BNB: the native cryptocurrency of the Binance ecosystem
Cryptocurrencies can be traded on a lot of platforms. One of the most popular exchanges globally is Binance, the exchange founded in 2017 and quickly branched out into all corners of the crypto-sphere. One of the things Binance is known for is the Binance coin (BNB) cryptocurrency. What utility does this altcoin have, and why is it such a success? You'll read it in this article!
History and background of Binance
Let’s begin with Binance. The trading platform was founded in China in 2017 by Chanpeng Zhao and Yi He. Both founders already had extensive experience in the crypto-sector, being former employees of OKCoin and other crypto companies. The platform grew quickly to become the most popular and widely used crypto exchange in the world. The rapid growth was achieved by the large number of altcoins that are offered on the platform. Also, the platform is considered very user-friendly. Many different languages are supported and both beginners and experts will find everything they need for their crypto investment adventures.
For many, Binance is the go-to trading platform due to its ease of use and offerings. Nowadays, Binance doesn’t only offer a spot trading platform. It branched out in many different directions. Here a short introduction of the things Binance does.
The crypto community is very eager to help the world. With Binance Charity, Binance aims to achieve global sustainable development goals by leveraging the transparency and possibilities of blockchain technology. The platform is 100% transparent and claims to take no fees or other costs from donations made by the community. Read more about Binance Charity here.
Crypto has long been the money of the geeks that could only be spent at a minimal selection of companies. Those times are long gone. Nowadays, there are many different crypto payment cards. The Binance Card is a Visa debit card with which you can spend your crypto directly from your wallet in every store that accepts Visa payment cards! Read more about the Binance Card here.
Binance offers investors a safe platform to invest in new crypto projects. During the initial coin offering (ICO) boom in 2018, it was common for investors to lose all their money to projects that promised big returns but eventually left with the investor’s money. Binance Launchpad pre-selects projects and investors have to meet specific requirements to be able to participate. As a result, many projects that launched on the Binance Launchpad proved to be successful. Read more here.
There is more…
The company is behind many more projects and therefore is a market leader within the crypto sector. Some more initiatives from Binance are:
- Binance Chain; A simple design blockchain that facilitates highspeed transactions.
- Binance Smart Chain; A smart contract blockchain that can communicate with the Binance Chain. Many crypto projects moved their applications to this chain due to the scalability problems Ethereum (ETH) has. The network is, therefore, one of the potential “Ethereum killers.”
- Secure Asset Fund for Users (SAFU); An emergency fund that compensates users in case of a hack where funds are lost. Binance invests 10% of all trading fees in this fund.
- Binance Research; Offers in-depth insights and analysis of crypto-related topics.
Binance coin (BNB)
Binance coin (BNB) is the native cryptocurrency of the Binance ecosystem. The cryptocurrency plays a role in almost all of the above products. For example, to be able to join one of the Binance Launchpad token sales, you’ll need a certain amount of BNB to be able to receive lottery tickets. These tickets then may give you the right to join in one of these popular early investment chances. Let’s now dive a little deeper into the technical foundations of the coin.
Binance coin was launched as an ERC-20 token. This meant that BNB was launched on the Ethereum (ETH) network. However, Binance’s ambitions soon made it possible to migrate BNB to the Binance Chain mentioned earlier, Binance’s own blockchain based on the Tendermint byzantine-fault-tolerant (BFT) consensus mechanism, a form of Proof-of-Staked-Authority (PoSA).
PoSA is a hybrid version of Proof-of-Stake (PoS) and Proof-of-Authority (PoA). This means that a certain number of validators are chosen, after which they stake a certain amount of BNB. They then receive transaction fees as a reward for processing transactions. While this is an efficient protocol that is much more scalable than Proof-of-Work (PoW) chains such as Bitcoin and Ethereum, the Binance Chain has received criticism for the degree of centralization on the network.
Even though there are some worries surrounding centralization and the possible influence Binance has on the Binance Chain and Binance Smart Chain, BNB is one of the most popular altcoins on the market. The value of the crypto has risen significantly, resulting from the growing popularity of Binance’s products and the token burns.
Burning tokens means destroying crypto. This may sound disastrous, but many BNB holders are eagerly looking forward to the quarterly tokens burns. The idea is that this decreases the amount of BNB that is in circulation, meaning the BNB that stays in circulation increase in value. The amount of BNB that will be destroyed each quarter depends on the amount of trading activity on the Binance trading platform during that quarter. These burns will continue until 100 million BNB are destroyed, 50% of the total circulation of 200 million BNB.
Binance coin utilities
To conclude this article, let’s look at the actual utilities BNB has. As mentioned, BNB is the native cryptocurrency of the Binance ecosystem. Traders who pay their trading fees with BNB receive a discount. BNB can also be traded against a large number of altcoins on the Binance trading platform. The plans for BNB are to use it as gas on the Binance Smart Chain and the Binance Decentralized Exchange (DEX).
In short, Binance coin is the altcoin of one of the most popular trading platforms in the world. Furthermore, due to the regular token burns, the role it plays within the Binance ecosystem, and the increasing number of use-cases, BNB is one of the top cryptocurrencies of the market.