Table of Contents
Ethereum compatibility
Staking
A Standalone Blockchain
Native Cross-Chain Communication
Binance chain is a blockchain developed and launched in 2019 to support the Binance decentralized exchange. It also powers the Binance coin. After its launch, Binance realized it needed all the functionality it wanted. They still saw a use for it, so instead of scrapping it, they kept it and built the Binance Smart Chain.
Let us understand what it does, why it was built, and how it runs alongside its counterpart Binance chain. We’ll also examine some of its drawbacks and the future of the Binance smart chain development.
It’s essential to first look at the limitations of Binance’s first blockchain, the Binance chain. In April 2019, Binance unveiled the Binance chain blockchain to serve its decentralized trading vision.
At the same time, it launched the Binance decentralized exchange, which is built for high transaction throughput.
Binance aimed to offer a more friendly user interface and user experience, superior to the clunky decentralized exchanges on the market for trades on the platform. It sought sub-one-second confirmation times.
The problem with the Binance chain is that it needs to be more flexible.
It could have been optimized for smart contracts. Scalability also became an issue, and that’s why the idea of Binance smart chain development came into existence.
According to Binance, upgrading the Binance chain to introduce additional functionality would have made the network less efficient by bogging down the network’s speed. Instead, they decided to build the Binance Smart Chain, enabling the same level of speedy transactions while vastly expanding the features and capabilities available.
The Binance smart chain runs parallel to the Binance chain and offers a platform for developing decentralized applications and other DeFi solutions.
It has cross-chain asset transfers, a three-second block time interoperability with the Ethereum virtual machine, and a proof of stake consensus algorithm.
Binance smart chain development is based on four key principles:
With a few tweaks, the most notable of them being the consensus mechanism, cross-chain interoperability is made more accessible by copying Ethereum’s source code allowing native Ethereum decentralized apps to be readily ported to the Binance Smart Chain.
Binance Smart Chain uses Proof of Staked Authority (PoSA) consensus mechanism. A maximum of 21 validators are active on the network, which speeds up the validation process. It’s a modified form of Proof of Stake (PoS), and also combines the features of Poof of Authority (PoA).
The name of the token used for staking is BNB and they are burned regularly, resulting in fewer outstanding balances. Reducing the supply may appear to be a good thing as it often leads to a rise in token prices.
What does the future hold for the Binance Smart Chain?
When it was first launched, it gathered a lot of attention.
Binance smart chain’s future goals include facilitating broader interoperability in the blockchain realm, including between blockchain decentralized applications and assets, all within a compatible ecosystem.
The future of any blockchain is undoubtedly unknown. Even with tendencies pointing in one direction or another, even though it heavily relies on Ethereum, the Binance Smart Chain still offers an additional option to build upon aside from Ethereum, given its focus on higher speeds and lower fees.
In February 2022, it was also announced that the Binance Chain and Binance Smart Chain would be rebranded into a unified name called the BNB chain.
Binance calls the BNB chain the evolution of Binance smart chain.
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