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Lesson 14: An Introduction to BNB Smart Chain (BSC)
Lesson Intro:
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14. An Introduction to BNB Smart Chain (BSC)
TL;DR
BNB Smart Chain (BSC) was launched in 2020 to run parallel to the BNB Beacon Chain, providing advanced features and customization through smart contracts. This has fueled significant growth in decentralized applications (DApps) and Web3 services. BSC supports high-performance blockchain operations with compatibility for the Ethereum Virtual Machine (EVM), allowing for easy porting of projects from Ethereum. Soon, BNB Beacon Chain will be discontinued and merged with BSC, forming a unified BNB Smart Chain. BSC uses the BEP-20 token standard, facilitating diverse digital asset creation. With a Proof of Staked Authority (PoSA) consensus mechanism, BSC offers ~3 second block times, supporting a robust DeFi ecosystem and various digital assets from other blockchains through wrapped tokens.
Key Takeaways
- BNB Smart Chain (BSC) was created in 2020 to run in parallel with the BNB Beacon Chain. The two chains were built for different purposes, but both are part of the broader BNB Chain ecosystem.
- BSC brought new features and more customization through the use of smart contracts, fostering an explosive growth of decentralized applications and Web3 services.
- Soon, the BNB Beacon Chain will be discontinued and merged with BSC, giving birth to a single, unified BNB Smart Chain.
Introduction
BNB Smart Chain (BSC) is a blockchain network that offers a wide variety of Web3 tools and decentralized applications (DApps). It’s a high-performance blockchain that supports smart contracts, which allow developers to create all types of services and applications, including blockchain games, governance and voting systems, decentralized finance (DeFi), and much more.
What Is BNB Smart Chain (BSC)?
BNB Smart Chain was created in 2020 to address the limitations of the BNB Beacon Chain. So, to understand the BNB Smart Chain, it’s helpful to explore its relationship with the BNB Beacon Chain.
BNB Chain was launched in 2019. At the time, the BNB utility token migrated from the Ethereum network to become the native token of the BNB Chain. That early version of the BNB Chain is what we now know as the BNB Beacon Chain.
In 2022, the BNB Smart Chain (BSC) and BNB Beacon Chain were put together under the BNB Chain ecosystem. Since then, the two blockchains have continued to operate separately, serving different use cases.
BNB Beacon Chain vs. BNB Smart Chain (BSC)
Unlike BNB Beacon Chain, BSC boasts smart contract functionality and compatibility with the Ethereum Virtual Machine (EVM). The design goal was to introduce smart contracts to the BNB ecosystem without interfering with the BNB Beacon Chain operations.
- BNB Beacon Chain: Adopts the BEP-2 token standard and acts as a governance layer, with staking and voting systems.
- BNB Smart Chain (BSC): Created to offer smart contract functionality. Adopts the BEP-20 token standard and works as an EVM-compatible layer with DApps, DeFi services, multi-chain support, and other Web3 applications.
In essence, both blockchains operate side-by-side. It’s worth noting that BSC isn’t a so-called layer 2 or off-chain scalability solution. It’s an independent blockchain that could run even if BNB Beacon Chain went offline.
Because BSC is EVM-compatible, it launched with support for the rich universe of Ethereum tools and DApps. This makes it easy for developers to port their projects over from Ethereum. For users, it means that applications like MetaMask can be easily configured to work with BSC.
The BNB Chain Fusion
In late 2023, the BNB Chain team announced its plan to retire the BNB Beacon Chain, transferring its core functionalities to the BNB Smart Chain network.
The migration is expected to happen through multiple stages, starting in April 2024 and concluding in June of the same year. For more information, please refer to the BNB Chain Fusion roadmap.
How Does BNB Smart Chain Work?
Consensus mechanism
BNB Smart Chain achieves ~3 second block times with a Proof of Stake (PoS) consensus algorithm. Specifically, it uses the Proof of Staked Authority (PoSA) mechanism, where participants stake BNB to become validators.
Validators are incentivized with transaction fees derived from the blocks of transactions they validate. Note that, unlike many protocols, there is no block subsidy of freshly-minted BNB, as BNB is not inflationary. In fact, the supply of BNB decreases over time as the BNB team regularly conducts coin burns.
BEP-20 token standard
BNB Smart Chain adopts BEP-20 as its main token standard. Have you read An Introduction to ERC-20 Tokens? Then, you are already familiar with the format of BEP-20. It uses the same functions as its Ethereum counterpart.
BEP-20 acts as a blueprint for tokens, defining important parameters and rules for token issuance and functionalities. Designed as a technical specification for BNB Smart Chain, BEP-20 allows developers to create a diverse array of digital assets, including NFTs, stablecoins, utility tokens, and more.
Blockchain transactions on the BNB Smart Chain require a small amount of BNB to be paid as gas. Similar to ETH on the Ethereum blockchain, gas fees provide an incentive for validators to confirm transactions and secure the network.
Decentralized finance on BNB Smart Chain
If you use PancakeSwap or other DeFi applications on BSC, you may have noticed digital assets from other blockchains, such as BTC, USDT, ETH, and many more. Such assets exist on the BNB Smart Chain as “peggy coins” or “wrapped tokens”. These are tokens that have their values pegged to the original assets on their native chains.
For instance, the BTCB token on BSC tracks the value of BTC on the original Bitcoin blockchain. This is done through smart contracts that issue a new BTCB token for every unit of BTC locked on the original chain. By doing this, we can effectively port external assets onto the BSC ecosystem.
In other words, due to the flexibility of BNB Smart Chain, assets from a number of different chains can be used in the growing DeFi space of the BNB Chain ecosystem – allowing users to exchange assets, engage in yield farming, vote on proposals, and much more.
Closing Thoughts
BNB Smart Chain (BSC) stands as a dynamic and high-performance blockchain within the BNB Chain ecosystem, offering a multitude of Web3 tools and decentralized applications (DApps). Created in 2020 to address the limitations of the BNB Beacon Chain, BSC has played a pivotal role in fostering the explosive growth of decentralized applications and Web3 services through the implementation of smart contracts.
Further Reading
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Critical Thinking Questions
- How does the Proof of Staked Authority (PoSA) consensus mechanism in BNB Smart Chain contribute to the security and efficiency of blockchain transactions, and what potential advantages or disadvantages might it have compared to other consensus mechanisms like Proof of Work (PoW) or Proof of Stake (PoS)?
- Considering the integration of smart contracts and decentralized applications (DApps) on BNB Smart Chain, how can these technologies be leveraged to create transparent and fair systems in various sectors such as finance, governance, and voting?
- The migration from BNB Beacon Chain to BNB Smart Chain involves significant technological and operational changes. What are the potential risks and benefits of such a migration for developers, users, and the broader blockchain ecosystem?
- Wrapped tokens allow digital assets from different blockchains to be used within the BNB Smart Chain ecosystem. How does this interoperability impact the liquidity, security, and overall functionality of decentralized finance (DeFi) platforms?
- The BNB Smart Chain supports a variety of Web3 tools and decentralized applications. How can these innovations promote inclusivity and provide opportunities for individuals and communities who are traditionally underrepresented in the tech and finance industries?
Advocacy Initiative:
We encourage participants to begin memorializing the ways they are using time in prison to prepare for success upon release. I encourage participants to create a personal profile by:
- Writing a simple biography
- Writing a daily journal to show all that you’re learning
- Writing book reports that memorialize the books you read
- Writing a release plan to show the ways you’re preparing for success upon release
These strategies helped me immensely once I got out. By using my time wisely inside, I was able to raise capital, build businesses, and succeed in ways that few people would think are possible for someone who served multiple decades in prison. Anyone can do the same—if they prepare first.
If you’d like to follow in the same footsteps, I encourage you to begin building your personal profile. Get started by sending an email message to our team at:
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My name is xxx, and I am in prison. I would like to begin showing the strategies I am using to prepare for success upon release. Please send me a Release Plan Workbook, and any other books that will help me prepare for the job market. After receiving those workbooks, I will begin building my profile to show others how I am using my time inside to prepare for success outside.
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Glossary
- Algorithm (noun) – A process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer.
- Blockchain (noun) – A system in which a record of transactions made in cryptocurrency is maintained across several computers linked in a peer-to-peer network.
- Consensus Mechanism (noun) – A fault-tolerant mechanism used in blockchain systems to achieve the necessary agreement on a single data value or a single state of the network among distributed processes or multi-agent systems.
- Cryptocurrency (noun) – A digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority.
- Decentralized Applications (DApps) (noun) – Applications that run on a blockchain or P2P network of computers instead of a single computer and are outside the purview and control of a single authority.
- DeFi (Decentralized Finance) (noun) – Financial systems that operate without traditional, centralized intermediaries such as banks and governments, using blockchain technology instead.
- Digital Asset (noun) – An asset that exists only in digital form and can be owned and transferred by individuals, representing value.
- Ethereum Virtual Machine (EVM) (noun) – The runtime environment for transaction execution in Ethereum, which allows anyone to run any code.
- Gas (noun) – A unit that measures the amount of computational effort required to execute operations, such as transactions, on a blockchain network.
- Governance (noun) – The system of rules, practices, and processes by which a blockchain network is directed and controlled.
- Interoperability (noun) – The ability of computer systems or software to exchange and make use of information.
- Migration (noun) – The process of moving data, applications, or other business elements from one computing environment to another.
- Peggy Coins (noun) – Tokens on one blockchain that are pegged to the value of an asset on another blockchain.
- Proof of Staked Authority (PoSA) (noun) – A consensus mechanism combining elements of proof of stake and proof of authority, where validators are selected based on their stake and authority.
- Smart Contract (noun) – A self-executing contract with the terms of the agreement directly written into lines of code.
- Staking (noun) – The process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network.
- Token Standard (noun) – A set of rules that describe how tokens are issued, transferred, and stored.
- Validator (noun) – A participant in a blockchain network who is responsible for verifying transactions and maintaining the blockchain.
- Web3 (noun) – A new iteration of the World Wide Web based on blockchain technology, which incorporates concepts such as decentralization and token-based economics.
- Wrapped Tokens (noun) – Digital tokens that are pegged to the value of another cryptocurrency, allowing it to be used on a different blockchain.
