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What is Binance Smart Chain | BSC Explained

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This Binance Smart Chain review article discusses most of the things about the BSC network and its features. However, this article should not be taken as financial advice. Instead, we urge the traders and investors to do their own research before getting involved in cryptocurrencies.

The Binance network is one of the famous names in the crypto world when it comes to crypto exchanges, digital assets, and blockchain systems. In fact, the Binance exchange keeps its position as one of the top crypto exchanges in CoinGecko. What’s more, the BNB crypto market cap amounts to over $75 billion. Hence, the BNB crypto ranks among the top 5 crypto in the market.

In terms of blockchain systems, the network’s Binance Smart Chain (BSC) is one of the most talked about topics in the crypto world. This system created by Binance in April 2019 seeks to facilitate a fast, and non-custodial trading. Furthermore, the developers of BSC designed its system to be compatible with the Ethereum Virtual Machine (EVM). As a result, start-up developers can easily patch their Ethereum projects to work with BSC.

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On the other hand, the team of Binance Smart Chain launched its mainnet on September 21, 2020. This mainnet created by Binance easily became so popular in the crypto world due to its blockchain compatibility and solutions. Furthermore, the BSC mainnet continues to embrace more startups projects in the crypto space. Some of the projects in BSC mainnet include Cryptozoon, My DeFi Pet, and Cryptoblades to name a few.

This month of September 2021, the BSC celebrated its one year anniversary. The event was celebrated with the participation of different projects across the crypto ecosystem. In detail, the biggest names in the crypto space such as Chainlink, Animoca brands, and Certik have attended the event and shared some insights about DeFi blockchain.

What is Binance Smart Chain?

Binance Smart Chain is a smart contract blockchain designed to be compatible with the Ethereum Virtual Machine (EVM). It is also created to run in parallel with the Binance Chain. As a result, Binance Smart Chain retains the fast execution times and low transaction costs of the network. In addition, the BSC also enables smart contracts functionality to support alcompatible dApps in the network.

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Going back, since BSC is EVM-compatible, developers can easily port their projects to the BSC network from Ethereum. For example, a platform like MetaMask, a crypto wallet created to interact with Ethereum blockchain can easily be configured to work with BSC. Yes, you read it right, the MetaMask wallet can easily operate with BSC, it’s just a matter of fixing some settings.

Best of all, the BSC runs separately from the Binance Chain’s mainnet. For this reason, the connection between BSC and EVM are exclusive and will not affect each other in case of any network disruption. Of course, all this is made possible with the help of the tech team. In short, the team designed each network to have a separate blockchain running its own network with its own system and protocol.

All these things that the BSC achieved brings joy to the crypto community and tech teams behind each crypto project. In other words, the tech team behind every Ethereum project can easily migrate to BSC in case of any network congestion. Hence, users can stay away from the high fees caused by the congested ecosystem of the ETH network.

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Now that we already have some background about What is Binance Smart Chain, let us know the pros and cons of BSC.

Pros and Cons of Binance Smart Chain

Pros

Lower Gas Fees – If there is one thing that BSC is famous for, it is the low transaction cost or Gas Fee. The average gas fee of BSC amounts to less than 10 gwei, where each gwei is equal to 0.0000000001 BNB. Best of all, at the time of writing, the network is still far from its congestion capacity which means that BSC gas fees can still remain at this range.

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High and Fast Transaction Speeds – the transaction speed of BSC has a block time of 3 seconds. Today, this kind of processing time is one of the fastest speeds in the crypto world. Also, this kind of speed that BSC possesses in confirming transactions enables BSC to outrank other networks in confirming transactions.

Established Reputation –  Binance is one of the famous crypto assets in the crypto world. In addition, the Binance exchange today is one of the largest and most trusted crypto exchanges in the crypto space. Through this, Binance was able to earn the trust of people when it comes to their tech systems and upgrades like BSC.

Support Different languages – the Binance Smart Chain websites contain different languages. As a result, all interested users of BSC can fully choose their native languages to fully experience and understand the BSC network. Also, this facilitates adoption in audiences that are not fluent in English.

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Compatibility and Interoperability – The Binance Smart Chain system is fully designed to be compatible with EVM. Through this, tech teams from ETH projects can easily migrate from ETH to BSC. Best of all, BSC also has a good connection with the Binance Chain. Hence, users can work both in these blockchain seamlessly without issues.

Cons

Centralization – one of the things that the users of BSC must know is that BSC is a centralized platform. In detail, there are only 21 validators in the network. Also, centralized systems are more exposed to cyber attacks, government compliance, and system failures. Regardless, BSC continues to provide its users with low block time and low transaction costs.

How to Acquire Binance Smart Chain Crypto

In this part of the article, we will now discuss how to acquire BSC crypto. One of the first step in having a Binance Smart Chain is the user should have a BNB crypto. Then we just need to tweak some buttons to convert BNB to Binance Smart Chain. To know the procedure, let us check the details below.

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  • Create an account in the Binance Exchange
  • Fund your Binance account and Buy BNB crypto
  • Then, go to your Binance account wallet and click withdraw
Binance-Smart-Chain-BNB
  • In the withdraw page, choose BNB crypto
Binance-Smart-Chain-BNB-Coin
  • After clicking the BNB crypto, you will arrive at the WITHDRAW BNB page. In this page, you will see the address box, network option and the amount box where you can put the number of BNB  you want to withdraw.
Binance-Smart-Chain-BEP2-Coin
  • Let us say that you have already put the correct address of the wallet where you want to transfer your BNB-BSC. The next thing you need to do is choose a network to convert your BNB crypto to BSC. Note, always make sure that the address you will put in the address box is a Binance Smart Chain (BSC) address.
  • To do this, click the “network” option then choose Binance Smart Chain (BEP20) as shown above. Afterwards, put the amount of BNB-BSC you want to withdraw and click confirm. Through this, the BNB that will be transferred to your wallet from the Binance exchange will instantly be BNB-BSC.

FAQ

What is Binance Smart Chain?

Binance Smart Chain is a technology that is developed by the Binance network. In particular, this system that Binance created provides a fast way to approve transactions with low gas fees.Is Binance Smart Chain a scam?

The Binance Smart Chain is one of the projects of the famous Binance crypto network. Having said that, we can be sure that BSC is a real project with a system backed by Binance. However, it is still best that you do your research about crypto projects.How to get Binance Smart Chain?

The BSC crypto can be acquired by converting the BNB token to BSC token. To know how, scroll up to the subtitle, How to acquire Binance Smart Chain crypto.What wallet supports Binance Smart Chain?

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The most common wallets that support BSC are the Trust and MetaMask wallets. However, there are still more crypto wallets out in the market that support BSC. It is wise that users do their own research to know more about crypto wallets.

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Binance proposes a real-time token burning mechanism to boost BNB value

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  • Binance has proposed the BEP-95 aimed to burn a percentage of transaction fees as a deflationary measure.
  • BEP-95 will occur alongside the quarterly token burn and well after the 100 million token supply is achieved.

Binance Smart Chain (BSC) is taking further steps to incorporate an additional deflationary mechanism to increase token valuation. As announced today, Binance (BNB) is introducing a new Binance Evolution Protocol (BEP) known as BEP-95. The BEP stands out from the network’s occasional token burns since it introduced a real-time burning mechanism.

According to Binance, a fixed portion of gas fees collected by validators in each block will be sent to the burn address. The ratio initially set at 10 percent, is adjustable according to changes proposed by the Binance community. BSC validators get to vote on community proposals, where voting power is based on staked BNB.

For a proposal to be reviewed by the validators, it has to receive a minimum deposit of 2,000 BNB (mainnet). All BNB is returned to holders after the finalization of the voting process. A proposal that wins is that which gathers 50 percent of the total voting power on the mainnet. Binance notes that voted-upon parameters are implemented immediately.

Details of Binance BEP-95 token burning mechanism

BEP-95 became relevant as it speeds up the BNB token burn, and makes the network increasingly decentralized. The BNB supply cap is about 168 million tokens and Binance intends to burn until 100 million tokens remain in circulation. This will take about 5-8 years to complete, according to Binance. The network’s most recent quarterly burn wiped out over 1 million tokens, worth about $639 million, from circulation.

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However, the latest update from its blog now says the BEP-95 burn “will continue functioning” even after the above target is attained. With the burn, Binance expects the intrinsic value of the BNB token to increase in tandem with demand. The network notes that validators and delegators may receive fewer tokens from staking, but the “fiat-denominated value of their rewards may increase.” Moreover, BNB has multiple use cases that benefit all holders of the token.

Currently, BEP-95 is in the draft stage and the network is yet to give a specific date for its implementation.

Several blockchains use the crypto-burning mechanism to create token scarcity and a subsequent increase in token value. Ethereum, for instance, uses the EIP-1559 for this purpose. 

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BNB price action

BNB, the fourth-largest cryptocurrency by market cap, was trading at $494 at press time, according to our data. The token has gained 0.8 percent in the day, and 4.8 percent week-over-week. Similar to other digital assets, BNB has rallied fueled by the Bitcoin-led gains. Crypto investor and YouTuber Lark Davis expects “good things” for the BNB price following its launch of a $1B growth fund.

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New proposal aims to raise Binance Coin value by burning BSC fees

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Amid the ongoing rally of Binance’s native token, Binance Coin (BNB), the developers of Binance Smart Chain (BSC) have proposed more measures to maintain the token’s deflationary model and improve its intrinsic value.

According to a new Binance Evolution Protocol, BEP-95, BSC developers are considering introducing a real-time burning mechanism for a portion of gas fees to reduce BNB supply and drive BNB value higher by increasing the demand. According to the BEP, BNB holders will decide how to dispatch the BSC gas reward.

Releasing the proposal on Friday, BSC developers noted that the new BEP might decrease the total amount of BNB that validators and delegators obtain from staking. The burning mechanism will be enabled by introducing governable parameters for two system smart contracts for collecting gas fees.

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Created by Binance in 2017, BNB is a deflationary token by design, meaning that Binance burns a percentage of the BNB supply every three months to maintain the token’s value. Binance will stop burning BNB once 50% of the initial supply has been burnt and only 100,000,000 BNB remain.

The latest BNB token burn took place last Monday, with Binance burning 1,335,888 BNB ($640 million) in its 17th quarterly burn.

The proposal comes amid BNB seeing a major rally recently, with the token breaking above $500 on Wednesday. At the time of writing, BNB is the third-largest cryptocurrency by market capitalization after Bitcoin (BTC) and Ether (ETH). The token is trading at $495, up around 44% over the past 30 days. BNB’s all-time high was recorded in May 2021, with the token surging to as high as $686, according to CoinGecko.

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The latest BIP, which occurred in August, is similar to a new transaction fee mechanism implemented for Ethereum’s London upgrade. According to Etherchain, the current average ETH burn rate amounts to 3.76 ETH or $15,448 per minute.

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BinanceUS Blamed the 87% Bitcoin Flash Crash on Algorithm Bug

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A day after the massive 87% flash crash on its trading platform, Binance US has blamed it on an algorithm bug.

The US branch of the leading cryptocurrency exchange explained that yesterday’s severe flash crash that saw BTC’s price dumping from $65,000 to $8,700 in mere seconds was because of a bug in the trading algorithm.

  • CryptoPotato reported yesterday when the price of bitcoin nosedived from its near all-time high level to below $10,000 on Binance US.
  • Other trading platforms, such as Kraken and FTX, also saw flash crashes as BTC dropped more on those two exchanges than it did in reality.
  • Although these flash crash events do occur from time to time, an 87% drop (the one on Binance US) is something that caught the attention of the public.
  • The company decided to explain what happened in a letter shared with Bloomberg. It reads that the problem came from an algorithm bug.
  • “One of our institutional traders indicated to us that they had a bug in their trading algorithm, which appears to have caused the sell-off. We are continuing to look into the event but understand from the trader that they have now fixed their bug and that the issue appears to have been resolved.”
  • A flash crash is an event in which the price of the underlying asset falls hard before it immediately recovers to its previous levels.
  • It could be particularly damaging to traders using leverage as it can liquidate their positions in an instant.
  • Another recent one in early October saw BTC dropping by several thousand dollars once more on Bitstamp following a massive sell order of over 210 bitcoins.

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