the basics of Binance Smart Chain, let us take a look at some of the attributes of the Binance Smart Chain;
While we have mentioned before that Binance Smart Chain runs in parallel with Binance Chain, it is fully independent, meaning that if Binance Chain stops operating, Binance Smart Chain will continue to run both its technical and business functions.
One of the most important thing about Binance Smart Chain is that it is Ethereum compatible. What this means is that smart contracts created on Ethereum are supported by Binance Smart Chain as well. Moreover, this feature allows developers to both build and migrate decentralized applications, tools and other components of their ecosystem on to the Binance Smart Chain network without any friction.
The Binance Smart Chain platform runs on a proof-of-stake consensus model and proof-of-staked authority to be more specific. The native token of the smart chain is known as Binance Coin (BNB). Not only can this native token be staked to contribute to network security but it also helps the users vote on community governance protocols. The proof-of-stake model of the smart chain is integrated into the network so as to enable it to process transactions faster. This puts the Binance Smart Chain above those networks that implement full proof-of-work model.
As mentioned earlier, users can easily interoperate between the two native chain networks i.e. Binance Chain and Binance Smart Chain. Both the blockchain networks can easily communicate with each other without any major friction, despite the fact that Binance Smart Chain is not a layer 2 solution. All of this allows the user to easily move their currencies across the chains, allowing them to exchange BEP2 tokens for BEP20 tokens.
DeFi on Binance Smart Chain
If you have ever come across the native Binance Chain, you’ll be aware of the fact that a number of digital assets including BTC, LTC, ETH, EOS or XRP already exist on the Binance Chain and they are what we refer to as Peggy Coins, meaning that these tokens are pegged to assets on their native chains. A good example of this would be if you wanted to lock up 10 BTC, in order to receive 10 BTCB on Binance Chain, you could at any time trade your 10 BTCB for BTC. So in conclusion, the price of BTCB will closely track that of the original asset on the native chain.
The flexibility that Binance Smart Chain can afford is the real dealmaker, which is why assets from a number of different chains can be used in the growing decentralized finance DeFi space. Applications like pancake swap are now allowing users to trustlessly exchange assets, vote on proposal and engage in yield farming.
To sum it all up, Binance Smart Chain is a great addition to the Crypto space. It already takes what Binance Chain was good at and then builds on top of it thus joining a range of cutting-edge protocols designed to bridge the gap between various blockchains. Though it is still relatively new when compared alongside other blockchains, the promise on BNB staking alongside EVM makes Binance Smart Chain an ideal choice for developers looking to develop powerful decentralized applications.