Binance Smart Chain, the company’s parallel chain, creates a formidable ecosystem for decentralised finance.
The DeFi market is an internet-native financial ecosystem that offers many of the same products and services as traditional finance but in the form of decentralised, autonomous applications built on blockchain technology.
Let’s talk about what Binance Smart Chain is before we get into the reasons to use it for Fintech projects.
This article delves at how DeFi strengthens traditional financial markets, increases financial inclusion, boosts traditional financial service innovation, and whether regulators should create new legal frameworks for it.
What is Binance Smart Chain?
Binance Smart Chain (BSC) is a blockchain protocol developed by Binance that works alongside Binance Chain. Binance Smart Chain, on the other hand, powers smart contract capabilities and is compatible with the Ethereum Virtual Machine, unlike Binance Chain (EVM).
Furthermore, BSC boasts one of the fastest blockchain transaction times and lowest fee structures, making it desirable for developers to build DeFi apps using the protocol.
Binance Smart Chain secures the network through a consensus process known as Proof of Staked Authority (PoSA), in which 21 validators stake BNB, the Binance ecosystem’s native token.
Reasons to Choose Binance Smart Chain for Fintech Projects
The Binance Smart Chain is constructed on a dual-chain architecture, allowing users to transfer assets between blockchains with ease. Binance Smart Chain’s interoperability allows users to tap into a huge ecosystem with a wide range of applications. Interoperability is one of the primary aspects that DeFi proponents value and Binance Smart Chain is at the forefront of achieving it.
Transactions at a Low Cost
The cost that users pay when they make a transaction on a blockchain is referred to as transaction fees or blockchain fees. Miners or validators receive this charge to verify that the blockchain only stores and processes valid transactions.
The majority of DeFi apps entail a large number of transactions, each of which incurs a cost. As a result, blockchain fees are a significant consideration when selecting a blockchain protocol.
Quickness of Transaction
Before a transaction can be completed, it must receive many confirmations on the blockchain. The purpose of confirmations is to prevent double-spending. The greater the confirmation time, the longer it will take to complete a transaction.
Scalability issues have hampered Ethereum, resulting in congestion and lengthier transaction completion times.
Binance Smart Chain was created to improve scalability in high-throughput blockchains so that smart contracts may be easily implemented to create scalable decentralised apps.
Binance Smart Chain has a similar structure to the existing Binance Chain, which is a high-performance, low-latency blockchain, however, it cannot accommodate smart contracts due to a design choice to improve speed.