Why Do Investors Like Binance Coin? A Review Of BNB

Why Do Investors Like Binance Coin? A Review Of BNB

By ChangeNOW | ChangeNOW Crypto Blog | 15 Oct 2021


Once launched in 2017, Binance exchange managed to skyrocket on a highly competitive market. Its founder CZ became one of the first crypto billionaires in less than a year. Today, Binance is a huge ecosystem, and its key elements are the exchange, Binance Chain, Binance Smart Chain (BSC), and their native coin, BNB. This asset allows you to save on trading fees on the exchange, pay gas fees on BSC, and much more.

Binance is growing at a high pace, and so is BNB: investors appreciated how quickly it soared to the 4th position by market cap among all other cryptos. In this article, we will walk you through the basics of the Binance ecosystem and BNB, and you will see why it has become one of the pillars of the crypto industry today.

Why did Binance skyrocket?

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Binance was launched in 2017 — a year when the crypto market surged by 3,400%, and there were quite many competitors at the time. In just three months, Binance managed to reach a $500 million daily transaction volume. The influx of new users was so high that in January 2018, the company even had to suspend the registration of newcomers and upgrade its infrastructure due to the high load.

The exchange succeeded at the time when Bittrex was one of its main competitors, however, suffering from technical troubles amid the overheated market. On top of this, Binance proposed 230 coins for trading compared to Bittrex’s 190, and fees at 0.1% against 0.25% in its counterpart. These factors helped Binance achieve $2 trillion in trading volume in 2020.

Binance ecosystem: the core elements


Exchange

Launched first, Binance exchange remains the central element of the ecosystem. It allows for Spot, Margin, and Futures trading, and provides tools for both experienced and newbie traders. Unauthorized users have limited access to the platform, while those who’ve done a KYC check, can use fiat currencies and withdraw large amounts of money. The more you trade on Binance, the lower fees you will have.

Binance chain

Binance Chain is a blockchain launched by Binance in April 2019. Its main goal was to promote fast decentralized (or non-custodial) trade, and Binance DEX was the largest DApp on the platform. However, due to this blockchain’s limitations, Binance Chain couldn’t provide a trading experience that would be fast and cheap enough for users. Binance Smart Chain was designed later to address these limitations.

Binance Smart Chain

Launched in September 2020, BSC is a blockchain that runs in parallel with Binance Chain. It is faster (block time is 3 sec) and cheaper (average gas price on BSC is around $0.01–0.03).

Since it allows for building smart contracts, BSC has become a competitor to Ethereum in the domain of decentralized finance. Moreover, the chain is compatible with Ethereum Virtual Machine, so anyone can easily migrate their smart contract from Ethereum to BSC — and that’s what many projects do. Although Binance Smart Chain is often criticized for being centralized, many users relocate there for low fees. In the chart below, you can see in yellow how fast the share of BSC in DeFi was growing during 2021:

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Binance coin (BNB)

Binance Coin is the native cryptocurrency of the Binance ecosystem. First, it was an Ethereum-based ERC-20 token; after Binance Chain was launched in 2019, BNB migrated there under the BEP-2 standard, and BNB ERC-20 were burned. Users with BNB ERC-20 could swap their coins to the new version. Later, another format of BNB emerged — BEP-20 on Binance Smart Chain.

Here’s how Binance Coin is used today:

  • Trading fees on Binance exchange. If you use BNB to pay for your trading operations, your fees will reduce from 0.1% to 0.075%.
  • Gas fees on Binance Smart Chain. Every transaction initiated on BSC has to be paid with gas. Gas is measured in Gwei (1 Gwei equals 1*10^-9 BNB), and its average price can be monitored on BscScan.
  • Services such as payments, traveling, entertainment, and finance. For instance, you can buy an HTC smartphone or book a hotel on Travala.com with BNB.

What is a BNB quarterly burn?

Every quarter, Binance burns about 1–2 million BNB coins, which is 0.4–1.2% of its circulating supply. By reducing the latter, Binance makes the coin inflation-proof: while demand for BNB is growing and supply is reducing, the price of the coin goes up.

The latest quarterly burn was carried out on April 16, 2021. 1,099,888 BNB were burned — and this is record-breaking in terms of value expressed in USD. The coin cost $510 at the moment, so in total, Binance burned over $0.5 billion! The burns will take place every quarter until 100 million BNB (50% of ever minted coins) are burned, and the quantity of burned coins is defined by the quarterly trading volume.

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Here’s a table from 2019 showing why quarterly burns matter: keeping inflation under control helps maintain good price growth.

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Binance Coin price history

In the last 2 years, BNB was dangling somewhere between Top 10 and Top 20 cryptos by market cap. After the BSC launch, things changed amid the 2020–2021 bull run: Binance Coin soared from below $40 to the whopping $690 at the all-time high, and now is at the $345 mark. Upon its launch in 2017, BNB cost $0.1.

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How can I get BNB?

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BNB is a Proof of Stake coin, so you can only get it by buying or staking.

Where should I buy BNB?

The most obvious option is Binance — once you buy BNB there, you can stake it right away or use it for cheaper trading on the exchange.

However, if you are mostly interested in the investment potential of BNB and your wallet lies outside of the Binance ecosystem, we recommend you using ChangeNOW. Here, you can buy BNB coins without registration and KYC: simply set the currencies and the amounts, deposit the crypto you want to buy BNB with, and receive your Binance coins in a few minutes. We offer you to buy BNB with over 200 crypto assets.

How do I stake BNB?

Once you have some BNB, you can stake it to get some more coins as rewards for helping secure the network. Binance Smart Chain works on the Proof of Staked Authority consensus algorithm, which means blocks are validated by 21 nodes that have been elected by delegates. You can become a delegate and get a part of the validator’s rewards for confirming blocks. A delegates’ Annual Percentage Rate is 60%. You can delegate here.

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What is the best BNB wallet?

Binance officially promotes Trust Wallet — a multi-asset wallet that supports 40 blockchains (hundreds of cryptocurrencies, including BNB). It’s non-custodial — unlike Binance exchange, it doesn’t store your funds and doesn’t have access to your private keys. Trust Wallet is deeply integrated with the Binance ecosystem, i.e. you can stake BNB and browse BSC-based DApps in it.

We also recommend Guarda Wallet for storing your BNB: this wallet also supports BEP-2 and BEP-20 tokens. Here, you can buy BNB with 200+ other cryptos through a built-in exchange tool powered by ChangeNOW or use a fiat provider service to buy BNB with your credit card.

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One more Binance use case

Binance has become a very large ecosystem with multiple products that constantly drive its growth. This growth, together with thoughtful tokenomics, has made the system’s native cryptocurrency BNB a very sought-after asset among investors.

One of the latest drivers of Binance’s growth was BSC — a public blockchain with smart contracts and low fees that competes with Ethereum. One of its use cases is NFT: the largest marketplaces have quickly adopted BSC, and recently, Binance has launched its own NFT marketplace. Remember the NFT boom in early 2021? Here’s what it ended up with: take a look at the top-10 most expensive NFTs ever sold.

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ChangeNOW is a non-custodial service created for simple and fast cryptocurrency exchanges. We strive for maximum safety, simplicity, and convenience. We do not store your funds or require any sort of account creation. https://changenow.io/


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