How to use Binance Smart Chain (BSC) for Beginners

The Binance Smart Chain (BSC) is a blockchain protocol built by one of the largest centralized exchanges in crypto, Binance, that operates in parallel with the Binance Chain.

It’s important to note, right out the gate, that the Binance Smart Chain is not an off-chain or layer-2 protocol running on top of the Binance Chain.

Instead, it is an entirely independent blockchain that operates side-by-side with the Binance Chain and supports smart contract functionalities and compatibility with the Ethereum Virtual Machine (EVM).

That’s why we emphasized “DeFi” in the title– the Binance Smart Chain is centralized to Binance as a company.

Unlike Ethereum, which is still a Proof-of-Work-based protocol, BSC uses a hybrid consensus algorithm called Proof of Staked Authority (PoSA), which allows BSC to achieve significantly higher transaction throughput without sacrificing security.

Another critical difference between the two competing blockchains is that, unlike Ethereum, whose native token ETH is inflationary, BSC’s native token BNB is deflationary (burned by Binance on a regular schedule). This means that BSC validators aren’t rewarded with newly minted BNB for securing the network, but rather solely by racking up transaction fees.