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Explained Easily: A Lazy beginners Guide to Binance BSC
Blockchain, Strictly for Lazy Beginners
What is Binance BSC?
Binance BSC means Binance BNB Smart Chain. It is a type of blockchain. This blockchain was created by Binance, the world’s largest cryptocurrency exchange.
History of Binance BSC (BNB Smart Chain)
Binance BNB Smart Chain was developed in September 2020 by Binance.
Components of Binance BSC
The Binance BSC comprises various components that make its operations possible. Some of these components are:
Binance Coin (BNB)
Binance coin is known as BNB (Build and Build). BNB is the native token of the Binance Smart Chain. It was created in July 2017.
BNB powers everything on the Binance BSC; BNB is used for staking (validators and investors stake BNB) and paying gas fees.
Bep-20 tokens
- BEP is a short form for Binance Smart Chain Evolution Proposal.
- BEP-20 refers to the token standard. This basically means before a token is created on the Binance Smart Chain, it has to follow these standards.
- Bep-20 tokens are tokens created on the Binance after following this set of standards (rules).
BNB is an example of a Bep-20 token.
NB: Most Shitcoins are bep-20 tokens.
Validators
Blockchain validators are computers (nodes) that verify and approve transactions on the blockchain. Once a transaction is approved, it is added to the distributed ledger.
Validators are the backbones of all blockchains. They are rewarded for every correct transaction they approve.
Binance BSC relies on 21 validators. These validators are exchanged every 24 hours.
How can a computer become a validator on Binance BSC?
To be a validator is much o, so much that your eyes would turn before I am done listing the requirements. But the most important requirement is:
10000 BNB: A pre-validator needs to stake a minimum of 10000 BNB on the Binance Smart Chain to be in the race of becoming a validator.
How Binance BSC Operates
The operation of the Binance Smart Chain is highly dependent on validators.
The Binance Smart Chain operates on Both Delegated Proof of Stake (DPoS) and Proof of Authority (PoA). This is referred to as Proof of Staked Authority (PoSA).
How Does Proof of Staked Authority (PoSA) Operate?
Delegated Proof of Stake (DPoS)
- This type of staking model requires interested validators to stake a minimum of 10000 BNB in hopes of being picked as a validator.
- Investors of BNB who are not interested in being validators are also included in the fun rewards. These investors can stake their BNB holdings in staking pools. This action would give them the right to allocate (delegate) these staked BNBs to any validator of their choosing.
- These investors are called delegators.
Validators have to be voted by delegators to be part of the 21 validators that would be picked by Binance.
Validators distribute their rewards earned from validating transactions to the delegators that gave them their staked tokens and voted for them.
Proof of Authority (PoA)
- This is the picking of validators by a central authority.
- On Binance Smart Chain the central authority is Binance. 21 validators are randomly picked daily (24 hours) by Binance.
- This Proof of Authority is used to prevent bad actors (validators who try to attack the blockchain by approving wrong transactions).
Binance ensures that interested validators are who they say they truly are before being chosen.
The combination of these consensus mechanisms makes the Binance Smart Chain network secure. It creates a network that approves lightning-speed transactions with reduced energy usage.
Proof of Authority is used to counterattack Byzantine attacks.
Yeah, a big word!
Byzantine attacks are known as the 51% problems faced in some blockchains. Another name for it is majority attacks.
This attack arises when more than 50% of the validators in a blockchain network go rogue. What happens when more than half of validators in a blockchain agree to approve wrong transactions? This would lead to a blockchain that contains inaccurate data.
This type of attack leads to validators reversing already approved transactions. Reversing transactions could allow attackers to double-spend coins.
These sorts of issues can be encountered in a Proof of Stake network. Hence Binance Smart Chain’s further use of Proof of Authority.
Aim of Binance BSC
Binance Smart Chain aims to provide a blockchain that is Investor friendly, developer-friendly, and validator friendly.
Tokenomics of Binance BSC
Tokenomics of Binance Smart Chain is BSC’s features that make it attractive to validators, investors, and developers.
Consensus Mechanism
Consensus mechanism refers to various methods a decentralized network of computers uses to build trust amongst themselves.
The combination of Proof of Authority (PoA) and Delegated Proof of Stake (DPoS) increases validators’ speeds for approving transactions on the Binance Smart Chain. This combination also allows cheaper transactions (gas fees) on the blockchain.
Binance Smart Chain has a block time of 3 seconds (i.e., new blocks are created every 3 seconds).
Scalability
Scalability in blockchain refers to a blockchain’s ability to adapt to increased users (transactions).
The scalability of Binance BSC is impressive. BSC carries out about 300 transactions per second at lightning speed. This is attractive to both developers and investors.
BSC Scalability is possible because of the presence of a Proof of Stake (PoS) consensus mechanism.
Interoperability
Interoperability in blockchain refers to data’s ability to move seamlessly from one blockchain to another.
BEP 20 tokens can run on the Ethereum blockchain and Binance Chain. ERC 20 and BEP 2 tokens can also efficiently run on the Binance Smart Chain.
Pegging of Bep 20 tokens with other blockchain native tokens makes it possible for those tokens to work on the Binance Smart chain. These tokens are called Peggy tokens.
Cross-Chain Compatibility
Cross-chain compatibility on a blockchain is described as when products from another blockchain can easily be moved to another blockchain with ease.
Examples of blockchain products are tokens, NFTs and, Dapps (decentralized applications).
Binance Smart Chain has high compatibility with Binance Chain (the first chain of the Binance exchange). Bep-20 tokens can be easily swapped for Bep-2 tokens.
Bep-2 is the token standard for tokens on Binance Chain (BC).
Binance Smart Chain (BSC) is also compatible with ERC 20 tokens. This is because BSC is compatible with the Ethereum blockchain through the integration of EVM (Ethereum Virtual Machine). This feature allows developers to easily migrate Ethereum blockchain products and Ethereum smart contracts on the Binance Smart Chain.
Staking and Governance
A huge percentage of blockchains have these features. These features allow investors to be active participants in the governance of the blockchain and its native token.
Staking and governance in Binance Smart Chain (BSC) make it very attractive to investors and validators. Validators get rewarded for approving transactions on the network. Users who stake their BNB on the network get rewarded in BNB when they actively participate in the voting of validators.
Smart Contracts
Smart contracts are programs (rules) stored on a blockchain. These programs are activated when pre-determined conditions are met.
Binance Smart Chain contains smart contracts. These smart contracts provide an environment on the Binance Smart Chain that is friendly toward developers. It is easy for decentralized exchanges (DEX), Decentralized applications (Dapps), and tokens to get built on the blockchain.
Advantages of Binance BSC
- Transactions are cheaper on the Binance Smart Chain in comparison to other blockchains.
- Easy running of Decentralized Exchanges (DEX) and Decentralized applications (Dapps) on the Binance Smart Chain.
- Transactions are very fast on the Binance Smart Chain. Transactions take a few seconds to get completed on the Binance Smart Chain.
- Binance Smart Chain is a multi-chain blockchain due to its cross-chain compatibility and interoperability.
Disadvantages of Binance BSC
- Scam projects can easily build on the Binance Smart chain due to the reduced fees required to develop on the blockchain.
- Fewer validators are used to verify transactions on the Binance Smart Chain. While this has led to increased scalability and speedy transactions, the negative impact of this is the death of decentralization. Authority on the blockchain belongs to a few sections of the network. (21 validators).
Examples of Binance BSC Products
Below are a few examples of products built on the Binance BSC.
PancakeSwap: One of the most popular decentralized exchanges built on the Binance Smart Chain.
Tiny World: A blockchain game built on Binance BSC.
Bakery Swap Collectibles: A collection of NFTs (non-Fungible tokens) built on the Binance BNB Smart Chain.
Our greatest wish is you had a chilled time learning about Binance BNB Smart Chain. If yes, you would also love this article about blockchain games tokens and why they are investors’ favorites in crypto.
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