What is Binance Coin (BNB)?

BNB Price Decline Predicted if Coin Is Absent for Binance US | Coinfomania

Binance coin was created with the intent of operating a native crypto asset, called BNB, meant to offer an alternative way to pay for fees charged to traders using the exchange.

BNB can be used to pay Binance’s 0.1% per trade fee in addition to its withdrawal fee, which is charged when users move their cryptocurrencies from the exchange to a private wallet. BNB can also be traded for other cryptocurrencies.

Uses of Binance Coin

Just like other evolving cryptocurrencies, the Binance Coin offers several uses that go beyond the Binance exchange, such as

  • Trading: Binance Coin can be traded for other cryptocurrencies on various exchanges, depending on the restrictions set by the exchange.
  • Transaction fees on the Binance Exchange: BNB can be used to pay for transactions on the Binance Exchange, and users also receive a discount for doing so.
  • Credit card payments: BNB can be the form of payment for crypto credit card bills on Crypto.com.
  • Payment processing: Merchants can offer BNB as a means of payment for customers, offering more flexibility in payment methods.
  • Booking travel arrangements: BNB can be used to book hotels and flights on select websites.
  • Entertainment: From paying for virtual gifts to buying lottery tickets, BNB serves several purposes in the entertainment space.
  • Investment: Several platforms allow investors to invest in stocks, ETFs, and other assets using Binance Coin.
  • Loans and transfers: BNB can be used as collateral for loans on certain platforms. Also, there are apps that allow users to split bills and pay friends and family through Binance Coin.

 

Binance Coin: Initial Coin Offering

Binance Coin was launched with an initial coin offering (ICO) in July 2017. As part of the ICO, BNB tokens were distributed among various participants, including angel investors and the Binance founding team.

Here’s a brief breakdown of how BNB tokens were initially distributed:

  • Founding team: 40% (80 million BNB)
  • Angel investors: 10% (20 million BNB)
  • Public sale: 50% (100 million BNB)

All of the 100 million BNB tokens available for public sale were sold during the ICO at 15 cents per token. Therefore, Binance raised a total of US$15 million in bitcoin and ethereum.

From the $15 million that was raised, 35% was allocated to upgrading the Binance platform and exchange system; 50% was allocated for Binance branding, marketing, and education of new innovators; and the remaining 15% was used as a reserve in case of any emergencies or unprecedented circumstances.

 

BNB Burning

As mentioned in the Binance whitepaper, every quarter, Binance uses 20% of its profits to buy back and burn Binance Coins, destroying them completely. Binance’s consistently performed quarterly burns, the latest being the 13th quarterly burn on October 17, 2020.

Binance will continue to perform quarterly burns until it buys back and destroys 100 million Binance coins – 50% of the total supply. The practice ensures that the supply of Binance Coin remains finite, making it scarce and more valuable.

Binance Coin (BNB) | Freewallet Customer Support

How does Binance Coin work?

Vision

Binance coin is an ethereum-based (ERC-20) token that can be used to trade cryptocurrencies and pay for fees on the Binance exchange. BNB tokens can be used to pay fees on the exchange, with the incentive being that Binance offers a rebate as an incentive for up to five years of membership.

Binance is distinct from other crypto exchanges in that it transacts purely in cryptocurrencies as opposed to exchanges that deal in fiat currencies. Founder Changpeng Zhao’s vision for Binance coin was to compete with the other exchanges by offering solutions to the numerous problems he saw with the cryptocurrency trading infrastructure.

Launch & issuance

Binance completed its initial coin offering (ICO) of 100 million BNB on July 21, 2017.

All BNB tokens were created prior to the ICO, and were sold within 20 days, raising approximately $15 million.

The funds raised were used in three different ways: 35% of the funds were used to build the Binance platform and perform system upgrades; 50% were used for Binance branding and marketing; and 15% were reserved as emergency funds.

Network design & security model

BNB started as an Ethereum-based (ERC-20) token that eventually moved to its own custom blockchain called Binance Chain. Unlike Ethereum, however, Binance Chain does not support smart contracts.

Binance Chain utilizes the Tendermint byzantine-fault-tolerant (BFT) consensus mechanism. The system involves several different types of nodes: Validator nodes, select community members who vote to validate transactions; witness nodes, which witness the consensus process and broadcast transactions to other nodes; and accelerator nodes, which are owned by organizations and speed up the transaction validation process.

Once blocks are produced, the fees collected are distributed among all validators.

Monetary policy/ token policy

Binance has capped the BNB supply at 200 million tokens. 100 million tokens were released to the public during the ICO, while 80 million were allocated to the founding team and 20 million to angel investors.

In order to combat the depreciation of value that will happen with the yearly decreasing discount, Binance plans to burn half of its total supply, 100 million tokens, over time. The final goal of “The Burn” is to stabilize the price of BNB over time.

Transaction processing

Validator nodes vote to process transactions in the network as part of Binance Chain’s Tendermint byzantine-fault-tolerant (BFT) consensus mechanism.

Users can speed up transaction processing by choosing an accelerator node, which works in tandem with validator nodes.

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