Nicole is a professional journalist with 20 years of experience in writing and editing. Her expertise spans both the tech and financial industries. She has…
Binance Smart Chain (BSC) is a layer-1 blockchain built to support smart contracts, running alongside the Binance Chain, which was designed to support high transaction volumes.
Binance Smart Chain implements the Ethereum Virtual Machine (EVM) to enable smart contracts, allowing developers to create or migrate Ethereum-based decentralized applications (dApps) like MetaMask.
BSC was designed based on Geth, an Ethereum execution client that handles transactions, deploys and executes smart contracts, and contains the EVM.
The Binance blockchain, built by the world’s largest cryptocurrency exchange, has evolved since its launch in 2017. As decentralized finance (DeFi) applications enabled by smart contracts took off in 2020, Binance launched a parallel Binance Smart Chain to run alongside the Binance Chain and compete with the Ethereum blockchain.
BSC quickly gained popularity among developers and users in early 2021 as network congestion and high gas fees on the Ethereum blockchain increased the cost of transactions while slowing processing times.
In 2022, BSC merged with the Binance Chain in a new dual-chain structure. The original Binance Chain has been renamed the BNB Beacon Chain and merged with BSC, meaning that Binance Smart Chain is now the BNB Smart Chain. Together, the two chains comprise the BNB Chain.
The rebranding was in line with Binance’s goal to develop a broader ecosystem for the blockchain separate from the Binance exchange. According to Changpeng Zhao, Binance CEO, “BNB” is an abbreviation for “Build ’N Build.”
The blockchain’s growing popularity has led to an explosion of new projects being built on BSC as of 2023, for example Bitcoin BSC.
BNB Smart Chain brings programmability and interoperability to the BNB Beacon Chain using a combined delegated proof of stake (DPoS) and Proof-of-Authority (PoA) consensus mechanism known as Proof-of-Staked-Authority (PoSA).
PoSA uses a system of validators elected based on the number of tokens they stake. They take turns verifying transactions and adding them to the chain in new blocks. Backup validators called “candidates” provide security, as in the event of a malicious attack that brings the validators offline, the candidates can report to the Beacon Chain, resume processing on BSC, and propose the re-election of active validators.
According to Binance, BSC’s consensus protocol has been designed to fulfill the following goals:
Previously known as Binance Coin, BNB is the native utility token for the Binance ecosystem. It is used to pay transaction fees on the Binance exchange and BNB Chain, staking, and asset transfers. BNB is also used to execute smart contracts on BSC.
BNB holders who want to earn additional BNB or contribute to network security can stake BNB on a smart contract. They can also delegate their stake to a BSC validator to earn a share of the block rewards. Validators can decide how much of the BNB they collect from gas fees is redistributed to delegators.
In addition to BNB, the BSC supports other token standards, including BEP-20, which developers use for creating tokens, and ERC-20 from the Ethereum blockchain for compatible apps. BEP-20 is equivalent to BEP-2 on the BNB Beacon Chain, so holders of BEP-20 tokens can swap them for BEP-2 tokens and vice versa in the Binance Wallet.
BNB Chain is undergoing a series of technical upgrades to support further decentralization and fast transaction processing as part of the dual-chain transition.
BNB Chain will focus on providing the infrastructure to support a virtual ecosystem of applications across decentralization gaming finance (GameFi), social media finance (SocialFi), Web3, non-fungible tokens (NFTs), and the metaverse.
It is scaling from one chain to a multi-chain structure, increasing the throughput of BSC, introducing new governance mechanisms, increasing scaling, and expanding the number of BSC blockchain validators from 21 to 41.
The top five BNB Chain applications based on the total value of the assets in smart contracts are:
Cryptocurrencies are often highly volatile and face regulatory uncertainties. In addition, decentralized apps can be susceptible to fraud.
As such, it’s important to conduct due diligence when buying cryptocurrencies and using blockchain apps, only investing what you can afford to lose.
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Nicole is a professional journalist with 20 years of experience in writing and editing. Her expertise spans both the tech and financial industries. She has developed expertise in covering commodity, equity, and cryptocurrency markets, as well as the latest trends across the technology sector, from semiconductors to electric vehicles. She holds a degree in Journalism from City University, London. Having embraced the digital nomad lifestyle, she can usually be found on the beach brushing sand out of her keyboard in between snorkeling trips.
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