Binance Coin, denoted by BNB, is a native coin of the Binance cryptocurrency exchange which has been created on Ethereum blockchain using the ERC20 token standard. Binance will issue a maximum of 200m BNB tokens. Its primary goal is to fuel the exchange operations while offering convenience and affordability to the traders and cryptocurrency enthusiasts.
The coin was created in July 2017, through an Initial Coin Offering (ICO) which put 20 million BNB tokens up for grabs for angel investors, 80 million for the project contributors and remaining 100 million for individuals who participated in the ICO. The funds raised by selling BNB tokens were used for exchange development, branding, and marketing. A percentage of the investment was also spent on adding necessary upgrades to the Binance crypto exchange.
Why Was Binance Coin Invented?
It has been designed to empower the crypto platform and fuel its operations to establish a sustainable ecosystem. The coin can be used for a multitude of goals including paying the listing fee, exchange fee, trading fee, or any other charges that a user may incur on the exchange. In the first year, Binance offered 50% trade discount which would drop in half every next year with discount ending from the fifth year.
The coin can be used for IEO investments that are listed in Binance’s Launchpad section too. These new currencies will then be listed on Binance exchange, providing them with a full-featured platform for trading. Having a native currency will reduce dependency on traditional money which can make delays and extra charges which put an additional financial burden on the end-user. This token offers a seamless experience while allowing users to save money on trades.
How Does Binance Coin Work and What Technology Is Behind It?
BNB is created on Ethereum blockchain and uses ERC20 tokens which can store and hold value. However, you can’t mine them as they have been pre-mined and distributed through ICO. Tokens in circulation are used for discounted trading on Binance Exchange.
To counter the value deprecation, Binance has been buying back tokens and destroying them to reduce the supply. The crypto exchange aims to eliminate half of the tokens in circulation.
Is Binance Coin Real Money?
The main purpose of BNB is to fuel the operations of crypto exchange and empower the Binance ecosystem. Currently, it can also be used for trade discounts. However, the promotion will no longer be there in the next years. It can be used for paying for travel and hospitality services, but so far its acceptance as a viable currency is low. That’s why it can’t be considered as real money, yet.
Binance Exchange has good financial and strategic backing, which can keep the token afloat for coming years. This means that the landscape of the dominant alternative currencies can change in the future. It won’t be a smart idea to bet against a token that’s supported by a powerful exchange which carries out billions of dollars in crypto transactions. At this moment, BNB is a viable currency replacement; in fact, it’s not even close to Bitcoin or Ripple in terms of acceptance. If you’re looking for high liquidity for trading or any other purpose, you may want to get another cryptocurrency.
Fees & Expenses
Since it is primarily designed for internal exchange use and the coins have already been pre-mined, there’s no fee associated with the network. However, when you buy Binance Coin tokens or make any other trade on Binance exchange, you must pay 0.1% of the trading amount. If you pay for your trades with BNB, you will get a 50% discount. For example, if you are going to buy $100 worth of BNB through Binance Exchange using any other coin or conventional money, it’ll cost you $0.10. However, if you are paying with BNB tokens, you will only have to pay half, i.e. $0.05 or 5 cents.
You can also use the currency on various services, especially travel and hospitality ones. Their service charges or commission fee are determined by the respective vendors or service provider.
What Are the Benefits of Binance Coin?
If you are using BNB to trade on the exchange, you will have access to the platform’s proprietary matching engine which can support up to 1.4 million orders each second. You can always find the proper trade, and using BNB makes it even faster and more reliable.
Secure & Trustworthy
Binance already has millions of users and traders who rely on the exchange and trust its security and protection features. The exchange uses a multi-cluster and multi-tier system framework and Secure Assets Fund for Users (SAFU) to keep your funds safe.
Trade Multiple Cryptocurrencies
Using BNB, you can trade more than 150 cryptos on the exchange relying on a fast, secure and affordable trade matching system. Apart from that, Binance Coin also gets its own trading pairs to meet your particular trading needs. You don’t have to look anywhere else.
As mentioned before, BNB also enables you to get a 50% discount on trading fee.
Spend Binance Coin
Apart from a seamless experience within the Binance ecosystem and trade fee discounts, you can also use it in many other ways. It is accepted by multiple service providers, particularly in travelling and hospitality industry.
Participate in ICOs/IEOs
Binance Launchpad also hosts new token sales where you can use your BNB tokens to buy a stake in a new and upcoming currency. Later on, these new cryptocurrencies are added to the Binance exchange where you can trade them as well providing a complete and unique experience.
Can It Be Used Anonymously?
It is kind of challenging to maintain anonymity when you are using Binance Coin. Since the token is mostly used within the Binance ecosystem, you have a verified account on the exchange to use the currency. Binance complies by Know Your Customer (KYC) and Anti Money Laundering (AML) regulations which means it will ask you to give your personal information to verify your identity before making your account. You can’t use BNB on the platform without an account. So if you are privacy-conscious, then you should try any other cryptocurrency such as Zcash that uses deliberate ways to mask your identity on the blockchain and the transaction details.
Additionally, any digital activity using BNB can be traced by Binance itself, the government, and any competent hacker. So if you are leaving a digital footprint behind, there is always a good chance that people who want to find you will find you, particularly if you are a frequent cryptocurrency trader.
How Safe Is Binance Coin?
It is created on the Ethereum blockchain, which uses cryptographical encryption to prevent data breaches and interception. Since the blockchain is decentralized, there is no single central hub which can be hacked to compromise the data. Moreover, Binance cryptocurrency exchange is known as a reliable platform in the crypto space with its security features which add safety layers to keep your personal information and funds safe. These include two-factor authentication and SSL certified encryption. It is always better to use wallets to keep your BNB secure.
What Teams Are Working on Binance Coin Development
Binance is based in China and was launched by Changpeng Zhao, who was CTO of OKCoin. After the launch, Yi He also joined the Binance team who was one of the co-founders of OKCoin. Both have grown Binance exponentially since then, and it’s now the second-largest exchange in the world by trading volume. Since Binance Coin is a derivative cryptocurrency which has been pre-mined and it’s now being burned in huge quantities to limit the supply, there are no current teams who are working on the development of the token itself.
Which Financial Institutions Are Invested in Binance Coin?
Binance has always had a lot of traction when it comes to attracting investors as the founders have already demonstrated the ability to make a fully functional successful crypto platform. That’s why Binance and BNB ICO attracted many important investors and financial institutions including Vertex Ventures, Plutus21, Black Hole Capital, Funcity Capital, Sequoia Capital, Limitless Crypto Investments, Fundamental Labs, and more. However, Binance has to see more competition which may hinder its way to get more funding.
Additionally, it has also been able to establish relationships with many vendors, service providers, and merchants to allow its users to use BNB tokens for making small to big purchases. Today, Binance has partnerships in place with more than 100 different service providers like travel, hospitality, real estate, and dining brands.
Binance Coin Mining
Binance Coin is pre-mined as 200 million BNB tokens were issued for the use. In July of 2017, the firm held its Initial Coin Offering (ICO) after allocating total supply of tokens. Since all the tokens are already in circulation, there are no more coins to be mined.
- 50% or 100 million BNB coins for ICO participants
- 40% or 80 million BNB coins for the founding team
- 10% or 20 million BNB coins for angel investors
In order to preserve value as the trade fee discount reduces annually, Binance has been burning the tokens to limit supply. So far, nearly 10 million BNB tokens have been destroyed in six phases.
Binance Coin Wallet
If you aim to store your BNB tokens securely, you can use hardware or software wallets to do so. The official wallet for storing BNB coins is Trust Wallet. However, you can also store Binance tokens onwallets such as Enjin Wallet, Ledger Wallet, Trezor Wallet, Jaxx, CoolWallet S, Metal Vault, BRD, Gifto, Request Wallet, Ethos Universal Wallet, WinQ, Atomic Wallet, Clay, Coinomi and Blox.io Wallet.
Is Binance Coin Worth the Investment?
One of the most positive things about Binance Coin tokens is that even if it doesn’t make it as a viable currency alternative, its success doesn’t solely hinge on that. It can still be used within the Binance Exchange ecosystem for powering operations and digital trading, providing a unique experience to the platform users. It’s one of those coins which have an inherent use.
That being said, cryptocurrency sphere can be quite unpredictable, especially when it comes to the price fluctuations. If you are looking to invest in BNB or any other cryptos, do so with great deliberation and caution to ensure your investment capital remains safe. You can’t understate the importance of risk mitigation.