Due to the introduction of Binance Smart Chain and Binance Coin(BNB) over the last two years, the cryptocurrency market has seen the rise of a new and growing trend. Now, it has successfully attracted the interest and attention of cryptocurrency investors.
But what exactly is Binance Smart Chain, and how is the trend progressing? In this article, we’ll dive deeper into understanding this emerging Blockchain.
What Is Binance Smart Chain?
Binance Smart Chain (BSC) is a blockchain network designed for the implementation of smart contract-based applications. BSC runs in parallel with Binance’s native Binance Chain (BC), giving users the best of both worlds: BC’s high transaction capacity and BSC’s smart contract functionality.
Also, the Binance Smart Chain implements the Ethereum Virtual Machine (EVM), allowing it to run Ethereum-based applications such as MetaMask.
The platform’s goal is to enable developers to create decentralized applications (DApps) and to assist users in managing their digital assets cross-chain with low latency and high capacity.
Binance Smart Chain has gained significant traction in early 2021, owing in part to Ethereum’s congestion and gas fee issues, which have caused developers and staking investors to seek alternative options.
To counter Binance Coin’s (BNB) insane price jump to over $300 in February, the BSC community reduced its gas fee from 15 Gwei to 10 Gwei, making the network even more appealing to new users as a cost-effective and stable alternative.
How Binance Smart Chain Works
Binance Smart Chain uses a Proof-of-Stake consensus algorithm to achieve second block times. It employs a technique known as Proof of Staked Authority (PoSA), in which participants stake BNB to become validators. They will receive transaction fees from the transactions included in the proposed block if it is valid.
Because BNB is not inflationary, unlike many protocols, there is no block subsidy of newly minted BNB. On the contrary, the supply of BNB decreases over time as the Binance team burns coins on a regular basis.
While it runs in parallel with BC, Binance Smart Chain is a standalone blockchain. This means that even if BC stops operating, BSC will continue to run its technical and business functions.
Supports Staking and Community-Based Governance
Its PoS model also enables it to process transactions faster, putting it above networks that still implement full proof-of-work (PoW) systems.
What Is Binance Smart Chain Coin(BNB)?
Binance Coin (BNB) is BC’s native token, which debuted in July 2017 as an ERC-20 token.
As the native token, BNB serves as the gas fee for BC transactions, issuance costs for new assets, minting and burning costs, and more. BNB also powers the BSC and is used for delegated staking on the authority validator. BNB can also be used to pay for trading fees on Binance.com.
BNB will run on BSC in the same way as ETH runs on Ethereum so that it remains as a “native token” for both BSC and BC. This means, in addition to BNB being used to pay most of the fees on Binance Chain and Binance DEX, BNB will be also used to:
- pay “fees“ to deploy smart contracts on BSC
- stake on selected BSC validators, and get corresponding rewards
- perform cross-chain operations, such as transferring token assets across BC and BSC
Binance Smart Chain (BSC) wallets
Blockchain wallets enable users to store their assets safely away from exchange platforms. But most importantly, in the case of smart contract networks such as BSC and Ethereum, wallets allow users to interact with native dApps.
Despite its relatively young age, BSC already has a vibrant selection of decentralized apps, and to use them, here are three excellent wallets the network supports:
Binance Chain Wallet
The Binance Chain wallet is a browser extension that is created and maintained by the Binance exchange. It is the official Binance wallet for accessing BSC and Binance Chain available on both Firefox and Chromium browsers, such as the Brave Browser. The wallet’s functionality may be limited, but it gets the most important job done, and Binance is constantly improving it.
The Trust Wallet is a standalone mobile wallet for iOS and Android owned and maintained by Binance. It supports several features related to the BSC, including interacting with BSC dApps, swapping BEP-2 with BEP-20 tokens, buying and selling thousands of digital assets, and staking tokens for rewards.
Trust Wallet was the first wallet to support BSC. It also supports several other network protocols, including Ethereum, Tron, EOS, and Solana. Additionally, it easily integrates with hardware wallets such as Coolwallet, increasing the safety of assets.
Metamask is a popular crypto wallet developed and maintained by Ethereum development studio Consensys and is available as a web browser extension as well as a mobile app on both iOS and Android platforms. Supported browsers are Google Chrome, Brave, Firefox, and Microsoft’s Edge.
Metamask enables its users to explore blockchain applications on both Ethereum and Binance Smart Chain as well as buying, selling, sending, and swapping tokens. For added safety and security of assets, Metamask supports hardware wallet integrations with companies such as Trezor and Ledger, among others.
Binance Smart Chain (BSC) dApps
So, now we’ve got a wallet, and we’ve transferred some funds to it. What can we do with our magic internet money? Let’s take a look at some of the most popular decentralized applications on BSC.
While the AMM is at the core of PancakeSwap, there’s much more you can do. You can also take part in the lottery, win NFTs, participate in token sales, compete for spots on the leaderboard, and more!
However, it aims to allow for much more in the future, such as the creation of synthetic assets collateralized by liquidity pools, as well as lending and on-chain derivatives.
Binance Smart Chain greatly expands the functionality of the original Binance Chain and joins a growing list of cutting-edge protocols designed to bridge the gap between different blockchains.
Though the platform is still in its infancy, the promise of BNB staking combined with EVM compatibility makes it an ideal engine for developers building powerful decentralized applications.