What Is Binance Coin (BNB)?
Although Binance Coin BNB is the token of the same-name crypto exchange, it can be used like Bitcoin or anyone else altcoin for being exchanged for any other assets. It is a token which originally used Ethereum blockchain, but later BNB switched to Binance Chain. On its platform, BNB performs three major functions : considered as a trading asset; used to reduce commission; perfect for paying for goods presented on platforms that accept Binance Coin BNB. The second function has time limits: Binance Coin can be used to reduce commissions only during the first four years after the launch of the cryptocurrency, i.e. until 2022. In addition, the discount decreases every year: 50% for the first year, 25% for the second year, 12.5% for the third year, and 6.75% for the fourth year.
BNB's Pros And Cons
The Background Of BNB
We would have neither Binance exchange, nor its cryptocurrency if the founder of the project, a Chinese IT specialist Changpeng Zhao, failed to overcome a chain of obstacles. In 2014, he became interested in Bitcoin and realized very soon, that the cryptocurrency field is a true goldmine. Changpeng Zhao sold his house to invest in Bitcoin. At that time, BTC was traded for approximately $600 per coin. But by the beginning of 2015, the price dropped to $150. The Chinese IT specialist decided not to get rid of the assets and in 2017, when he was a multi-billionaire according to Forbes, Changpeng opened his own centralized exchange called Binance. The BNB token is a kind of digital fuel powering the Binance ecosystem. The coin makes it possible to save fee money and can be easily exchanged for any other asset. Holders of Binance Coin can earn more money just for storing the coins in their wallet. Besides, trading BNB on other exchanges is a good deal too.
Binance Coin BNB In Figures
BNB was issued in July 2017 and brought its developers only $15 million. It seems not so much, especially in comparison with, for example, Eos and Tron which earned several billion dollars each.
According to information from open sources, 50% of the funds went for commercial promotion of the new cryptocurrency. 35% of the money helped to develop the Binance platform and 15% made up the company's reserve.
Since BNB is the internal coin of the Binance exchange, all the coins were issued by premining. The total quantity originally was 200 million coins, but later only 100 million tokens remained. The company distributed them as follows: 50% for the ICO participants, 40% for the company (the "reserve"), 10% for investors of venture funds.
Binance Chain And BNB Coin Burn
In the process of BNB's transition to Binance Chain the exchange burned the coins on the Ethereum network using the function of liquidating smart contracts.
After the launch of Binance Chain, BNB coins are no longer burned on the Ethereum network. Currently, this function is activated using a specific command in the Binance Chain. This protects Binance Coin BNB from inflation. The total amount of the coins to be burned depends on the number of exchange transactions carried out within three recent months.
Every quarter, Binance's board of directors buys BNB tokens spending 20% of the profit they got from transaction fees, and then coins are burned. The strategy is to cut the supply of the coins by 50 percent, leaving the final 100 million tokens. After this, BNB increases in value slightly.
The Current State Of BNB
It is impossible to mine BNB like any other proof-of-work cryptocurrency, since the Binance blockchain uses the Byzantine Fault Tolerance (BFT) consensus mechanism. Instead of miners, it has validators who earn money for protecting the network by checking blocks, but an unauthorized person cannot become a validator.
To store BNB coins in your wallet, you need to buy them on Binance and then deposit them with a rate of interest. But on the other hand, to trade BNB a Binance account is not required. This type of cryptocurrency is widely traded on other exchanges too, such as P2PB2B.
You need an account of any exchange you like or a wallet. You should keep in mind, that previously only ERC20 wallets (for example, My Ether Wallet or MEW) could be used, but after Binance Coin switched to Binance Chain MEW no longer works with BNB. Along with Binance deposit, you can use Trust Wallet, Atomic Wallet, Coinomi, Exodus, or Ledger. The list of wallets is not full, but it is enough to make the right choice.
Prospects Of BNB
Currently, Binance Coin BNB can be found in the TOP-10 cryptocurrencies. The BNB cryptocurrency is one of the most interesting and unique coins, and many leading crypto experts believe it has a big future.
Now it is quite difficult to predict the further development of a crypto project and the price change of its token in the long run. But any forecast should be based on three factors: the current state of the project, indicators for previous years, and the use of tokens outside a particular exchange.
The BNB coin fully depends on the popularity of the Binance exchange. The project has a loyal and active community covering several countries, it has proven itself as reliable, and buying BNB can be a good investment.
Where To Buy BNB Coin
BNB can be purchased on Binance or a crypto exchange, such as Poloniex, KuCoin, P2PB2B, etc. Just choose any site you like for trading not only BNB, but also many other cryptocurrencies.
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