For this reason, Binance designed the BSC protocol to be compatible with Ethereum, allowing for most of Ethereum’s dApps, tools, and ecosystem components to be ported or simply copied on BSC with zero or minimum effort. The Binance Smart Chain’s primary mission is to provide a full-fledged environment for building high-performance “decentralized” applications. To further exacerbate things, most of these nodes on BSC are operated by Binance itself.īecoming a validator on BSC involves being approved by Binance and staking BNB to secure the network, and Binance still holds a vast majority portion of the total BNB supply.Ĭentralization concerns, however, aren’t that bad considering that Binance is transparent about their vision - the Binance Smart Chain optimizes for speed, scalability, cross-chain interoperability, or more specifically, Ethereum-compatibility, and not decentralization.
Namely, the Binance Smart Chain has only 21 validating nodes in its PoSA network, compared to Ethereum, which has about 10,000 PoW mining nodes. That being said, Binance’s flagship smart contract platform for “decentralized” applications is a bit of an oxymoron because the blockchain itself is highly centralized. This means that BSC validators aren’t rewarded with newly minted BNB for securing the network, but rather solely by racking up transaction fees. 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.Īnother 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).