Binance Smart Chain (BSC) facilitates the creation of decentralized applications (dApps) and digital assets through its blockchain infrastructure.
Operating alongside Binance Chain, BSC employs a dual-chain model. Its backbone is Binance Coin (BNB), the native token of the Binance ecosystem.
This piece delves into the intricacies of Binance Smart Chain (BSC), covering its structural design, consensus protocol, token economy, practical applications, and advantages.
What is Binance Smart Chain (BSC)?
Binance Smart Chain (BSC) is a blockchain platform by Binance. Launched in 2020 alongside Binance Chain, it’s for DApps and smart contracts.
BSC uses Proof of Staked Authority (PoSA), blending PoS and BFT for speed and scalability.
Compatible with Ethereum Virtual Machine (EVM), it allows easy DApp migration with lower fees.
BSC’s native cryptocurrency, Binance Coin (BNB), is vital for transactions, staking, and ecosystem access.
What is the History of Binance Smart Chain (BSC)?
To know about Binance Smart Chain’s history, let’s start with its parent company, Binance. Binance is a big cryptocurrency trading platform started by Changpeng Zhao (CZ) in China in 2017. People liked Binance because it was easy to use, had low fees, and supported many different cryptocurrencies.
In 2019, Binance made its own blockchain network called Binance Chain. This blockchain was made to be quick and safe for trading and making digital assets. It works using something called Proof of Stake (PoS) and uses its own token called Binance Coin (BNB).
Binance Chain was good for trading and making digital assets, but it couldn’t do everything. It couldn’t handle smart contracts or decentralized apps (dApps).
So, in September 2020, Binance made Binance Smart Chain (BSC). This was like a twin to Binance Chain, but it could do more. It could handle smart contracts and decentralized apps (dApps), as well as trading and making digital assets.
Binance Smart Chain (BSC) Tokenomics
Binance Smart Chain (BSC) runs on Binance Coin (BNB), which is its main currency. BNB is needed to pay for transactions on BSC, and it’s also used for staking and helping to make decisions about how the network works.
Tokenomics is about how a cryptocurrency or digital asset is set up economically, like how it’s shared out, how much there is, and what it’s used for. In BSC, BNB is really important in how the network’s tokenomics work.
1. Distribution and Supply of BNB
Binance originally launched BNB as an ERC-20 token on the Ethereum blockchain in 2017. They set the total supply of BNB at 200 million tokens, allocating 100 million tokens to the Binance team and making 100 million tokens available for sale during the initial coin offering (ICO).
In 2019, Binance launched its blockchain network, Binance Chain, and migrated BNB from the Ethereum blockchain to Binance Chain. The total supply of BNB remained the same at 200 million tokens.
2. The distribution of BNB is as follows:
40% of the total supply (80 million tokens) is allocated to the Binance team and investors. These tokens are subject to a vesting schedule, with a portion of the tokens released each year.
10% of the total supply (20 million tokens) is allocated to Binance’s angel investors.
50% of the total supply (100 million tokens) is available for trading and distribution through various channels.
3. Use Cases of BNB
BNB has several use cases within the Binance ecosystem, including:
- Transaction fees: BNB is used as the primary gas fee for transactions on the Binance Smart Chain. Users can pay transaction fees in BNB to reduce their overall fees.
- Staking: Validators on the Binance Smart Chain are required to stake BNB to participate in block validation. Users can also stake their BNB to earn rewards and participate in network governance.
- Trading: BNB is listed on several cryptocurrency exchanges and can be traded against other cryptocurrencies and fiat currencies.
- Purchasing goods and services: Some merchants and businesses accept BNB as payment for goods and services.
As the demand for BSC and its ecosystem continues to grow, the use cases for BNB are likely to expand as well. Binance has also announced plans to launch its decentralized exchange (DEX) on the BSC, which could further increase the demand for BNB.
What Are Some of the Main Use Cases for Binance Smart Chain?
Here are some of the main use cases for Binance Smart Chain:
1. Decentralized Finance (DeFi)
Decentralized finance (DeFi) is a rapidly growing sector of the cryptocurrency industry. DeFi applications allow users to access financial services like lending, borrowing, and trading without the need for intermediaries like banks. Binance Smart Chain has a growing ecosystem of DeFi applications, including decentralized exchanges (DEXs), yield farming platforms, and more.
2. Gaming
Blockchain technology has the potential to revolutionize the gaming industry by enabling true ownership of in-game assets and facilitating secure, decentralized gameplay. Binance Smart Chain’s high throughput and low transaction fees make it an attractive option for gaming projects that require a fast and affordable blockchain network.
3. NFTs
Non-fungible tokens (NFTs) are unique digital assets that can represent anything from art and music to virtual real estate and gaming items. Binance Smart Chain’s support for smart contracts and its compatibility with the Ethereum Virtual Machine (EVM) make it an attractive option for NFT projects.
4. Social Media
Decentralized social media platforms allow users to control their data and protect their privacy. Binance Smart Chain has the potential to support social media platforms that use blockchain technology to enable decentralized content sharing, social engagement, and monetization.
5. Supply Chain Management
Blockchain technology has the potential to transform supply chain management by enabling secure, transparent tracking of goods and ensuring that all parties in a supply chain have access to accurate and up-to-date information. BSC’s support for smart contracts and its fast, low-cost transactions make it an attractive option for supply chain management applications.
Benefits of Binance Smart Chain
Binance Smart Chain (BSC) is a type of digital system that has some good things compared to others like it.
One big advantage is that it can handle a lot of actions at once and charges less money for each action.
For example, it can process up to 100 actions every second, which is much quicker than systems like Bitcoin and Ethereum. People like using BSC because they can do things fast without having to pay a lot of fees.
Another good thing about Binance Smart Chain is that it works well with Ethereum. BSC uses something called the Ethereum Virtual Machine (EVM), so it can support apps that are made for Ethereum.
This means developers can easily move their Ethereum apps to BSC and benefit from its speed and low fees.
Binance Smart Chain also has a way of making sure it stays safe and reliable. It uses something called the PoS consensus mechanism.
This means people who validate blocks need to use a digital currency called BNB. They have to put some of their BNB at risk, which encourages them to help the network.
This system helps keep BSC secure and working well.
How Does Binance Smart Chain Compare to Other Blockchain Networks?
Binance Smart Chain (BSC) is a relatively new blockchain network, having launched in 2020.
As such, it is still in the process of establishing itself and building its ecosystem.
However, it has already gained significant attention due to its unique features and capabilities.
In this article, we will compare Binance Smart Chain to other blockchain networks and explore its strengths and weaknesses.
1.Ethereum
Ethereum and Binance Smart Chain (BSC) are both famous blockchain networks for decentralized apps (dApps) and smart contracts. But they have some big differences.
First, they use different ways to agree on transactions. Ethereum uses Proof of Work (PoW), which needs a lot of energy and can make fees high. BSC uses Proof of Staked Authority (PoSA), which is greener and has lower fees.
Second, Ethereum can work with lots of other blockchains, so you can trade assets between them easily. BSC is also working on this, but it’s not fully there yet.
Lastly, Ethereum has problems with being slow and expensive, while BSC is quicker and cheaper, able to handle lots of transactions at once.
In short, Ethereum is more popular, but BSC is faster, cheaper, and getting better at connecting with other blockchains.
Read more: How to Scalp Crypto?
2. Polkadot
Polkadot is a type of blockchain network, like Binance Smart Chain (BSC). It focuses on making different blockchain networks work together. For example, it helps with exchanging things like money or digital assets between them.
One big difference between Polkadot and Binance Smart Chain is how they agree on things. Polkadot uses something called “sharded Proof of Stake (PoS)” to agree on transactions. This helps it to handle lots of transactions quickly while staying secure. BSC, on the other hand, uses “hybrid Proof of Staked Authority (PoSA)” which uses less energy.
Another difference is how many people are involved in running the network. Polkadot aims to have many people (called validators) and smaller networks (called parachains) involved. BSC also has lots of people involved, but it’s a bit more controlled by a smaller group.
Lastly, let’s consider the number of apps and projects developers are creating for each network. Polkadot currently hosts numerous projects. BSC continues to expand its roster of apps, garnering attention for its cost-effectiveness and speed.
In summary, Polkadot is more established, while Binance Smart Chain is newer but offers some good advantages like being cheap and fast. BSC has the potential to become a big player like Ethereum and Polkadot in the future.
Conclusion
Overall, Binance Smart Chain is an attractive option for developers and users who want to transact quickly and affordably on a high-performance blockchain network.
With its innovative architecture and growing ecosystem, BSC is poised to continue growing in popularity in the years to come.