BNB Price (BNB)

Binance Coin (BNB) Uses, Market Cap, History, and More

The world of cryptocurrency can often be simplified down to tokens and exchanges. As it turns out, Binance does a bit of both and does it well. Currently, Binance is the largest cryptocurrency exchange in the world in terms of daily trading volume.

Its native coin, Binance Coin (BNB), is a critical part of that ecosystem. Because of that, BNB price prediction is a viable option for investors of all backgrounds. Within this guide, you will learn more about Binance Coin (BNB), its uses, how it is different from Ethereum, and everything there is to know about Binance’s native coin.

What is Binance Coin (BNB)?

Binance Coin (BNB) is part of the Binance cryptocurrency exchange, acting as its native coin. As the current largest cryptocurrency exchange in the world, Binance is capable of handling more than 1.4 million transactions per second. Think about that for a minute.

Those using Binance Coin on the Binance exchange get a discount on transaction fees. NBN can also be sold, traded, and exchanged on other major exchanges like Litecoin, Bitcoin, Ethereum, and others.

Binance Coin was initially part of the Ethereum blockchain after its creation in 2017. After some time, it migrated to the Binance exchange, acting as the token for the Binance Chain.

Who are the Founders of Binance Coin (BNB)?

Binance Coin (BNB) is the native token of Binance, a cryptocurrency exchange. The exchange itself was created in 2017 by Changpeng Zhao, a developer who had previously been working on the creation of high-frequency trading software as well as blockchain technology. He is also the former CEO of Binance, though he has since moved on from the platform.

What Makes Binance Coin (BNB) Unique?

The creation of the Binance blockchain is interesting in that it actually started on the Ethereum blockchain. Though it has since migrated to its own blockchain, it still uses BNB as its native token. During an initial coin offering, BNB was launched and a strict maximum of 200 million BNB tokens has been set.

As part of the ICO, 80 million tokens (40%) were given to the founding team, 10% went to angel investors, and the remaining 100 million tokens (50%) went to a litany of participants.

During the ICO process, almost half of the funds were earmarked for branding and marketing of the Binance brand, while one third was used to build out the Binance platform and perform any necessary upgrades to the ecosystem.

Coin Burning

Within the Binance whitepaper is a description of coin burning. Every quarter, Binance takes 20% of its profits to buy back and then burn Binance Coins. Coin burning involves destroying those coins completely, eliminating them from the total supply.

Binance performs its burns quarterly and will continue to do so until it has bought back and destroyed 100 million Binance coins – exactly 50% of the total supply. The goal is to ensure that Binance Coin remains finite, which will make it scarcer and (ideally) more valuable in the process.

Smart Contracts

Beginning in 2020, Binance launched the BNB Smart Chain. Through this chain, smart contract functionality was provided to the BNB Chain. With predetermined conditions, smart contracts give two parties the ability to conduct and carry out agreements without needing an intermediary to execute them.

Smart contracts on the BNB Smart Chain have allowed the network to improve its utility while at the same time reducing the costs required to create and implement contracts between two parties. More than 1 million users and 2,000 dApps make use of the BNB Smart Chain.

Smart contracts are cheaper to create compared to larger networks like Ethereum. Though the latter is implementing a layer-2 rollout, its gas fees are still significantly higher than the BNB Smart Chain, making it a preferred choice for creating smart contracts on a regular basis.

How Does BNB Work?

There are plenty of reasons that Binance Coin (BNB) is so viable. Like other evolving cryptocurrencies, Binance Coin has several uses that stretch beyond the exchange itself. Here are some of the most common use cases of Binance Coin (BNB):

Transaction fees on the Binance Exchange. Initially, BNB was created so that it could be used to pay for transactions within the Binance Exchange. Users are given a discount for using BNB to pay those fees on the exchange.

Trading. As a major viable investment, Binance Coin is available to be traded for a litany of other cryptocurrencies on any number of exchanges. There may be restrictions in place on that exchange, but BNB is one of the most commonly available tokens on the market.

Payment processing. As cryptocurrency becomes a more trusted form of payment, merchants are beginning to offer BNB as a payment method for customers. This means having more flexible payment methods for customers without having to withdraw BNB from their crypto wallet.

Credit card payments. In step with the aforementioned use, BNB can also be used to make certain credit card payments. Specifically, BNB can be used to pay crypto credit card bills through the main crypto.com website.

Entertainment. The entertainment industry has seen rapid growth in terms of acceptable cryptocurrency methods. When it comes to entertainment, BNB can be used to pay for virtual gifts, lottery tickets, make deposits at online casinos, and a plethora of other entertainment uses.

Investment. Aside from being a utility token on the Binance Exchange, perhaps the main purpose of BNB is to be used as an investment. There are a wide range of platforms that allow investors to not only invest in stocks and ETFs, but other assets as well all while using Binance Coin.

Loans and transfers. Another use of BNB is as collateral for loans. Keep in mind that this isn’t widely available yet, so only certain platforms offer this service. There are also apps that allow users to pay friends and family or split bills while using Binance Coin as a payment option.

Travel arrangements. With more establishments accepting cryptocurrency as a form of payment, BNB is being used more and more to make travel arrangements. BNB can be used in some instances to book flights and hotels on websites that accept it as a form of payment.

How the BNB Chain Works

The main BNB Chains work by combining elements of a Proof of Authority (PoA) model with a Proof of Stake (PoS) model that works to secure the network. For instance, users are required to stake a minimum of 10,000 BNB if they hope to be selected as a validator.

Users that don’t have that amount can delegate their stake to an elected validator. They then receive some of the rewards received by the validator. Aside from staking 10,000 BNB, validators can stake their own reputation and act in public rather than through anonymity.

Operating publicly is not uncommon among mining companies that have their own blockchains, but it is a requirement on the BNB Chain rather than a choice.

The PoSA consensus protocol within the BNB Chain has far fewer validators than major networks like Ethereum and Bitcoin. The BNB Chain gives up decentralization in the hope that it will prevent bad actors from eventually becoming validators. As a result, the network is able to have a relatively higher transaction volume while using fewer validators.

How Many Binance Coins (BNB) are There in Ciruclation?

BNB has a total supply that is capped at 200 million BNB. Currently, the circulating supply sits at about 140.89 million BNB. Binance also has a deflationary mechanism in place that removes or burns tokens from circulation, eventually reducing the total supply of BNB to about 100 million tokens.

How is the Binance Coin (BNB) Network Secured?

The BNB Chain is often compared to Ethereum, and with good reason. After all, they do share a few functional similarities. When you get down into the bedrock of functionality, however, they are actually quite different.

Binance started as a for-profit, centralized company compared to Ethereum, which initially started as an open source, decentralized, not-for-profit organization. They also have very different consensus mechanisms. BNB Chain uses hybrid Proof of Stake Authority (PoSA) compared to the Proof of Stake (PoS) method that Ethereum utilizes.

Network creators on the BNB Chain have chosen to opt for scalability potential rather than decentralization. That decentralization aspect of Ethereum is perhaps the biggest difference between the two blockchains.

Finally, Binance’s dApp environment has rapidly gained on Ethereum. It has become a haven of huge value locked across a number of different projects, all of which are hosted by the BSC blockchain.

BNB Ecosystem

Investing in Binance Coin (BNB) comes with a number of key advantages. Let’s take a deeper look at the best reasons to invest in BNB currently:

Low fees. Cost is critical for any coin and the unique PoSA consensus makes transaction fees far lower on the BNB Chain. This is because less computational energy and validator participation is required compared to major smart contract blockchains like Ethereum.

Programmability. Smart contracts are now apart of the BNB Smart Chain, which means that the Chain itself is very programmable. Any protocol or app built onto the network is able to then interact with any other app or protocol. As the community continues to grow, innovative use cases could become more commonplace.

Tokenization. If it is an item that can be registered in a digital format, it can be tokenized on the BNB Chain. Tokenization is commonly used for NFTs, but it does have real-world applications when it comes to gold, art, and real estate. It acts as a digital certificate of ownership for any type of asset.

Burning mechanism. BNB has an auto-burn feature meant to ensure that it is capable of dealing with ongoing changes and pressures when it comes to supply and demand. Auto-burning has been designated to continue until there are 100 million BNB left in the market.

Binance Coin (BNB) FAQ