Binance Review: Full Coin Guide
Quick inner navigation:
Cryptocurrency exchange, Binance, is currently the largest in the world with the trading platform recording roughly $1.3 billion in trade every day. Binance was launched less than a year ago but has seen its rise to the top very fast. It currently records millions of new users per week.
The exchange platform launched a cryptocurrency dubbed BNB coin. This coin is currently being traded and used on their platform. Since its ICO last year, BNB has risen in value, and now trades around $12. This swift rise of BNB means it is now among the top 30 cryptocurrencies in the world in terms of market cap.
The Binance coin BNB has become so appealing to investors and traders due to the huge number of people that use the exchange platform on a daily basis. In this guide, we will look at everything you need to know about this coin and why it has become one of the most valuable currencies in the world.
What is Binance Coin (BNB)?
The Binance coin is a digital currency that was developed and issued by the exchange platform, Binance. The coin which is dubbed as the BNB is an ERC20 token that is issued on top of the ethereum blockchain. The Binance coin was launched about the same time as the exchange platform, which was in mid-July last year. The ICO lasted less than two weeks after which the tokens were distributed to the participants.
Binance is a company originally started in Shanghai, China, but their headquarters is now based in Hong Kong. The development team comprises the founder, Changpeng Zhao. Roger Wang is the co-founder of the platform and the CTO of Binance.
The chief architect is James Hofbauer, while the Vice President of Engineering is Paul Jankunas. The two members of the development team are Allan Yan, who is the Product Director and Sunny Li, their Operations Director.
Some of their investors and advisors include; Roger Ver (an angel investor), Yang Linke, who is the co-founder of BTCChina, Jun Du, a co-founder of Huobi exchange, and several others.
The use of BNB tokens
If we are to describe the Binance coin, then it would fall under the category of utility tokens due to their ability to be used as a means to pay the trading fees imposed by the parent exchange platform. Using the BNB tokens, users of Binance are charged lower transaction fees. Binance cuts transaction fees when users make use of the Binance token.
Other expenses such as withdrawal fees can also be paid using this token, with the user getting a little discount for that too.
Even though most people believe that the BNB is a representation of the value of Binance, that view is completely wrong since the price of the token is in no way attached to the success of the Binance platform. However, if Binance continues to grow and record more users, then the use of BNB tokens will automatically grow with it, subsequently hiking its price. This, however, does not mean that the price of BNB will have to increase as more people use it. There are other market factors in play for the coin, just like there is for every other cryptocurrency.
With the fee discount for BNB users decreasing annually, the value of the token is also expected to decrease along with it. In order to stop the decrease in price, Binance will destroy their tokens over time. This will reduce the total supply of the coin, from the current 200 million to 100 million. Reducing the amount of the token in circulation as the discount decreases will help keep the price in check. The main aim of all this is to keep the price of BNB stable over a long time.
The idea behind the BNB coin
The idea behind this token is to make it easier and cheaper for traders on the Binance exchange to pay their transaction fees. When a user starts using the BNB coin to pay for trading fees, withdrawal fees, listing fees and other related fees, they will be able to enjoy a great discount. The platform offers traders using the BNB token a 50% discount on trading fees as they use the exchange for at least a year.
If the trader uses it consecutively for four years, then Binance will give the trader a substantial discount annually. By your fifth year using the exchange platform though, you will no longer be eligible for discount fees using the BNB coins.
In addition to all these, BNB coin comes with the necessary features that a trader and an investor will make use of in an exchange. One of such features is its support for trading pairs with all the major cryptocurrencies. However, BNB doesn’t support fiat currencies, with only crypto-crypto trading allowed.
Even though paying for fees is the main reason why the BNB token was created, the coin can also be used to invest in ICOs, though the ICOs must participate in Binance’s Launchpad program. As soon as the ICO has been completed, the newly created tokens will be listed on Binance platform automatically, thus making it easy for the traders.
The total fixed supply for the BNB coin stands at 199,013,968 tokens.
Why do exchanges need their own tokens?
Exchanges create their own tokens with the aim of making it easier for their customers to pay their transactions fees. Similar to the BNB, exchange platform, KuCoin also has its own token dubbed KCS, while we also have the COSS token. Just recently, Huobi exchange launched its own HT token.
Using the exchange based tokens makes it easier for traders and investors to pay their exchange fees. In addition to that, users are also given discounts when they use the currency, though that is not the main aim of the tokens.
Key Features of the Binance Coin
Stability and trouble-free operation
The main feature of the Binance is to create stability for traders in terms of paying their transaction fees. To make this happen, Binance makes use of a very high level of system reliability. Their branched and multilevel network was developed with the most intrinsic of architectures.
With this feature, users can conduct operations without any stress to them or to the system.
Multiple cryptocurrency support
Traders and investors that use the BNB token conduct their transactions using all the currencies supported by Binance exchange (which is almost all the cryptos in the world). This means that it doesn’t matter the coin you have in your reserve, it will be very easy for you to conduct your transactions.
A limited number of coins
BNB coins have been capped at 200 million. The development team doesn’t plan to add more coins, though they plan to reduce the tokens in circulation down to 100 million at a certain point in time. The limited number of coins will protect BNB from rapid devaluation later on.
Security of transaction
One of the features BNB is working is the complete security in the execution of transactions. Binance will do that by creating of their own blockchain. As soon as that is complete, BNB coin will increase in value. Asides that, Binance and the BNB coin will become the most secure crypto exchange in the world.
Binance is currently ranked among the top three largest cryptocurrency exchanges based on 24-hour trading volumes. Surprisingly, the Hong Kong-based exchange didn’t exist before July 2017. The company held an ICO in July last year with plans to launch the Binance coin, which is now used to trade other cryptos on the Binance exchange for lower trading fees.
For the ICO, Binance released 200 million BNB coins, each which was sold for $0.1 USD. The coin’s value rose fast and by January 2018, the coin was trading for $22. The Binance ICO coin is an ethereum ERC-20 token but its growth and value are in no way connected to the growth of the Binance exchange. Instead, traders are attracted to the coin because it offers half the trading fee you pay when you use other trading pairs. The Binance ICO helped the exchange gain a lot of attention. And in a progressive way, Binance used the attention to create a user-friendly, crypto exchange that is professionally managed. Binance has a team of highly skilled individuals who ensure that the exchange works 24/7. Their customer services are helpful and there are almost no challenges with trading on the exchange.
BNB Supply and Sustainability
Binance created 200 million Binance coins during the launch. After the ICO, 100 million coins were distributed to the public ICO investors while the remaining 100 million tokens were distributed to the private investors and the development team. Keep in mind that even though the development team holds the largest share of the tokens, they won’t be able to crash the BNB market by dumping the coins.
During the ICO, Binance stated their intention to buy back 50% of the coin over time. By purchasing these coins, Binance aims to burn them. The main aim of this is to sustain the currency over time. The question is why they need to sustain the coin over time. The answer is simple- so that the currency doesn’t experience a rapid decrease in price.
The discount incentive on using BNB coins by traders and investors will decrease over time and by the fifth year of use, a user will no longer get any discount for using the BNB.
- Year 1 – 50% fee discount
- Year 2 – 25% fee discount
- Year 3 – 12.5% fee discount
- Year 4 – 6.75% fee discount
- Year 5 – 0% fee discount
At that point, it is estimated that the price of BNB will massively reduce. To stop that from happening, Binance will keep purchasing the public tokens and burning them.
Binance cannot be mined since the coins have already been distributed to the investors and the development team.
How does Binance Coin work?
The BNB coins work primarily for users on the Binance exchange platform. If you purchase the Binance coin, you get a 50% discount on transaction fees for a year. The second year, the fees are reduced to 25%, in the third year the discount will be reduced to 12.5%. In the fourth year, the discount fee will be reduced to 6.75%. In the fifth year and every other year after that, you will not get any discount for using BNB to pay transaction fees. This structure is used as an incentive for traders and investors to buy BNB and do trades with it within the Binance exchange.
Each time you use the BNB coin to pay your transaction fees; Binance collects the coin and burns them. The platform has committed 20% of their profit every quarter to buying back the coins from users and burning them. This is to ensure that the coin doesn’t lose its value.
What you get as a trader
By making use of the BNB tokens, you will get the aforementioned discount on your transaction fees. Apart from that, you can also trade the BNB coins on the platform. Due to the high number of people registering and trading on Binance, the value of that coin has soared over the past few months and has now reached the $12 mark.
The coin burn that Binance is doing will definitely play a role in the currency’s rise. So by purchasing the BNB token, you will get a discount on trading fees for four years, you will get the chance to trade the currency against virtually all the cryptocurrencies on the platform.
The decentralized exchange platform which Binance will soon launch will most likely lead to increasing in the value of BNB, thus trading in the currency now will allow you to make a profit from it both now and in the near future.
Notable BNB coin competitors
This is the token issued by KuCoin exchange. In terms of functionality, it works almost similarly to BNB. The KCS token is also an ERC20 token with a 100 million of them distributed to investors during the ICO.
Transaction fees paid using the KCS coin are shared in three places. KuCointakes 10%, the referred trader takes 40% while the KSC shareholder is given the remaining 50%. Thus, you stand to make 50% of all transaction fees paid if your own a KSC token.
The coin name and the exchange name are the same. It is a very small token when compared to BNB and KCS.
COSS is a well-known decentralized exchange that pays their coin holder 50% of the total revenue generated at the end of each week. This incentive makes the COSS token a very attractive one.
The Huobi Token (HT) differs from BNB in that there no ICO was held for this token. The exchange distributed around 300 million of the tokens, which is around 60% of the total coin supply to new users. The remaining 40% would be kept for the operation of the platform.
Instead of an ICO, Huobi gave the coins to users who bought a service fee package at a discount on Huobi Pro using Tether (USDT).
Binance Coin price growth and history
The coin was just launched and the price was $0. The launching of the BNB coincided with the launching of the Binance exchange.
As the exchange platform grew, so did the price of the BNB coin which hit the $1 mark less than a month after it was launched.
By December, Binance had become one of the leading cryptocurrency exchanges in the world with millions of users registered on the platform. This led to the increased use of the BNB coin, ultimately resulting in its price going up to $3.16 that month.
In the same month, the BNB coin, just like the other cryptocurrencies attained all-time highs, BNB surged past the $11.30 mark.
January to March 2018
January was the month that most cryptocurrencies started to plunge, but that wasn’t the case for BNB which attained an all-time high of $24.91. The coin now followed the trend of other cryptocurrencies. With the cryptocurrency market still in a bearish mode, the price of BNB has decreased, despite the increase in the number of users on the platform.
How to buy Binance Coin?
You can purchase the BNB tokens at Binance and Bancor. To buy Binance Coins, follow this procedure.
- The first thing to do is to open an account with either of the two. Creating an account with Binance is a very simple process.
- After registering and verifying your email address, the next step is to enable the 2FA using Google Authenticator. This will make your account more secure.
- To purchase BNB, you have to exchange it with another cryptocurrency or convert that crypto to BNB. You cannot purchase BNB with fiat currencies. To do that, you can deposit Bitcoins, Ethereum or Tether coins to your Binance account.
- After sending the coins to your Binance account, the next step is to convert that coin to BNB. Go to the market page, you will see the BNB trading pairs.
- Navigate to the BNB/BTC or BNB/ETH page and exchange your bitcoin or ethereum for the BNB token. Once you have done that, just wait for a few minutes and your order would be confirmed, with the BNB tokens appearing on your wallet afterward.
- To pay for your transaction fees, access your Binance profile page. The pay for transaction fees button will be there, simply click on it and you are done.
Binance Coin wallet
If you are interested in storing BNB coins, you can hold them in either of the following; Ledger Nano S, Trezor, and MyEtherWallet since we do have a Binance Coin wallet.
MyEtherWallet >> is a free open-source wallet that can store ERC20 tokens, including BNB. You will be in charge of securing your funds and it is a very good place to hold your BNB token.
Trezor >> is a hardware wallet that supports ERC20 tokens, thus you can store your BNB coins there. With Trezor, your coins are secure. Not only that, your transactions are also secure and it is very easy to use.
Ledger Nano S >> is another hardware wallet that supports ERC20 tokens. It is very easy to use while the security is also top notch. It is recommended that you store your BNB tokens on a hardware wallet as this makes your coins more secure.
In a Nutshell
It is safe to say that BNB is the biggest exchange-based token currently available. The features of the token make it a very attractive coin to traders and investors.
The exchange platform continues to promote the adoption of their token as they hope it will lead to customer loyalty. Due to the rapid growth of the token, there is every possibility that the value of BNB could grow even higher as an asset.
The launch of the Binance decentralized platform will lead to an increase in the adoption of the BNB coin. From all indications, Binance would likely add more features to their coin.
Thank you for reading. Make sure to check our site for more.