BNB: Everything to Know
By Beluga Research July 8, 2023
- Binance Chain (BNB) is the Binance platform's utility token.
- Binance has launched its own blockchain, BNB Chain
- This allows the BNB cryptocurrency to be used as a native Chain
- Binance is one of the largest cryptocurrency exchanges in the world
Binance Chain (BNB) is a cryptocurrency that serves as the utility token for the Binance platform. It launched in 2017 by crypto exchange Binance. The main purpose of BNB is to serve as a utility token for the Binance platform. Binance Chain is built on the Ethereum blockchain.
Binance Chain has become increasingly popular in recent years and is now one of the top 10 cryptocurrencies by market capitalization. Its popularity can be attributed to the fact that it is used for a variety of purposes on the Binance platform, including trading fees, listing fees and other expenses.
A Brief History
Binance Chain launched in July 2017 as an ERC-20 token on the Ethereum blockchain. The initial Chain offering (ICO) for Binance Chain was held in July 2017. This event raised $15 million in 15 minutes. The total supply of Binance Chain is limited to 200 million tokens. Binance plans to use 20 percent of its profits each quarter to buy back and burn Binance Chains. It will do this until only 100 million tokens remain.
In 2019, Binance launched its own blockchain, Binance Chain. This blockchain allowed Binance Chain to be used as a native cryptocurrency. That year, Binance also launched its decentralized exchange, Binance DEX. This exchange is built on the Binance Chain. Binance Chain is used as the primary currency on the Binance DEX. It is also used for trading fees on the platform.
BNB was previously known as Binance Coin. However, in 2022 the Binance Chain cryptocurrency and Binance Smart Chain smart contract merged to become BNB Chain - with the BNB standing for (Build and Build).
What is BNB?
Binance Chain is a utility token used on the Binance platform for a variety of purposes. One of the main uses of Binance Chain is to pay for trading fees on the Binance exchange. Users who hold Binance Chain in a Binance account receive a discount on trading fees. These discounts can be as high as 25 percent. This makes Binance Chain a popular choice for traders who frequently use the Binance exchange.
Binance Chain is also used for listing fees on the Binance exchange. Cryptocurrency projects that want to be listed on Binance must pay a listing fee. They typically pay this fee in Binance Chain. The listing fee helps ensure that only high-quality projects are listed on the Binance exchange.
Binance Chain is also used for other expenses on the Binance platform, including withdrawal fees and margin trading fees. Binance Chain can be used to purchase virtual gifts on the Binance live streaming platform, Binance Live.
- Create an account on Binance. Once a user has an account, they can purchase BNB directly on the exchange using fiat currency or other cryptocurrencies. They can also earn BNB through various promotions and rewards programs offered by Binance.
- Pay for transaction fees on the Binance exchange. When a party uses BNB to pay for fees, they receive a discount. The discount starts at 25 percent in the first year. It decreases over time until it reaches 0 percent in the fifth year.
- Participate in token sales on the Binance Launchpad. These token sales allow users to invest in new cryptocurrency projects before the projects are listed on other exchanges. By using BNB to participate in these sales, users can receive additional benefits like a higher allocation of tokens.
- Use on the Binance DEX decentralized exchange. The Binance DEX allows users to trade cryptocurrencies without the need for a central authority. By using BNB to pay for transaction fees on the Binance DEX, users can receive a discount similar to the one offered on the centralized exchange.
- Use as a utility token. While many cryptocurrencies are created solely for speculation or investment purposes, BNB has a specific use case within the Binance ecosystem. This use case gives BNB a level of stability and predictability that is lacking in other cryptocurrencies.
- Deflationary model. Binance has committed to buying back and burning a portion of BNB each quarter until 50 percent of the total supply is destroyed. This burning process reduces the total supply of BNB. In theory, this practice should increase BNB's value over time.
- Use as a governance token. Binance has created a decentralized autonomous organization (DAO) called the Binance Smart Chain (BSC). The BSC is governed by BNB holders. By holding BNB, users can vote on proposals that affect the Binance ecosystem. These could range from transaction fees to the addition of new cryptocurrencies to the exchange.
- Low transaction fees. One of the biggest advantages of using BNB is its low transaction fees. Binance charges a 0.1% trading fee for all trades made on its platform. A party who uses BNB to pay for their trading fees can get a discount of up to 25%. This can result in significant savings for frequent traders.
- Fast transaction times. BNB transactions are processed quickly, thanks to Binance's high-speed trading engine. This means a user can buy and sell BNB quickly. They do not need to wait for long confirmation times as they would with some other cryptocurrencies.
- Wide adoption. BNB is accepted by some merchants. A party can use BNB to buy goods and services or trade for other cryptocurrencies on a variety of different platforms.
- Strong community. Binance has a large and active community of users who are passionate about the platform and BNB. There are always people available to help answer questions and provide support.
- Utility token. BNB is both a cryptocurrency and a utility token. This means that it has a specific use case within the Binance ecosystem. BNB can be used to pay trading fees and participate in token sales on the Binance Launchpad. This gives BNB an added layer of value beyond its use as a simple currency.
- Centralization. One of the biggest criticisms of BNB is that it is centralized. The cryptocurrency is effectively controlled by Binance. This means that the value of BNB is tied to the success of Binance as a company. If anything were to happen to Binance, the value of BNB would drop.
- Lack of privacy. Binance requires users to complete a KYC (know your customer) verification process in order to use its platform. A user's personal information is linked to their Binance account. This lack of privacy could be a concern for users who value their anonymity.
- Limited use cases. While BNB has a specific use case within the Binance ecosystem, its use outside of Binance is limited. A party who is not a frequent trader on Binance or interested in participating in token sales on the Binance Launchpad may have little use for BNB.
- Volatility. As is the case with all cryptocurrencies, BNB is subject to volatility. This means that the value of BNB can fluctuate rapidly. This presents a concern for users looking for a stable store of value.