What is Binance Coin
Whether you have some experience in the space and have been investing in crypto for a while, or you’re new to the field, you’ve probably come across the name Binance and it’s not surprising. It is the largest cryptocurrency exchange in the world. The name “Binance” is a combination of two words, “Binary” and “Finance”. If you’ve ever used the platform, you may already be aware that it has its own cryptocurrency called Binance Coin (BNB).
Binance Coin is a digital currency issued by the crypto exchange Binance, which powers all operations on Binance.com.
Binance Coin is used by users to pay the fees charged by the exchange for using their services. These fees include, but are not limited to, trading fees, exchange fees, and cryptocurrency listing fees. In addition, like any other cryptocurrency, BNB may also be traded on supported crypto exchanges.
Token development
Binance was founded in 2017 by its CEO, Changpeng Zhao, along with co-founder and CTO, Roger Wang. Changpeng Zhao, who is also known as “CZ” in the crypto community, previously served as the CEO of BijieTech. In addition, CZ is also the co-founder and CTO of OKCoin.
Binance has issued a total of 200 million BNB tokens. The company conducted its initial coin offering (ICO) between July 14 – 27, 2017. The total token offering was distributed in a certain percentage among different entities:
- 100 million (50%) BNB tokens were reserved for the ICO.
- 80 million (40%) BNB tokens were distributed to the team standing behind the project.
- 20 million (10%) BNB tokens were reserved for the business angels who invested in Binance’s cryptocurrency.
One of the key aspects of Binance Coin is the plans to redeem the tokens and burn them, which happens every 3 months. This process is explained in the Binance white paper. To summarize, Binance will use 20% of each quarter’s profits to redeem and then burn BNB. The exchange will continue this process until the supply of BNB is 50% of the original amount, with 100 million BNB remaining. Any buyback transaction made by Binance to burn BNB will be announced through the blockchain for more transparency.
What are the benefits of Binance Coin?
As mentioned earlier, Binance uses the BNB token to collect various fees charged for using the platform, such as trading, withdrawals, registration, etc. As of August 2018, the platform charges a trading fee of 0.1% for each transaction, but if users pay into BNB, they can claim an additional discount on trading fees.
Although the main purpose remains to pay transaction fees on Binance.com, Binance DEX and Binance Chain, BNB is used for payments, hotel and airline ticket bookings, various online services and even financial purposes.
BNB is also used to invest in various ICOs, which can be found in the Launchpad program on Binance.
Unlike Bitcoin, Binance Coin’s functionality is not limited to peer-to-peer payments. It is an integral part of the Binance ecosystem. The BNB token is essentially a revenue collection vehicle for the platform.
The BNB token has some unique advantages for its use on the platform. Through BNB, users are entitled to additional discounts that are otherwise not applicable with any other cryptocurrency.
BNB Burning
Although 100 million Binance tokens were initially offered in the ICO, the current total offering is less. Each quarter, Binance uses a fifth of its profits to buy back and permanently destroy or “burn” the BNB tokens it holds in its vault.
Lost BNB in eligible cases can also be recovered through the ‘BNB Pioneer Burn Program’. It counts users’ lost coins towards the official burn count and restores them with BNB.
In addition, BNB uses a real-time burn mechanism based on gas charges. In each block, a fixed ratio of collected charges is burned, with the ratio determined by BNB validators.
How do I buy a BNB?
1. Choose a crypto exchange
There are numerous cryptocurrency exchanges and marketplaces that range from easy-to-use systems to complex dashboards for advanced traders.
Since BNB is so popular, you will be able to purchase the token on most cryptocurrency exchanges, but it is advisable to stick to a few of the more popular exchanges such as Binance, Kraken, Coinbase, etc. Different platforms come with different fees, security measures, and may include other features, so it’s a good idea to do your research before signing up.
2. Create an account and confirm it
Start with account registration, which is completely free on the above platforms. For added security, 2FA – two-factor authentication is also enabled. This way, you and your device are the only ones who can grant access to the account.
You are then taken through a KYC process, which is providing personal information – ID card/passport/driving license details, proof of address (e.g. bank statement or utility bill).
After completing these steps, you are ready to buy, sell and trade Binance Coin (BNB), as well as take advantage of various services such as staking.
3. Fund your account
Once your account has been registered and verified, you need to deposit funds into the account to start taking advantage of the platform’s buying and trading services.
The main deposit options are:
- Credit/Debit Card
- Bank deposit
- Peer-to-peer (P2P)
Where to buy BNB?
On Binance, the world’s largest cryptocurrency exchange, deposits are absolutely free.
