In the past year (2020), the cryptocurrency markets have been buzzing with activities as more investors are taking note of the potential and growth of the coins. That has driven the call for more secure and efficient blockchains and that was widely expected as it deals with money.
New names and technologies
At the moment, blockchains pretty much form the backbone for cryptocurrencies. It has a long way to go before they become robust enough to be used in daily life. Changes and upgrades are common because this is a growing platform and an expanding community. Thus, new names like BEP20 and BSC have come into the picture. So, what exactly are they? We simplify it for you.
Binance Smart Chain – More flexible and faster than the original Binance
In a nutshell, The BSC offers flexibility and super-fast transaction processing. This is because the conventional Binance Chain is fast but is not very flexible. With the introduction of the Binance Smart Chain, a new system is now available where a full-fledged platform can be used to develop decentralized applications that come with better and higher performance. The BSC was designed to offer better cross-chain compatibility with the Binance Chain so that, such functions are available for its users.
- The Background – Launched in April 2019, it was intended to provide the platform with faster and more decentralized transactions. The original Binance DEX is one of the most user-friendly exchanges in the market currently and is also among the biggest. One of the biggest problems with blockchains is always with flexibility especially when it comes to smart contracts. When the system is optimized, it could cause a slow-down to the network and everyone connected to it. This means that when it comes to blockchain development, scalability is the most challenging issue and that is what the BSC is designed for.
- The Solution – The BSC refers to the blockchain that runs with the Binance Chain but it functions for smart contracts compatible with the EVM or Ethereum Virtual Machine. Both these blockchains run parallel with each other and should not be seen as a different layer. This is because the BSC is independent and runs on its own with or without the Binance Chain. Perhaps the biggest similarity here is from the design of both the blockchains. The BSC, being EVM-compatible has become easy when developers use Ethereum to run their apps.
Binance Chain Evolution Proposal 2 – BEP2
BEP2, which stands for Binance Chain Evolution Proposal 2 is Binance’s effort to continue growing its market. Since its inception, Binance becomes one of the top crypto-to-crypto exchanges in the world. It currently facilitates more than 100 cryptocurrencies and they are able to do this at super-fast speed. The recorded time was at more than 1.4 million orders per second. On top of that, they provide a very high level of verifiable liquidity and Binance is starting to implement this in a decentralized model.
- Infrastructure – This platform is designed to provide ease of use, good performance and liquidity. Built upon the Tendermint technology and the Cosmos SKD, it is the best use case where digital assets can be created on a decentralized exchange marketplace that is integrated and highly efficient.
- Tokens – The value of tokens can be transferred over the Binance chain. The tokens must be compatible with the BEP2 or the Binance Chain Evolution Proposal 2 for it to be possible. It refers to the set of rules and criteria which are pre-defined involved in managing tokens that will be adopted on the chain. Projects will announce the transition of their tokens or a segment of them to the BEP 2. This comes from the original main network and happens each day. The main net is the ERC-20.
- Energy efficiency – To determine who gets to mine which blocks on the Binance Chain, a combination of the DPos (Delegated Proof-of-Stake) and pBFT (Practical Byzantine Fault Tolerance) is used. This makes it more energy-efficient as compared to the Proof-of-Work platform adopted by Bitcoin which is a lot more energy-intensive. With the Tendermind consensus algorithm, it is widely believed that a lot of the challenging issues can be overcome.
ERC20 – Ideal Solution for Startups
The ERC20 has obvious benefits where start-ups are very fond of. They have been able to raise millions of dollars through the sale of tokens. In definition, ERC20 is the protocol used to issue tokens that are transacted on the Ethereum blockchain which is very much the basis of its technology. ERC stands for Ethereum Request for Comments where it controls the tokens on the network. 20 here represents the unique proposal ID of this platform.
ERC20 became hugely popular after it changed the operations and functions of the Ethereum blockchain. In the last few years (2020 in particular), the market has been growing tremendously and this has yet to be standardized especially on the operations of DApps. ERC20 hence provides the fundamentals on how they can use tokens better. For these projects, developers use the ERC20 token where they can tokenize while allowing them the channel to raise funds. When it comes to ICOs, it is all about raising funds and that is where the interesting market can fund a particular project.
- A standard protocol – ERC20 is a standard protocol similar to the concepts of the HTTP (Hypertext Transfer Protocol) and it is not any form of technology platform like software. A token needs to meet the technical specifications which must be ensured because it would not be regarded as an ERC20 token if it does not. Basic functions must follow a standard so that ERC20 works as it is set out to be.
- Standard of Token – Tokens that exist here can be running on the Ethereum blockchain and they do not need to have their respective blockchains.
- Implementation of tokens – The ERC20 has its own standard that makes development extremely easy and developers are able to follow them quite effectively.
- Protocol – With the ERC20, the standard protocol is there where one can easily follow and then maintain.
- Liquidity – Very high as offered by ERC20 tokens.
- Risk – With ERC20, transactions are literally risk-free through the use of smart contracts.