Binance Coin (BNB) is a very popular cryptocurrency created by the famous Binance exchange. Binance is the largest cryptocurrency exchange in the world and was founded by the influential Changpeng Zhao, who is known as a very influential person in the world of cryptocurrencies. In November 2023, Zhao pleaded guilty in the United States to violating anti-money-laundering law and stepped down as Binance’s chief executive; in April 2024 he was sentenced to four months in prison, and Binance agreed to pay about $4.3 billion to settle US charges.
In this cryptocurrency overview, we will take a look at what Binance Coin is, the essentials of investing in Binance Coin, how BNB works, and how you can potentially profit from trading or using BNB.
Development of Binance Coin
Binance Coin was first made available to the public on July 25, 2017 and has the ticker symbol BNB. BNB can be divided into “Jagers” just like Bitcoin can be divided into Satoshis. 1 Jager = 0.00000001 BNB. Interestingly, BNB was launched on the Ethereum blockchain as an ERC-20 token, just like Tron and many other well-known cryptocurrency exchanges.
In its first Initial Coin Offering (ICO), Binance Coin raised 15 million within three weeks. BNB has since moved from the Ethereum blockchain to its Binance blockchain in 2019. It’s also worth noting that Binance Coin has a limit of 200 million.
This means that Binance Coin will eventually surpass Bitcoin in terms of volume, making it easier to trade. Binance offers the largest number of pairs for cryptocurrency buying and has a daily trading volume of around $15,840,708,435.
They are so big that they dwarf all other exchanges, including their biggest competitor, Coinbase. Either way, it’s up to you to decide if Binance Coin Buying is worth it. Where to buy BNB? How to do it in detail will tell you about specialized service Changelly.
What is Binance Coin used for?
According to CoinMarketCap, there are 166,801,148 Binance Coins in circulation at the time of writing. With a market cap of $85 billion, Binance Coin is the third largest cryptocurrency and has two main functions:
- “Discount token” to pay fees on the Binance exchange;
- Fuel for the Binance smart chain.
Originally, in 2017, Binance Coin was just a “utility token” that gave traders a discount on trading fees when used on the Binance exchange. For several years, Binance Coin was little used.
Then in September 2020, Binance launched Binance Smart Chain, a parallel chain exclusively for smart contracts, dApps, and DeFi services. Interestingly, there are a number of different types of exchange fees that can be paid with BNB. They include:
- Transaction fees;
- Reconciliation fees for new tokens;
- Fees for launching new instruments.
Why did the price of BNB increase by more than 300% in 2021?
BNB started to rise in February 2021, and this was almost entirely due to the Binance Smart Chain (BSC). Since working with BSC was much cheaper than working with the Ethereum network, it became a viable alternative and many projects started switching to it. According to YCharts, the average transaction fee for Ether peaked at $39.49, an incredibly high value.
After this peak, Ether transaction fees continued to be extremely volatile, causing headaches for most DeFi developers. On May 11, they even reached $62.51. In short, the more projects run on BSC, the more BNB is used, increasing demand and driving up the price.
Today, BSC is DeFi’s second largest platform. The DeFi market is expected to show tremendous growth in the coming years. As CoinDesk‘s Christine Kim reports, DeFi bids increased from $20 billion to $50 billion in the first quarter of 2021, a 150 percent increase. For the average trader from Germany, perhaps the most attractive aspect of investing in BNB is the fact that you can get a 25% discount on the Binance exchange.
