Updated: Dec 15, 2019
BNB or Binance Coin is the cryptocurrency issued by Binance exchange, which runs on the Ethereum blockchain. The Coin is designed to fuel the Binance exchange and all other networks, within its ecosystem. This includes paying all intended listing fees, trading fees, and exchange fees. You can use BNB at the Binance Launchpad program as well, which lists Initial Coin Offerings for other platforms.
This guide will explain BNB in detail, the team behind it, how it works and major applications.
What is Binance Coin Designed For?
Binance Coin was initially launched by Binance (a cryptocurrency exchange) on the Ethereum blockchain network. However, the intent behind the creation was always to operate a native crypto asset, which offered an alternative mode of payment for fees charged to traders. Since the initial launch, Binance has developed into the decentralized exchange (DEX) and waded more firmly in the crypto sphere.
Binance is different from other crypto exchanges on several accounts. The primary difference is that Binance deals completely in cryptocurrencies and not fiat currencies. The founder, Zhao envisioned Binance to compete with other cryptocurrencies, offering viable solutions to the multiple scalability and functionality problems, experienced in other cryptocurrency trading infrastructure.
Who Is the Team Behind Binance Coin?
Binance Coin was launched in 2017 through an Initial Coin Offering (ICO). BNB was earlier issued as an ERC-20 token, by founder Changpeng Zhao under the Ethereum network. But, later it was migrated to Binance Chain (Binance’s proprietary blockchain).
Zhao, who is the current CEO for Binance and the third-richest person in the Crypto sphere as per Forbes, is known for building the high-frequency trading systems called, Fusion Systems in 2005, which was primarily intended for brokers. He has also worked as the CTO with OKCoin, for spot trading between digital assets and fiat.
How Does Binance Coin Work?
Binance is one of the world’s largest cryptocurrency exchanges as per trade volumes, and its native currency (BNB) is the platform’s only exchange currency that serves multiple other functions. The exchange is capable of processing more than 1.4 million orders every second.
It is important to understand that Binance exchange functions primarily as facilitators or brokers of cryptocurrency exchange, and does not directly deal with these currencies. The entire system works on a fee model, where a consumer looking to make any transaction (purchase or sale of cryptocurrencies) is required to pay a percentage fee first, called the trading fee. BNB is extremely useful in paying this fee because of the various perks involved.
It is important to understand that BNB cannot be mined since all tokens came pre-mined before its inception. Instead, users need to acquire the cryptocurrency through an exchange. Exactly, 70 crypto coins are currently paired with BNB and are available for exchange on BNB trading, Gate.io, IDEX, Bancor Network, and Trade Satoshi, among others.
However, similar to other traditional cryptocurrencies, a wallet is provided by Binance where you can store all your Binance Coins, among other cryptocurrencies.
While understanding how Binance coins work, you need to understand the concept of coin burning. Because all BNB was pre-mined, periodical burning sessions must be undertaken to contribute to an increased token value and demand.
Binance after separating from the Ethereum blockchain, network-enabled its framework to allow the burning of 100 million BNB tokens. There have multiple quarterly burning sessions, and more are expected to take place in the future.
What are Current and Future Applications of Binance Coin?
Binance Coin has several uses as a cryptocurrency. You can easily use it to pay for any trading fees, which may accrue on the Binance Exchange. Experts claim, using BNB to pay for the standard trading fee of 0.1% is a wise decision since you get a special discount. This deduction follows a predefined schedule, where the discounts are reduced every year. So, you should keep the bulk of your spend for the first few years.
You can also use BNB to participate in token sales, which are hosted on the Binance Launchpad. The coin can be used to power Binance DEX or Binance Decentralized Exchange.
There are several other areas where you can use BNB as a mode of payment, such as:
● Travel expenses
You can travel the world and pay using BNB at Australian merchants through TravelbyBit
● Credit card bills
Crypto.com credit card bills can be paid by using Binance coin
● Virtual gifts
Gifto is a live video streaming platform that allows payments made via BNB
● XPOS associated vendors
XPOS is a device created by Pundi X that is in use by various stores. You can easily pay at these stores using BNB.
● Pilot shop
You can pay for aircraft in BNB at the pilot shop powered by Aeron
● Impact investments
Media platform allows users to make impactful investments using BNB
The list doesn’t end here, as more and more merchants and vendors are partnering up with Binance. Some of the more notable partners include Monetha, Decentraland, ETHLend, NAGA, VIBE, Storm, Metal Pay, and Nexo.
Binance Coin has enjoyed a market capitalization of $1.4 billion over the years, and this figure is expected to grow more relentlessly. While it does not offer any exchange through fiat currencies, you can purchase BNB through other crypto coins like ether tokens (Ethereum currency) or bitcoins. The future looks promising for BNB, and eventually, will be used as the native currency of the Binance exchange.