What is Binance Coin?
What is Binance Coin?
With over 1.4 million transactions per second, the Binance Exchange is the largest cryptocurrency exchange in the world. The Binance Coin (BNB) can be used to pay fees or trade on the exchange, making it one of the most secure and reliable of all cryptocurrency. As with most cryptocurrencies, you can exchange or trade BNB for another cryptocurrency such Ethereum, Litecoin, or Bitcoin.
Created in 2017, the BNB was originally on the Ethereum blockchain before moving to its own. Today, you can find it on the Binance Chain. For those who may remember, the coin was originally known as ERC-20 on the Ethereum blockchain.
When initially released, the BNB was distributed to a wide group of participants that includes the founding team of Binance Coin, angel investors, and more. There were 200 million BNB initially released, including 20 million for the angel investors, 80 million for the founding team, and the remaining 100 million BNB went up for public sale.
A total of $15 million was raised for Binance which included bitcoin and Ethereum. Part of that money was used to upgrade the Binance platform along with its exchange system. Another part was held back for emergency use. But the remaining part which constituted 50% was allocated for the marketing and branding of the Binance Coin, along with educating the public about its use.
How to Use the Binance Coin
You can use the BNB just like most other cryptocurrencies. However, there are uses that go beyond the Binance Chain itself which makes it a versatile cryptocurrency.
- Credit Card Payments
- Loans & Transfers
- Payment Processing
- Transaction Fees
- Travel Arrangement
As mentioned earlier, BNB can be traded for other types of cryptocurrencies. You can use BNB to make credit card payments for lenders that accept cryptocurrency. In addition, there are many merchants who accept BNB as a means of payment itself. This means that you can employ different payment methods when desired.
Because of the security of BNB, you can often find areas of entertainment in which it is accepted. From purchasing lottery tickets to buying virtual gifts, there are many places which accept this cryptocurrency. Plus, some lenders allow for BNB to be used as a form of collateral for making loans. You can even split bills and make payments to family or friends using BNB.
You can use BNB to pay for transactions when on the Binance Exchange. Those who do so will receive a discount when using the cryptocurrency. Plus, there are travel websites that accept BNB as a form of payment. This may help make your vacation plans easier to purchase when employing BNB.
In order to keep the value of the Binance Coin high, 20% of the profits earned by the company are used to purchase and then burn or destroy the coins. This is performed during each quarter or four times each calendar year. The practice of burning BNB will continue until 50% of the existing coins are destroyed. This means that only 100 million BNB will exist at some point in the future, making it quite scarce, but also holding its value.
Growth Strategy of Binance Coin
In comparing BNB to other popular cryptocurrencies such as Bitcoin and Ethereum, the Binance Coin has enjoyed considerable growth thanks in large part to the strategies employed by the company. It is probably true that BNB will not challenge Bitcoin anytime soon, but the strategy is not to replace that popular cryptocurrency, but to be the alternative.
One of the main reasons for its growth is the stability that is built into the Binance Exchange. Unlike many other cryptocurrencies which tend to swing wildly in value over a short period, the BNB has tended to remain solid and steady relatively speaking.
It helps in that investors can receive a solid discount of 25% when investing on the Binance Exchange. While down from the 50% when the coin was initially released, it does represent a healthy discount that is quite attractive to those who are just starting their investment in cryptocurrency.
What also has helped is how BNB is accepted as payment for transaction fees, commissions, launching new instruments, and even voting fees for new tokens. Because of how the Binance Coin represents a discount option, many cryptocurrency investors use for their purchases and paying fees.
The Future of Binance Coin
Although the coin itself is only a few years old, it has risen in value dramatically in just the past several months. This is primarily due to the Binance Smart Chain or BSC which has become a popular alternative to the Ethereum network. Because the BSC is easier to use and much cheaper, more people are buying up BNB to work on the BSC.
It is also because the transaction fees on Ethereum have soared dramatically over the past several months as well. With fees reaching $50 and more, a larger number of people are looking towards cheaper alternatives which include the BSC to make their cryptocurrency transactions. The result is that the BSC is now second only to the DeFi platform, even ahead of Bitcoin. The increase has been quite dramatic since the arrival of the Binance Coin.
The result has been considerable momentum for the Binance Coin. With the current boom in interest, Binance has garnered considerable profits in just the past year alone. The ability to use BNB across different platforms is a strong reason for its popularity as well. The discounted fees have no doubt played a strong role, especially with the rise in the transaction fees for Bitcoin.
However, it must be noted that the discount may not last. It may end once the supply of BNB has been reduced to 100 million coins. When that happens, BNB may no longer be the discount option, but it also may have increased in value to the point where it takes on new interest from investors.
By being a solid, reputable, and alternative cryptocurrency, which offers considerably lower transaction fees, the future looks bright for BNB.
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