What Is Binance Coin (BNB)?
Binance Coin is the cryptocurrency issued by the Binance exchange and trades with the BNB symbol. It was initially based on the Ethereum network but is now the native currency of Binance’s own blockchain, the Binance chain.
Launched in July 2017 through an Initial Coin Offering (ICO) which made available 20 million BNB tokens to to angel investors, 80 million to project contributors and 100 million tokens to the general public. The funds raised from the ICO were used to grow and develop the exchange.
At the time of writing which is mid-year 2022, BNB had a market cap of more than $37.8 billion and ranks #5 behind Bitcoin, Ethereum, USD Tether and USD Coin (USDC) in terms of market cap.
How Does BNB Work?
Binance uses one-fifth of its profits every quarter to repurchase and permanently destroy, or “burn,” Binance coins held in its treasury. BNB was created as a utility token to provide discounts on trading fees in 2017, but its uses have expanded since then to include payments for transaction fees (on the Binance Chain), travel bookings, financial services, online services and entertainment.
Fees And Expenses
Since it is primarily created for internal exchange use and the coins have already been pre-mined, there’s no fee associated with the network. Usually, when you trade on the Binance exchange, (i.e when you buy or sell token), you have to pay 0.1% of the trading amount as fees. However, If you pay for your trades with BNB, you get up to 25%-50% discount.
For instance, if you are going to purchase $100 worth of BNB through Binance Exchange using any other coin or conventional money, it’ll cost you 0.1% or $0.10 in fees but if you are paying with BNB tokens, you will only have to pay roughly $0.08 or $0.05 (8 cents or 5 cents respectively) depending on your VIP level and trading volume on the exchange.
Having a native currency enables the platform to cut unnecessary costs associated with currency exchange.
Binance Coin Burning
The current total BNB supply now is lower than 100 million though 100 million Binance tokens were initially offered in the ICO. And this is due to the “burning” or destruction of the token every quarter by Binance. This “burn strategy” as they call it is supposedly used to reduce the token’s total supply in circulation thereby increasing the value of the token.
The latest BNB burn came in April 2022, when Binance burned a total of 1.8 million BNB coins, equivalent to $741,840,738 USD worth of tokens at an average price of approximately $403 per BNB.
Economic Benefits, Applications And Uses of BNB
First and foremost, BNB was created and has been used as a utility token for discounted trading fees. It is used to pay for transaction fees on Binance.com, Binance DEX, and Binance Chain.
It can also be used for payments to book travel accommodations and airfare (at sites like Travala.com, TravelbyBit and Trip.io); to pay for online services (BitTorrent, Canya, Dent, Storm); for entertainment purposes (lotteries and virtual gifts); and even to take out a loan or make investments at Nexo or ETHLend. Spend your BNB at more than 60 million merchants worldwide with Binance Visa Card.
BNB coins can also be used to invest in some ICOs that are listed through Binance’s Launchpad program. You can earn good APY on some BNB projects by depositing BNB tokens into select projects.
Where To Purchase BNB?
At the time of writing, BNB can be purchased on the following top exchanges: Binance, MEXC, ByBit, FTX, BTCEX, Bitgert, HitBTC, WOO Network and more. Although, Binance exchange supports the largest variety of trading pairs with BNB, and also provides the best trading rates for the coin. But keep in mind that trading in BNB and any other crypto token for that matter can be risky.
BNB coin has an all-time-low of $0.03981770 on October 19, 2017 but reached an all-time-high of $686.31 on May 10th, 2021. It currently trades in the range of $215.95 – $236.35 at the time of writing June 2022. A drop of over 68% from its all-time-high. But some crypto experts are suggesting that BNB is gearing up for a significant bounce back.
Changpang Zhao known as CZ is the CEO of Binance. A former employee at Bloomberg and one of the wealthiest men alive, is the founder and CEO of the biggest crypto exchange. He started his crypto journey in 2013 by investing in Bitcoin and before you know it, he’s building the exchange we all know now as Binance. He’s got great vision for BNB and the Binance eco system as a whole and we can already see it in the Binance coin and its many uses.