Binance Coin (BNB)
The Binance Token is a digital token created on the Ethereum Network (ETH). Binance Coin is an official token on the Binance cryptocurrency exchange, which is used not only to raise funds for the development of the exchange platform, but also to reduce transaction fees for customers who use BNB to cover commissions for transactions in the Binance cryptocurrency market.
The maximum cryptocurrency reserve Binance Coin (BNB) (the number of coins available) was set at 200 million units. Binance Coin was the first service token created by the cryptocurrency exchange.
The creators of the Binance platform (and hence the BNB cryptocurrencies) are Changpeng Zhao and Yi He from China, who managed to build the world’s largest cryptocurrency exchange from scratch in a few months. The name of the Binance exchange is a combination of the words “binary” and “financial”.
The project team
BNB Coin was developed by a group of Chinese programmers who later merged into Beiji Technology. The creator and manager of the project is Changpeng Zhao. Even before the launch of Binance Coin and its own exchange, this person had experience in the field of blockchain technologies.
So, he led the development team in the well-known Blockchain.com project. In addition, he was a co-founder of other crypto projects (OKCoin and BijieTech).
In addition, Changpen Zhao is a well-known and respected person in the crypto community. He leads an active “life” in social networks, where he discusses with the Binance community members the future of his projects and the prospects for the development of the cryptosphere as a whole.
BNB Functions: Why is Binance Coin cryptocurrency needed
BNB is an official token of the Binance exchange, originally used to raise capital during the development of the platform, during the ICO ($ 15 million). The main function of Binance Coin is the payment of commissions to users of the exchange on more favorable terms, thanks to discounts.
In the first year from the launch of the exchange (until August 1, 2018), the discount on commission fees at Binance Coin (BNB) was 50%, in the second year it was halved (up to 25%). On the exchange via BNB:
- Transaction fees;
- Commission for the payment of funds;
- Commissions for creating new financial instruments;
- Voting for new tools.
An extremely interesting and unique function of BNB tokens is their regular “burning”, that is, an irreversible decrease in the maximum number of available units, which initially amounted to 200 million BNB. On a quarterly basis, the board of directors of the BNB exchange buys BNB tokens from the digital market in the amount of 20% of the profit from transaction fees, and then burns them (using the Proof of Burn protocol).
The current maximum reserve of BNB tokens is 192,443,300 units and will be systematically reduced to the level of 50% of the initial reserve of this cryptocurrency, namely to 100 million tokens.
In August 2018, the owner of the cryptocurrency exchange Changpeng Zhao announced that more than 80% of his employees receive compensation in the cryptocurrency Binance Coin (BNB).
Fundraising at ICO Binance Coin (BNB)
ICO Binance Coin was supposed to raise funds to launch the exchange platform. The sale of BNB tokens began on July 1, 2017 and lasted three weeks until July 21. Of the maximum number (200 million tokens created), half (100 million) tokens were allocated for public sale, 80 million for developers and the founding team of the stock exchange, and the remaining 20 million for consultants and business investors.
During the ICO, all 100 million tokens were sold for about 15 cents (US dollars). Meanwhile, on July 14, 2017, the Binance exchange launched a beta version of its cryptocurrency, initially making trading available in BTC, ETH, LTC, NEO and BNB. Investors who took part in the Binance Coin ICO currently have an impressive rate of return (above 6500%).
Cryptocurrency wallet for Binance Coin
BNB is a convenient token based on the ERC20 smart contract developed on the Ethereum platform (ETH). Although it is usually recommended not to store digital coins and tokens directly on cryptocurrency exchanges, an exception can be made to the Binance exchange trading token utility, since storing tokens on this platform allows you to reduce transaction fees. Since BNB is the standard Ethereum token, it provides a wide range of different types of wallets.
The most popular online wallet for ERC20 tokens is MyEtherWallet. However, for security reasons, it is recommended that you use a compatible wallet as a browser extension, such as MetaMask. BNB is also supported by the Exodus desktop wallet, available for Windows, MacOS, and Linux. The most popular mobile portfolios for ERC20 tokens are imToken, as well as Jaxx and Coinomi multi-wallets. Binance Coin is also supported by hardware wallets from Ledger and Trezor.
Although BNB is a marker of the Binance exchange, it is also available on six other trading platforms. Currently, BNB is the largest capitalized token in the digital market (approximately 950 million US dollars), which ranks 16th in the capitalization rating.
Cryptocurrency Binance Coin – the principle of work and mining
BNB Coin is a coin of the ERC20 standard, which was created on the Ethereum blockchain and therefore the whole “life activity” of this coin is based on the same characteristics: the Proof-of-Work consensus algorithm and the Ethash encryption algorithm. Mining Binance Coin is not provided and the only way to get coins is to buy them.
Pros and Cons of BNB Coin
The Binance Coin cryptocurrency is considered to be one of the most promising coins. And not in vain, because she has her very significant advantages:
- High liquidity – Binance Coin cryptocurrency is paired with more than 400 coins, making it one of the most liquid coins;
- Reduced supply – the quarterly “burning” of coins, which the Binance team has so far carried out according to the plan, has a positive effect on the increase in the price of Binance Coin in the long term;
- Possibility of reducing commission during trading – holders of BNB coins can open and close transactions on the exchange with a commission that is currently 25% lower than for other users;
- Good reputation – the exchange and its founder Changpen Zhao have a very good reputation, and this is one of the important conditions for the success and longevity of any project;
- The ability to use to pay for services – in the fall of 2018, Binance wrote on its blog that Binance Coin cryptocurrency is accepted at 150 sites.
However, there are also disadvantages:
- A large concentration of coins in the hands of the founders – during the ICO, the organizers left 40% of the coins “for themselves”, which creates the danger of manipulating the course for the personal goals of the company;
- Few places to buy – the main place where you can buy BNB, is the Binance exchange. There are several other platforms that offer Binance Coin, however, there you can buy a coin mainly only for Bitcoin, Ethereum or “native” exchange tokens.
The fate of the Binance Coin cryptocurrency depends entirely on how the Binance exchange develops, since without a platform this coin simply loses its meaning.
At the moment, we must admit that Binance is showing positive development. It is the second largest crypto-exchange and is very popular among traders due to the small fees and the lack of the need for mandatory verification.
In addition, recently launched projects (the Binance Chain test network and the ICO platform called Binance Launchpad) have further strengthened user confidence. All this positively affects not only the reputation of Binance as an exchange, but also the growth in the value of Binance Coin. Particular attention is paid to the fact that the founders are trying to expand the possibilities of using the coin, agreeing with various sites that the Binance Coin cryptocurrency can be used as a payment method.
However, do not forget about one unpleasant moment – about 40% of all coins are in the hands of Binance. And if we take into account the fact that the team “burns” BNB tokens on a quarterly basis, then the above percentage of cryptocurrency concentration in one hand increases. And this can lead to negative consequences if the founders decide to use their ‘reserves’ in order to manipulate the course. But we, nevertheless, will hope that this does not happen and the Binance Coin cryptocurrency, just like the Binance exchange, will have a great and bright future.