Binance Coin (BNB) is the utility token for the popular Binance cryptocurrency exchange and is used to pay transaction fees on the Binance Smart Chain, an ecosystem with a decent number of projects in development. Created with the goal of creating a decentralised finance-based (DeFi) ecosystem, the coin allows users to pay for transactions and trading fees at a lower rate than they would be with other tokens. Binance uses the process of token "burns", meaning they use the profit from token sales to repurchase more BNB and then burn (destroy) them.
Did you know?
- Binance started off as a crypto exchange in 2017. Today, it is probably the biggest player in the $1.8 trillion (roughly Rs. 1,37,03,710 crore) crypto industry.
- Binance Coin (BNB) is the 4th largest crypto in the world by market capitalisation. Its market cap is over $64 billion (roughly Rs. 4,87,180 crore).
- Over the last 24 hours, more than $1.5 billion (roughly Rs. 11,420 crore) of BNB has changed hands.
- 90 percent of Binance employees earn a portion of their income in BNB.
- Binance recently invested $200 million (roughly Rs. 1,520 crore) in Forbes.
The Binance Ecosystem
The ecosystem includes:
- Multiple crypto exchanges
- Multiple cryptos — Binance Coin (BNB), Bitcoin BEP2 (BTCB)
- Trust Wallet and its TWT token
- Multiple blockchains
- Token Launchpad
- Binance Pool comprising over 10 percent of the Bitcoin mining hash rate
Binance has 3 crypto exchanges:
- Binance.com — the original and largest crypto exchange by volume.
- Binance.us — which was created after Binance was banned in the US in 2019 on regulatory grounds.
- Binance DEX — a decentralised exchange built on Binance Chain.
Binance Coin (BNB) was issued as part of Binance's initial coin offering (ICO). Its first use case was discounted trading fees on the Binance exchange.
BUSD is a US dollar-backed stablecoin issued jointly by Binance and Paxos. BUSD is one of the few stablecoins approved by the New York State Department of Financial Services (NYSDFS).
Trust Wallet is a popular mobile wallet that supports 53 blockchains and more than a million digital assets. It was acquired by Binance in 2018.
Binance operates 2 blockchains that run in parallel:
- The high transaction capacity Binance Chain (BC)
- Binance Smart Chain (BSC), which has smart contract functionality and implements the Ethereum Virtual Machine (EVM)
BSC has gained massive traction in 2021-22 mainly because of Ethereum's slow speeds and high costs. Creating tokens on BSC is simple and cheap. But there is a caveat here — validation is done by a small number of validators and this makes it quite centralised.
Binance Coin (BNB)
Binance Coin (BNB) was launched in 2017.
Initially, 200 million BNB were issued. Binance regularly "burns" some BNB and will continue to do this till only 100 million BNB remain. Currently, there are 165 million BNB in circulation.
BNB is a utility coin that can be used on Binance Chain and Binance Smart Chain.
Some of its use cases are:
- Crypto traders get discounts if transaction fees on binance.com are paid using BNB.
- Crypto traders can also use BNB as collateral for loans.
- Payments for third-party services.
- Participation rights on Binance Launchpad.
- Delegated Staking on Binance Smart Chain, which uses Proof-of-Staked Authority (PoSA) consensus.
Binance legal troubles
On the positive side, Binance is facing legal troubles across the world — Canada, Cayman Islands, Italy, Japan, Malaysia, Singapore, South Africa, Thailand, the UK, and the US.
On the negative side, Binance has recently been granted a Virtual Asset Licence in the UAE by the Virtual Asset Regulatory Authority (VARA).
If Binance is able to solve its legal problems, I think the BNB price could easily cross its previous All-Time-High of $690.93 (roughly Rs. 52,600) by the end of 2022.
Rohas Nagpal is the author of the Future Money Playbook and Chief Blockchain Architect at the Wrapped Asset Project. He is also an amateur boxer and a retired hacker. You can follow him on LinkedIn.
Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.