Binance Smart Chain is Binance Exchange’s smart-contract-enabled blockchain where anyone can make a cryptocurrency using the platform. Launched in 2020, Binance Smart Chain (BSC) is a relatively new platform with a lot of room for growth.
What is BNB Smart Chain?
With blockchain technology innovating at a rapid rate, so has Binance Chain. Binance Chain is Binance Exchange’s native blockchain that secures Binance Coin (BNB). The Binance Smart Chain was released in 2020 and runs parallel to the Binance Chain; the main difference is that Binance Smart Chain supports smart contracts.
While Binance Smart Chain is similar to Ethereum, they aren’t the same. Ethereum uses proof-of-work consensus, and Binance Smart Chain uses delegated proof of stake. Because of this, Binance Smart Chain can process many more transactions per second at far lower costs. This isn’t without its tradeoffs, however. Binance Smart Chain is extremely centralized, as only 21 validator nodes control the blockchain’s network.
Risks of Investing in Binance Smart Chain Tokens
Binance Smart Chain is home to some of the most risky cryptocurrencies on the market. While there is huge upside potential for many of these altcoins, the vast majority of coins won’t last through a bear market.
Binance Smart Chain also faces the risk of centralization. Because just 21 validators control the transactions on Binance Smart Chain, it can be controlled by a small group of people, mostly those who are affiliated with Binance Exchange. If regulators press Binance to delist certain tokens, it may have the ability to do so. This is in stark contrast to Ethereum, where regulators would have to coerce thousands of miners around the world to comply with regulation –– something that’s essentially impossible.
Put simply, a lot of tokens on Binance Smart Chain are pyramid schemes. They rely on users to hold their tokens while others buy into the coin, all while offering no real utility or real-world use case. As a general rule of thumb, stay away from any project that describes itself as a “frictionless yield-farming token.” These tokens tax users with every transaction, just to pay large token holders dividends for doing nothing.
Types of Tokens on Binance Smart Chain
There are 2 main types of tokens on Binance Smart Chain — BEP-20 tokens and BEP-721 tokens. The tokens on this list are BEP-20 tokens, as the majority of coins on Binance Smart Chain are BEP-20. BEP-721 tokens are non-fungible tokens on Binance’s network, whereas BEP-20 tokens are fungible. Fungible tokens all hold equal value, like how each bitcoin is worth the same amount or how each U.S. dollar has the same value.
Where to buy Binance Smart Chain Tokens
In order to invest in Binance Smart Chain tokens, you’ll need a Binance account. The only other way to get Binance Coin is on KuCoin, but other tokens on Binance Smart Chain aren’t available on the platform.
To invest in altcoins on Binance Smart Chain, you’ll have to use PancakeSwap’s decentralized exchange. Many tutorials on how to use PancakeSwap are available, including one on Binance.com. You’ll need a MetaMask wallet connected to Binance Smart Chain to interact with the PancakeSwap DEX.
How to Store BSC Tokens
The 2 main storage solutions for Binance Smart Chain tokens are hardware wallets and software wallets. While a software wallet is necessary to use PancakeSwap, a hardware wallet is optional and adds a layer of security. Hardware wallets are physical devices that store your funds offline, protecting them from hackers.
The Ellipal Titan is a multicurrency hardware wallet that can support more than 7,000 different cryptocurrencies. Because the Ellipal Titan holds such a variety of cryptos, it’ll be the only hardware wallet you’ll ever need. The hardware wallet offers a sleek, touch-screen interface that lets you easily view your portfolio directly on the hardware wallet.
Plus, Ellipal has a software wallet you can download on the app store for free. The software wallet works alongside the hardware wallet, and it lets you trade cryptocurrencies directly from the mobile app. The Ellipal Titan is currently $30 off on the company’s website, making it a bargain considering all the premium features.
Cryptocurrency Price Movements
Cryptocurrencies are much more volatile than stocks, and the market never closes. It’s not uncommon to see double-digit percent moves in a single day, so be prepared for volatility. The best way to be prepared for the ever-changing, never-closing cryptocurrency markets is with a portfolio tracker. Plenty of options are available when it comes to portfolio trackers, but Crypto Pro is a great option you can download for free on iOS and Android app stores.
Binance Smart Chain Versus Ethereum ERC-20 Tokens
Because Binance Smart Chain is so new, its ecosystem is far less developed than Ethereum’s. If you’re looking to invest in already established products with large user bases, you should check out the best tokens on Ethereum’s blockchain. However, Binance Smart Chain presents an opportunity for risk-hungry individuals looking to invest in new and innovative products.
Binance Smart Chain = BNB Smart Chain