Binance Coin Guide | Learn Everything About BNB
Binance Coin is the native token of the Binance trading platform and cryptocurrency exchange that is built on the Ethereum blockchain. It initially used the ERC20 token standard and its main purpose is to facilitate the platform's users and traders ensuring affordability and convenience.
As the leading crypto exchange continues to expand and further its global reach, many financial experts believe that the future of its native coin is a bright one. Binance also incentivises investment in BNB through reward schemes and lower fees on its exchange platform.
What Is Binance Coin?
Binance Coin is denoted by BNB and has been launched by the reputed crypto exchange Binance to fuel its trading operations and develop a cryptocurrency ecosystem around its own token. Traders can use BNB for a variety of applications including making payments of trading fees, exchange charges, or listing fees. During its launch year, i.e. in 2015, Binance offered a 50% discount on trading that would reduce by 50% each year, eventually ending in its fifth year.
At the time of writing, BNB is priced at $23.96 with a market capitalization of just over $3.4 billion. Binance also allows the coin to be used for Initial Coin Offering (ICO) investments listed on the exchange's Launchpad section. These new tokens are then offered on the exchange giving them a diving board to launch the trading.
Is Binance Coin a Type of Money?
The primary reason for creating BNB is to empower the crypto exchange ecosystem while facilitating trading operations for investors. The token can be used, in some instances, to pay for selected hospitality and travel services but overall acceptance as compared to other currencies has been subpar. For the same reason, it cannot be classified as a type of money.
Is It Legally Recognized?
Since Binance Coin is a native token of a cryptocurrency exchange that already adheres to all the laws and regulations and is mostly used within the platform, there is really nothing left to question the legality of the coin itself. It should be kept in mind that Binance, as a trading platform, abides by the rules of KYC and AML regulations to ensure the traders' personal and financial information along with their funds remain safe and secure.
What Do People Use Binance Coin For?
BNB can be used for a multitude of reasons including short and long term investment. Some of the popular applications of the coin include the following:
Investing in BNB for day to day trading to earn quick passive income using cryptocurrency volatility to your advantage.
Using BNB to pay the Binance exchange's listing fee or trading charges to save in terms of transaction expenses.
Making ICO investments in new cryptocurrency tokens that are being initiated with the help of Binance's Launchpad feature.
Staking BNB tokens to earn a passive income and get airdrops by using the Launchpool feature.
What Merchants Accept Binance Coin?
Binance has used its leverage to strike partnership deals with multiple vendors and service providers that have enabled the exchange to offer its users the convenience of spending BNB on a variety of outlets. Some of the top online and retail outlets which accept BNB as a payment method are listed below:
TravelbyBit - You can use the service to travel the world and pay with BNB tokens at merchants in Australia.
Crypto.com - If you are looking to pay your credit card bill with BNB, Crypto.com gives you the option to do so.
Mithril - Using this advanced service, you can both stake and shift BNB tokens through the VAULT wallet making it quick and convenient.
Gifto - Use your BNB tokens on this live video streaming platform to buy virtual gifts with ease.
Pundi X - Any store that uses the XPOS device made by Pundi X will accept BNB from you as a valid payment mode.
AERON - You can pay with your BNB coins for aircraft in the pilot shop that has been powered by Aeron.
Moeda - If you are looking to make investments using your BNB tokens, Moeda allows you to do so all across the globe.
The Technology Behind Binance Coin
Binance Coin used the Ethereum blockchain infrastructure and relied on ERC20 tokens initially which had the capacity to store and hold value. However, these were replaced with BEP2 BNB tokens in April 2019 when the exchange launched the Binance Chain mainnet.
You don’t have the ability to mine tokens through proof-of-work or proof-of-stake protocols as all the coins have been pre-mined and were already distributed at the time of ICO. BNB coins that are currently in circulation are primarily used for discounted trading on the exchange. The discount rate was initially set at 50% during the first year of the launch but it's decreased by half every year since then.
In the fifth year, trading will have no discount which may impact the token price. To confront this depreciation in BNB value, Binance has adopted the strategy of buying back BNB coins and burning them to limit the coin supply. Binance plans to burn 50% of the BNB tokens that are in circulation.
How It All Started - the History of Binance Coin
The Binance Coin was launched in July 2017 via an ICO that offered 20 million BNB coins for sale for investors, 80 million for a variety of project stakeholders and the rest 100 million for retail investors who had participated in the ICO. The money raised through the BNB ICO was spent on developing exchange, branding, and marketing. A certain portion of the investment was also used to add crucial upgrades to the Binance trading exchange.
Mining Binance Coin - How Are New Coins Created?
BNB cannot be mined using the proof-of-work or proof-of-stake protocol. Instead, it relies on the Byzantine Fault Tolerance (BFT) consensus method where validators are involved who earn the BNB tokens by verifying blocks on the network.
Supply - How Many Coins Are Available, What if They Run Out?
Initially, at the time of the ICO, Binance capped the total supply at 200 million tokens. However, due to the BNB burn which was done to counter value depreciation, the total and maximum supply of BNB tokens currently is around 176 million. It means that almost 12% of the coins have been destroyed since launch. At the time of writing, the BNB tokens that are in circulation have a volume of 144 million with a market capitalization of over $3.4 billion.
Binance has no plans to create more tokens and relies on demand and supply to drive the price of the token.
Decentralization - What Does It Mean?
Decentralization is a concept that no single individual, regulatory body, or organization should have total or substantial control over the governance matters of a network such as a blockchain. Instead, it is run through the consensus of the people that contribute to its success and keep the operations running. There are different methods to run a decentralized network but the one thing that is common among them all is that no central authority can control it single-handedly.
This makes the network more democratic and immutable. It means that nothing can be censored because of the wishes of the few and all the matters are publicly disclosed for enhanced transparency.
Binance Coin as an Investment
When it comes to investment, the Binance Coin is slightly different as compared to other cryptocurrencies. Since it is a native currency of a popular exchange, it has the backing and resources to keep the price relatively stable and that's why it's not as volatile as some of the other cryptocurrencies which often respond quickly to market factors. The price of BNB has been comparatively stable, especially in the short term. This means that it may not be the best short term investment driver but for the long term, it has more promise.
Why Should You Invest?
You want to earn passive income by trading the BNB tokens and other cryptocurrencies.
You want to make a long term return on your investment by holding the BNB tokens for a while.
You want to park your capital in a safe and reliable decentralized network.
You believe in the Binance Coin project and want to support it with your finances.
Don't forget that different investors have different objectives when it comes to trading and you need a unique and well thought out strategy to achieve them. This is why it is crucial to identify why you would want to invest in BNB.
Price and Volatility - Why Is the Price So Volatile?
When it comes to cryptocurrencies, there is no strict single-handed and centralized supervision such as a monetary policy by the State Bank. This means that they are totally driven by the market forces and sentiment which results in high volatility due to a wide range of factors including regulations, technology updates, opinion pieces, virality, or social acceptance. Having said that, BNB has been one of the more stable cryptocurrencies out there since it is a native coin of an established trading platform.
This means that while there is enough volatility to earn profits, it's still relatively stable as compared to the other tokens which can see massive plummeting and surges within hours.
Where to Buy Binance Coin
BNB is offered by many cryptocurrency exchanges and naturally the best place to purchase it is the native Binance platform. However, if you are looking for other options, you need to take different factors into account including fees, user-friendliness, customer support, and reputation. Three of our favourite and vetted trading platforms are listed below:
eToro – One of the top social trading websites that offer cryptocurrency CFDs and makes the experience swift, convenient, and affordable. With the ease of use, professional analysis, and economical fees, eToro is one of the best options.
FXTB – Another reputed platform that was created for forex trading but has leveraged its exceptional market position to become one of the best cryptocurrency exchanges for buying BNB.
Where to Store Binance Coin
When you purchase BNB, you cannot hold it in the exchange’s account for long periods as it’s quite unsafe. It means that you will need a more secure and robust option i.e. cryptocurrency wallets which are specially designed to store all types of tokens.
What Are Wallets?
Cryptocurrency wallets are physical devices or software programs with the capacity to securely hold a wide variety of tokens and digital assets including Bitcoin, Dash, Bitcoin Cash, Iota, Ethereum, Chainlink, Tezos, Monero, Ripple, and more. They have modern security features to keep your funds safe and secure for longer periods.
What Types of Wallets Are Available?
When you are searching for the best wallet to store your BNB tokens, you need to review multiple options.
Web wallets use browser extensions or are built into the cryptocurrency platform that is easily accessible through your credentials. They are user-friendly but don't have a lot of security features.
If you are looking for more portability and want to trade on the go, then what you need is a mobile wallet. Mobile wallets are offered as iOS or Android apps that you can install on your phone to store your crypto coins. These wallets offer reasonable security and set of features. Some of the Binance mobile wallets include Atomic Wallet, Exodus, and Coinomi Wallet.
These are software programs which you can install on your Windows or macOS computer to store your tokens. They bring more security features and offer built-in trading which can be quite useful for traders. Coinomi, Exodus, and Atomic Wallets are good options.
If you prioritize security over everything else, the best bet for you is a cold or hardware wallet. They are completely disconnected from the outside networks which can make devices vulnerable. They also offer leading security features such as passphrases and 2FA. You can use Ledger Nano S and Trezor to store the Binance Coin.
You also have the option to combine different types of wallets to get the best features of a variety of wallets including reliability, security, convenience, and ease of use. You can use Ledger Nano S in combination with the Atomic wallet.
Storing Your Wallet on an Exchange, the Potential Upside and Downside
Although there is nothing inherently wrong with storing your BNB in an exchange's account, it is not the best idea to keep your tokens there for longer periods. While crypto exchange wallets deliver improved user experience, ease of use, and swift accessibility, they don't have the best security. Apart from that, if the website is temporarily unavailable or experiences a hacking attempt or a security breach, your BNB tokens will either get stuck or may get stolen.
Frequently Asked Questions
Binance recommends the Trust Wallet officially. However, BNB tokens can also be stored on Enjin Wallet, Ledger Nano, Trezor, Jaxx, Metal Vault, Request Wallet, Atomic Wallet, Clay, and more.
BNB tokens have been pre-mined and already distributed at the time of ICO. 50% of the coins were for ICO participants, 40% for the team, and 10% for investors.
Although BNB is relatively less volatile than other cryptocurrencies, you need to take all the precautions and manage your risk to ensure you don’t lose more than you can afford to lose.
In some cases, it is possible to buy certain products and services, however, it is not as widely accepted as BTC.
Yes. It is built on a decentralized blockchain that ensures complete immutability.