Binance Smart Chain (BSC) is an Ethereum Virtual Machine-compatible blockchain that executes smart contracts and runs applications. Announced in April 2020 by the leading cryptocurrency exchange Binance, BSC complements Binance Chain — Binance’s first blockchain, which was launched in April 2019, by bringing smart contract functionality to the Binance ecosystem.
While there have been several attempts at developing an improved and high-throughput smart contract-enabled blockchain in the past few years, none has managed to gain as much traction as BSC in such a short time. This can be largely attributed to the fact that the project is backed by Binance, one of the world’s largest cryptocurrency exchanges, which serves more than 15 million users. The recent rise of the Binance Smart Chain ecosystem has caused a heated debate on whether BSC can be trusted or not. In this guide, we try to elaborate on why Frodo Tech chose BSC.
The advantages of Binance Smart Chain
Binance Smart Chain is quickly growing in popularity, so it has to be doing some things right — here are the BSC ecosystem’s most significant advantages.
Low cost of transactions and on-chain operations is the decisive factor driving developers and users to migrate from Ethereum and other smart blockchains to the BSC. In times of high congestion of the Ethereum network, the same transaction could cost over 1,000 times more on Ethereum than BSC.
In addition, gas prices on BSC are relatively constant, and the average transaction fee has hovered around $0.15 ever since the genesis block. Ethereum, on the other side, experiences massive fluctuations in gas price, with surges to over $100 for a simple transaction in times of highest network congestion. The low cost of transactions on BSC is this chain’s most significant advantage and, consequently, something that even Binance CEO Changpeng Zhao likes to mention.
Faster adoption rates
While decentralization is a huge sacrifice to make, the centralized nature of Binance Smart Chain is not all bad. It comes with a few advantages, such as Binance having an already established user base to draw exponentially more users to BSC. This allows for much faster adoption than the organic growth of a smart blockchain project unbacked by a significant entity like Binance could ever achieve. The number of unique addresses on BSC grew 10x. The total number of transactions has increased 15x since the beginning of this year, giving you a rough indication of how fast the network activity is growing.
Developers have established several cross-chain bridges so BSC users can quickly move tokens from one blockchain network to another. The Binance Bridge currently supports over 40 tokens, and this allows users to move assets such as USDT, ETH, and many other tokens to and from Binance Smart Chain with ease.
Surprisingly, there is more than just one advantage of centralization. Binance’s backing also comes with many technical, human, and financial resources along with a large user base. In October 2020, Binance dedicated $100 million from its treasury to establish the BSC Accelerator Fund. The funds will be used to fund protocols, wallets, explorers, other tools, and infrastructure for their blockchain.
Last but not least, Binance Smart Chain websites are usually available in several different languages. Binance UI itself, for example, is translated into 16 languages. The most popular BSC application, PancakeSwap, supports just one language less. This facilitates adoption also in audiences that are not fluent in English.
The bottom line
Binance Smart Chain offers an exciting alternative to users who don’t mind more centralization and are merely looking for a cheaper solution to high farm yields. In addition, with its lower costs, BSC offers a suitable environment for Decentralized Finance (DeFi) newcomers with minor trade and transaction sizes. According to Binance’s research, only 13% of all crypto users fall in the category of crypto-native “power users”, a subgroup that could tolerate the high fees on the Ethereum network. Other users cannot afford that and are merely looking for an affordable, fast blockchain, and offers sufficient scalability to meet demand — and the BSC has got that covered.