Binance Coin (BNB) is a cryptocurrency that may be used to trade on the Binance cryptocurrency exchange and to pay transaction fees. As of January 2018, the Binance Exchange was the world’s largest cryptocurrency exchange, processing more than 1.4 million transactions every second.
As an incentive, users of Binance Coin enjoy a reduction in transaction costs on the Binance Exchange. Additionally, BNB can be swapped or traded for other cryptocurrencies, including Bitcoin, Ethereum, and Litecoin.
Binance Coin was launched in July 2017 and initially operated on the Ethereum blockchain using the ERC-20 token until transitioning to the Binance Chain’s native currency.
Binance Coin (BNB) Uses
As with other emerging cryptocurrencies, the Binance Coin has a variety of uses outside of the Binance market, including
- Trading: Binance Coin can be exchanged for other cryptocurrencies on a variety of exchanges, subject to the exchange’s trading limits.
- BNB can be used to pay for transactions on the Binance Exchange, and users receive a discount for doing so.
- Credit card payments: BNB can be used to pay Crypto.com’s crypto credit card bills.
- Payment processing: Merchants can accept BNB as a form of payment, providing customers with additional payment options.
- BNB can be used to book hotels and flights on specific websites.
- From purchasing virtual presents to purchasing lottery tickets, BNB performs a variety of functions in the entertainment arena.
- Investing: Several platforms let investors use Binance Coin to invest in stocks, ETFs, and other assets.
- Loans and transfers: On certain platforms, BNB can be used as collateral for loans. Additionally, there are applications that enable users to split expenses and make payments to friends and family using Binance Coin.
Initial Coin Offering (ICO) of Binance Coin
Binance Coin was introduced in July 2017 via an initial coin offering (ICO). BNB tokens were given as part of the ICO to a variety of parties, including angel investors and the Binance founding team.
The following is a summary of how BNB tokens were initially distributed:
- 40% of the founding team (80 million BNB)
- 10% for angel investors (20 million BNB)
- Sale to the public: 50% (100 million BNB)
The 100 million BNB tokens made available for public sale were all sold during the initial coin offering (ICO) at a price of 15 cents per token. Binance raised a total of US$15 million in bitcoin and ethereum as a result.
From the $15 million raised, 35% went into modernizing the Binance platform and exchange system; 50% went toward Binance branding, marketing, and education of new innovators; and 15% went onto a reserve fund in case of crises or unusual events.
Although an initial amount of 100 million Binance tokens was given during the ICO, the current overall supply is lower. Binance spends one-fifth of its quarterly revenues on repurchasing and permanently destroying, or “burning,” Binance coins held in its treasury.
Binance has held these burning activities on a regular basis. The most recent BNB burn occurred on April 15, 2021, when Binance destroyed 1,099,888 BNB, which is equivalent to $595,314,380 USD in tokens.
This is Binance’s fifteenth quarterly BNB burn and the largest in terms of dollar volume ever. The overall supply of BNB has fallen to 169,432,937 from 170,532,825 previously.
Binance Coin Holding and Storing (BNB)
Numerous hardware and software wallet providers support Binance Coin (BNB). The choice between hardware and software wallets is largely a matter of balancing the user’s convenience and security. This section will provide a brief overview of them.
In general, hardware wallets (e.g. Ledgers) are non-custodial wallets that keep the wallet’s private keys offline and accessible only to the wallet’s owner.
While this is certainly the safest method of storing because the user retains complete control of the coins, it is also likely the least convenient method because it needs the user to operate additional hardware in order to spend/use the bitcoin.
Non-custodial software wallets (e.g. Trust Wallet, Atomic Wallet) offer the same level of security as hardware wallets but are likely more convenient.
Although the user owns the private keys, because the wallet is stored on an online device (e.g., a phone), you run the risk of losing your bitcoin if a hacker acquires access to your smartphone.
Finally, and maybe the most convenient yet riskier form of holding cash is to use custodial wallets (for example, on a centralized exchange such as Binance), where users do not own the private keys to the funds.
However, an attack on their systems could result in customers losing their assets, much like the historic 2014 Mt. Gox incident, which resulted in a catastrophic loss of 850,000 BTC, the majority of which were client monies.