Comparison between Binance Smart Chain and Ethereum

The Binance Smart Chain (BSC) is a hard fork of the Go Ethereum (Get) protocol and as such has a lot in common with the Ethereum blockchain. However, BSC developers have made significant changes in several key areas. The biggest change is the BSC consensus mechanism, which allows for cheaper and faster transactions.

basic concepts

Ethereum (ETH) is a blockchain created in 2015 by Vitalik Buterin, Gavin Wood and Charles Hoskinson. Ethereum allows users to deploy and execute smart contracts with decentralized computing power.

The Binance Smart Chain (BSC) was proposed by Binance CEO Changpeng Zhao in 2020 with the desire to create a smart contract environment that can solve the problems of high transaction fees and slow speeds on Ethereum today. . Since BSC is fully compatible with Ethereum, developers can easily migrate dApps from Ethereum to BSC. Binance Smart Chain officially became the mainnet in September 2020.

To learn more about Ethereum and the Binance Smart Chain, you can visit the following links:

consensus mechanism

Proof of Work (PoW) is an effective method of reaching consensus and ensuring network security. However, developers are investigating using other mechanisms to find better and more environmentally friendly alternatives without compromising security.

Ethereum PoW is a very unique system. Instead of the community selecting validators, this algorithm challenges network members to try to solve any math puzzle of their choosing. Anyone can participate, but must purchase or rent special mining equipment. However, this mechanism will no longer exist when Ethereum is upgraded to Ethereum 2.0 with the replacement of the Proof of Stake (PoS) algorithm.

Unlike Ethereum, Binance Smart Chain (BSC) does not use the Proof of Work (PoW) algorithm but uses the Proof of Stake Authority (PoSA) algorithm. This algorithm is a combination of Delegated Proof of Stake (DPoS) and Proof of Authority (PoA) consensus mechanisms, 21 validators take turns picking up building blocks and receiving transaction fees in return. translate BNB. To participate in BSC network validation, validators must operate nodes and install at least 10,000 BNB.

There are clearly a lot of similarities between the Binance Smart Chain and Ethereum. This makes it easy for Ethereum users to migrate and experiment with the BSC. But despite these similarities, BSC has made some interesting changes to try and improve network performance. The PoSA consensus mechanism enables cheaper and faster blockchain transactions for users.

You can read more about PoW, DPoS and PoA at the following links:

Blockchain traffic and dapp ecosystem

As of August 2021, Ethereum hosts nearly 2400 DApps on the blockchain versus around 1200 on the BSC. This is a significant difference, but BSC has only grown since 2020, showing that BSC is a thriving ecosystem.

Active addresses are also an important on-chain metric to consider. Despite being a newer blockchain, BSC recorded a peak of 5,585,307 addresses on August 2, 2021, which is higher than Ethereum’s all-time high of 1,376,408 addresses on August 16, 2018.

Looking at the daily transactions, there is a bigger difference between the two. With BSC, users transfer money and interact with smart contracts faster and cheaper. Below is the peak of BSC with more than 12.5 million daily transactions and currently more than 8 million.

In contrast, Ethereum has never exceeded 1.75 million daily transactions. For users who need to transfer funds frequently, BSC seems to be the most popular choice. Daily transactions should also be viewed in the context of the active address. At the time of writing, BSC now has a higher average number of commercial users.

transaction processing speed

Measuring the average transaction time on the blockchain can be very complicated, transactions are completed when the miner successfully validates the block. Several factors can affect transaction times, such as: B. transaction fees that are too low, causing miners to delay your transactions, or denying a valid block by the network, resulting in outages. Your transaction must move to the next block for confirmation. In addition, some of the more complex blockchain interactions require multiple transactions, which also requires longer transaction processing times.

If we look at the BSC gas statistics, we can see that the average block time is only 3 seconds. Compared to Ethereum, this speed is currently considered very fast.

On the other hand, if we look at Ethereum gas statistics, we can see that the average confirmation time per block is currently around 14 seconds, but this number does not take into account additional confirmation requests from the network. Report.

For example, if you deposit ETH (ERC-20) into your Binance account, you will have to wait for 12 network confirmations. The confirmation time for each block is about 14 seconds, so you have to wait 168 seconds for your transaction to complete.

transaction fee

The issue of high fees is a sore point for Ethereum. Although the London hard fork made some changes to the gas royalty mechanism, I think this update will only have a deflationary effect on Ethereum and not even help lower transaction fees on the platform. . In the past there were times when the average Ethereum transaction fee was close to $68.72, this is a very scary fee and users are very worried when using this platform.

For transferring ERC-20 tokens to another wallet, the average price at the time of writing is $2.46. It will rise to $7.58 as Uniswap’s liquidity pool covers multiple trades.

Below we see a BSC transaction with a fee of only $0.04. BSC calculates it by multiplying the amount of gas consumed in the transaction (21,000) by the gas price (5 gwei). This shows that in terms of transaction fees, BSC completely dominates Ethereum with fees several times lower.

Difference between ERC20 and BEP20

First we need to define ETH and not ERC20. ETH is Ethereum’s native on-chain currency. ERC20 is a token on the ETH chain and also BEP20 is a token on the Binance Smart Chain.

We can easily see that your Ethereum and BSC wallet addresses are the same. If you accidentally withdraw your ERC-20 tokens from the BSC, you can still find them at the respective BSC addresses. You can also do the same process if you accidentally send BEP20 tokens to Ethereum. Neither of these cases is your money gone forever.

Epilogue

With current gains, BSC appears to be occupying more market share than Ethereum. However, the time when Ethereum goes from PoW to PoS is not long ago when London Hard is ready. Once the transaction fees and transaction speed issues are resolved, I believe Ethereum will regain its “king” status in the cryptocurrency market.

The above is all the information our team would like to give you about the two largest ecosystems on the market today. Hopefully this article will help you get a better insight into these two ecosystems. How are you friends! See you in the next post!

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