What is Binance Coin?
Those who are in the cryptocurrency world are familiar with Binance, which is a highly popular exchange trading platform with its own native token – BNB. Also known as Binance Coin, the token has various uses and functionalities as per the BNB whitepaper .
Originally, BNB was a key part of funding for Binance via their initial coin offering (ICO) and it was issued as an ERC20 token on the Ethereum blockchain. However, in September 2020, the Binance Smart Chain was introduced.
Binance Coin (BNB) key facts:
- BNB is a token hosted on the Binance Smart Chain
- BNB burning will continue until 50% of the original supply is cut
- The token has several use cases but is largely used for exchange trading benefits
BNB’s price history
At the time of writing, BNB’s price is around $22, showing over 12,000% gains since it listed at $0.1553. Binance issuance happened on July 8, 2017, so this dramatic upwards trend has taken place in just three years. When first launched, BNB’s total supply was at 200 million BNB tokens.
What is the purpose of BNB?
BNB’s primary function is to be the underlying gas powering the Binance ecosystem. Users of the platform can pay trading fees using BNB – which is a more efficient and less costly alternative for exchange users. In fact, as much as a 50% discount on trades can result from utilising exchange tokens – hence their popularity.
However, BNB also has additional functionality, such as using it across mobile apps and Visa cards that accept the token. The same can be said for other exchange tokens, which offer a variety of services and exchange benefits to users of their respective tokens (like the SwissBorg CHSB token ).
What is BNB ‘burning’?
One of the major elements of the Binance token is its plans for buying issued tokens and burning them – i.e. tokens from the official supply. This process is outlined in the Binance White Paper.
In the original white paper, Binance explained:
“Every quarter, we will use 20% of our profits to buy back BNB and destroy them, until we buy 50% of all the BNB (100MM) back. All buy-back transactions will be announced on the blockchain. We eventually will destroy 100MM BNB, leaving 100MM BNB remaining.”
As trading volumes increased, however, Binance shifted from a flat 20% policy to burning tokens based on volumes.
The Binance Smart Chain
In 2020, Binance introduced BSC or Binance Smart Chain. Instead of simply upgrading their already available blockchain platform to the next level, Binance decided to develop a whole new one. This new chain has the same features and functions as Ethereum. The smart contracts on the Binance Smart Chain support and are compatible with Ethereum dApp. As a result, the BSC network makes it possible for developers to easily construct and migrate dApps, tools, and other ecosystem components. The BSC has a Proof of Staked Authority (PoSA) consensus mechanism, that reduces the time and costs for the transactions.