Binance Coin (BNB) is the native cryptocurrency of the Binance blockchain and the Binance platform.
Binance is a crypto exchange platform that enables users to buy, sell, and trade cryptocurrencies. Since the platform’s founding and launin 2017, it has become one of the most popular cryptocurrency exchanges at a global scale, recognized by old and new crypto users alike.
Binance Coin (BNB) facilitates transactions on the crypto exchange Binance, where it is used to pay reduced transaction fees, and to grant access to certain features and services that are exclusively available to BNB holders. Meanwhile, the currency is also trades other cryptocurrency exchanges.
Key Takeaways
- Binance Coin (BNB) is a widely used cryptocurrency that plays a key role in the Binance ecosystem.
- BNB is used to pay for transaction fees, participate in initial coin offerings (ICOs) and access exclusive perks and features in the Binance exchange.
- Binance Smart Chain is a BNB-powered blockchain network that hosts Ethereum compatible decentralized applications.
How does Binance Coin (BNB) Work?
Binance Coin (BNB) powers the Binance platform as a utility token that pays for transaction fees, and gives holders access to certain features and services.
When users pay for trading fees on the platform, they can use BNB to receive a discount. This discount starts at 50% in the first year and decreases each year by half until it reaches 0% in the fifth year.
In addition to that, users can also use BNB to access certain features and services on the platform, such as participating in initial coin offerings (ICOs) on Binance Launchpad, as well as reducing trading fees on Binance DEX – a BNB powered decentralized exchange.
An Initial Coin Offering (ICO) is an early-stage fundraising mechanism that takes place on the blockchain. In an ICO, a certain percentage of the newly issued tokens sells to early investors that participate.
Binance Smart Chain
Binance also built the Binance Smart Chain – a smart contract-enabled blockchain network. A smart contract allows developers to build and deploy any decentralized application (dApp) on a blockchain. A network that supports smart contracts enriches and expands its utilities beyond sending transactions.
Therefore, Binance Smart Chain was built with this emphasis, allowing for robust and scalable dApps and DeFi applications to be built and run on the network.
High transaction throughput
Due to its consensus mechanism, Binance Smart Chain can handle high transaction throughputs. This makes it a compelling choice for dApps that need to efficiently process large transaction numbers.
Compatibility with the Ethereum Virtual Machine (EVM)
Smart Chain is compatible with the EVM that contains Ethereum tools and frameworks developers are familiar with to build and deploy dApps.
Proof-of-staked-authority (PoSA) consensus mechanism
Binance Smart Chain uses the PoSA consensus, where users who hold Binance Coin (BNB) earn rewards by staking their tokens to help secure the network.
Built-in support for decentralized finance (DeFi) applications
BSC has built-in support for DeFi applications, making it easy for the developer community to build and deploy decentralized financial services on the platform.
Flexible and customizable
New users and developers can to create custom tokens and set custom transaction fees. They can tailor the network to their specific needs.
Binance Chain
Binance Smart Chain is not to be confused with the Binance Chain.
The Binance Chain (later renamed BNB Beacon Chain) is the original blockchain launched by the team at Binance in 2017. Binance Smart Chain is a newer platform built on top of it, adding additional features and capabilities.
The key difference between the two platforms is that Binance Smart Chain is an Ethereum smart contract-enabled blockchain mainly used for deploying and hosting dApps, while Binance Chain is mainly used for governance.
Additionally, Binance Smart Chain secures itself by a Proof of Staked Authority (PoSA) consensus mechanism, while Binance Chain uses a different algorithm called Delegated Proof of Stake (DPoS). These differences give different capabilities and performance characteristics to each of the networks.
Binance Coin Wallets
Some of the popular wallet options for storing BNB include the Binance.com web wallet, the Binance mobile app, the Trust Wallet mobile app, Metamask, and the Ledger Nano hardware wallet.
It is important to research and carefully evaluate the security and reliability of any wallet type on your own, before deciding to use it to store your BNB or any other crypto.
We also recommend to store the majority of your holdings in a secure hardware wallet rather than a software wallet. It reducec the risk of theft or loss.
Binance Coin Development
BNB development is led by Binance, the company behind the Binance exchange. They are responsible for overseeing the continued development and growth of the platform and the token.
Changpeng Zhao, widely known as CZ in the crypto industry, founded the platform in 2017. Since then, Binance has become the largest and most popular cryptocurrency exchange in the world. As a result, they’ve attained a large user base over the last two years.
In addition to Binance’s exchange, the company also operates a number of other platforms and services. Here we include the Binance Launchpad used for initial coin offerings (ICOs), and the Binance DEX, a decentralized exchange platform.
Binance BNB FAQ
How Can I Buy Binance (BNB)?
To purchase BNB, you can follow these steps:
- Firstly, open a cryptocurrency exchange account. The Binance exchange is the best place to buy BNB since it’s the exchange’s native currency. Other popular exchanges that support BNB include Kraken, Bittrex, and Huobi Global.
- Secondly, once you have opened an account, deposit funds using a bank transfer, credit or debit card, or another cryptocurrency.
- Thirdly, Buy BNB. Once you funded in your account, you can buy BNB by placing an order. You can choose to buy BNB using the currency you deposited (e.g. US dollars) or another cryptocurrency. To clarify, Circulating supply and market capitalization determines the BNB price.
- Finally, after your purchase is complete, you can transfer your BNB from the exchange to a personal crypto wallet for safekeeping.
Keep in mind that the steps and details of buying BNB vary depending on the exchange you use and the specific details of your transaction. Above all, we recommend carefully reading and following the instructions provided by the exchange to ensure a successful and secure purchase.
What Is BNB used for?
As the native cryptocurrency of the Binance crypto exchange, BNB facilitates transactions and grants access to certain features and services that only BNB holders have the entitlement to.
One of the main use cases for BNB is paying for transaction fees on Binance. When you place a trade on Binance, you must pay a transaction fee to the network. You can pay this fee using BNB, and doing so offers a discount on the fee compared to using other cryptocurrencies. This incentivizes the use of BNB on Binance’s platform and helps drive its adoption and value.
The second use case for the coin is granting access to certain features and services on Binance that aren’t available to non BNB holders. For instance, Binance Coin holders can participate in Binance’s “VIP” program.
The program’s benefits and perks include discounted spot and futures trading fees, increased withdrawal limits, priority customer support, increased borrowing limits, sub-accounts, and access to the VIP Portal.
During the 2021 bull run, many projects chose to use Binance Coin as the base currency for their ICOs, demanding the use of BNB to participate in the Initial Coin Offering and purchase the project’s tokens.
How to Add BNB Smart Chain to MetaMask
To add Binance Smart Chain (BSC) to Metamask, follow the steps below:
- Open Metamask and click on the “Networks” dropdown in the top-left corner.
- Click on the “Custom RPC” option in the Networks dropdown.
- In the “New RPC URL” field, paste the Binance Smart Chain RPC URL: https://bsc-dataseed.binance.org/.
- In the “ChainID” field, type in the Binance Smart Chain ID: 56.
- Type in BNB in the “Symbol” field.
- In the “Block Explorer URL” field, paste the Binance Smart Chain block explorer URL: https://bscscan.com/.
- Click “Save” to add Binance Smart Chain to the list of networks.
After successfully completing the steps, you will have access to the BNB Smart Chain (BSC) in Metamask and can now use it to interact with BSC-based dApps. You can also view your BNB balance and transact on the network.
Final Thoughts
Binance has grown into a giant ecosystem that sits amongst the leaders of the space in terms of innovation. Speaking of ecosystems, we have to segway into our very own dua matchmaking ecosystem, which will bridge the gap between the Social and the Financial for its +5M userbase. This will manifest thanks to the DUA token – which brings DeFi to our users. Learn about DUA token and follow our Twitter for updates regarding its development!