Binance Smart Chain (BNB)

BNB Smart Chain (BSC) is best described as a blockchain that runs in parallel to the BNB Beacon Chain. Unlike BNB Beacon Chain, BSC boasts smart contract functionality and compatibility with the Ethereum Virtual Machine (EVM). The design goal here was to leave the high throughput of BNB Beacon Chain intact while introducing smart contracts into its ecosystem.

In essence, both blockchains operate side-by-side. It’s worth noting that BSC isn’t a so-called layer two or off-chain scalability solution. It’s an independent blockchain that could run even if BNB Beacon Chain went offline. That said, both chains bear a strong resemblance from a design standpoint.

Consensus and Governance Associated with StakingThe focus on staking-based consensus is another crucial highlight of BSC, which draws attention towards the Binance Smart Chain Metamask integrations. Why is BSC becoming popular among Metamask users? BSC offers an environment-friendly approach for achieving consensus and governance through staking, alongside the assurance of rewards from staking.

The flexible approach for community governance through staking on BSC also provides better network performance in comparison to Proof-of-Work blockchains. Staking-based consensus serves as a crucial highlight for improving the transaction capacity and blocking time without any boundaries.

Binance Chain vs. Binance Smart ChainFrom the above descriptions, it is easy to pick up some differences and similarities between the two Binance blockchains; here’s how they fare against one another for a quick comparison.

Similarities

• They were both launched and are maintained by Binance exchange. The company has less control over BSC than it does with BC but it is still significant enough to be a concern.
• They support fast block times. In the case of BC, it’s less than a second per block, while blocks on BSC are created every three seconds.
• Both blockchains charge significantly lower fees to process transactions compared to the industry giants such as Bitcoin and Ethereum.

Differences

• BC is limited in functionality, currently serving only one purpose
• Hosting the Binance DEX. On the other hand, the BSC is a programmable platform on which any dApp can be hosted. Even those running on Ethereum can be easily ported over to BSC.
• BC uses the Tendermint BFT consensus mechanism, while BSC uses delegated Proof of Staked Authority (PoSA). The former allows Binance exchange to control the BC blockchain 100% without involving the community. The latter opens up the network to allow other validators to participate in governance and block validation. However, Binance still controls the BSC blockchain through its role of vetting block validators.
• BC network tokens are minted under the BEP-2 issuance standard, while those issued on BSC must comply with BEP-20 standards. BEP stands for Binance Evolution Proposal. The BSC network has the capability of rolling out more token issuance standards if the need arises. For instance, the BEP-721 standard for issuing NFTs and other unique digital collectibles is similar to Ethereum’s ERC-721.

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1. Lack of clear guidelines and regulations: The lack of clear guidelines and regulations surrounding the use and reporting of cryptocurrency transactions can make it difficult for businesses and individuals to properly account for their cryptocurrency holdings and transactions.

2. Decentralized and global nature of cryptocurrency: The decentralized and global nature of cryptocurrency can make it difficult to track and record transactions in a consistent manner.

3. High volatility of cryptocurrency prices: The high volatility of cryptocurrency prices can make it challenging to accurately value and report on cryptocurrency assets.

4. Difficulty in reconciling cryptocurrency transactions: The complex and decentralized nature of cryptocurrency networks can make it difficult to reconcile transactions and ensure the accuracy of accounting records.

5. Limited software and tools for cryptocurrency accounting: There are currently limited software and tools available specifically designed for cryptocurrency accounting, which can make it difficult for businesses and individuals to efficiently manage their cryptocurrency transactions.