What is Binance Coin?
Binance Coin is the native cryptocurrency token of the Binance trading platform.
Launched in 2017, the Binance digital exchange is one of most popular because of its revolutionary technology that allows them to process over 1.4 million orders per second.
According to their website, the Binance name is derived from two names, binary and finance.
The Binance coin (BNB) they've created is used to pay for trading fees on their platform.
It’s an ERC20 standard coin with a maximum supply of 200 million BNB tokens.
One important thing to note is that Binance users who primarily pay for fees using the BNB token get an incentive in the form of a 50% discount in the first year of trading; 25% in the second year and so forth.
This helps investors cut on the costs of transactions.
The information provided here is for informational purposes only and should not be seen as investing advice. Our opinions on this site are only that, if you are considering an investment into cryptocurrency or anything we speak about on this site, please advise a trusted financial professional first, before doing so.
The company’s plan is to use 20% of its profits to buy back BNB tokens.
The coins that have been repurchased are then destroyed to cut the supply of coins and to increase the value of remaining coins. In the end, the company hopes to cut the number of BNB coins in circulation to 100 million.
In June 2018, they announced that they have plan to burn another 2.2 million BNB coins.
City of Zion’s influence
The City of Zion is an international group of coders, developers and specialists who have been working together to decentralize NEO, another cryptocurrency platform.
The consortium of coders has since moved NEO to the City of Zion consensus node.
Keen on becoming a decentralized exchange, Binance could soon be influenced by the activities of the City of Zion consortium through Binance Labs, their blockchain incubator.
Binance Labs recently launched a $1 billion investment fund supported by Neo Global Capital, an affiliate of NEO.
In some ways, their partnership could see Binance moving to the City of Zion consensus node.
In line with its vision of becoming a decentralized digital exchange, Binance recently announced the launch of its own blockchain dubbed “Binance Chain’’.
Binance chain will run its own cryptocurrency token BNB, instead of relying on the Ethereum blockchain.
Binance founder Chanpeng Zhao said that centralized exchanges are flawed and struggle with many challenges, including high fees, poor liquidity and low user base.
He plans to decentralize Binance to move it from a company to a community by launching the Binance DEX on a public blockchain.
The entire chain will be launched later in the year although a demo version is available.
Pros of Binance Coin
Binance is best known for its fast transaction speeds.
Its technology is capable of handling over 1.4 million orders per second, making it one of the fastest and most popular decentralized exchanges.
Team and Partnerships
The Binance team is made of blockchain professionals with a wealth of experience in cryptocurrencies. Changpeng Zhao, the founder of Binance is the most recognizable name behind the exchange. He's a former CTO of OKcoin.
The Binance team's experience seems to have boosted investors confidence as the platform has since attracted new strategic partnerships.
These include; Skycon, a strategic partner that enables Binance to enhance its number of trading pairs. Notably, the exchange also partnered with Uplive, Asia's premier live video platform.
The partnership will see Binance reach Uplive's 20 million users.
Trading Fee Discount
With a flat trading fee of 0.1%, Binance has attracted millions of users who prefer an exchange with low fees and high quality services.
The fact that you can pay some of the trading fees using the BNB token makes Binance an even more attractive trading platform.
In July, the platform announced a new tiered trading fee discount for BNB users.
First year traders can expect a discount of 50% which reduces to 25% in the second year, 12.5 in the third year and 6.75% in the fourth year. These discounts drive down the cost of trading on the platform.
Without a doubt, investors want to pump money into projects that can potentially give them attractive profits.
In the cryptocurrency world, the potential of a coin is determined by its network effect & scalability mostly.
To increase the value of BNB, the team has a coin burning program that seeks to cut the number of coins in circulation from 200 million to 100 million. They do hope that coin burnings will reduce the supply of coins and increase their value at the same time.
Barely over a year old, the Binance platform has proven to be one of the fastest growing cryptocurrency exchanges not just in China but across the globe. The only other big name that we can think of is Coinbase, and they are very different.
In the first half of 2018, the company has already earned over $300 million in revenue while growing it's user base by five times to reach 10 million users.
It's growth is good news for cryptocurrency investors.
Cons of Binance Coin
Even with its many advantages, Binance Coin has its own shortcomings as shown below.
Binance seems to have an innovative system of driving up the value of its BNB tokens. While destroying the coins seems like a good move, it drastically reduces the number of coins in circulation.
This could prove to be harmful in the event the team wants to raise more capital as there's no provision of minting new coins.
As a Chinese company, Binance has most of its documentation in Chinese language.
As such, some details could be lost when documents are translated from Chinese to English and other languages
No Fiat Exchange
One of the key disadvantages of the Binance platform is that it doesn’t support a fiat exchange.
All traded coins can only be bought in cryptocurrencies. This certainly puts off customers who prefer fiat exchanges like Coinbase.
The Binance discount schedule could be revolutionary, but it's not long-term. After the fourth year of trading, users get no discount.
Long term traders will not be happy after realizing that the rewards diminish every year.
Poor censorship resistance
As popular as Binance might be, it doesn’t seem capable of overcoming cryptocurrency censorship .
The platform repeatedly experienced poor liquidity issues in China after the country started its censorship efforts on cryptocurrencies. Binance has since moved its headquarters to crypto-friendly island of Malta
With cryptocurrency exchanges, there’s always the risk of a technical failure and Binance is not exempted from such a risk.
In July the platform was unavailable for hours as it underwent a scheduled system upgrade.
How To Get The BNB COIN?
Before getting some BNB coins of your own, it's important to note that the platform does not really support fiat to crypto exchange.
With that out-of-the-way, the first step is to get hold of any major cryptocurrency like ETH or BTC.
The best way to get some BTC is to head over to a large exchange like Coinbase where you can exchange your fiat for BTC or ETH.
After getting your cryptocurrency, you'll need to visit the Binance platform to create your account.
After your new account is approved, you can then exchange your crypto for BNB, which will be deposited into your wallet...
Talking of wallets, you'll need a wallet to store your cryptocurrencies. Given the diverse nature of cryptocurrencies, the wallets involved vary from one cryptocurrency to another.
BNB is an ERC 20 standard token and can be stored in any Ethereum wallet, including MyEther, Trezor, ETH Mist DAPP, Metamask and many more.
For a full review of our favourite wallet, the Ledger - head over here.
Where To Spend BNB
Hurray! You have successfully purchased some BNB coin of your own and locked them in your own wallet.
So, how do you spend the coins?
BNB’s main use is to pay for all fees on the Binance platform.
Just head over to the Binance platform and start trading. You will have the opportunity to pay half the trading fee in BNB tokens when you make your trade!
It's that simple. To get started, head over to Binance now.