What is Binance Coin (BNB) in simple terms

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2019-09-06 00:00:00:

Cryptocurrency users have probably heard a lot about the popular Binance trading platform. It is also known that Binance is the first crypto exchange to issue its own Binance Coin (BNB). Despite the fact that the release took place quite recently, and the crypto exchange itself has been operating for a little over two years, the market capitalization of this cryptocurrency is growing steadily. What caused this, what does the future hold for BNB? You will find answers to these and other questions in this article!

What is Binance Coin (BNB)

Answering the question, "What is Binance Coin?" we can say that this is a coin originally created on the basis of Ethereum. Using it, you can take advantage of discounts when paying for the services of the Binance crypto exchange. In the future, Binance will turn into a decentralized exchange of blockchain assets. In addition, users with BNB crypto coins on their accounts can take advantage of innovative features that are planned to be implemented when the decentralized crypto exchange is launched.

Appeared quite recently, this altcoin does not have a unique blockchain, its creators have not publicly announced any important goals for the project. More than 500 of these tokens have been created on the Ethereum platform. They, as conceived by the developers, should only be used to pay for transactions performed within the Binance crypto exchange. For example, holders of BNB crypto coins can purchase over 100 other digital currencies on Binance. With these altcoins at their disposal, traders can save a lot. If you have BNB on your balance, you can pay a commission reduced to 0.05% with these coins when making transactions of buying and selling cryptocurrency on the Binance crypto exchange (instead of the established commission of 0.1%).

The goal set by the Binance Coin developers is to create an efficient "fuel" to fuel the crypto exchange. We can say that it, in comparison with the goals of the creators of other coins included in the TOP-20, is rather unassuming and insignificant. The difference becomes especially noticeable when comparing BNB with crypto-coins of a large-scale project EOS, whose developers thought about creating an "operating system of the Earth", or with the digital currency IOTA , intended for mutual settlements of hundreds of billions of devices in the Internet of Things ecosystem.

Binance Coin (BNB) History

The history of Binance Coin begins with the founder of the Binance crypto exchange, a programmer from China, Changpeng Zhao. He worked for a long time in large successful companies - Blockchain.info, Bloomberg, OKCoin, as well as on the Tokyo Stock Exchange. His story of the road to success is quite exciting: in 2014, Changpeng Zhao sold his own house, after which he bought BTC for $ 600. Soon, the value of this cryptocurrency fell three times. It would seem that its time to finally fold your hands, but no. Just four years later, Changpeng Zhao made the cover of Forbes, ranking third on the list of people who became cryptocurrency billionaires. Then he announced an Initial coin offering to create the Binance cryptocurrency exchange in July 2017.The new crypto exchange got its name from the merger of two English words Binary and Finance. From July 1 to July 21, an Initial coin offering was held, as a result of which 100 million coins were sold. The project itself was able to arouse great interest from various investors. After the end of the ICO, the developers summed up the results, and it turned out that a total of 15 million US dollars had been collected. This amount may seem rather small if you compare it with the one that was received by such "giants" of the Initial coin offering as Tron (it is written about this project here ) or EOS (in more detail ). They, in turn, managed to collect several billion US dollars. However, the Binance Coin token sale gave Changpeng Zhao the opportunity to create a fairly successful centralized business. Already in 2018, quarterly profits were not tens, but hundreds of millions of USD.

According to the decision of the creators of BNB, coins should be partially destroyed in the future. For example, already in the middle of spring 2018, 2 million crypto coins were withdrawn from circulation. Developers take these steps to control the value of an asset.

The BNB Coin issued as part of the project was created on the Ethereum blockchain. In total, 200 million tokens were issued. Initially, 100 million coins were available for sale. ICO investors purchased coins with a total value of 15 million US dollars in equivalent. Early investors became the owners of 20 million Binance Coin. The crypto exchange kept the remaining 100 million tokens for itself. The original value of the coin was: 2,700 BNB for 1 ETH, or 20,000 BNB for 1 BTC . Thus, we can say that the price of the coin has increased significantly since its inception.

By the decision of the developers, the crypto coins remaining on the exchange were distributed as follows:

50% of their number was left for brand promotion, as well as for the creation of educational blockchain programs;
35% of the coins were used by developers for technical improvement of the crypto exchange;
15% of the coins went to the reserve fund and will be used in case of emergencies.

At the time of this writing, Binance cannot be considered an ordinary popular cryptocurrency exchange. Now it is a real empire with its own venture division, a charitable company, a platform for launching IEO, an educational platform, and specialists from the research department.

More recently, the coin moved to its own blockchain . It cannot be argued that this path was easy for Binance. The creators of Binance Coin have been working on the project for a long time and continue to improve it. So, in April 2019, the Binance Mainnet was launched. This was a landmark event and an important step for both Binance itself and the cryptocurrency community as a whole. After 04/23/2019, Binance.com no longer supported the issuance of crypto coins based on the ERC-20 standard . If users had reasons to save these coins, they needed to put them in their own Ethereum crypto wallets . But, according to the developers, sooner or later, all Binance Mainnet crypto tokens are planned to be connected to the Binance Chain network to the improved BEP2 standard.

The exchange of old BNB cryptocoins, created on the basis of ERC-20, for new ones is carried out automatically. This is possible when the user sends his coins to accounting accounts for the Binance exchange. As follows from the statement of the management of the crypto exchange, everything will happen automatically during the BNB Mainnet Swap. If a user stores BNB tokens on other wallets that do not belong to Binance, he will still need to transfer them to his crypto wallet on Binance. This is the only way he will be able to get new crypto coins instead of outdated ones.

Distinctive features of Binance Coin

This digital currency has several uses:

it can be used when paying a trading commission on the Binance crypto exchange;
the number of sellers working with Binance Coin and accepting payment for their goods in this cryptocurrency is growing every day;
BTC can be used in the coin sale process organized by Binance Launchpad;
in the near future the developers are planning to use BTC to support the Decentralized Exchange from the Binance cryptocurrency exchange.

The token also has one more important feature that distinguishes it from other crypto coins - it can be used to convert “cryptocurrency dust” into Binance Coin (small balances in the account that cannot be withdrawn or sold). In this case, there is only one condition - the price of "cryptocurrency dust" cannot exceed an amount exceeding the equivalent of 0.001 BTC. To make such a conversion, you need to go to the "Funds" section on the Binance exchange, then select the "Balances" item, and then click "Convert to BNB". The user will be presented with a list of available cryptocurrencies for conversion.

Now lets look at what has contributed to the rise in the value of BTC coins since their inception. We can say that this cryptocurrency has 3 powerful engines that push the price higher and higher:

the creator of crypto coins already had a certain authority in the crypto community. In just six months, this man, who at that time was a millionaire, increased his capital many times and turned into a billionaire. The media dubbed him "the king of crypto trading" for this;
Binance crypto exchange today is a successful business. In just 8 months from the moment of its foundation, it has gone a difficult path from an idea to the worlds most famous trading platform for performing transactions with cryptocurrency. It is not surprising that it is actively pulling its own internal token to new heights;
As long as Binance Coin exists on the crypto market, there are so many disputes around it, which are fueled by aggressive marketing policies.

It is worth considering in more detail one more unique feature of BNB tokens. These coins are regularly "burned", i.e. - there is an irreversible reduction in the maximum number of available coins. Recall that at the very beginning, 200 million units were produced. The creators were well aware that BNB, like any other crypt, is inevitably subject to inflation. They took this point into account even when developing the project roadmap. As follows from the paragraphs of this document, every three months the board of directors of the Binance cryptoexchange "saves" 20% of its own income. They then buy the tokens, after which they are "burned" using the PoB protocol.

The current maximum supply of BNB tokens is 192,443,300. In the end, there will only be 100 million Binance Coins left, which is exactly 50% of the originally issued amount. As of the date of this writing, the Binance exchange team has already performed several similar "burnings" of BNB crypto coins:

in the middle of autumn 2017, coins in the amount of 986 thousand BNB were “burned”;
at the beginning of 2018 - 1,821,586 Binance Coin;
in April 2018, 2,220,314 crypto coins were “burned”;
in July 2018, 2,528,767 tokens were “burned”;
in the middle of autumn 2018 - 1,643,986 BNB;
at the beginning of 2019, 1,623,818 cryptocoins were “burned”.

Currently, the Binance team has “burned” a total of 10,824,471 BNB crypto coins, which means that a little more than 88 million tokens still have to be liquidated.

How Binance Coin works

The Binance Coin token, as we said, is released on the basis of Ethereum, which means that it supports the ERC-20 standard. The main purpose of these tokens is to serve as the internal digital currency on the Binance crypto exchange. Binance Coins are used only to carry out transactions within the cryptocurrency exchange, and no other tasks were set for BNB.

Now that we know what Binance Coin is for, we can consider how it can help with trading fees.

the user can pay a commission after completing each operation on Binance;
also a trader has the opportunity to pay a commission using the funds that he trades on the exchange;
By using BNB to pay, a trader can expect to receive a decent discount. Binance motivates traders to use BNB more actively by reducing the amount of commissions paid when making trades.

In the first year of the merchants work, his discount is 50%, and then it decreases. It decreases annually, this will happen until 5 years after the opening of the Binanc exchange:

Year 1: Traders discount is 50%;

Year 2: the discount is reduced to 25%;

Year 3: another discount reduction to 12.5%;

Year 4: the discount is 6.75%;

Year 5: No discount available.

Partially, the profit received by the crypto exchange is directed to the redemption of coins, which must subsequently be liquidated. In fact, BNB is needed only for traders who carry out operations with cryptocurrency on the Binance crypto exchange. It should be noted that this coin belongs to the leaders (if we consider the volumes of transactions performed per day).

The creators of Binance Coin plan to expand the capabilities of BNB to those of Ethereum in the near future (the network is described in detail here ). We are talking about the emergence of the possibility of making a confidential exchange, the conclusion of smart contracts, the formation of a completely decentralized crypto exchange, on which this crypto coin will be the main asset.

Although the digital currency Binance Coin is quite consistent with the main parameters of traditional electronic money, the developers considered it necessary to change some key points. The main one is the almost complete lack of privacy:

to be able to use the functionality offered by the developers, you will need to enter your email address. In this case, the user will be able to work with some basic functions, as well as withdraw up to 2 BNB every day;
to gain access to advanced features, the user will need to enter their own phone number. It should be noted that this can only be a Chinese number. In the event that the user does not have one, he must provide his scanned documents, as well as a photo with these documents. After all this is done, he will be able to withdraw 100 crypto coins per day;
if you want to get access to all the functionality of the crypto exchange , as well as to use the possibility of unlimited withdrawal of cryptocurrency , you will need to pass an interview with an employee of the exchange support service.

Binance Coin advantages and disadvantages

The digital currency Binance Coin is not for nothing called one of the most promising crypto coins. There is good reason for this, since Binance Coin has very important advantages over other electronic coins:

proposed Binance affiliate program. Anyone who wants to increase their income can do this by starting cooperation with the company. It is rare to find resources that offer this opportunity;
significant liquidity - the considered electronic currency is today traded in a pair with a large number (more than 400) cryptocurrencies, therefore it belongs to the most liquid crypto-coins. Due to the fact that the Binance exchange works with many crypto-coins from Asia, which are difficult to find on most well-known platforms, it has an additional advantage over its competitors;
a decrease in supply (discussed in the previous sections "burning" coins every three months) has a positive effect on the increase in the value of BNB in the long term;
Binance offers an efficient payment processing engine. Its profitability depends entirely on how fast the resource engine works. For example, given the current popularity of BTC and many altcoins, most crypto exchanges process millions of different requests in one minute. This leads to business-threatening delays in payments. As for Binance, it can process roughly 1,400,000 transactions per second. This indicator is unique and characteristic only for this platform;
there is a possibility of reducing the size of the commission when trading, we have already discussed it earlier;
the ability to pay Binance Coin for services. At the end of 2018, a message appeared on the Uinance blog that this cryptocurrency was already accepted on 150 trading platforms. Their number has continued to grow since that time;
good reputation. The founder of the Binance crypto exchange, Changpeng Zhao, has a reputation as a successful businessman. This plays a huge role in the success of his project and its longevity.

Lets not hide the fact that Binance Coin, like other digital currencies, has certain disadvantages:

significant concentration of tokens in the hands of creators. During the Initial coin offering, the organizers kept 40% of the tokens for themselves. In view of this, we can talk about the possibility of manipulating the value of this cryptocurrency in the interests of the company. The fate of the token is completely in the hands of the site owners. They often make important decisions without listening to the wishes of their audience. As a result, investors are also dependent on the decisions made by the developers, and not everyone is happy with this;
insufficient number of platforms for buying coins. Basically, you can buy BNB directly on the Binance crypto exchange. Of course, there are other trading platforms for performing transactions with Binance Coin, but in most cases it will be possible to purchase a crypto coin on them only for Ethereum, BTC or the "native" tokens of these cryptocurrency exchanges;
possible risks of the Ethereum blockchain. Today it can no longer be argued that this code is the most convenient of the existing ones. A fairly large number of new developments are already known, which are more adapted for use in the worldwide network. Therefore, it can be assumed that the ecosystem can expect significant changes, the result of which is difficult to predict.

Does BINANCE COIN mining exist?

Mining BNB is impossible, these crypto coins can be done in rather limited ways. Of course, you can buy Binance Coin directly on the Binance crypto exchange itself, and this coin is also traded on several other cryptocurrency exchanges. Among them are ShapeShift, Exrates, LBank, HitBTC, Bancor Network, Gate.io, Trade Satoshi, EtherDelta, Airswap, FCoin, DDEX.

Another opportunity to get Binance Coin is worth mentioning - to start working on the Binance exchange. According to its creator, Changpeng Zhao, 90% of employees wages are paid in BNB, although the crypto exchange itself pays in EUR. It is possible to assume that the companys employees know something that the public does not know, since they prefer BNB to the popular fiat currency.

How do I buy or sell Binance Coin?

You can buy Binance Coin on the Binance cryptocurrency exchange itself. Here you can find pairs with any electronic currency available on the trading platform. The creators of Binance have competently approached the work on the exchange interface. As a result, it turned out to be simple, intuitive. In the process of making a decision on investment, the user can study diagrams, graphs, get acquainted with other data that help weigh all the pros and cons. Trading on Binance is easy - you can complete a transaction with just a few clicks. All you need is to find the currency pair you are interested in and then create an order. For the convenience of users, mobile applications for iOS and Android were developed, an official website was created. Another important factor that keeps Binances popularity growing is worth mentioning - support for 8 different languages. The user can choose any convenient for himself - Chinese, English, Japanese, Russian, Korean, Spanish, German or French.

If you want to exchange BNB for fiat currency and vice versa, you can do it only on some crypto-exchanges unknown to a wide range of users - P2PB2B, Extrates. There is another way to buy BNB - use the services of exchangers, but we will not recommend it. Despite the fact that Binance Coin can be bought here for RUR directly, the value of the coin will be 25-30% higher than on the crypto exchange (even without taking into account the size of the commission).

BINANCE COIN to ruble rate

As of the date of this writing (04/04/2019), the Binance Coin rate against the ruble was 1.444 RUR for 1 BNB. Over the past day, the cost of this cryptocurrency fell by 3.62%. Market capitalization was 224,747,603,828. Data taken from https://coinmarketcap.com/ru/.

BINANCE COIN to USD rate

The Binance Coin rate to the US dollar as of 09/04/2019 was 21.78 USD per 1 BNB. Market capitalization reached the equivalent of USD 3 387 657 527. Over the past day, the BNB rate has decreased by 3.62%.

BINANCE COIN to EUR rate

According to data from the website https://coinmarketcap.com, the Binance Coin rate to EUR is 19.77 EUR per 1 BNB (data for 09/04/2019). Over the past 24 hours, it has decreased by 3.62%. The market capitalization on the same date was EUR 3,074,878,495.

Of course, the state of the cryptocurrency market affects the Binance Coin rate, but the actions of the management of the crypto exchange are also strongly reflected in it. This is clearly seen in the charts, according to which the value of these cryptocoins increases or decreases in proportions different from those that are typical for other electronic currencies. It is also obvious that the owners of the Binance cryptocurrency exchange are much more interested in the active use of the coin within their own platform, and not in increasing its value. This is quite understandable, because, as we already know, they buy tokens themselves.

Where to store BINANCE COIN

First of all, you can store Binance Coin on the Binance platform itself. In addition, users can store these cryptocoins on internal accounts of other cryptocurrency exchanges where BNB transactions are made. You can also store coins on unofficial multi-currency wallets that support the ERC-20 standard. For example, it can be the "MyEtherWallett" wallet or any of the existing multicurrency crypto wallets (Exodus, Jaxx).

If the user has already managed to exchange the BNB crypto coins he has in the process of replacing the main BNB network, he can use other crypto wallets that are compatible with the new BEP2 standard.

How much is BINANCE COIN in total

The total number of Binance Coin banknotes was initially limited. The volume of emission of this electronic currency amounted to two hundred million units. Binance Coin is a deflationary digital currency, which means that the total amount of cryptocurrency data in circulation will start to decrease slightly. As already mentioned, as planned by the developers, Binance buys and "burns" coins every three months. Their total cost corresponds to 20% of the income of this cryptoexchange.

Binance Coin emission

More recently, the Analytical SMS service (CoinMarketCap) has made some changes to the rules by which the emission of Binance Coin is calculated, which is the native coin of the most famous cryptocurrency exchange Binance. This happened a few days after Binance announced the upcoming changes to its BNB token burn program.

In July of this year, the cryptocurrency exchange destroyed 808,888 Binance Coin. The total amount of these “burned” coins was 23.838 million US dollars. The founder of Binance, Changpeng Zhao, then made a statement that in order to improve the Binance ecosystem, its creators decided not to use those crypto coins that were left from the very beginning for the needs of the company.

After that, there was a decrease in the market capitalization of Binance Coin by more than one and a half billion US dollars (it was 4.59 billion USD, it became 3.08 billion USD). As for the position of this token in the CoinMarketCap ranking, it has also changed. Binance Coin dropped from 6th place to 8th. As of the date of this writing (September 4, 2019), however, the situation has improved slightly, and BNB is in 6th place in the ranking.

As we have already said, the plans of the Binance Coin developers include the destruction of these crypto coins to a certain limit, namely, until their emission stops at the 100 million Binance Coin mark. Currently, this value is at the level of 109.1 million BNB crypto coins.

What is Binance Coin backed by?

After the success of Binance, quite a few crypto exchanges also wanted to develop their own digital currency. For example, the Bibox and KuCoin exchanges are engaged in the issue of coins and, following the example of Binance, periodically "burn" a certain amount of them in order to maintain the liquidity of the rate. Huobis experience is interesting - tokens were issued on this crypto exchange, giving their owners the right to vote in the process of choosing digital currencies for listing.

However, the BNB coin was the first to be released by a cryptocurrency exchange. Until now, it is in the lead in terms of capitalization. For other similar cryptocurrency assets, things are completely different. This is due to the fact that Binance ranks first in the world in terms of cryptocurrency trading volumes per day. It is worth noting that the rate of this coin is influenced by news published about its parent exchange. When they are good, the price of the token remains at a fairly high level.

In addition, the reverse issue of the crypto coin also has a positive effect on the dynamics of the rate. Due to the periodic "burning" of BNB tokens, their total number is reduced, and this indirectly stimulates an increase in the price of this cryptocurrency in the long term.

Although until today Binance Coin is not widely used as a means of payment for transactions, the token continues to move in this direction. For example, in the summer of 2018, it became possible to pay for Binance Coin at merchants that operate POS terminals of Pundi X. A little later, in October 2018, Binance Coin joined another payment gateway for digital currencies called Coingate. Almost immediately, the Adamant messenger implemented BNB for making transfers directly in the chat.

An important moment for Binance Coin is the upcoming opening of a decentralized trading platform called Binance Chain. The BNB token has every chance of becoming a crypto coin actively used on this site.

The future of Binance Coin

Binance Coin cryptocurrency confidently leads among other exchange electronic currencies. Thanks to its application, you can take advantage of discounts when making trading operations, receive bonuses from referrals, and also exchange "cryptocurrency dust" for Binance Coin. It is also known that the Binance management has set itself an ambitious goal - to launch a decentralized trading platform. Subsequently, the developers plan to completely transform the crypto exchange into a special blockchain. It is quite natural that in this case this cryptocurrency will play a key role, which means that the future of Binance Coin promises to be brilliant.

Despite the fact that initially Binance Coin was used only to pay for the services of a crypto exchange, now it can now be used to invest in a number of Initial coin offering, which take part in the Binance Launchpad project. After the completion of the ICO, new coins will be automatically traded on the crypto exchange. Thus, we can talk about the disappearance of the boundaries between the exchanger and the Initial coin offering for users.

Summing up, we can note the following: Binance Coin has gone from an ICO coin to the internal digital currency of Binance. The moment is approaching when this crypto coin will go beyond the parent exchange. It was then that the most interesting part of her story would most likely begin.