Binance Smart Chain vs Ethereum (Why are transaction fees on Binance Smart Chain cheaper and faster… | by Saim Can Özgen | Coinmonks | Aug, 2022 - Rvpg media

Binance Smart Chain vs Ethereum (Why are transaction fees on Binance Smart Chain cheaper and faster… | by Saim Can Özgen | Coinmonks | Aug, 2022

Binance Smart Chain vs Ethereum (Why are transaction fees on Binance Smart Chain cheaper and faster than Ethereum?)

Ethereum uses Proof of Work (PoW) as its consensus mechanism and its block time is approximately 13 seconds. Reducing the block time means producing more blocks and increasing the block size. If the block size increases, the overall size of the blockchain increases and for a node to join the blockchain, it must increase its storage requirements. This makes normal users unable to install nodes, and only companies with large servers can install nodes. This is against decentralization. In 2021, because transaction fees on the Ethereum network increased so much, Binance decided to develop its own network and created the Binance Smart Chain (BSC), the result of the hard fork of the Go Ethereum (Geth) protocol. Therefore, it has many similarities with the Ethereum blockchain. But BSC developers have made notable changes in some key areas. The biggest difference is that BSC uses the Proof of Staked Authority (PoSA) mechanism instead of PoW, which allows for cheaper and faster transactions. BSC’s PoSA combines Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). Only 21 validators sequentially generate blocks and receive BNB transaction fees as a reward. Being a validator requires running a node and staking at least 10,000 BNB to become an elected candidate. The switch to PoSA reduced the block time to 3 seconds, resulting in very fast network operation and very low transaction fees, but decentralization was compromised because the number of validators is very low.

Ethereum, on the other hand, tries to solve the problems of transaction fees and speeds without sacrificing decentralization. For this, Ethereum is currently in the transition phase from PoW mechanism to PoS mechanism. Updates such as sharding, which can be made thanks to the PoS mechanism, will be able to solve this scaling problem in Ethereum.

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