While the exchange platform Binance is certainly not the only one to offer its users and investors a native token, few are proving to be as dynamic as the Binance Coin, the crypto asset launched by the eponymous DCE. 2019 saw the development of a keen interest in utility tokens, with Binance’s BNB even being credited with the immense popularity of its own platform.
So, what makes Binance Coin such a firm favorite amongst the crypto community? Let us take a closer look at this very special token in our BNB guide.
What is the Binance Coin cryptocurrency? Introduction and definition
Above all else, Binance is an exchange platform in which traders have found a reliable solution to carry out their transactions easily and at a reasonable price. Since its launch in July 2017, Binance has risen above the competition, and many believe that its success has much to do with the popularity of its BNB Token, which came with some very palpable benefits.
The coin in question was created to function in conjunction with the platform itself, making the use of the DCE both more practical and more cost-effective. The logic Binance applied in developing the Binance Coin was to create an incentive by providing a limited-time advantage for early adopters. The token offers a discount on transaction fees implemented by the service for operations within the Binance ecosystem, including listing and exchanging. For a whole year following the platform’s launch, BNB holders were given 50% off their trading fees. As the market brims with exchanges whose rates can prove prohibitive, this move ensured the platform attracted much attention. Many active speculators jumped on the opportunity to save what, in some cases, added up to a lot of money.
The subsequent year, the discount was reduced by half to allow traders to save 25% on their fees. The third-year discount was 12.5% and the fourth (as of July 2020) will be 6.25%. As of July 2021, Binance Coin holders will no longer benefit from any discounts.
How does Binance Coin (BNB) work?
Despite its short history, the Binance exchange platform is now one of the three most significant on the cryptocurrency market. When the ICO was organized in July 2017, 200 million coins were released, half of which were sold at $0.1 a BNB: a bargain considering the savings the token promised. As the platform itself managed to convince traders, the fee-saving Binance Coin token started to gain in value and, by January 2018, it was trading at $22. Out of the 200 million BNB tokens Binance originally mined, 100 million were distributed during the ICO, 80 million funded the teams of professionals involved in the Binance project and 20 million were attributed to angel investors.
The tokens themselves are ERC20 Ethereum coins which may be traded for other cryptocurrencies over the Binance Chain. The latter supports the entire Binance DEX (or exchange) and allows for digital assets to be issued and exchanged without centralization. The platform provides a means of transferring the Binance Coins which exist within the Ethereum network to the Binance Chain. Gradually, Binance buys BNB in order to carry out the token burning necessary to remove more and more of it from circulation and ensure the asset continues to increase in value. Half of the total supply of BNB will eventually be destroyed that way.
As for the coins themselves, in essence, they represent both the advantages holders can gain from using and supporting Binance DEX and the platform’s own goals and undertakings.
Why use Binance Coin?
Traders were originally drawn to Binance Coin because of the substantial savings they were guaranteed to benefit from with regard to trading fees. The additional price reductions and bonuses VIPs could get from their status and from endorsing other traders played their part too. As of now, Binance VIPs (those users who have 50 BNB or more and trade 100 BTC worth of assets over a 30-day period for the lowest tier) get even more discounts. These perks can go as far as to cut their Maker fees down to 0.020% and their Taker fees to 0.040%. Those who own over 500 BNB may endorse other users and receive 40% of the commissions they generate. Binance Coins also possess an intrinsic value, which makes them an interesting asset in and of themselves for those looking to speculate on their evolution over time. This has led to BNB no longer being traded exclusively on Binance DEX. It has become a true utility token and a means of payment in the same capacity as any other altcoin, with more and more organizations and websites accepting payments in Binance Coins.
As for Binance as an organization, their Launchpad provides a space for fundraising events (or IEO: Initial Exchange Offerings) to take place. Participants investing BNB in such projects as BitTorrent, Fetch.A.I. and other successful events thus far have strengthened the position and value of Binance Coin.
What are the advantages of Binance Coin?
As stated above, one of the main benefits of Binance Coin is how affordable it makes trading on the eponymous platform. In addition, BNB has cemented the reputation of Binance DEX and, together with the fact that the total supply of tokens is being reduced over time, the asset’s value is proportional to its undeniable popularity. Similarly, this status is turning BNB into a recognized means of payment.
What are the drawbacks of Binance Coin?
Because the Binance platform and its coin are so tightly intertwined, however, BNB would suffer greatly should the company itself be facing any complications. Moreover, most applicable uses of the currency bind it to its platform where those who wish to utilize it need to store it, with all the security issues it may entail. Binance Coin may also lose some of its popularity (and therefore its value) once it no longer contributes to making transactions more affordable. Finally, while the token has many uses, it does not grant its holders any say in how the community is run or which decisions are made.
How to buy Binance Coin on Bitit?
If you are wondering how to buy Binance Coin, know that the platform itself is not the only place where it is available for purchase. On Bitit, you can see at a glance how many BNB the amount of your choice in your own fiat currency will get you. You can also check how much BNB costs in Euros, in U.S. Dollars, in British Pounds and many more. Just a few easy steps are required to create an account and buy BNB, which you can immediately store on the wallet of your choice. Bitit’s Dashboard provides a user-friendly interface which displays all prices in real time and allows you to select your preferred payment method (credit or debit card, wire transfer or cash).
How to store Binance Coin?
While no BNB news thus far indicates that token holders will ever be able to utilize Binance Coins stored externally, it is recommended to avoid storing large amounts of any cryptocurrency on exchange-issued wallets. The main reason why it constitutes such a problem is that as platforms operate online, they are susceptible to cyberattacks which could wipe all accounts clean! One difficulty Binance users cannot circumvent is that, if they wish to take advantage of the various benefits their tokens grant them, they need to potentially risk losing them to a hacker, at least while they are effectively using them.
The rest of the time, our Binance Coin guide’s recommendation is to use a physical wallet such as the Trezor or the Ledger Nano S. You may also choose to rely on a highly secure third-party solution which supports ERC20 tokens, such as MyEtherWallet.