What Is Binance?
Before we begin discussing what the Binance Coin is, we shall first discuss about Binance, the exchange. Binance is one of the biggest cryptocurrency exchange in the crypto space, with almost $1.5 billion in trading volume every single day.
The exchange was launched in July 14th 2017, in an ICO which raised nearly $15 million in 2 weeks. The platform was founded by Changpeng Zhao and Yi He. Changpeng Zhao served as CTO at OKCoin (a platform for spot trading between fiat and digital assets) for less than a year before moving on to Binance.
How Does the Binance Exchange Work?
The Binance exchange works like most cryptocurrency exchanges, letting its users exchange one cryptocurrency for another. It employs a custom matching engine that pairs buyers and sellers at the requested prices. After the transactions are processed and the coins are in the accounts of the users, Binance receives a small fee for its services. This is how an exchange makes its income.
Binance developed their own proprietary trading engine which currently has a processing capacity of 1.4 million trades per second.
What Is the Binance Coin (BNB)?
Binance Coin is an ERC-20 token and altcoin created by Binance which is used in their business interest in trading. Binance users benefit from a 50% discount (in the first year) on their trading fee (0.1%) if they held BNB.
The token uses Ethereum’s network and blockchain. This means that the coin also runs according to the rules established by the community for the Ethereum blockchain.
BNB isn’t a currency; it is a token used on the Binance platform to pay fees on the exchange. Rather than paying a fee of $1 for every $1,000 in trades, traders can make use of Binance coins to cover the fees.
The exact mechanism for this involves Binance rebating trading fees for those that want to use the Binance coin when trading – for the first five years. The discount’s value lowers each year, so in the first year, you receive a 50% rebate of your fees by using Binance coins.
The discount halves each year, so in the second year, the discount will be 25%, in year three it will be 12.5%, in year four 6.75%, and in the fifth and final year the discount will be no more. This discount is automatically calculated and subtracted if you have Binance coins in your exchange wallet.
On July 15, 2018, a date which marks the beginning of the second year, the discount was reduced to 25%, as the exchange said it would.
A total of 200 million BNB were issued at a price of 0.00005 BTC. In their whitepaper, Binance promised that every quarter they would use 20% of their profits to buy back BNB and burn a certain amount of coins.
The total amount they aim to burn is 100 million tokens. So far, more than 7 million BNB have been burnt over the course of 4 quarters. This is to reduce the supply and increase the demand in value for the coin.
The main purpose of the Binance coin is to reduce trading fees. However, users may also use the coin to participate in certain ICOs that take part in the Binance Launchpad program, and will subsequently be listed on the Binance exchange.
The BNB price is currently $9.75 and ranks in 14th position according to its market cap, which is valued at $1,275,187,887 USD. The circulating supply is 130,799,315 BNB out of a total supply of 190,799,315 BNB.
Where can you buy BNB?
The BNB coin can be purchased on the Binance exchange, but there are a few other exchanges that offer the token, including EtherDelta and HitBTC. Any supported coin on Binance can be traded against BNB.
Where to Store BNB?
Binance coins can be kept in a wallet, just like any other cryptocurrency. You can either store it in the exchange wallet, or you can move it to any wallet that that is compatible with ERC-20 tokens. One very popular Ethereum-compatible wallet is MyEtherWallet.
Conclusion
Binance has seen am impressive growth in just one year since its launch, which has also been evident in its coin growth. As Binance will keep on making strides in the crypto world, this will undoubtedly affect BNB’s value.
