Definition
Binance Coin (BNB) is a digital currency issued by the cryptocurrency exchange Binance. It is used to pay for transactions on the Binance platform, offering users a discount on trading fees when using BNB. Furthermore, BNB is backed by the Ethereum blockchain and follows the ERC20 standard.
Phonetic
The phonetic pronunciation of “Binance Coin (BNB)” is “Bai-næns Koin (B-N-B)”
Key Takeaways
- Utility: Binance Coin (BNB) is used for various transactions within the Binance Exchange, one of the largest cryptocurrency exchanges in the world. Users can use BNB to pay for fees, participate in token sales and more. Its versatility makes it highly valuable within the Binance ecosystem.
- Burn Mechanism: Binance uses 20% of its profits each quarter to buy back and burn BNB tokens. This reduces the overall supply of BNB over time, making remaining tokens potentially more valuable. This model of supply reduction can potentially drive higher BNB prices in the long term.
- Participation in Binance Smart Chain: BNB is also used in the Binance Smart Chain, a blockchain platform for decentralised applications. BNB can be used to execute transactions and also to participate in the network’s governance.
Importance
Binance Coin (BNB) holds significance in business and finance because it operates as the native cryptocurrency of the Binance exchange, which is one of the largest and most used cryptocurrency exchanges globally. BNB provides various benefits for its users in the Binance ecosystem, including reduced trading fees, eligibility for participation in token sales, and use in various operations on the Binance platform. Further, BNB has various uses beyond the Binance exchange, such as in online purchases, travel bookings, entertainment, and more. Its wide usability, intrinsic value, and connection to the leading cryptocurrency exchange make it an essential element in the crypto finance sector.
Explanation
Binance Coin (BNB) serves several key purposes within the Binance ecosystem, creating not only a token for transactions but also a foundation for the wider Binance infrastructure. One of the primary uses of Binance Coin is to pay for fees on the Binance cryptocurrency exchange. These include trading fees, withdrawal fees, and more. By using BNB, users on the platform can receive significant discounts on these fees. BNB can also be used to invest in certain Initial Coin Offerings (ICOs) listed on Binance’s Launchpad program which promotes new blockchain projects, acting as a token of investment, much like equity in a listed company. In addition, Binance Coin is also used as a utility token in other capacities. It can be used to participate in token sales on the Binance launchpad. BNB can also be used in various payments scenarios including booking travel accommodations, entertainment, and online services. A wealth of different merchants, ranging from real estate companies to payment processors, now accept BNB as a form of payment. This all propels Binance Coin far beyond the singular use of other exchange-based tokens, integrating it thoroughly into both Binance services and the wider crypto industry.
Examples
1. Use for Transaction Fees: Binance coin is predominantly used to pay transaction fees for all the exchanges occurring on the Binance platform. This includes trading, buying, and selling of cryptocurrencies. Users can choose to pay these fees in BNB and receive a significant discount, which is a major incentive to hold and use this coin.2. Binance Chain Ecosystem: Binance Coin is used within the Binance Chain ecosystem. For instance, projects issuing in Initial Coin Offerings (ICOs) on Binance’s launchpad platform pay in BNB. Also, several blockchain projects built on Binance’s native blockchain, Binance Chain, use BNB for transactions and utility purposes.3. Use in Real-world Applications: Various companies and service providers worldwide accept BNB as a form of payment. For example, TravelbyBit, a crypto travel booking platform backed by Binance, accepts BNB payments for its services. Likewise, crypto debit card providers like Crypto.com and Swipe have integrated BNB, allowing users to spend their BNB balance in real-world scenarios, ranging from online shopping to bill payments.
Frequently Asked Questions(FAQ)
What is Binance Coin (BNB)?
Binance Coin (BNB) is a cryptocurrency that can be used to trade and pay fees on the Binance platform, a cryptocurrency exchange. It was created by Binance in July 2017.
Where can you buy Binance Coin (BNB)?
Binance Coin can be purchased on the Binance exchange or any other exchange that lists BNB.
What is the use case of Binance Coin?
Binance Coin is primarily used to pay for transaction fees on the Binance platform. Users who pay their fees in BNB receive a discount. It’s also used for investment in certain Initial Coin Offerings listed through the Binance Launchpad.
What is the total supply of Binance Coins?
The total supply of BNB is capped at 200 million coins, but Binance conducts burns periodically, where a portion of the circulating BNB supply is permanently removed, reducing the total supply.
Why does Binance burn BNB coins?
The burning of BNB coins is a strategy by Binance to increase the coin’s value by reducing its supply, as per the basic principles of demand and supply.
Can Binance Coin be mined?
No, Binance Coin (BNB) cannot be mined. The coin operates under the Binance Chain blockchain which follows the Byzantine Fault Tolerance (BFT) consensus algorithm where all coins were pre-mined.
What is BNB’s relevance outside of the Binance platform?
BNB can be used for multiple purposes outside Binance, such as travel bookings, gifting, payment for transaction fees on other platforms, among others.
Can I store Binance Coins in an external wallet?
Yes, BNB can be stored in any wallet that supports Binance Chain BNB. Some popular options include Trust Wallet, Ledger, and Trezor.
Is Binance Coin a good investment?
Investing in any cryptocurrency, including Binance Coin, involves risk. It’s recommended you conduct thorough research and consider your financial situation before making investment decisions.
Related Finance Terms
- Cryptocurrency
- Blockchain
- Binance Exchange
- Initial Coin Offering (ICO)
- Crypto Trading Pairs
Sources for More Information
