What is BNB? A Beginner’s Guide
What is BNB?
Binance Coin is the cryptocurrency issued by the Binance exchange and trades with the BNB symbol. With a volume of over $7.6 billion as of Q2 2022, Binance Exchange is the biggest cryptocurrency exchange in the world. Initially, BNB’s official name was Binance Coin. In February 2022, Binance announced that BNB now stands for “Build and Build”. 🧱
BNB is ranked fifth in terms of market capitalization as of the end of May, only behind Bitcoin, Ethereum, USD Tether, and USD Coin. BNB was initially based on the Ethereum network but is now the native currency of Binance’s blockchain, the BNB Chain. 5️⃣
BNB launched in July 2017 and initially worked as an ERC-20 token on the Ethereum blockchain. Binance was founded by Changpeng Zhao, popularly known as CZ, a developer who had previously created software for high-frequency trading. After the Chinese government began to regulate cryptocurrencies more strictly, Binance eventually transferred its headquarters outside of China.
How does BNB work?
The value of BNB fluctuates as it is used and traded, much like crypto available on the market. BNB may be held by users in acceptable wallets off cryptocurrency exchanges and sent directly to others for payments or other purposes.
BNB may be purchased on several platforms, including Binance’s cryptocurrency exchange, Kucoin, Crypto.com, FTX and others.
Binance Chain and Binance Smart Chain (BSC) were merged to become the BNB Chain. Binance built the BNB chain, a blockchain that was optimized for on-chain trading performance, and based Binance’s decentralized exchange (DEX), on this newly created chain. Additionally, BNB is used to pay gas fees and power transactions on the BNB chain. 🔋
For the first two years, BNB’s use cases were limited to just trading fee discounts and Initial Exchange Offerings (IEOs) on Binance. The exchange introduced the Binance Chain to crypto in April 2019. The Binance Chain aimed to provide an ultra-fast trading option, a decentralized one. On 1st August 2020, Binance launched the Binance Smart Chain (BSC). After the launch of these two chains, BNB became the native token of the two blockchains. Binance was created as a utility token for discounted trading fees in 2017, its uses have expanded to numerous applications, including;
💰 Trading: Depending on the limitations imposed by the exchange, BNB may be exchanged for other cryptocurrencies on a variety of exchanges.
💰 Investing in Initial Coin Offering (ICO): BNB can be used to invest in some ICOs that are listed through Binance’s Launchpad program. The Binance exchange lists new cryptocurrencies, and it serves as a convenient trading platform for several well-known and emerging virtual tokens.
💰 Payment processing: BNB may be used as payment at businesses, offering clients more alternatives for payment methods. BNB is also utilized for a variety of purposes in the entertainment sector, including buying lottery tickets and paying for virtual goods. It can also be used to pay for online services on websites like BitTorrent, Canva, Storm.
💰 Booking flights and hotels: On certain websites, BNB may be used to make reservations for lodging and travel. The websites Travala, Travelbybit, and Alternative Airlines are a few examples of them.
💰 Investments and Loans: On several sites, Binance Coin may be used to invest in stocks, exchange-traded funds (ETFs), and other assets. BNB may be used as loan collateral on various sites. It can be used to take out a loan at ETHLend or make investments at Moeda.
💰 Donate to Charity: BNB can be used to make impactful donations to the Binance Charity Foundation (BCF).
Tokenomics and ICO
BNB exists as an ERC-20 token on Ethereum and on the BNB chain.
It launched with a maximum supply of 200 million. The token sale offered 100,000,000 units of BNB (50% of the total supply).
Here’s an overview of the inaugural distribution of BNB tokens:
– Angel investors: 10% (20 million BNB)
– Founding team: 40% (80 million BNB)
– Public sale: 50% (100 million BNB)
The ICO accepted BTC and ETH.
One-third of the cash received during the ICO process went toward building the Binance platform and making required improvements to the Binance ecosystem, while the remaining two-thirds were allocated to branding, marketing and education of new innovators for Binance.
The 100 million BNB coins that were made available for public sale were all purchased during the ICO for 15 cents each. As a result, Binance was able to raise a combined $15 million in BTC and ETH.
To counter the value depreciation, Binance has been buying back tokens and destroying them to reduce supply. Initially, Binance was committed to removing 100 million BNB, or half of the total supply from circulation, through a process called burning which occurred every quarter. Binance recently introduced the Auto-Burn formula. The number of tokens removed is automatically calculated according to this formula. 🔥
In January 2022, the organization completed its first BNB Auto-burn eliminating 1,684,387 BNB coins worth $906.76 million from circulation.
Although it was the 18th quarterly burn overall, this was the first BNB coin burn that was carried out automatically. The BNB Auto-Burn effectively replaces the prior burn mechanism in favor of a more impartial procedure independent of the Binance centralized ecosystem.
💰 Safe and Reliable: Millions of cryptocurrency users and dealers already use Binance, and they depend on the exchange and respect its security and protection measures. Your money is safeguarded by the exchange using a multi-cluster, multi-tier, and Secure Assets Fund for Users (SAFU) system structure.
💰 Speedy Transactions: You will have access to the platform’s in-house matching engine, which can accommodate up to 1.4 million orders per second if you are utilizing BNB to trade on the exchange. Finding the correct transaction is always possible, and doing it with BNB makes it much easier and more dependable.
💰 Trade Several Cryptocurrencies: You can trade more than 150 cryptocurrencies on the exchange using BNB, depending on a quick, safe, and reasonably priced transaction matching mechanism. In addition, BNB has its trading pairs to accommodate your unique trading needs.