Binance Smart Chain (BSC) is a blockchain platform capable of executing smart contracts. It operates alongside Binance Chain, a separate blockchain platform optimized for ultra-fast trading with significantly higher transaction throughput.
Binance, one of the largest centralized cryptocurrency exchanges, launched Binance Chain in 2019 to support its decentralized exchange (DEX), BinanceDEX. Binance Chain was specifically designed for fast and non-custodial trading. It introduced a native utility token called BNB, with a fixed supply of 200 million BNB tokens.
However, Binance Chain lacks the flexibility to support smart contracts, a deliberate design choice to prevent network congestion.
If a platform optimized for fast and non-custodial trading were to support smart contracts, it could lead to significant network congestion. A notable example validating this statement is the blockchain game CryptoKitties, which congested the entire Ethereum network at the peak of its popularity.
In September 2020, Binance Smart Chain (BSC) was launched as a programmable smart contract blockchain platform running parallel to Binance Chain. BSC is fully compatible with the Ethereum Virtual Machine (EVM), allowing developers to migrate their EVM-based applications directly to the BSC platform.
While BSC operates parallel to Binance Chain, it should not be categorized as a Layer-2 scalability solution or sidechain. BSC is an independent and standalone blockchain that can continue to operate even if Binance Chain goes offline.
Due to its EVM compatibility, developers can not only port their DApps seamlessly but also use their favorite tools like Metamask to interact with BSC. This native compatibility will help BSC leverage the rich Ethereum ecosystem that exists today.
BSC uses Proof of Staked Authority (PoSA), a variation of the Proof-of-Stake (PoS) consensus algorithm, achieving an average block time of ~3 seconds, making it much faster than Ethereum.
