What is Binance Coin (BNB)
Binance Coin (BNB) is one of the largest cryptocurrencies in the whole world in terms of market capitalization. It's the native crypto token of Binance, which is the largest crypto exchange across the globe by trading volume. Both the Binance crypto exchange BNB Coin were created at the same time back in 2017. At that time, the project was deployed and started running on the Ethereum blockchain, and BNB coins were actually ERC-20 tokens. But later on, the project migrated to its own blockchain known as Binance Chain. This article will discuss everything you need to know about Binance Coin (BNB), how it works and what you can do with it. So, without any further ado, let's jump into it.
Binance Coin (BNB) Development and History
Changpeng Zhao (Current CEO) and Roger Wang (Current CTO) founded Binance back in July 2017. At that time, the headquarter of the cryptocurrency was in Shanghai. However, in September 2017, the company had to move its headquarters and servers to Japan because of the ban from the government of China.
Binance Coin (BNB) Tokenomics
The project first minted 200 million BNB coins, and the first ICO (Initial Coin Offering) took place between 14th to 27 July 2017. Here’s the breakdown of how Binance distributed its coins.
- 50 percent or 100 million BNB coins were reserved for public sale.
- 40 percent or 80 million BNB coins were reserved for the Binance team.
- 10 percent or 20 million BNB coins were allocated for the Angel investors.
Binance Coin (BNB) Burn
Binance also reduced the number of its total coins by conducting quarterly burns. According to the official stats, 20 million coins are burnt every year, and the company will burn 100 million coins in total. Therefore, the burning of BNB tokens is expected to end in 2022. The following image shows all the BNB token burns that have already taken place.
Initially, the price of one BNB token was only 0.10 US dollars, and today (on 16 July 2021), it's well over 300 US dollars per token.
Why was Binance (BNB) Created?
The primary aim of creating a BNB token was to help traders and investors performing transactions on the Binance exchange. Not only does it ensure fast transaction confirmation, but it also reduces the transaction cost significantly. But now, the BNB coin has itself become a valuable crypto asset that currently flaunts the status of the world’s 4th largest cryptocurrencies in terms of market capitalization.
How Does Binance Coin (BNB) Work?
Binance Coin (BNB) comes with a couple of different functionalities. As mentioned earlier, it works as a native cryptocurrency of Binance Chain, but at the same time, it also operates as an exchange token.
BNB as an Exchange Token
BNB offers the following functionalities to the users when it works as an exchange token.
- When users need to pay an exchange trading fee on Binance, the BNB token provides them with a 25 percent discount.
- BNB token comes with more trading volume discounts on Binance as compared to other crypto tokens.
- Operates as one of the most valuable trading pairs on Binance.
BNB Trading Fee Discount
When a user holds BNB tokens on the Binance crypto exchange, s/he can use them to pay the trading fees. Paying the trading fee in BNB means the user will get a 25 percent discount regardless of the underlying trading pair.
Trading volume discounts
Just like most crypto exchanges, Binance also offers discounts for its users trading in high volumes. But it's important to note that in order to get these discounts, the users need to hold a certain number of BNB tokens in their accounts.
Major Trading Pair
Binance platform allows its users to trade BNB coins against almost all the other available virtual coins. It means that on the Binance exchange, the most diverse cryptocurrency is undoubtedly BNB.
BNB as the Native Cryptocurrency
Users can use BNB tokens in the following way when it operates as the native Binance Chain token.
- Users can spend BNB tokens to pay the platform’s gas fees
- On Binance DEX, the BNB token also works as the most valuable trading pair
- BNB coin is most commonly used and accepted on almost all the applications running on Binance Chain.
Binance Chain, as mentioned above, is a blockchain that was launched in 2019. It was specially designed for Binance coin (BNB), and it's tightly bound with Binance DEX (Decentralized Exchange) and related finance applications. Binance Chain doesn’t offer smart contracts’ functionality. The token standard of Binance blockchain is known as BEP-2 that ensures compatibility across the blockchain ecosystem. Initially, Binance used to work only on the DPoS (Delegated Proof of Stake) consensus mechanism, but now it also supports the PoS (Proof of Stake) algorithm as well.
Proof of stake is a mechanism where people stake crypto tokens (BNB in this case) as collateral to earn more coins. This algorithm replaces the crypto mining that ensures energy efficiency and accessibility.
On the other hand, the delegated proof of stake is a mechanism in which users delegate the staking operation to a few representatives.
Binance Coin (BNB) Use Cases
The Use cases of BNB token also go beyond the Binance exchange, and the following are the most significant ones.
- Trading: Users can use Binance (BNB) tokens to trade for other digital currencies or pretty much all the major crypto exchanges.
- Transaction Fees and Discounts: Binance (BNB) coins can be used to pay the transaction fees on the Binance crypto exchange. Moreover, users also receive discounts if they pay the transaction fee in BNB tokens.
- Account Tier: Users who have an account balance in BNB with a trading volume of the last 30 days more than a certain threshold receive VIP Binance account tiers. It offers additional perks and fee discounts.
- Payment Method: Many online platforms accept BNB tokens as their valid payment method where users can buy both digital and physical products.
- Dust Conversion: Binance allows users to convert “Dust” (non-tradable digital currency amount) into BNB using Binance exchange.
- Gas: BNB token can be used to perform transactions on Binance DEX because it works similar to gas which is used to pay transaction fees on the Ethereum platform.
- Binance Launchpad Participation: Binance Launchpad is another platform by Binance that allows different projects to launch IEO (Initial Exchange Offerings). Binance Launchpad chooses qualified traders for the initial exchange offerings using a lottery system. But all the participants must have a certain number of BNB coins in their accounts. If a user is eligible to participate in the initial exchange offering, s/he will be able to use BNB tokens in order to buy new IEO tokens.
What Makes Binance (BNB) Unique?
Unlike other popular cryptocurrencies such as Bitcoin, Binance BNB isn’t limited to only P2P payments. In fact, it operates as an integral part of the ecosystem that Binance offers. In its essence, the BNB token is a means to collect revenue/profit from the Binance platform. Other than Binance exchange and Binance Chain, the company also offers “Binance Labs” that allows users to invest, empower, and incubate different blockchain projects, entrepreneurs, and communities.
Advantages of Binance (BNB)?
Binance (BNB) token has some of the best use cases in the whole crypto world. It offers an excellent level of usability that even most popular cryptocurrencies such as Bitcoin don’t. One of the best features of BNB tokens is Binance Visa Card that allows the users to convert their BNB tokens directly into government-issued fiat currency. Moreover, the BNB token is an effective alternative to Ethereum because of low transaction fees.
One of the most important things to note about crypto exchanges is that they don’t buy or sell cryptocurrencies from the users directly. Instead, they provide an environment to facilitate users to buy or sell their desired cryptocurrencies from other users. That's why crypto exchanges try to provide as many crypto trading pairs as they possibly can. Moreover, it's also critical to managing a large number of transactions successfully, and Binance can easily confirm about 1.4 million orders per second. It also means that Binance is one of the fastest crypto exchanges in the whole world, with BNB coin as the most versatile cryptocurrency.
Liquidity is yet another factor, and no crypto exchange can succeed without it. Currently, Binance supports more than 500 cryptocurrencies which means that it possesses the busiest order book with highly competitive prices.
Binance crypto exchange is also available in 17 different languages, and that number is only increasing. The multilingual support makes it easier for all types of people to use the platform in the most effective way.
Disadvantages of Binance (BNB)?
The biggest disadvantage of BNB is that the majority of the coins are owned by the exchange, which indirectly shows centralization. According to many crypto experts, it's far too much control which is against the basic concept of cryptocurrency.
Because of the rise of decentralized exchanges, Binance’s centralized exchange can face a lot of trouble. One of the biggest examples of Uniswap DEX is growing dramatically. In order to manage this problem, Binance has also launched its own DEX. But still, in the future, the total number of people using the Binance crypto exchange will probably decrease.
Is Binance Exchange Secure?
If you don’t already know that keeping your cryptocurrency in your exchange’s account or an unreliable wallet can be very dangerous. However, it’s not true when it comes to storing your BNB token in your Binance account. Other than getting discounts and other benefits for holding BNB coins in your account, Binance offers a very high level of security. It certainly doesn’t mean that it’s impossible to hack the platform, but the ultra-secure protocols make it extremely difficult.
In order to keep your funds safe, Binance has developed a state-of-the-art feature known as SAFU (Secure Asset Fund for Users). The company has been saving 10 percent of the total transaction fees since 14 July 2018 in the cold wallet. The best thing about this cold wallet is that it doesn’t communicate with the system in any way.
Binance announced that the SAFU would help the company to compensate its users if any data breach takes place.
How to Earn Binance BNB without Investing?
It’s actually possible to earn BNB tokens without investing. It’s important to note that the following methods can make you rich, but you can certainly earn BNB tokens for less.
By Referring People to Binance Website
The first and the easiest option to earn BNB tokens is to refer other people to the Binance crypto exchange. For that, you’ll need to copy your referral link and share them with your friends. If they open their Binance account using that link, then the platform will consider them your referrals. Whenever any of your referrals perform a trade on the platform, you’ll receive 20 percent of the total transaction fees.
According to the new referral program that Binance has recently launched, you can earn 40 percent of the transaction fees. However, your referrals will need to hold at least 500 BNB tokens in their accounts for that.
Converting the Fractions of Other Cryptocurrencies to BNB Tokens
Binance allows you to choose from two different methods to pay your transaction costs while trading. You can either use BNB coins to take advantage of an orderly discount, or you can pay the costs directly by using the exchanged cryptocurrency. In the latter situation, you may find digital currency fractions that you cannot use on the market anymore because of the very low value. In other words, these fractions become useless, but Binance allows you to convert that into BNB tokens. Undoubtedly, you’ll also get a very small amount of BNB after converting. But the cumulative BNB amount received from converting more fractions can be used to perform trading on the Binance exchange.
BNB Vault Program
You must hold a certain number of BNB tokens in your account in order to take part in the BNB vault program. Therefore, you’ll need to invest a little to buy the required BNB token. However, if you have BNB tokens already in your account, earned from any of the two methods mentioned above, you can participate in the BNB vault program to earn more coins. All you need to do is to deposit your BNB token in the crypto wallet supported by the BNB vault. This way, you’ll automatically participate in De-Fi (Decentralized Finance) staking, Savings, Launchpool, and several other projects simultaneously to earn BNB coins.
How to Buy Binance BNB Tokens?
If you directly want to buy BNB tokens, then you can do it by using many crypto exchanges. However, the best option is undoubtedly Binance. That's because it's the native exchange that offers a lot of perks and benefits of holding BNB tokens.
First, you’ll need to go to the official Binance website and register yourself. For that, you only need to provide your email address or phone number. After that, you’ll need to verify your account and start your BNB buying process.
Binance allows you to buy BNB by using both your cryptocurrency and fiat currency. If you want to buy BNB tokens with your cryptocurrency, then you'll need to attach your crypto wallet. On the other hand, you'll need to attach your bank account information to buy BNB tokens with fiat currency.
The Best Crypto Wallet for BNB
You would already know that using a reliable and secure crypto wallet is the best way to keep your Binance (BNB) tokens safe. You’ll need to choose the crypto wallet that supports BNB tokens.
Binance offers its own crypto wallet known as "Binance Chain Wallet." You can use this wallet to safely transfer, receive, and hold BNB tokens. It's basically a browser extension that works pretty much like other software crypto wallets. Other than that, you can also store your BNB tokens in your Binance account wallet, which is associated with your account.
If you want to store your BNB tokens in any other type of crypto wallet, then you'll need to choose the one that supports BEP-20 and BEP-2 coins. The following are the best available options that you can use to store your BNB tokens.
Ledger is the best company that offers the most reliable hardware wallets. You can use them to store more than 1000 different types of cryptocurrencies. It’s important to note that hardware wallets are known to be the most secure way to store your cryptocurrency. That’s because they store your crypto tokens without internet connectivity. The most commonly used crypto wallets by Ledger that support BNB coins are as followed:
Software Wallets for Smartphones
If you want to store your BNB token in a software wallet that you can access using your smartphones, then consider using the following options.
Both of these wallets come with both iOS and Android support.
Software Web Wallets
As mentioned, the best option to store your BNB tokens is the native wallet by Binance.
What Can I Buy with Binance Coin (BNB)?
Now that you understand how to earn and buy BNB tokens, it’s time to discuss what you can buy with them. BNB coins come with many use cases. If you choose the right online platform, you can use BNB tokens to buy anything that you want.
There are many online platforms where you can choose BNB as your payment method. However, most of them allow you to trade your cryptocurrency with other available options. But if you want to actually buy the products that you can use in your daily life, then Coinsbee is your best bet. That's because, on this platform, you can buy giftcards with BNB for over 500 popular brands. You can then use those gift cards to buy any product that you want from those brands. Moreover, you can also buy a mobile phone top-up with BNB as well.
Coinsbee allows you to buy Amazon BNB gift cards, eBay BNB gift cards, Walmart BNB gift cards, Flipkart BNB gift cards, Hudson’s Bay BNB gift cards, Adidas BNB gift cards, Nike BNB gift cards, and many other renowned brands.
If you are a foodie, then you can also buy giftcards BNB for your favorite restaurants, such as KFC BNB gift cards, Pizza Hut BNB gift cards, Boston Pizza BNB gift cards, Burger King BNB gift cards, and more.
Coinsbee also offers gift cards for BNB for many gaming platforms as well as games such as Steam BNB gift cards, PlayStation BNB gift cards, Xbox Live BNB gift cards, Nintendo BNB gift cards, League of Legends BNB gift cards, PUBG BNB gift cards, Battle.net BNB gift cards, etcetera.
Future of Binance (BNB)
In the expectation that this will foster consumer loyalty, Binance promotes the use of BNB coins. Naturally, fast transaction time and reduced trading costs are wonderful advantages of BNB tokens for Binance users. It’s safe to say that the BNB coin will continue to circulate extensively because of the largest parent cryptocurrency exchange. Binance exchange is growing continuously, and because of that, the BNB token can become more valuable in the future.
Currently, the primary value of the BNB coin is currently in its parent exchange. It’s a unique cryptocurrency, especially when considering only the new ones because it offers a solid practical use. Most investors utilize BNB coins to gain high trading volume discounts. However, the value of this token may rise as an asset in the future. The earliest investors have already seen a significant return on BNB tokens. It’ll be interesting to witness if investors start holding BNB tokens by considering them an asset or continue to use them to gain discounts.
Binance will definitely incorporate new features and functions if it continues to be successful at its current level. All the projects that Binance has launched so far use BNB coins, and the company will continue to do so. Not only will it increase the usability of the BNB token, but it'll also increase its value. We hope this guide will help you to understand Binance (BNB) token in detail and how to utilize it in the best possible way.