Binance Smart Chain is a new platform that aims to lower transaction costs and provide a space to create DApps and other DeFi products.
Binance Smart Chain (BSC) is a blockchain network built for running smart contract-based applications. BSC runs in parallel with Binance’s native Binance Chain (BC), which allows users to get the best of both worlds: the high transaction capacity of BC and the smart contract functionality of BSC.
Furthermore, Binance Smart Chain also implements the Ethereum Virtual Machine (EVM), which allows it to run Ethereum-based applications like MetaMask.
The aim of the platform is to enable developers to build decentralized applications (DApps) and help users manage their digital assets cross-chain with low latency and large capacity.
Binance Smart Chain has made immense traction in early 2021 so far partly thanks to Ethereum’s congestion and gas fee issues, which has caused developers and staking investors to look for other options. The BSC community made the network even more appealing to new users as a cost-effective and stable alternative, by lowering its gas fee from 15 Gwei to 10 Gwei to counter Binance Coin (BNB)’s insane price jump to over $300 in February.
Risks of Investing in Binance Smart Chain TokensBinance 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.
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