Binary cross-entropy is the standard loss function for two-class classification. It compares the probability returned by the sigmoid with the true label, 0 or 1, and punishes confident mistakes hard. Its formula comes from maximum likelihood, and its derivative combines with the sigmoid into a very simple gradient.
The sigmoid function maps any real number to a value between 0 and 1, which makes it the natural activation function for expressing probabilities in a neural network. It is differentiable across its whole domain, though it suffers from saturation and vanishing gradients in deep networks, so today it is mostly reserved for the output layer.
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