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 April 2019, ERC-20 BNB coins were swapped with BEP2 BNB after the launch of the Binance Chain mainnet and BNB is no longer hosted on Ethereum.
Binance Coin (BNB) key facts:
- BNB is a BEP2 token hosted on the Binance Chain
- Its circulating supply is 155 million coins
- BNB burning will continue until its total supply reaches 100 million coins
- 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 $19, 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.
Back in January 2020, the exchange conducted its 10th quarterly burning, which amounted to 2,216,888 BNB tokens removed from the supply. By reducing the number of tokens in circulation, the value of the remaining tokens naturally goes up due to supply and demand economics (assuming the demand remains constant).
The Binance chain explained
Binance has developed a new exchange that aims to push DEX (decentralised exchange) technology to the next level. This is also known as the Binance Chain. The exchange will use the BNB token to power it, which in theory should increase the coin’s demand which would ultimately be reflected in its value. The idea is to develop a fast-decentralised exchange with a community-driven blockchain governance scheme.
Putting it all together
BNB, or the Binance Coin, is the token of choice for the popular exchange, while its main function is to facilitate trading fees and providing benefits to users, there are other purposes in the pipeline which are crucial to the Binance Chain DEX project.