What is Binance Smart Chain? How it differs from Binance Chain

The Binance Chain and the Binance Smart Chain were launched by Binance in 2017 and 2020 powered by blockchain technology.

What is Blockchain and the Binance Chain?

Blockchain, as the name suggests, is a chain of blocks that are maintained by a decentralized network of nodes, with each block being verified and confirmed by each node. Blockchain brings the benefit of maintaining a distributed ledger that everyone agrees on without the need for a central entity.

The Blockchain-based Binance Chain developed by Binance serves as a decentralized marketplace where users can exchange digital assets.

• The Binance Chain formed the basis of the Binance DEX.
• This truly decentralized medium for the exchange of digital assets allows the user to hold funds and directly access the chain without needing a central intermediary or facing downtimes, as the chain is run by nodes distributed across the globe.

In addition, the UI experience for the Binance chain incorporates functions from the Binance website, further enhancing its value proposition.

BNB Coins and what is Binance Smart Chain?

The BNB Coin was introduced as a ‘token for discounted trading fees’ and was first used as a store of value for the payment of transaction fees on the cryptocurrency exchange Binance. It was then converted as the native token of the Binance Chain & the Binance Smart Chain. It is currently the third-largest cryptocurrency in the world, trailing BTC and ETH. The growth in value of the BNB has been consummated with the increase in transaction volumes on the Binance Chain. Indian Crypto investors can directly buy BNB coins from ZebPay or any other cryptocurrency exchange in India.

Binance announced the Binance Smart Chain (BSC) in 2020, which, like the Binance Chain, is a blockchain implementation like the Binance Chain.

• It uses the BNC coin as its native token
• The Binance Smart Chain runs in parallel to the Binance Chain, and its transactions are validated by users who have a stake in the system (by staking BNB coins against honest validation)

The Proof of Staked Authority ensures that the consensus mechanism is quick and validation leads to the validator receiving transaction fees. Another advantage of the Proof of Staked Authority is that it consumes a fraction of power compared to the BTC.

So, what is the difference between Binance Chain & the Binance Smart chain?

This brings us to the last bit of this read: what exactly is the difference between the Binance Chain and the Binance Smart Chain? Well, the clue lies in its name – ‘Smart.

• The Binance Smart Chain adds support for smart contracts and is compatible with the Ethereum Virtual Machine.
• Being compatible with the Ethereum Virtual Machine opens it up to a large ecosystem of DApps, Ethereum-based tools, and smart contracts while maintaining the same throughput of the Binance Chain.
• The Binance Smart Chain is built keeping cross-chain compatibility in mind – hence, it offers seamless transfer assets between both the chains. The addition of support for smart contracts now allows its participants to transfer assets using many DeFI applications.

With the number of use cases of the architecture rising, we can be sure to a high degree that the value of the BNB coin is set to rise. Perhaps a good time to buy BNB coins, then?