What is Binance Coin (BNB)? The world of crypto on Binance exchange
Binance Coin (BNB) is a cryptocurrency that can be used to trade and pay fees on the Binance cryptocurrency exchange. The Binance Exchange is the largest cryptocurrency exchange in the world as of January 2018, facilitating more than 1.4 million transactions per second.
What is Binance Coin?
Binance Coin (BNB) is the cryptocurrency coin that powers the Binance ecosystem. As one of the world’s most popular utility tokens, not only can you buy or sell BNB like any other cryptocurrency, but BNB comes with a wide range of applications and benefits.
Binance Coin was created in July 2017 and initially worked on the ethereum blockchain with the token ERC-20 before it became the native currency of Binance’s own blockchain, the Binance Chain.
Users of Binance Coin receive a discount in transaction fees on the Binance Exchange as an incentive. BNB can also be exchanged or traded for other cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, etc.
BNB began as an asset sold in Binance’s initial coin offering (ICO), becoming a way Binance exchange users could pay less trading fees on the platform once the exchange launched. Since then, BNB has retained a role in Binance’s growing ecosystem as Binance has expanded into more than a digital asset exchange.
What does Binance Coin do?
Just like other evolving cryptocurrencies, the Binance Coin offers several uses that go beyond the Binance exchange, such as
- Trading: Binance Coin can be traded for other cryptocurrencies on various exchanges, depending on the restrictions set by the exchange.
- Transaction fees on the Binance Exchange: BNB can be used to pay for transactions on the Binance Exchange, and users also receive a discount for doing so.
- Credit card payments: BNB can be the form of payment for crypto credit card bills on Crypto.com.
- Payment processing: Merchants can offer BNB as a means of payment for customers, offering more flexibility in payment methods.
- Booking travel arrangements: BNB can be used to book hotels and flights on select websites.
- Entertainment: From paying for virtual gifts to buying lottery tickets, BNB serves several purposes in the entertainment space.
- Investment: Several platforms allow investors to invest in stocks, ETFs, and other assets using Binance Coin.
- Loans and transfers: BNB can be used as collateral for loans on certain platforms. Also, there are apps that allow users to split bills and pay friends and family through Binance Coin.
How to buy Binance Coin?
BNB can be purchased at crypto exchanges such as Binance, Bithumb, KuCoin, and FTX. But, as BNB is the native asset of the Binance exchange, several competitors have not listed the coin on their platforms. Coinbase, Huobi, Bitfinex, Bitstamp, and Kraken, among others, don’t offer BNB trading.
As Binance Coin is also the native blockchain asset of the Binance Chain and Binance Smart Chain (BSC), decentralized exchanges (DEX) like PancakeSwap and BakerySwap running on the BSC offer BNB swaps to other BSC-based tokens. Solely Ethereum-based DEXs like Uniswap don’t support BNB swaps on their protocols, as BNB is an asset that is foreign to Ethereum’s blockchain. Other DEXs such as SushiSwap and 1inch, which previously were Ethereum-only services, have switched to a multi-chain approach. They now offer their services on the Binance Smart Chain as well and allow for BNB swaps as long as users are connected to the protocol with a Binance Smart Chain wallet.
BNB Price Statistics
In general, BNB’s price has historically fluctuated in a fashion similar to other crypto assets trading on the market. Binance Coin’s market cap has grown over the years, surpassing a valuation of $70 billion. During Binance’s ICO, BNB sold for about $0.10 per token.
Since Binance’s ICO, BNB has traded its way up in value significantly, fetching a price tag of more than $600 per coin at times. Is Binance Coin a good investment? Its historical price rise likely yielded profit if buyers entered and sold at the right times. Although going forward, only the future will reveal where BNB’s price will head.
Here’s a brief breakdown of how BNB tokens were initially distributed:
- Founding team: 40% (80 million BNB)
- Angel investors: 10% (20 million BNB)
- Public sale: 50% (100 million BNB)
All of the 100 million BNB tokens available for public sale were sold during the ICO at 15 cents per token. Therefore, Binance raised a total of US$15 million in bitcoin and ethereum.
From the $15 million that was raised, 35% was allocated to upgrading the Binance platform and exchange system; 50% was allocated for Binance branding, marketing, and education of new innovators; and the remaining 15% was used as a reserve in case of any emergencies or unprecedented circumstances.
Is Binance Coin a good investment?
Evaulating crypto-assets for their quality as an investment opportunity can be a tough exercise. With something like Bitcoin or even Ethereum, it is easier to place value when analyzing their decentralization.
Bitcoin, for example, has a high quantity of geographically distributed nodes and miners and has survived over 11 years of ups and downs. With Bitcoin, you can know with a high degree of certainty that no sole company, government, group, or individual has control. Instead, the collective of its users determines its future, meaning that a free and open market only determines its price.
While Ethereum has half as many nodes as Bitcoin does, it is still orders of magnitude more distributed than Binance Coin. This is due to its PoA model that gives the Binance exchange full control.
Conclusion and analysis
Binance coin is still a potential virtual currency for investors along with the development of the Binance coin ecosystem as well as the Binance exchange.
However, the virtual currency market is always volatile, affecting the prices of virtual currencies in general and BNB in particular, participants should closely monitor market movements to be able to trade effectively.
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DISCLAIMER: The Information on this website is provided as general market commentary, and does not constitute investment advice. We encourage you to do your own research before investing.
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