How Does Binance Smart Chain Work?
Binance Chain is Binance’s first attempt at a blockchain. However, it did have certain limits in terms of programmability. Binance Smart Chain (BSC) was created to address these issues. Now the question is, what is Binance Smart Chain and how does the Binance Smart Chain work?
Binance Smart Chain, launched in September 2020, is primarily aimed towards decentralized app developers, whether they're seeking a new platform to work on or want to migrate a project from Ethereum.
Binance Chain's creators decided to shift since it does not support Ethereum-based apps. They created the Binance Smart Chain, which is programmable using the Ethereum Virtual Machine (EVM).
Connecting Your Binance Smart Chain Blockchain Address to ZenLedger For Your Crypto Tax Forms
- To import your Binance Smart Chain Blockchain transactions into ZenLedger for your crypto tax forms, all we need is your public address.
- Select the proper blockchain or wallet from the dropdown list.
- Paste your address into the address field in ZenLedger.
- Select if the wallet is based in the USA or not.
- Then hit ADD COIN button
How Does Binance Smart Chain Work?
Now that we have answered what is Binance Smart Chain, let’s now take a look at how it works.
Binance Smart Chain combines elements of proof-of-stake and proof-of-authority consensus methods known as Proof-of-Staked Authority (PoSA). Both of Binance's platforms — Binance Chain and Binance Smart Chain, are meant to function together, and Binance has built-in cross-chain interoperability.
Assets can be instantly moved between blockchains, combining the former's fast trade capabilities with the latter's smart contract features. For instance, the BEP-2 and BEP-8 tokens on the Binance Chain may also be exchanged for the BEP-20 tokens on the Smart Chain.
Additionally, because of Ethereum Virtual Machine compatibility, developers of dApps on certain blockchains may easily migrate them to Binance Smart Chain.
While Ethereum's planned transition to a proof-of-stake paradigm in Ethereum 2.0 may solve some of its present scaling difficulties, this might be particularly tempting to dApp operators as Ethereum grows and gas prices rise.
Binance Smart Chain: Applications
Binance has large brand recognition in the market, as well as a lot of capital and liquidity thanks to its thriving exchange and ecosystem.
- Cross-chain interoperability of Binance Chain and Binance Smart Chain opens up a fascinating set of options for developers
- Improved functionality and performance of their dApps
- EVM compatible
- dApps from Ethereum may be imported
Binance Smart Chain is primarily aimed towards decentralized app developers, whether they're seeking a new platform to work on or want to migrate a project from Ethereum. Binance intends to attract developers into its ecosystem, producing value for all stakeholders, thanks to its dual-chain structure, EVM support, and its own funding.
The Bottom Line
Binance Smart Chain is still in its infancy since it just started at the beginning of September 2020 after the concept was presented earlier in the year. Despite this, Binance is putting a lot of funding behind the platform, with a $100 million support fund for DeFi apps and a focus on the dual-chain strategy.
Surprisingly, Binance Smart Chain's introduction and aggressive courting of DeFi developers go counter to Binance's main business of being a centralized exchange. The corporation claims that it is always attempting to "disrupt" itself.