The controversy around whether or not the Binance Smart Chain is centralized or decentralized was cleared on the Inside Blockchain Show powered by CryptoTVPlus this morning 22nd February, 2020. The topic for discussion by the host; Tony Obiajuru was Binance Smart Chain – The Ideal Protocol for DeFi Projects and Ugochukwu Aronu, Chief Executive Officer of Xend finance was the guest on the show to discuss the topic in question.
The show started with the guest explaining how the Binance Smart Chain works. While answering the question, Ugochukwu highlighted three points on how the chain works. The first was Consensus. According to him, consensus works with the idea of blockchain technology. He explained it as a connection of millions of computers all over the world. The importance of this was decentralization and security from cyber-attacks.
The second point stated was low transaction fees and fast transactions. The Chief Executive pointed out that the Binance Smart Chain has an edge over the Ethereum counterpart because of its low transaction fees and the speed at which transactions are processed on the Binance Smart Chain.
The last point was EVM compatibility. He explained that codes for dApps built on the Ethereum blockchain are compatible with the Binance chain. In the sense that, a code file can be copied from the Ethereum chain and used on the Binance Chain by a developer.
Is Binance Smart Chain DeFi or CeFi?
On the question whether the Binance Smart Chain was DeFi or CeFi, the chief executive started by explaining what CeFi (Centralized Finance) meant. Ugochukwu likened Centralized Finance to how banks operate. He stated that there is always a central body that handles the finance processes; lending, savings like banks when it comes to CeFi.
Furthermore, he went on to note that the Binance Smart Chain is not for Centralized projects because it is decentralized by nature for mainly DeFi purposes;
“It is not correct to say the Binance Smart Chain is centralized, the right thing to say is that the Binance Smart Chain supports DeFi projects…Binance exchange is centralized for CeFi projects while the Binance Smart Chain is decentralized for DeFi projects.”
Why Is the Binance Smart Chain the Ideal Protocol for DeFi projects?
On this question, Ugochukwu underscored the low transaction fees and fast transaction as an advantage that the BSC has over the ETH chain that makes it the ideal chain for DeFi projects. He highlighted the problem of money in Africa during the interview and related it as a problem that could be encountered using the ETH chain with high gas fees.
The chief executive also stated that the Binance Smart Chain can accommodate a lot of transactions without increase in gas fees which has given it a selling point and edge over the ETH chain;
“…the selling point for the BSC is low fees in my opinion…and the ideal protocol for DeFi projects is the Binance Smart Chain.”
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