Binance Coin (BNB)
Launched in July 2017 through an ICO , Binance Coin is the native token issued by Binance Exchange . Binance Coin is the cryptocurrency that fuels operations on the Binance platform. Binance is a popular cryptocurrency exchange founded in China in 2017 by Changpeng Zhao (CZ). The Chinese company relocated to Malta, Southern Europe, following the Chinese government ban on cryptocurrencies.
Binance crypto-coin trades under the symbol BNB on various exchanges. BNB tokens were pre-mined by the Binance founding team before launching the ICO on the Ethereum network. The token was issued as an ERC-20 token on the Ethereum blockchain.
The BNB Initial Coin Offering aimed to raise funds for the development of the exchange platform. The money collected from the ICO was used to upgrade the Binance ecosystem and for branding and marketing the exchange platform.
Binance has a total supply of 200 million coins ever to be mined. During the ICO, Binance Exchange distributed the coins between its team members, angel investors, and other participants. The platform offered 20 million BNB tokens to private investors, 80 million coins to the founding team, and the rest, 100 million tokens, to other participants in the ICO.
The fundraising activity that took place from June 26 to July 3, 2017, managed to raise $15 million. Most of the funds were used to launch, market, and improve the Binance exchange. At the end of the ICO, BNB crypto was listed on exchange platforms, including Binance, where investors would trade it against other cryptocurrencies like Bitcoin, Ethereum, etc. They would also purchase BNB coins as a store of value in hopes for its value to rise in the future.
At the launching time, BNB was worth $0.12. For 1ETH, investors received 2700 BNB or 20.000 BNB for 1BTC .
Binance has currently reached its total supply of 200 million coins. However, Binance is destroying BNB tokens over time to reduce the total amount to 100 million BNB coins and fight the coin’s depreciation. The platform has a repurchase plan where they use 20% of their profits every quarter to buy back BNB crypto-coins, and then burn them until they buy back a maximum of 100 million tokens.
BNB token is mostly used as a utility token within the Binance exchange ecosystem. You can use a cryptocurrency of your choice to trade on the exchange platform, but Binance offers a rebate to incentivize customers to use BNB coins. It enables customers to receive discounts if they use it to pay for their trading fees. However, the fee discount is reduced every year until it reaches 0% in July 2021.
Besides using BNB coins to pay transaction fees on the Binance exchange, you can use BNB tokens to participate in ICOs on the Binance Launchpad, which is a token launch platform. Once the ICO ends, the new tokens will be listed on Binance exchange, where you would trade them against other cryptos.
Also, more and more businesses accept BNB as a payment method; therefore, you can use your coins to buy products and services on the Internet.
BNB will soon be transferred from the Ethereum network to Binance decentralized exchange platform (Binance DEX), the Binance Chain. Binance Chain will then use BNB as gas to supply its operations and future features, which should increase the token’s demand, thus its value.
As of November 23, 2019, Binance Coin boasts a market capitalization of $ 2.5 billion, making it the 8th largest crypto by market cap. BNB is currently trading at $16.22.
Benefits of The Binance Platform For BNB
Binance is the biggest crypto exchange by trading volume in the world, meaning that it already has a large user base of customers capable of driving the coin's adoption. Also, the platform encourages its customers to use the tokens in exchange for discounts on trading fees. Even though the discount is scheduled to end in 2021, the Binance platform is ever-evolving, and you could still use the coins to pay for new services, especially on the Binance Chain.
There are so many ways the Binance platform influences the growth of BNB:
An attractive fee model
Binance uses BNB coins to fund its operations, which why they encourage their customers to use the native token in their transactions. BNB users are entitled to unique discount rates. Those who pay fees in BNB can claim extra discounts on transaction fees.
Binance has predefined discount rates on a five-year basis. In the launch year of the exchange, the platform offers a 50% on trades to people using BNB. In the second year, the discount rate is 25%. For the third year, the rate is fixed at 12.5%, and the fourth-year at 6.25%. The discount ends from the fifth year onwards. To enjoy your discount, you have to turn on the function "Using BNB to pay for fees" on the User Center; otherwise, you will be paying 100% of trading fees.
Binance platform provides special offers to US residents who can only trade on the Binance.US platform. Binance.US is relatively new and offers US customers a 25% discount on their trading fees plus access to an exclusive club. The VIP club allows users to save even more on the trading costs. However, Binance requires members to have a monthly trading volume of at least $500.000. Their marketing strategy worked on the American market and saw an incredible increase in the trading volume. The daily trading volume shortly exceeded $10 million.
Binance platform is available in more than ten languages, including English, French, German, Spanish, Chinese, Japanese, Korean, etc. Binance multi-language platform attracts users from across the globe.
Binance exchange has high liquidity in various assets,
Bitcoin being the most traded on the platform. The liquidity of an exchange platform measures the amount and speed at which assets move around the exchange. Binance exchange is known to process trading orders quickly. The platform has one of the busiest orderbook in the cryptocurrency market as it allows customers to find a match for their request at affordable prices rapidly. Also, new coins, especially Asian tokens, often prefer to list with Binance. The wide range of assets traded on the exchange is another key to increase the number of customers. The safe and competitive Binance exchange allows customers to trade over 380 cryptocurrencies, thus attracts more crypto investors. As more people adopt BNB to pay for their trading fees on the platform, the value of the token will rise subsequently.
Exchanges like Binance act as matchmakers in the crypto market. When you place a buy/sell order, the exchange will match your request with another client willing to buy or sell your asset at the price you are proposing. With the rising popularity of Bitcoin or other cryptocurrencies, users can experience delays in their orders, which will affect their investment negatively if they miss their opportunity. Luckily, Binance’s order matching engine is capable of executing over 1 million trades per second. Binance’s processing speed has attracted many investors over the last few years.
How to buy and store BNB
BNB tokens assume a wide array of functions that attract people to buy and use the token in their day-to-day activities. Apart from being used to pay fees in the Binance platform, you can use BNB coins to pay for travel expenses on TravelbyBit, purchase virtual gifts from live video streaming like Uplive.
Besides, you can use the coins to pay for goods and services on online marketplaces that accept BNB tokens. What more, BNB users can access loans on crypto lending platforms such as Nexo. Moreover, you can use BNB coins to make donations to charity via the Binance Charity Foundation (BCF). Further,you can earn BNB tokens by completing tasks and surveys in StormPlay. Again, investors can hold the coinsas a long-time investment hoping for its value to increase in the future.
2. Where to BNB tokens
Now that you know how you can benefit from the tokens let's see ways you can acquire them. Since BNB coins were pre-mined before the ICO, people cannot obtain BNB through mining. Alternatively, you can buy BNB with fiat currencies on Dether, Metal Pay, or with a bank account on SpendTM.Currently, one BNB is worth $16. Also, you can get it on the Binance platform by exchanging it with other cryptos. BNB tokens are traded on other platforms like Trade Satoshi, Bancor Network, IDEX, etc.
3. How to store your coins
Keeping your coins on the exchange platform after you bought them isn’t secure, so you should consider purchasing a crypto wallet. However, you need to make sure that the wallet of your choice supports ERC-20 tokens.
Binance platform provides its users with crypto wallets where you can store your BNB coins or other cryptocurrency tokens that trade on the exchange. There are many types of wallets that you can choose from, including web, desktop, mobile, hardware, or paper wallet.
If you are an active crypto user, you should opt for web, desktop, or mobile wallet. However, if you are looking for a secure wallet for your long-term investment, hardware, and paper are your go-to wallets. The Binance platform now has its official wallet called Trust Wallet (mobile), which is compatible with all ERC-20 tokens. Binance Exchange also supports other wallets such as Trezor, Ledger Nano S, Mist, MyEther, Metamask, Jaxx, Coinomi, etc.
BNB Coin Burning Mechanism
As mentioned above, Binance exchange plans to destroy BNB tokens each quarter based on the trading volume until half of the total supply is burned. A decrease in the total amount of the BNB is expected to increase its value.
The platform uses 20% of its gains every quarter to buy back the tokens. The repurchased tokens are then burned. So far, there have been nine token burning events, the last one, which happened during the third quarter of 2019, completed a burn of 2,061,888 BNB (roughly $30.7 million). In total,14,525,153 BNB coins have been burned.
The burning events are scheduled to happen every three months, according to the trading volume. They plan to spend 20% of each quarter’s benefits to buy back remaining coins and burn them. If they burn many coins, it indicates the profitability of the Binance’s platform for that quarter.
All coin burn events are recorded as a transaction on the blockchain to keep the activities transparent. The burn events are now taking place on the Binance chain, instead of the Ethereum network.
BNB burn events are one of the factors that influence the value of the token. BNB prices tend to rise right before the burn, and then significantly decrease right after the event. However, the post-burn price often stays above the value of the crypto before the pre-burn period.
Should One Invest in BNB
Briefly, BNB is the native cryptocurrency that powers all the transactions on the Binance ecosystem.BNB coin is used to support various activities on the Binance exchange, such as paying for trading fees, listing fees, etc. It also used to make in-store payments, invest in ICO on the Launchpad, and so on. Moreover, BNB tokens will be used to fuel transactions on the Binance Chain.Others prefer to hold it in hopes that its value will increase.
The BNB price mainly depends on the supply and demand factor. If the demand for Binance Coin is high, its value is bound to rise, and vice versa. Other factors that can influence BNB prices include policy updates, cryptocurrency news, and laws, amongst other things.
Binance exchange stands out from the competition with its low trading fees and attractive discounts, which makes it the number one choice for multiple investors. As many people adopt the coins as their transfer of value on the platform, its price will automatically increase. Furthermore, with the decreased total supply due to the burning events, BNB developers are expecting to see an increased demand, which will raise the value of the token.
What more, Binance is backed by a robust and dedicated team of developers and investors. They are continually working to improve the platform and push the project to success, thus, drive the value of the BNB token. Their prior discount strategy has helped to keep the price up as many traders on the platform are now opting to use BNB to pay for trading costs.
If you are a constant user of the platform, you should consider buying more BNB to cut down your trading expenses. Again, BNB tokens will also be used as the fuel on the future Binance decentralized exchange, meaning that they are an asset worth to have.
The cryptocurrency has achieved exponential growth within a short time frame despite a high volatile market. BNB was traded for the first time on the crypto market on July 25, 2017, at $0.12. Since then, BNB demonstrated a steady growth, which increased from December 2017. On December 19, the BNB price was worth $5.7. Only a week later, the token traded at over $10. In January 2018, BNB reached a historical $ 23.45, although the price dramatically decreased to $8 in less than a month.
2018 was a bad year for the altcoin, which experienced many ups and downs, with prices trading between $4 and $16.
The year 2019 has been hugely successful for the token. It showed an uptrend from February till mid-June, where it reached an all-high of $38. However, it experienced another downtrend that dramatically decreased the coin's value to $15 on September 29, 2019. The price started to increase again and reached $21 on November 14, 2019, but they shortly declined afterward.
Binance has shown a certain degree of stability compared to other cryptocurrencies. Nevertheless, BNB price, like any other crypto, can be highly volatile, thus involve risks. Their future performance is unpredictable, which why you should do researches and seek advice about the crypto you want to invest in. You can conduct your analysis based past trends to determine where its heading or check for experienced traders' advice on cryptocurrencies forum.