Post Menu and Details.
- Quick overview:
- History of Binance Coin
- How Does BNB Work?
- What Is Binance Coin Used For?
- BNB Pricing and Future Dynamics
Reading time: ~4 minutes
Binance coin, traded as BNB, is a cryptocurrency issued by Binance, one of the largest exchanges in the world. Originally, the BNB token was used exclusively for internal exchange operations. But then it grew into its own entity – now, you can buy Binance Coin on numerous platforms and with a wide range of payment options.
- The Binance Coin was launched on Binance in July 2017.
- The team is led by Changpeng Zhao, the founder, and CEO of Binance.
- It was exclusively mined as an ERC-20 token, which runs on the Ethereum network. But now, you can also find BNB as BEP-2 on the Binance Chain and BEP-20 on the Binance Smart Chain.
- BNB can be used as payment for trading fees, goods, and services or as a donation.
- The maximum limit was set at 200 million BNB tokens at the time of ICO. Currently, there are over 166 BNB in circulation, which is 100% of the total supply.
- It is ranked #3 based on market capitalization (over $100 billion).
History of Binance Coin
Binance Coin was launched in the same year as the company behind it – Beijie Technology, headquartered in Hong Kong. The native coin was created to simplify transactions on the platform and boost its growth. For instance, if a user wants to convert Litecoin to Bitcoin, they can pay the transaction fee in BNB without reducing the actual transaction amount.
The ICO lasted for about a month and raised some $15 million. The funds were used for various startup expenses, such as hiring developers, marketers, security specialists, running exchange servers, etc.
How Does BNB Work?
BNB is similar to most digital assets in the crypto market. It is a fairly volatile trading cryptocurrency, rising and falling in value over short periods of time.
On a more technical level, BNB follows the ERC 20 standard. This means the tokens are automatically interoperable with services and software supporting the standard (software wallets, hardware wallets, exchanges, etc.). Additionally, Binance Coin is also compatible with BEP-2 and BEP-20, both of which extend the original standard.
BNB prioritizes interoperability not only between different cryptocurrencies but also between Binance-issued tokens. For example, you can deposit ERC20 tokens into the Binance Exchange and withdraw them as BEP20 into a BSC wallet.
Binance made an unusual commitment in its original White Paper – to burn a certain amount of BNB every quarter. Binance will continue burning BNB until they remove 50% of the total supply.
40% of BNB’s initial supply (approximately 80,000,000 BNB) was transferred directly to the Binance team. These funds remain untouched. Instead of selling or using these tokens, the team utilizes their reserve for quarterly burn events.
The most recent BNB burn took place on October 18, 2021. The team removed 1,335,888 BNB, which was worth $639,462,868 at the time.
What Is Binance Coin Used For?
We’ve rounded up eight examples of real-world Binance Coin use cases for this pragmatic yet innovative coin:
- Transaction fees: Users can use their BNB to pay commission on the Binance Exchange, which also grants them a neat discount.
- Trading: Binance Coin can be used for crypto-to-crypto transactions. The most popular exchange pairs are BNB/USDT, BNB/BTC, and BNB/ETH.
- Investment: You can invest in BNB directly (i.e., purchase and hold it for an extended period of time) or use the crypto to invest in stocks, ETFs, and other assets.
- Payment processing: There are many businesses, mostly online merchants, that accept BNB as a means of payment.
- Traveling: BNB can be spent at flight booking services and hotels and flights.
- Entertainment: This token is becoming more and more prominent in the online entertainment space. For example, holders can spend their coins on virtual gifts or lottery tickets
- Loans and transfers: Some peer-to-peer lending platforms allow you to use Binance coin as collateral for loans.
- Credit card payments: BNB is often supported as payment for credit card bills, although it’s not widely available.
BNB Pricing and Future Dynamics
Cryptocurrencies exist in an ultra-competitive space, where hundreds, if not thousands of teams, compete for users’ attention. Competition for BNB will be fierce no matter what. But since this crypto has a decent concept and a backing of a powerful cryptocurrency giant, it stands a good chance of growing in the long term.
To put the price of BNB into context, 2021 was an explosive year in terms of value surges. Having started the year worth around $40, BNB finishes it with over $620 per token. This shows an exceptionally positive price dynamic, making investors very hopeful.
What is the purpose of the Binance coin?
Binance serves as a utility token and lets users pay their trading fees and transaction fees at a reduced rate compared to other tokens. In Binance, token sales are burned, which means they use the profits to purchase more BNB, burn (destroy) them.
Why do people like Binance Coins?
To trade cryptocurrency, you have to pay fees
Exchanges charge transaction fees for crypto transactions, and one of the reasons Binance is so popular is that its transaction fees are among the lowest in the world. Every one of these billions of trades costs users just 0.1%.
What is the reason for Binance’s U.S. ban?
On July 15, Italy’s regulators announced Binance no longer had the authorization to operate. Bloomberg reported that Binance was under investigation by the U.S. government as recently as May 2021 for tax fraud and money laundering.
What is the future of the Binance coin in 2021?
Pre-mining of all coins was done before their ICO, with a set price of $0.10 per BNB. The Binance Coin price has remained steady despite the crypto winter of 2018 – and fast forward to the end of 2021, Binance Coin’s price carries a lot of interest.
Is Binance a safe investment?
Binance: Is it safe? It is considered a safe exchange that uses Two Factor Authentication (2FA) to protect user accounts. However, The Binance exchange was hacked on May 7, 2019, resulting in 7000 Bitcoins being stolen.
Thank you for reading!