Getting Started With Binance Smart Chain
Gold Briefly Breaks $2000
Getting Started With Binance Smart Chain
Our previous two articles have covered how to get started with Avalanche and Fantom. This week, we will cover the Binance Smart Chain (BSC) and explore what it is and how you can use it. BSC has significant backing through Binance, the centralised exchange, and has found traction in the DeFi, NFT and gaming sectors.
What is Binance Smart Chain?
BSC is a layer 1 smart contract platform that is very similar to Ethereum in that it can power a wide variety of applications; these can be anything from DeFi to Web3.
Initially, the Binance exchange launched Binance Chain in April 2019, focusing on allowing ultra-fast trading. However, due to the trade-offs that needed to be made to achieve this, it lacked expressive programmability. Therefore it wasn't possible to create complex smart contracts or DApps on the network, severely limiting what was possible. Binance launched BSC that brought programmability and interoperability to Binance Chain as a solution to this.
BSC was created and designed to be complementary to the Binance Chain. The two chains run in parallel, and users can build DApps and run smart contracts while still making fast trades on the Binance Chain.
BSC is also an Ethereum Virtual Machine (EVM) compatible blockchain; this means it is very easy for developers to port over the code from existing Ethereum applications and use them on BSC. This can encourage people to move their projects over if they perceive problems on Ethereum or just see additional opportunities to expand onto the BSC.
How Does Binance Smart Chain Work?
BSC is a Proof of Stake blockchain that uses a specific consensus called Proof of Staked Authority (PoSA). The way this consensus works is that there are only 21 validators in charge of proposing valid blocks; you qualify to become one of the 21 validators by staking the greatest number of BNB tokens. Currently, you are required to stake over 816 600 BNB tokens ($312 750 000), so the barriers to entry are high. This approach differs significantly from Bitcoin or Ethereum, where anyone can qualify to be a validator if they start contributing resources to the network. However, as a BNB holder, you can delegate your tokens to a validator of your choice. As a BNB holder, you can also delegate on the Binance Chain; however, this chain only has 11 active validators. How do these chains work together though?
The BSC and Binance Chain are connected by the BSC relayer and the Oracle relayer. The BSC relayer will pass information from the Binance Chain to the BSC, and the Oracle relayer passes information from the BSC to the Binance Chain.
This two-way passage for information enables the transfer of assets between the separate chains and makes the two networks interoperable, allowing each to focus on what it does best.
How to Use Binance Smart Chain
As with both Fantom and Avalanche, there are several wallet options to choose from. This also depends on what you intend on using the wallet for. A wallet allows you to store your assets, participate in the network through governance and staking/delegating, and it can enable you to interact with both DeFi and Web3 projects.
The Trust Wallet is the official wallet of the Binance exchange; it can be used for the BSC, but it is a general-purpose wallet and can therefore be used to store other chains' assets. This guide will focus on the Trust Wallet, but you can also find the Binance Wallet here and go through the setup process yourself.
Creating a Trust Wallet
Note: The Trust Wallet is only available on mobile devices.
Step 1: Visit the Trust Wallet Website
Go to the Trust Wallet Website
Make sure the URL you land on is "https://trustwallet.com/"
You should see the below screen:
Click the link for your chosen OS (i.e. Apple or Android)
Install the application according to your selected device
Open the Trust Wallet application
Step 2: Create A Seed/Recovery Phrase
You will now have to create a new wallet. Your seed/key phrase is how you recover access to your account if something happens to your wallet. Therefore, it is crucial to concentrate during the next few steps.
Click CREATE A NEW WALLET
You will now be prompted to create a passcode. Always ensure that it is something you will remember, or better yet, record it on a piece of paper and store it in a secure place.
Enter a new passcode
Re-enter your passcode to confirm it is correct.
Now you will need to back up your wallet. We have previously written about the importance of storing a key phrase correctly. You can access that article here to follow best practices. Copy your 12 words down in order and ensure that they are accurate, store them as suggested in our article. You can never be too careful with your seed phrase.
You will now see your list of 12 words. Ensure you copy them down correctly and in order. You cannot screenshot these as they are protected by Trust Wallets' security policy.
Verify your recovery phrase by inputting the words in order on the next screen.
Well done. You have successfully set up your Trust Wallet.
Step 3: Use your Wallet
You will now have access to your wallet dashboard, which should look like the one below:
As Trust Wallet is a general-purpose wallet, you can control many different assets. You can send and receive assets and interact with the different DeFi and Web3 protocols available on the different chains within the wallet itself. To do this though, you need to fund your wallet.
Funding Your Wallet
Funding your wallet can be done in different ways, namely through an exchange or through a cross-chain bridge.
You can fund your wallet directly using an exchange like Binance or any other exchange that offers BNB as a trading pair. This will differ from exchange to exchange, so giving specifics is hard. But it will involve you withdrawing the BNB token directly to your Trust Wallet that you have just set up. Be careful during this process and make sure that you select the appropriate chain when going through the withdrawal procedure; this will be the Binance Smart Chain in our case. Always double-check that the address you are sending to matches the one from your wallet exactly. Sending to the wrong address will mean you lose access to your funds. It is also important to distinguish between BNB on the Binance Chain and BNB on the BSC.
This process has a couple more steps and involves setting up a MetaMask wallet. You can follow our guide to setting up your MetaMask here. MetaMask generally has more integrations into different DeFi and Web3 protocols and, therefore, a more comprehensive range of uses within the crypto industry.
This cross-chain bridge will be different to something like Fantom or Avalanche. BNB was once available on Ethereum as an ERC-20 token; however, once they migrated the BNB token to the Binance Chain, they ceased supporting the ERC-20 standard; while some still exist, they can't really be used. Therefore, you will notice that with most bridging solutions, you cannot transfer BNB between the BSC and Ethereum; however, you can transfer other compatible assets like USDC or Frax.
Step 1: Add Binance Smart Chain To MetaMask
Adding a custom chain to MetaMask is relatively straightforward. You can see a detailed explanation here under Step 3.
However, to add BSC to MetaMask, simply go into Settings -> Networks -> Add a Network, and paste the following details:
Network Name: Smart Chain
New RPC URL: https://bsc-dataseed.binance.org/
Block Explorer URL: https://bscscan.com
Always ensure those details are entered exactly as above. This will be for the Binance Smart Chain as this is the chain that works with the MetaMask wallet. Also, bear in mind this will have a different address from the Binance Chain on your Trust Wallet.
Step 2: Use Cross-Chain Bridge
Now you will need to bridge assets from the Ethereum network to the BSC.
You should land on the following page:
Login to your MetaMask wallet
Make sure that From is Ethereum Mainnet and To is BNB Chain.
Select which token and the amount you would like to bridge from the list available.
We always recommend moving the native asset of the destination chain because once it lands, you require it to pay gas. However, in this case, you cannot transfer BNB from Ethereum, so you will have to ensure you fund your wallet with BNB through a centralised exchange.
Please note that cBridge may charge a fee for doing this and only proceed if you are happy
Whenever prompted, click "Confirm" to sign the transaction on MetaMask
This can take some time, so don't worry if the funds don't reflect right away. You may also need to manually add the token to the MetaMask wallet to make the token visible.
Step 3: Use Binance Smart Chain
Now that you have bridged your assets and loaded BNB onto your wallet from an exchange, you can start using the DeFi and Web3 applications on BSC. You can view a list of the projects you can use here.
You can also transfer any of these tokens between your Trust Wallet address and your MetaMask. Remember though, always make sure you are on the right network!
Using these networks is the best way to learn about them. It shows and allows you to understand what blockchain networks are capable of. Each has its own unique advantages, disadvantages and user experiences.
Binance has created two chains that each serve a unique purpose. While still highly centralised, they have found a niche in the DeFi, NFT and gaming sectors. With the backing of the Binance Exchange and the funding they can provide, BSC has the potential to be a big player in the layer 1 game.
If you have any questions or have trouble using the network, please feel free to reach out and ask us questions. We always look forward to chatting with our readers. Otherwise, please feel free to share this article if you know anyone who is interested in using these networks.
Notable Articles and News Stories This Week:
U.S. Inflation Rises to 7.9% in February, Fresh 4-Decade High
U.S. inflation accelerated in February to a fresh four-decade high, signalling supply and demand imbalances were little improved amid soaring gas prices.
The Consumer Price Index rose 7.9% over the past 12 months, the fastest since 1982, the U.S. Labor Department's Bureau of Labor Statistics reported Thursday. On a monthly basis, the CPI rose 0.8% in February, faster than the 0.6% increase reported for January.
So-called core inflation, which excludes volatile food and energy prices, rose 0.5% in February, slower than analysts' expectations. The core inflation rate was driven by increases in shelter prices as well as for recreation, household furnishings and airline fares.
Read more about the increase here
Biden Issues Long-Awaited U.S. Executive Order on Crypto
U.S. President Joe Biden directed federal agencies to coordinate their efforts at drafting cryptocurrency regulations in a first-of-its-kind executive order on Wednesday.
The "whole-of-government" effort to regulate the crypto industry focuses on consumer protection, financial stability, illicit uses, leadership in the global financial sector, financial inclusion and responsible innovation, according to a fact sheet accompanying the order.
The executive order, the first such to focus exclusively on the growing digital asset sector, directs federal agencies to better communicate their work in the digital asset sector, but it does not lay out specific positions the administration wants agencies to adopt.
Similarly, the order did not announce any new regulations for which cryptocurrency companies to abide.
Read more about the executive order here
Biden's Executive Order Calls for 'Highest Urgency' on CBDC Research and Development
U.S. President Joe Biden called for an urgent, government-wide focus to be placed on the research and development of a potential central bank digital currency (CBDC) in his executive order signed Wednesday.
The order calls for a full-scale assessment of the potential benefits and risks of a CBDC, both for consumers and investors as well as the broader U.S. financial system. Biden has ordered the Treasury Department to spearhead the research and report, with input from other federal agencies, including the Secretary of Commerce and the Secretary of Homeland Security.
The assessment is also supposed to determine whether the implementation of a CBDC would be in "the national interest."
Read more about CBDC's here
Whilst we all have the option to look, to seek to understand, it’s often easier not to. Bitcoin, Ethereum and distributed ledger technology are complex systems that require significant due diligence. At Etherbridge, we aim to lower the barriers to understanding this fast-growing digital economy.
If you are interested in staying up to date, please subscribe to our newsletter at etherbridge.co
This is not financial advice. All opinions expressed here are our own. We encourage investors to do their own research before making any investments.