Binance is Launching Ethereum 2.0 Ahead of Ethereum
The Binance Smart Chain runs the full Ethereum Virtual Machine, and this is a game-changer.
Binance just published their Smart Chain whitepaper today, and there is a lot to unpack. I believe it can uproot the Ethereum landscape to a degree no one expected.
When Binance Chain launched in 2019, many tried to hype it up as an "Ethereum-killer." It wasn't. Binance Chain lacked smart contracts, and without smart contracts, a blockchain can't do much more than facilitating transactions. Binance Chain has been good at this, running the growing Binance DEX reliably.
The new Binance Smart Chain, on the other hand, is designed to be an Ethereum-killer -- while, paradoxically, Binance Smart Chain is Ethereum.
Confusing? It's the smartest move I've seen in this industry for a very long time.
The whitepaper suggests that Binance indeed wanted to add smart contract features to Binance Chain back then. They decided against it for two reasons.
First, it would have introduced risk factors (some of them unknown) threatening Binance DEX. Imagine Cryptokitties, while you are trying to run a DEX on the same chain. We've seen that before.
Second, they knew very well they couldn't successfully go against the tremendous network effect of Ethereum. The overwhelming majority of blockchain and dApp developers are working on Ethereum. New projects can find niches where they can be successful, but getting traction for something universal and completely new is hard, even for Binance.
They wanted full Ethereum-compatibility out-of-the-box. And that means running the full Ethereum Virtual Machine.
So they decided to launch Binance Smart Chain (BSC), which is parallel to Binance Chain. It is not a sidechain but a standalone blockchain, which should be able to run even without Binance Chain present. It's using a Proof of Authority + Delegated Proof of Stake hybrid consensus: people stake BNB and vote for a set of validators. It's quite fast, operating with around 5 seconds block times and about 75 seconds finality.
The Binance Smart Chain runs the full Ethereum Virtual Machine, and this is a game-changer.
Almost all Ethereum-based dApps should run with little or no modifications on BSC, even Ethereum developer tools like Truffle should work. Solidity works. Even the concept of "gas" is the same but paid in BNB, not ETH. There is cross-chain interoperability between Binance Chain and BSC so that any tokens can be immediately traded on Binance DEX.
The difference is, Proof of Authority consensus enables much higher throughput. Imagine a blockchain that is 100 percent compatible with Ethereum, all Ethereum-based dApps, has a staking element to it, and you don't need to worry about network congestion.
That's what Ethereum 2.0 is supposed to be, and Binance is launching it ahead of Ethereum.
Add to all of this the network effect of the Binance ecosystem: DEX, centralized exchange, incubator, community, etc.
If you are an Ethereum developer, would you launch your next app only on the Ethereum blockchain? Why not on both? Why not only on Binance Smart Chain?
After all, it’s just a better Ethereum.
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