Ethereum vs. Binance Smart Chain: Comparing Two Blockchain Networks

In the cryptocurrency world, Tier 1 blockchains such as Ethereum and Binance Smart Chain have a large number of users who use them in their daily lives. The Ethereum network does not leave English-language news sites and stays at the top. At the same time, the blockchain from the Binance exchange is more popular in non-English-speaking countries. 

Let's understand clearly what the differences are between these two networks.

Read more about Ethereum

Ethereum is one of the top and most significant cryptocurrencies in the world. It has a strong position in the market and has competitors, among which not only Bitcoin. 

Ethereum is primarily a blockchain platform, which aims to provide reliable security. The blockchain has its own currency, Ethereum (ETH). Today, it is often found in the crypto portfolios of both beginners and more experienced traders and investors.

One of the important features of Ethereum is its smart contract technology. These, combined with blockchain features, are actively used in decentralized finance (DeFi) and decentralized applications (dApps).

However, because Ethereum is so popular, network congestion and high fees for cryptocurrency transfers have been noticed. These scalability issues led to Ethereum's improvement and transition to ETH 2.0, with the ability to process up to 100,000 transactions per second and reduce network load by reducing power consumption.

What is the Binance Smart Chain

The network from Binance originates in April 2020, but officially launched in September, around the same time as the DeFi peak on Ethereum, called "DeFi summer."

Initially, BSC pursued the idea of creating a network that would have compatibility with the Ethereum Virtual Machine (EVM). With this compatibility, DeFi developers are able to port applications from Ethereum to BSC without any problems. This benefits from lower gas fees and fast transactions. This was the starting point for the competition between BSC and ETH that we are seeing now.

BSC is gradually dragging a significant share of the market. BSC clearly demonstrated its prowess on November 21, 2021, by processing a record 16 million transactions, while ETH only made 1.2 million on the same day. The difference is colossal. 

Despite its achievements, success, and rapid growth, BSC has faced criticism. Many users are outraged, calling BSC a pathetic copy of Ethereum.

ETH vs BSC

The first and most important difference between these two blockchains for many is the degree of decentralization and user security. User security depends directly on the degree of decentralization of the blockchain. And the more nodes are involved in blockchain validation and transaction verification, the higher the degree of decentralization. To determine, the Nakamoto coefficient must be taken into account. 

The Binance Smart Chain network has only 21 validators, which determines the Nakamoto coefficient. But in the Ethereum network, calculating this coefficient is problematic, there are over 300 thousand validators in this blockchain. 

Another important difference is the energy consumed. The Ethereum network consumes more energy than BSC, even after its transition to version 2.0, to maintain performance and process transactions. In the end, ETH is still more expensive in terms of fees and Binance SC is bypassing it in this regard.

Consensus Model

Their consensus models play a crucial role in comparing blockchains. Ethereum previously used the Proof-of-Work model, but it was decided to change this model to Proof-of-Stake and in September 2022 this successfully happened and had a positive effect on the network, speeding it up and reducing congestion. 

In turn, Binance Smart Chain uses a hybrid consensus model. It combines two models, Proof-of-Authority (PoA) and Delegated Proof-of-Stake (DPoS). The result is a Proof-of-Staked Authority (PoSA) model. By combining PoA algorithms and a DPoS voting system, the BSC network achieves high throughput and meets user requirements without incurring high costs.

The Scalability Trilemma

In order to do a qualitative analysis and calculate the competitiveness of blockchains, we need to look at three main factors called the "scalability trilemma": speed, cost, and security. When comparing speed, BSC has an advantage in blocks that are created every three seconds, in ETH it takes 14 seconds. When cost is taken into account, BSC again has the advantage because of lower commissions compared to the Ethereum network. 

But when it comes to security, ETH is definitely the more reliable network, with a large number of validators. Although BSC is trying to be a decentralized network, it is not doing well with 21 validators so far.

Final Conclusion

At the end of the day, considering all the factors described above, you can decide for yourself which network will suit you best, depending on your goals and requirements for the network. Binance Smart Chain is ahead of Ethereum in some aspects, but in other aspects, there is still some work to be done. The same goes for the Ethereum blockchain, there are advantages and disadvantages to consider when working on this network.