Our comprehensive guide aims to answer the question: What is Binance Smart Chain? Most people probably know it’s a popular blockchain, but there’s much more to it.

That’s why our guide will reveal the blockchain’s meaning and how it works in detail, explore the BNB coin, and uncover the difference between the BNB Beacon Chain and the BNB Smart Chain. Let’s start.

What Is Binance Smart Chain?

To better understand Binance Smart Chain, you should also comprehend its many attributes.

Independent Blockchain

Even though it operates in parallel with Binance Chain (BC), Binance Smart Chain (BSC) is an individual blockchain. In other words, if BC ceases operations, BSC will continue to conduct its business and technical functions. Knowing the BSC crypto meaning will help you appreciate its unique functionality.

Ethereum-Compatible

Smart contracts are Ethereum-compatible, and BSC supports them. The integration of Ethereum BSC crypto allows developers to migrate or build tools, dApps, and other ecosystem elements on the Binance Smart Chain without many obstacles.

Native Compatibility

Even though BSC isn’t a Layer-2 solution, BSC and BC have free communication with no friction, so users can seamlessly move their cryptos between them.

Supports Staking and Community-Based Governance

BSC uses a proof-of-stake consensus model combined with proof-of-authority. People can stake its native token, Binance Coin (BNB), to vote on community governance protocols and contribute to the network’s security. One difference between the proof-of-work (PoW) and the proof-of-stake (PoS) consensus models is that the PoS model allows for faster transactions.

Validator Quorum

A validator quorum secures the Binance Smart Chain network. Every 24 hours, BNB stakers elect 21 validators on the blockchain. Although anyone can be a candidate, only the ones belonging to the top 21 highest-staked nodes will be selected for the next validator set.

During an “epoch” period, validator sets can update the BSC network as needed. There are 240 blocks in an epoch, and each block is approximately 20 minutes long. To discourage malicious actors from confirming inaccurate transactions or double signing, BSC uses “slashing.” It exposes an attacker and makes their attempts highly expensive to execute.

Those who want to know what BSC crypto is have to understand these security mechanisms.

How Does BNB Smart Chain Work

BNB Smart Chain uses a combined delegated proof-of-stake (DPoS) and proof-of-authority (PoA) consensus mechanism called proof-of-staked authority (PoSA). This mechanism elects validators based on the number of tokens they stake.

The validators take turns and verify transactions, adding them to the chain in new blocks. If a malicious attack disrupts the validators, candidates, or backup validators, report to the Beacon Chain, resume processing on BSC, and propose the re-election of active validators.

  • Consensus mechanism: As mentioned, BSC uses a combined delegated proof-of-stake (DPoS) and proof-of-authority (PoA) consensus mechanism called proof-of-staked-authority (PoSA).
  • BEP-20 token standard: BSC doesn’t only support BNB, but some other token standards, too. One of them is BEP-20, typically used for creating tokens. BEP-20 is interchangeable with the BEP-2 on the BNB Beacon Chain, allowing holders to swap them in the Binance Wallet. That’s why this chain has become a popular place for some of the best ICOs.
  • Decentralized finance on BNB Smart Chain: As smart-contract-enabled decentralized finance applications gained popularity in 2020, Binance launched the parallel Binance Smart Chain to compete with the Ethereum blockchain. So, Binance Smart Chain development has focused on lowering transaction costs and enabling space to create dApps and other DeFi tools. DApps enable DeFi use cases like borrowing and lending, trading, NFTs, prediction markets, synthetic assets, crypto derivatives, and more on the BSC.

What is Binance Smart Chain mining? It’s a high-risk mine-to-earn dApp on the BNB Chain. By depositing USDT in the mining pool, you can view the number of nodes, the total output, user revenue from the pool, and participants. This system picks six lucky winners weekly and pays them USDT rewards.

What Is Binance Coin (BNB)?

What is Binance Chain‘s native token? You’re right; it’s BNB, which launched in July 2017. BNB can be used for asset transfers, staking, paying transaction fees on the BNB Chain and Binance exchange, and executing smart contracts on BSC.

BNB holders can stake BNB on a smart contract if they want to earn extra BNB or contribute to the network’s security. They can also delegate their stake to a BSC validator to earn a share of the block rewards. Validators can choose the percentage of collected BNB from gas fees to distribute to delegators. BSC also supports other token standards, like ERC-20 and BEP-20.

BNB Beacon Chain vs. BNB Smart Chain (BSC)

You already know the answer to: What is Binance Smart Chain? The BNB Beacon Chain was initially designed as a governance and staking layer. It complements BSC by supporting decentralized exchanges (DEXs) and boosting security.

The evolution of the Binance Chain into the BNB Beacon Chain and its integration into the wider BNB Chain framework have clarified the structure of Binance’s blockchain infrastructure.

BSC is still an integral part of this setup, known for its compatibility with Ethereum Virtual Machine (EVM) and enabling many blockchain interactions. BNB plays a critical part here, as it operates as a governance token and is also used for transaction fees in the network. BNB’s goal is to achieve universal utility and accessibility.

The integration of BSC and the BNB Beacon Chain under the singular BNB Chain designation still kept their individual roles:

  • The BSC segment is responsible for hosting dApps and DeFi services and using many Web3 technologies, relying on the BEP-20 token standard.
  • The BNB Beacon Chain segment is responsible for governance, providing staking and decision-making activities, relying on the BEP-2 token standard.

Because of this integration, the ecosystem has expanded by introducing new initiatives like the opBNB Layer-2 solution and the BNB Greenfield, enhancing Binance’s blockchain offerings.

Conclusion

Now you know the answer to: What is Binance Smart Chain? The blockchain is unique due to its robust security, Ethereum compatibility, and independence. It uses the proof-of-staked-authority consensus mechanism, enables seamless integration of dApps, and allows for staking and community governance.

BNB can be used for asset transfers, staking, paying transaction fees on the BNB Chain and Binance exchange, and executing smart contracts on BSC. The integration of BSC and the BNB Beacon Chain enhances the capabilities of the ecosystem.

FAQs

What is Binance Smart Chain used for?

Can you withdraw from Binance Smart Chain?

What is the difference between Binance and Binance Smart Chain?

Is it safe to use Binance Smart Chain?