Cryptocurrency is a digital asset that uses Blockchain technology to function thus transforming the entire payment system on the planet. You might be wondering, what are blockchains? In simpler terms, blockchain is a technology that helps in recording and managing transactions amongst several computer networks. Also, the word “cryptocurrency” has been derived from an encryption method, which is used to secure networks. Speaking of network security, it is important for you to know that the virtual currency is secured by Cryptography, thus making it next to impossible to double-spend or counterfeit.
Not just that, a key characteristic of cryptocurrencies is that usually they are not issued by the central administration, making it theoretically immune to manipulation along with government interference, thus helping it to step outside government jurisdiction.
Just like everything else in the market space, crypto also faces criticism for multiple reasons which if we think about are actually legitimate concerns including unpredictability in exchange rates, uses for activities that are against the law along with its tendency to be vulnerable. However, there are two sides to every coin, so is the case with cryptocurrency. While facing harsh criticism, it is also admired for its clarity in operation, its flexibility in its position, also known as portability, divisibility, and most importantly, its resistance to rate inflations.
Having said that, it makes it much more easier to understand why the digital currency caught the eye of a lot of interested investors along with some elite business tycoons over the years. Some of you might be wondering what all cryptocurrencies are available today in the market to pick from including, Baby Dogecoin, Dogecoin, Binance Coin, Ethereum, Ethereum 2.0, and Cardano to name a few.
Everything to know about Binance Coin (BNB)
Binance Coin or as it is often known as BNB is a cryptocurrency issued by Binance exchange and it trades with the BNB symbol on the coin which can be used to pay transactions and trade fees on the platform. Supporting 1.4 million transactions each second, Binance Exchange is known to be the largest cryptocurrency exchange around the globe.
Initially, when Binance Coin was introduced in July 2017, it was based on the Ethereum network(blockchain) having the token ERC-20 but later it moved on to being the native currency of BNB’s very own blockchain, known to be as Binance Chain. It was launched during an ICO which is an Initial Coin Offering and had a rigorous upper limit (maximum) of two hundred million BNB tokens, offering 20 million BNB tokens or ten percent to angel investors, with eighty million tokens or forty percent BNB tokens to the founding team and the remaining hundred million or fifty percent of the initial 200 million tokens to several participants through the Initial Coin Offering (ICO) process.
All of the BNB tokens made available for public selling, accounting to be a hundred million tokens were sold at fifteen cents per token during the ICO. In addition to this, out of the entire fundraising during the initial coin offering process, almost half of the funds that were raised were decided to be used for Binance marketing and branding, around one-third of the funds raised were used to do the necessary upgrades to the entire ecosystem of Binance along with building the Binance Platform.
As per the market capitalization, BNB or Binance Coin is currently known to be the fourth-largest cryptocurrency. All of this is mostly because of the creation of the Binance Smart Chain along with the growth of the Binance Exchange.
In addition to this, each quarter, Binance is known to use one-fifth of its entire profits to permanently destroy (burn) or repurchase the coins held in the treasury. Furthermore, as discussed previously, Binance was created for trading fees back in the 2017 model year as a utility token, but with time, its uses increased to have several applications including online services, travel bookings, financial services along with payments for transaction fees on Binance’s own chain.
On the Binance Exchange, the users of BNB are to receive a discount on the transaction fees. Binance Coin also has the ability to be traded for or exchanged for other cryptocurrencies on the market including Litecoin, Bitcoin, and Ethereum. Also, you must be aware that at the time of writing, BNB had a market capitalization of more than fifty-six billion dollars while it only ranks behind Ethereum, Bitcoin along with USD Tether as of market cap.
What is Binance Coin (BNB) burning?
Every quarter as mentioned in the Binance whitepaper, BNB uses around twenty percent of their entire profits to repurchase and burn Binance Coins, thus destroying them entirely. In order for you to understand better, in simpler words, although in the ICO initially, a hundred million BNB tokens were offered, the total supply for those today is lower. So, every quarter, Binance uses 1/5th of its total profits to buy back or burn(destroy) all the coins there are in its treasury.
Binance has been known to regularly perform these events of coin burning. The latest being Binance’s 15th quarterly burning on 17th April 2021 where Binance burned 595,314,380 US dollars’ worth of tokens which are equivalent to 1,099,888 BNB, making it the largest BNB burn ever in terms of US dollars. After this event, the overall supply of BNB tokens went from being 170,532,825 to a total of 169,432,937.
It is being said that, Binance will be performing these quarterly burning events and will continue to do so until it destroys a hundred million of these coins, which makes it almost fifty percent of the total supplied BNB tokens. All of this is done to ensure that the supply of these coins remains limited, thus making it scarce and much more valuable.
Uses of Binance Coin
As already discussed earlier, the Binance coin was developed to be a utility token for deducted trading fees back in the 2017 model year. But unlike before, its uses have spread onto a number of applications on various platforms. Now, it can be used for payments of transaction fees on Binance Chain, Binance .com along with Binance DEX.
Not just that, it can be used to make payments at places like Monetha, HTC, and crypto.com along with booking for accommodations while traveling, using sites including Trip.io, travel bit, and more. BNB can also be used for making payments for online services, entertainment, and financial purposes as well. Recent years have also see a proliferation of Binance Coin Casinos, part of a large and fast growing trend of using cryptos for playing.
Furthermore, you will be able to use Binance Coins for investing in Initial Coin Offerings (ICO’s), which are listed using Binance’s launchpad program. Along with this, Binance provides a much easier platform for trading using various new and established virtual tokens as a lot of new cryptocurrencies start listing on the Binance Exchange. It definitely seems like BNB token has acquired a lot of support from multiple other partnerships, thus helping its usage to spread.
To sum it up, beyond its use in exchange, Binance Coins has multiple uses including Donations to charity, making investments, making payments for credit cards, buying digital or virtual gifts, processing payments, and paying for travel accommodations but on selected websites only.
Binance faces regulatory struggles
Binance is among the most popular cryptocurrencies in the market, having a wide collection of currencies and services that it provides which indeed plays a vital role in its popularity in the industry.
However, Japanese officials have given warning that it is not allowed to operate on their land. Not just that, a BNB affiliate has been banned in the United Kingdom (U.K.) recently. Along with all of this, after having a crackdown on other exchanges, Binance has been known to pull out of Ontario, Canada as well.
With the rising popularity of online currencies, Authorities throughout the world are getting firm on Cryptocurrency services. Many are concerned that this virtual currency can be used to hide unlawful activities and launder money. Not just that, by using advanced trading tools retail investors could get burned to have to enhance the risk of what already seems to be a risky investment.
As per reports, Binance says it is not taking any of its regulatory responsibilities lightly and that it is now looking on investing immensely in compliance. The most numbers of crypto exchange associated licenses are probably held by the company – says Changpeng Zhao, founder, and CEO of Binance.
With strictness in regulations at the marketplace, if other top crypto exchanges manage to get licenses in jurisdictions where Binance has none then, it will definitely hamper Binance’s growth, especially if it somehow impacts user’s ability to withdraw or deposit traditional currency, like it already has in the U.K., thus eating into customer confidence.
Should you buy BNB?
The prices of BNB have gone uphill in the recent years. Moreover, it has one of the most popular cryptocurrency exchanges in the entire industry. With Binance constantly introducing new services and products, it has definitely attracted a wide community of traders.
After reading so far, you must be aware that BNB tokens can be used for multiple reasons including reducing trading costs, paying for transaction fees on the Binance Exchange along with this there are a lot of ways by which your BB token can earn interest. As of today, depending on how long you want to lock up your coins and the level of risk you are willing to take, BNB holders can earn up to ten percent APY or even more.
Considering programmers can build new applications on the Binance chain and the developers being frustrated with network congestions on Ethereum, it hasn’t been able to match pace with the higher demand and till it upgrades to a faster and cheaper network, programmers will keep looking for someplace else to go. That has really helped driving activities on the Binance network.
On top of everything else I just mentioned, Binance exchange has a launchpad where investors can go looking for new products. Seeing this, an opportunity to connect with interested investors while having lower fees is a powerful fusion for crypto project creators.
Evaluating cryptocurrencies for their quality of becoming an investment opportunity can be a difficult exercise. With cryptocurrencies like Ethereum or even Bitcoin, it is much easier to invest when examining their decentralization. Considering all odds and their PoA model, it gave Binance exchange full control. Thus being a valuable investment. Other than this, seeing its growth in the past two years, Binance Coin has increased by nine hundred percent.
According to this, if you would have spent near about 10000 US dollars to buy BNB coins back in 2019, that investment of yours would be worth 100000 US dollars today. This is the type of growth that attracts a lot of investors.
Having said that, you might be wondering what all cryptocurrency exchanges you can use to trade, right? There are several crypto exchanges currently available listing tons of cryptocurrencies to pick from. Some of the exchanges you must be familiar with include BuyUcoin, ZebPay, WazirX Binance Coin, Coinbase, and Kraken to name a few.
In conclusion, I think Binance Coin is a great investment. If you are planning on buying BNB tokens, don’t just go with the hype but do your own research instead before investing. It is essential that you invest only if you are willing to take risks and bear the losses if at all necessary.
What are your thoughts on Binance Coin? Do let us know in the comments below. Thank you for your time & if you found our content informative, do share it with your investor friends!
Also read: Ethereum 2.0: Everything you need to know