Binance Coin has risen exponentially this year, with BNB’s hike yet another feather in the cap of the world’s biggest crypto-exchange. Of late, however, it isn’t the exchange or the token that is grabbing the most eyeballs. Instead, it is Binance Smart Chain, a “high-performance blockchain with emphasis on smart contracts programmability.”
Consider this – For most of February, BSC’s daily transaction volume has been greater than the figures noted by Ethereum. In fact, with a host of projects now jumping ship to onboard Binance Smart Chain, BSC’s transaction volume has recorded YTD gains of over 300%.
What makes BSC so attractive? Well, there are a few reasons, but the gist of them can be summed up in one word – fees. Both the BSC’s and Ethereum’s.
Fee-ling the pressure
As was highlighted recently by Bankless’s David Hoffman, “Ethereum gas fees are restrictively high.” Fees associated with Ethereum are discouraging people, especially those new to crypto, from being onboarded onto Ethereum. Consequentially, one can argue that thanks to the same and high demand, retail investors in the DeFi market are often sidelined for whales.
What does this entail? Well, it means that the likes of Binance Smart Chain are well-equipped to swoop in and tailor to the growing demand that has contributed to the congestion on Ethereum’s network.
How is BSC able to do so? Well, among other reasons, it promises low transaction fees and transaction speeds, while also being 100% compatible with Ethereum.
Now, since it was launched in September 2020, many in the community have been obliquely referring to BSC as a competitor to Ethereum, a rival, maybe even an “ETH Killer.” Let’s examine that, shall we?
Fire and Ice
Competition or rivalry often comes down to differences. This is the case as far as BSC and Ethereum are concerned as well. However, one crucial feature can be highlighted to sum up what differentiates the two – Centralization.
Think about it – BSC is an L1 blockchain that is actually a fork of Geth, one that uses “21 trusted validating nodes instead of Ethereum 1.0’s proof-of-work.” In fact, as Hoffman pointed out, “these 21 entities are all extrapolations from Binance and its leadership,” entities that can even censor and reverse transactions.
Here, one can argue that as a centralized product, BSC captures value, but it does so solely for Binance and BNB’s shareholders.
On the contrary, Ethereum “captures value and returns it back into the ecosystem, either through ETH payments to Miners (or validators in the future), ETH holders under EIP1559, or smart contract deployers.” In fact, one of 2.0’s primary prerogatives is to ensure a sustainable, decentralized protocol.
Simply put, while Ethereum is a self-perpetuating protocol, Binance Smart Chain is heavily centralized.
To soul or not to soul
Curiously, BSC’s performance also questions the validity of Vitalik Buterin’s “Soul” thesis. When Buterin claimed that “even a billion dollars of capital cannot compete with a project having a soul,” some like Hoffman were quick to claim that projects like Bitcoin and Ethereum have souls, while the likes of BSC which run solely for profit do not.
— DavidHoffman.eth 🏴 (@TrustlessState) February 19, 2021
And yet, BSC has outperformed by leaps and bounds. How so? Well, the aforementioned factors have surely contributed, but what must also be taken into account is the role of Binance itself. Binance, after all, is the world’s biggest crypto-exchange, and BSC can always tap into the liquidity and volume generated by the platform.
Now, we can all argue about souls and profits and decentralization and whatnot, but the real question is, does anyone even care anymore?
Decentralization – Do you still care?
Take the latter, for instance. For a community that was built on…