Binance Smart Chain: complete explanation for beginners
The Binance Smart Chain (BSC) has contributed greatly to the growth of Binance and the Binance Coin. In this article, we will discuss in detail what the Binance Smart Chain is.
What is the Binance Smart Chain?
The Binance Smart Chain exists alongside the original Binance Chain and makes it possible to run decentralized applications.
When the original Binance Chain was launched in 2019, the focus was on executing many transactions. However, the Binance Chain could not work well with Ethereum, which limited its capabilities. The Binance Smart Chain has solved this ‘problem’, which means that much more is now possible within the Binance Coin blockchain.
How does the Binance Smart Chain work?
The Binance Smart Chain uses a Proof-of-Stake-Authority (PoSA) algorithm. Users can stake BNB to help validate transactions. When users correctly predict a block, they receive BNB. However, no new BNB is created in the process.
Binance has ensured that the original Binance Chain and the new Binance Smart Chain can work well together thanks to cross-chain compatibility. This allows tokens to be moved quickly from one chain to the other.
What can you do with the Binance Smart Chain?
Developers can use the Binance Smart Chain to build projects. With the Binance Smart Chain, Binance competes with Ethereum and Polkadot, which are well-known platforms on which decentralized applications can be developed. An advantage of the Binance Smart Chain is that the gas fees are low.
It is also positive that Binance founder Changpeng Zhao wants to bridge the gap between decentralized and centralized funding. To achieve this, Binance has set up a $100 million fund to launch new projects on the blockchain. Individual projects will receive up to $100,000, which gives the blockchain and crypto a nice boost.
DeFi on Binance Smart Chain
DeFi stands for decentralized finance and should make it possible to perform all kinds of financial actions on the blockchain. PancakeSwap is the best-known DeFi project active on the Binance Smart Chain.
With PancakeSwap, you can quickly trade crypto and participate in yield farming. Do you want to read in detail what you can do with PancakeSwap? Then read our detailed manual!
The future of Binance Smart Chain
The launch of Binance Smart Chain seems to have been a good move. Although decentralized exchanges can be a threat to centralized exchanges like Binance, they can certainly add things too. The goal of the Binance Smart Chain is to constantly disrupt exchanges by introducing new features.
So far, it seems that Binance succeeds in this goal. It can certainly be interesting to follow the Binance Smart Chain and look for promising investment projects that are launched on it!