Introduction
The cryptocurrency and blockchain sector comprises various projects and assets aimed at accomplishing multiple objectives. It is not unusual to come across programs to address similar problems.
For example, there are multiple cryptocurrency exchanges available. Although the design and functionality of each sale may be unique, their overarching goal is to provide cryptocurrency traders with a central location from which they may trade their holdings.
Often, a cryptocurrency exchange will have its asset, which can be utilize for specific reasons on its connected sale, such as providing fee savings on the trading platform.
One example of this cryptocurrency exchange asset is the Binance Coin (BNB), traded on the Binance exchange.
What exactly constitutes a Binance Coin? BNB was first an asset offer during Binance’s initial coin offering (ICO), which later evolved into a method by which users of the Binance exchange could pay reduced trading costs once the deal was up and running.
At that time, BNB continued to play an essential part in the expanding Binance ecosystem.
The background of Binance Coin
It would be difficult to tell the tale of the beginnings of Binance Coin without first discussing the history of the Binance exchange. The initial coin offering (ICO) for Binance Coin occurred in July 2017. As part of the initial coin offering (ICO), BNB tokens were distributed to various individuals, including angel investors and the founding team of Binance.
A basic recap of how BNB tokens were initially distributed are as follows:
All 100 million BNB tokens made available for public sale during the ICO were offered for 15 cents apiece. During this initial coin offering (ICO), Binance was able to raise a combined total of $15 million in Bitcoin (BTC) and Ethereum (ETH).
From the $15 million that was raised, 35% was used to upgrade the Binance platform and exchange system, 50% was used for Binance branding, marketing, and education of new innovators, and the remaining 15% was set aside as a reserve in case any emergencies or unusual circumstances arose in the future.
During its initial coin offering (ICO) and the early days of its operation, BNB functioned as an ERC-20 token built on the Ethereum blockchain. A few short days following the conclusion of its initial coin offering (ICO) in the middle of 2017, Binance launched its cryptocurrency exchange platform.
In 2019, Binance announced the launch of its native blockchain, which it dubbed Binance Chain (BC). With BC, the blockchain also got its native coin: BNB. In 2019, users participated in a token swap wherein they were given new Binance Smart Chain based BNB tokens in in return for their existing BNB (ERC-20 tokens).
How exactly does the Binance Coin function?
BNB is a cryptocurrency asset that fluctuates in value, just like other digital assets currently available. This occurs because individuals use and trade BNB. Users can, exchange it off a crypto exchanges in wallet-compatible wallets, send the coin straight to one another for payments or any other purpose.
One could also wonder how one would go about purchasing Binance Coin. Customers can obtain BNB through various channels, including Binance’s cryptocurrency exchange. However, make it a point to investigate and adhere to the legal requirements of any applicable jurisdictions.
Binance‘s layer-1 blockchain and the BNB Chain’s blockchain are joined to create the BNB Chain on a more technical level (previously, the Binance Smart Chain and the Binance Chain).
Binance optimized the blockchain during the process of establishing the BNB chain so that it would provide the best possible performance when it came to trading on-chain. Binance DEX, the company’s decentralized exchange (DEX), is based on this freshly developed chain. In addition, the transactions on the BNB chain are powered by a blockchain gas token that goes by the name BNB.
Both the BNB beacon chain and the BNB bright chain are elements that make up the BNB chain. The former is concerned with the governance of the BNB Chain, which allows BNB holders to participate in staking and voting. The latter is a consensus layer compatible with the Ethereum Virtual Machine and features hubs that connect to several chains.
Read more about Consensus Mechanisms here
BNB Burning
Each quarter, Binance uses a portion of its earnings to buy back and burn Binance Coins, thus eliminating the cryptocurrency. Since 2017, Binance has not skipped a beat regarding its quarterly burns.
BNB coins will continue to be burned every quarter until the exchange has purchased and destroyed 100,000,000 BNB coins, equal to half its original maximum supply. The procedure reduces the available collection of Binance Coin and has an impact on its rarity, both of which have the potential to affect the asset’s value.
Binance also offers a program known as the BNB Pioneer Burn Program. This program examines certain situations in which BNB holders have lost their BNB in a manner that cannot be recovered and then repays those individuals by removing the amount from the next BNB burn.
What is the function of Binance Coin?
The increased use of Binance Coin coincides with the development of Binance. The asset was initially conceived as a method of bringing new financial backing for the Binance exchange. Following its introduction in 2017, Binance experienced a meteoric rise in popularity as a cryptocurrency trading platform almost immediately. Under the Binance brand umbrella, Binance expanded from merely an exchange platform to becoming more of an ecosystem.
Binance has introduced several new features and services throughout its existence. They include a decentralized exchange (DEX), two blockchains, a peer-to-peer (P2P) trading option, an option for crypto borrowing, and more. The value of BNB has increased in tandem with the growth of Binance.
Binance Exchange
On the Binance Exchange, users can use BNB tokens as a form of payment for transactions. Customers of the Binance cryptocurrency exchange have previously been able to pay cheaper costs on the platform by holding BNB and paying platform fees in BNB. This is because the BNB coin has historically served as a mechanism of charge reduction on the Binance exchange.
The option to pay for trading fees with BNB and receive a discount of 25% normally. Moreover, BNB has incorporated various other goods offered by Binance.
In addition, retailers may accept BNB as a form of payment, providing clients with additional choices regarding the types of income that can be used. In addition, BNB can be used for various items within the entertainment business, like paying for virtual presents and purchasing lottery tickets, among other things.
Binance Coin can be used:
- to make investments in various assets, including equities, exchange-traded funds (ETFs), and other cryptocurrencies, on several different platforms.
- On certain exchanges, BNB can be used as collateral for loans taken out.
- Users of certain apps can use Binance Coin to pay one another, divide expenses, or send money to friends and family.
Pricing and behaviour dynamics at BNB
In general, the price of BNB has historically moved in a manner comparable to that of other crypto assets now being traded on the market. The market capitalization of Binance Coin has increased over time, passing a valuation of $70 billion. At the initial coin offering (ICO) for Binance, each BNB token was sold for approximately $0.15.
After Binance’s initial coin offering (ICO), the value of BNB has significantly increased, reaching a price of more than $600 per coin on occasion during trading. Is it wise to put your money into Binance Coin? Its past price rise almost certainly resulted in profits for buyers who joined and exited the market at appropriate times. Even though we are moving forward, only time will tell where BNB’s price will head.
Binance and regulation
Soon after it began conducting business in 2017, Binance became one of the most significant participants in the cryptocurrency market. Binance, on the other hand, ran into some critical regulatory issues in the year 2021.
In 2021, Binance was subject to regulatory scrutiny from various jurisdictions, including the Cayman Islands, Japan, Malta, the Netherlands, Malaysia, the United Kingdom, and Thailand.
Binance was issued a cease-and-desist order by the United Kingdom Financial Conduct Authority in June 2021 to end all its operations that the United Kingdom regulated since the company did not possess the required authorization, registration, or license.
Similarly, the authorities in Malaysia replied by initiating criminal proceedings against Binance the following month because the company was operating illegally as a virtual asset service provider (VASP).
Is it against the law to use Binance in the United States? In 2019, Binance announced that it would stop serving customers from the United States on its primary exchange. Nevertheless, in the same year, Binance launched Binance.US, a platform that is accessible to users from the United States and is compatible with Binance’s primary exchange.
Binance has said, in response to heightened regulatory scrutiny, that it plans to build additional offices worldwide and seek licenses in each area in which it operates. In addition, Binance is strengthening its compliance capabilities and resources and banning or eliminating several high-risk products and services.
Is BNB still a Good Investment?
One hundred and twenty million Binance Coins were available upon its inception. There are now about 160 million BNB in circulation, with a maximum of 200 million. Binance’s token-burning policy has resulted in a decrease in the total number of coins in circulation.
At the ICO, BNB coins were sold for $0.15 each; however, as of this writing, one BNB currency is worth $217.37. More than $50 billion is currently invested in BNB coin, making it the fourth most valuable cryptocurrency in the world.
From the all-time high of $690.93 on May 10, 2021, the price of BNB has fallen as much as 51%. Nonetheless, BNB has been steadily recovering, with a 64% price increase since June 2022, when it sold at $196.96.
There was a hack on the BNB Chain on October 6, 2022, and the offender earned $110 million, even though the BNB currency has a generally decent reputation in the market. The network had to shut down momentarily.
Thus new transactions and withdrawals were halted. The problem was addressed quickly and contained effectively, saving the chain as a whole. The BNB price likewise didn’t change noticeably; it went down by the same amount as the market. However, concerns about the network’s centralization have been raised after the hack.
Recent Report
In a recent report, crypto-risk-monitoring firm Solidus Labs discovered that almost 12% of all BEP-20 tokens are associated with scams. As these tokens are now part of the BNB ecosystem, they may have an impact on the BNB coin.
If you’re considering putting your money into BNB coins, you should know they are a high-risk, high-reward investment.
