Binance Smart Chain (BSC) has become one of the most used networks after ethereum in a very short time, because it has been able to solve the problems that this network had, with low fees. In April 2018, Binance decided to launch its own blockchain – Binance Chain which started to be used with a large volume in early 2021.
Making its cryptocurrency Binance Coin to be sometimes placed in the top 3 by market capitalization of all cryptocurrencies. As its name suggests, the Binance Smart chain has been created by the Binance platform, the world’s No. 1 and most widely used exchange.
This means that it is not a decentralized network, unlike ethereum. So it is a CeDeFi network, or the term used by the owner of Binance to define this network. DEFI refers to decentralized finance, so CeDeFi, is a mix between decentralization and centralization of the network. The Binance Smart chain is a fork of the ethereum network, and therefore, they have many. Below you will see the acronym BSC, which refers to the binance Smart chain.
The Binance Smart Chain platforms and ecosystem have experienced a huge growth, due to the great demand and compatibility with the ethereum network, by also using the solidity language, since, it is a fork of the ethereum network. This, has allowed many developers to create the ethereum network tokens on the binance Smart chain very easily, and create very similar platforms.
This has made the ecosystem grow very fast, in addition to the low commissions, which made it possible for many users to use the BSC and use their platforms with $100 or less. Being one of the most used networks, there are many platforms and new features in DEFI that have been developed in the BSC, such as auto compounding or other functions. If you want to know more in detail the main platforms of this network, below, you can find a detailed guide on how each one works.
Being a very large ecosystem, we have covered the platforms that we have used or we believe have more users, so it may be that, if you are looking for a lesser known platform in the BSC, we do not have a guide yet. Even so, I recommend you search in the search engine in the menu, to see if you can find a guide to the platform you want to know how it works.
Binance Smart Chain, instead of using a Proof-of-Work (PoW) or Proof-of-Stake (PoS) consensus mechanism, uses a Proof-Of-Staked-Authority (PoSA) model.
In this model, all transactions are validated by a set of nodes called validators. A validator can be active or inactive. The number of active validators is limited to 21 and only active validators can validate transactions.
Active validators are determined by ranking all validators based on the number of BNB tokens they hold. The top 21 validators with the most BNBs become active and take turns validating blocks. This is determined once a day and the set of all validators is stored separately in Binance Chain.
In addition to staking the BNB tokens themselves, validators can also encourage BNB holders to delegate their BNB tokens to them to receive a portion of the validator’s transaction fees. In this sense, all transaction fees on Binance Smart Chain are paid in BNB, which is the native token of the chain, similar to how ETH is native to the Ethereum blockchain.
Pros and cons.
After seeing in a summarized way how BSC works, let’s take a look at the main advantages it has over its competitors.
Speed and Price: Being a network that only uses 21 validators, the cost per transaction is very low, and the speed is very fast. This is achieved by being a much more centralized network, unlike the ethereum network. This has allowed many new users to enter the DEFI space, or CeDeFi, as they do not need a large capital to interact with the network.
Ethereum to BSC network converter: BSC developers know how big and important the ethereum network is, so they created a converter to migrate tokens from one network to another in a very simple way. In addition, the network uses the same programming language, which allows to migrate platforms from one network to another quite easily, compared to using another network with another programming language.
Ecosystem: Together with the converter, and the entry of many new users due to its low cost and speed, the ecosystem has grown very quickly, with less than a year, having thousands of platforms and being one of the most used networks. Although it cannot compete with the large ecosystem that ethereum has, due to the time that its mainnet has, its ecosystem has grown exponentially with large projects, and others not so large. This large number of dapps, has attracted many users in aspects such as crypto games or farming and staking platforms.
On the other hand, the binance Smart chain is not perfect, although it has served to create a breakthrough in the world of cryptocurrencies, by providing a lot of accessibility that the ethereum network did not offer. The main disadvantage and criticism of the BSC is how centralized it is, and the risks that this means. Having only 21 validators, while the ethereum network has more than 6,300, it is a very centralized network with the risks that this entails. By having more risks of validators coming together and manipulating transactions. Also, the network has a company behind it like Binance, which in due course, could make changes or limit the network. Although these are unlikely situations, many people prefer much more decentralized networks, even if it has a cost in price or speed.
Also, the main creation of bitcoin and many cryptocurrencies, is decentralization, so the BSC, goes against these values that were for many the foundations of this technology. Even so, the BSC has allowed access to many new users and has made many people interested in this world.
The commissions, unlike the ethereum network, are very low, and you will usually be paying between $0.10-0.50 per transaction. Since the commission is paid in BNB (Binance Coin), depending on the price of BNB, the dollar value may be higher or lower.
Keep in mind that these are low commissions, but if you make a lot of transactions, you could quickly be spending $5 or more in commissions. So it is an aspect to take into account and consider, especially in play to earn games, where you must make many transactions, you must also take into account the cost of transactions to know your profitability.
If the commissions are very high, I recommend you to wait some time, since it is possible that it is a time with a lot of traffic in the network, and this makes that the commissions can be somewhat higher. Even so, commissions are usually quite low, but always remember to have BNB in your wallet to pay for them.
Another relevant aspect is the type of transaction you make. Usually the transactions you make are simple, and therefore the commissions are the ones mentioned above, but sometimes you may want to make a more complex transaction and the commission may be 1-3$. This happens in auto compounding platforms such as pancakebunny, where the transactions are more complex, and therefore the cost of gas fee is somewhat higher.
Platforms to view transactions
The BSC, being a public network, you can view all the transactions that take place on it. To do this, you can use different sites, although the most popular and widely used is bscscan.com.
Here, you can search for an address, whether it is a token contract or a wallet address, and see all the transactions that have been made at that address. Although it has many uses, the most common use is to view transactions from your waller or other wallet.
This, especially when you send tokens and they do not appear in your wallet, problems with a transaction, or to see whether or not a transaction has been made in your wallet, is very useful.
To use BSC platforms, you will need a wallet. The most used option is metamask, where you will have to configure in networks the BSC to be able to use it, introducing the following data:
New RPC URL: https://bsc-dataseed.binance.org/
Block Explorer URL: https://bscscan.com
With this, you will be able to use the BSC in metamask, which is the most comfortable and most used option. There are also other good wallets such as Binance wallet, trustwallet, coin 98 and many others. My recommendation and that I personally use is metamask, as it allows you to use different networks, such as BSC, ethereum, CELO, avalanche, fantom, harmony, polygon and many others with the same wallet, which makes it much easier when you want to use another network, it will not be necessary to create another wallet from 0.