Layer 1 blockchains like Ethereum (ETH) and Binance Smart Chain (BSC) have large communities. But while Ethereum tends to dominate most English language crypto news sites, Binance is popular in densely populated, non-English speaking countries.
Binance Smart Chain (BSC) is a fork of Ethereum (ETH) that uses Binance Coin (BNB) instead of ETH for gas. Specifically, Binance copied Ethereum’s Go client, Geth, and uses an alternative consensus mechanism, Proof of Staked Authority.
A feature of Proof of Staked Authority is BSC’s ability to arbitrarily change block times and gas limits. This allows BSC to process more, faster, and larger data transactions relative to Ethereum. As trade-offs to achieve these feats, BSC sacrifices some of Ethereum’s decentralization and censorship resistance.
Ethereum versus Binance Smart Chain
Many people have not considered a side-by-side comparison of ETH versus BNB. Many Western readers assume that ETH is self-evidently better than BSC due to the obvious disparity in media coverage.
Yet BSC is the third-largest layer 1 blockchain, has outperformed ETH since its ICO, is backed by the largest crypto exchange in the world, and has one-fifth the Total Value Locked of ETH and growing.
Readers in the US might consider their predisposition against BSC. For example, Binance.com currently prohibits use by US residents, directing them to Binance.US instead. Yet Binance.US reports less than 3% of the daily spot volume of Binance.com.
There might be no better statistic than this figure to encapsulate the underestimation of BSC by US readers who fail to appreciate that 97% of BSC use could occur abroad.
More similarities than differences
Ethereum developers initially referred to Ethereum as a “world computer.” They meant for it to become a decentralized digital computer that could execute the smart contracts on which most decentralized apps (“dApps”) could run. The Ethereum Virtual Machine (EVM) concept could handle internal state and computation and developers initially envisioned ETH as merely the token that rate-limited the whole system.
Binance copied this concept. BSC remains an EVM-compatible blockchain that’s similarly rate-limited by BNB fees. For most users, interactions with BSC are familiar and uniform across ETH and BSC interfaces. MetaMask, for example, allows a user to toggle within seconds between ETH and BSC networks with a single click, using just one private key.
One big difference between the two systems is that ETH is famously expensive to use. The median gas fee is $0.20 compared to just $0.03 on BSC. When compounded by BSC’s faster transactions, BSC’s BNB claims to be more “spendable.” BSC also boasts integrations with popular payment processors like CoinPayments and NOWPayments.
Indeed, the number of daily transactions became one of BSC’s advantages over ETH. In November 2021, BSC demonstrated that it could handle 14.7 million transactions in a day, compared to ETH’s one million daily transactions.
In summary, both ETH and BSC blockchains allow users to send and receive, sign transactions, interact with web3 and DeFi properties, bridge assets to other blockchains, yield farm, manage loans, play games, use Layer 2 services, participate with DAOs, create and interact with dApps, and use tokens like NFTs and ERC20 tokens (called BEP20 with BSC).