The basics
  • 29 Nov 2021
  • 2 Minutes to read
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The basics

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Binance Smart Chain (BSC) was launched by crypto exchange Binance in September 2020. It has its own cryptocurrency, called BNB. While it runs in parallel to Binance Chain (their previously launched main chain), Binance Smart Chain is a standalone blockchain that runs on its own. It retains the fast execution times and low transaction fees of Binance Chain, while adding smart contract functionality to support dApps (distributed applications). The BSC ecosystem has a large and growing community of DeFi and NFT builders.

Binance Smart Chain's design is based on the Ethereum Geth client and is Ethereum Virtual Machine (EVM) compatible, allowing Ethereum dApps, components, and toolings to function natively within BSC.

Mainnet and Testnet

SettleMint supports both the Binance Smart Chain Mainnet and Testnet.

The Mainnet is the primary public Binance Smart Chain production blockchain, where actual-value transactions take place. Each transaction requires payment of a transaction fee, payable in the native coin BNB. The Testnet is an instance of the blockchain to be used for testing and experimentation. There are also coins used in the Testnet but they have no value, so there is no risk of real fund.

You can consider the Testnet as a prototype and the Mainnet as the official production blockchain. Or think of this as an analog to production versus staging servers.

Consensus mechanism

A consensus mechanism defines the rules for the nodes in a blockchain network to reach agreement on the current state of the blockchain ledger.

Binance Smart Chain introduces a new consensus mechanism, Proof of Staked Authority (PoSA). This is a hybrid between the Proof of Authority (PoA) and Proof of Stake (PoS) consensus mechanisms.

PoA is a consensus mechanism that gives a small and designated number of blockchain actors the power to validate transactions within the network and to create new blocks, using their identity and reputation as a "stake". PoS works by selecting these validators in proportion to their quantity of holdings in the associated cryptocurrency. Concretely, Binance Smart Chain's PoSA gives the 21 participants who “stake” the highest number of BNB (the cryptocurrency coin that powers the Binance ecosystem) the power to validate transactions within the network and to create new blocks. These participants take turns in validating blocks, for which they are rewarded. The PoSA consensus mechanism allows for shorter block times and lower costs than, for example, the PoW mechanism that Ethereum uses.

More information on Binance Smart Chain can be found on the official Binance Smart Chain website.

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