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What Is Binance Coin (BNB): A Complete Overview

Updated on :  

08 min read.

There are several cryptocurrency exchanges existing in the crypto space. And each of these may vary in terms of features and construction. However, they all aim to offer cryptocurrency traders a platform to swap their assets. 

In some cases, a crypto exchange may have its asset. Such an asset can be useful for specific purposes on the related exchange, like fee discounts on the trading platform. Binance Coin (BNB) is one such cryptocurrency exchange asset. As of August 2021, BNB is one of the top ten cryptos with a billion-dollar market capitalisation.

Here’s all you need to know about this crypto coin.

What is Binance Coin (BNB)?

In simpler terms, Binance Coin is the crypto issued by the Binance exchange. It trades with the BNB symbol. As a utility token for Binance, BNB enables users to pay for trading fees and transactions at a lesser rate than what they will have to do with other tokens.

History of Binance Coin

Binance Coin was launched in July 2017 with an initial coin offering (ICO). As a part of this ICO, there was a distribution of BNB tokens among several participants. This included the Binance founding team and angel investors. Also, some of the tokens were up for public sale.

This is how the distribution of BNB tokens took place initially:

  • Public sale: 50% (100 million BNB)
  • Founding team: 40% (80 million BNB)
  • Angel investors: 10% (20 million BNB)

All the 100 million BNB tokens on public sale were sold out during this ICO at 15 cents for every token. Hence, Binance raised US$15 million in Ethereum and Bitcoin. 

Allocation of this $15 million takes place in this manner: 

  • 50% for Binance marketing, branding, and educating new innovators
  • 35% towards upgrading the Binance exchange system and platform
  • Rest 15% utilised as a reserve for unprecedented circumstances or emergencies

Even though BNB was initially launched as an ERC-20 token on the Ethereum blockchain, the tokens were swapped onto the newly launched Binance Chain on a 1:1 ratio in April 2019. From then, BNB was the native crypto of the Binance Chain.

Working of Binance Coin

Built on the Ethereum blockchain, Binance Coin uses ERC20 tokens that can hold and store value. But, it is not possible to mine tokens as they are pre-mined and distributed via ICO. 

Tokens that are in circulation are utilised on Binance Exchange for discounted trading. In the first year, the discount rate started at 50%, but it is scheduled to be halved yearly. And by the fifth year, no discount will be available, which will impact the token’s value. To counter value deprecation, Binance has been purchasing tokens back and destroying them to lower the supply. 

This crypto exchange has plans to eliminate half of the circulating tokens.

About BNB Burns

Binance Coin uses an Auto-Burn system to lower its total supply to 100,000,000 BNB. This mechanism adjusts the amount of Binance Coins to be burned depending on the price of BNB and the number of blocks created on the BNB Smart Chain during the quarter. This provides greater predictability and transparency to the BNB community.

Also, there is a BNB Pioneer Burn Program which makes it possible to reimburse Binance Coins lost in eligible cases. It counts the lost coins of users towards the official burn count, and reimbursement takes place with BNB.

Additionally, BNB uses a real-time burning mechanism depending on gas fees. Here, the burning of a fixed ratio of the collected gas fee takes place in every block, with the BSC validators deciding the ratio.

About Binance Coin Wallet

If you are looking forward to securely storing your BNB tokens, you can use software or hardware wallets. 

Trust Wallet is the official wallet for storing Binance Coins. However, you can also opt to store Binance tokens on Ledger Wallet, Enjin Wallet, Jaxx, CoolWallet S, Trezor Wallet, Request Wallet, Metal Vault, BRD, Gifto, Atomic Wallet, Ethos Universal Wallet, WinQ, Blox.io Wallet, Clay and Coinomi.

Uses of BNB

  • Store on different wallets
  • Trade as an altcoin
  • Securing money in times of need
  • HODL for later use on Binance Chain and Binance Decentralised Cryptocurrency Exchange (DEX) 
  • Use on blockchains integrated with BNB
  • Have fun on social media platforms – buy, use a gift token, etc.
  • Earn a salary
  • Paying for crypto trading fees on the Binance exchange with discount perks
  • Spending on services and goods across several establishments

Benefits of Binance Coin

  • Quick transactions

If you use Binance Coin to trade on the exchange, you will get access to the proprietary matching engine of the platform. This engine can support up to 1.4 million orders per second. You will be able to find the right trade every time, and using this coin makes it even more reliable and quicker.

  • Trade multiple cryptos

Using Binance Coin, you can trade over 150 cryptos on the exchange relying on an affordable, secure and fast trade matching system. Also, to meet your specific trading needs, BNB gets its trading pairs. 

  • Take part in IEOs/ICOs

Binance Launchpad hosts sales of new tokens where you can use BNB tokens to buy a stake in an upcoming and new currency. Afterwards, the new digital currencies get added to Binance, where you will be able to trade them.

Binance Coin: Weakness

  • There is a higher downside risk with Binance Coin as Binance either holds custody or owns over 80% of BNB.
  • BNB is a centralised token controlled by a for-profit organisation with less utility outside Binance.
  • BNB tokens can be subject to US security laws because a private organisation wholly controls them.

Final word

BNB is one of the most promising and popular utility tokens in the space. You can trade BNB similar to other cryptos and use it in several use cases and applications.

You can use it for powering digital asset trading and operations within the Binance Exchange ecosystem. Offering a seamless experience to platform users, BNB features among those coins that have an inherent use.

Barring some extraordinary external influence, Binance Coin will likely witness steady growth through the remainder of this market cycle.