Friday, September 30, 2022

What is Binance Coin (BNB)?

The Binance Coin, or BNB, was established by the well-known crypto exchange Binance in order to create a cryptocurrency to power the utility around its own ecosystem.

Changpeng Zhao (CZ), a business expert from China and Canada who also serves as CEO, and Roger Wang, a co-founder and chief technology officer, started the company in 2017. It used to be that Binance was based in Shanghai, but the company’s operating base shifted shortly before the Chinese government banned cryptocurrency.

The idea behind BNB was initially offered to the public through an initial coin offering (ICO) on the Ethereum blockchain, and as an ERC-20 token, but now runs on its own open-source blockchain, the Binance Smart Chain. The objective was to establish itself as a viable replacement for Ethereum and other Decentralized Finance (DeFi) platforms.

At the time of this writing, the current live price of BNB is $442.64 per (BNB / USD) unit today, with a market capitalization of $73.09 billion USD. Additionally, Binance Launchpad’s lottery system and a wider range of payment alternatives have been added to the cryptocurrency’s capabilities over time.

BNB Initial Coin Offering

Binance Coin debuted through an initial coin offering (ICO) back in 2017, where it was sold for 1 ETH for 2,700 BNB or 1 BTC for 20,000 BNB. Binance distributed 200 million tokens at the time with 10% allocated to angel investors- wealthy seed capitalists who make significant investments to fund the business roadmaps. Some 40% of the Binance Coin supply went to the founding team, and various participants received the rest.

A total of 15 million dollars was raised through the ICO and all the tokens were generated in advance. Instead of being mined, the entire quantity of 200 million BNB coins was issued at the initial coin offering. This supply is being progressively degraded through the use of a technique known as “burning.”

Approximately half of the funds raised during the ICO were utilized for brand and marketing, with the remaining half going into the development and expansion of Binance’s platform. An amount equal to one-third of the funds received during the ICO was also utilized to develop and expand Binance’s platform, as well as to improve the services on offer by the exchange.

BNB Mechanism, Uses, and Storage

A version of the Binance Coin designed as an ERC-20 was used to launch the coin initially on the Ethereum blockchain, but the ERC-20 standard was dropped in favor of Binance Chain. 

Smart contracts are incompatible with the Binance Chain, in contrast to Ethereum’s. Instead, the Tendermint consensus, a byzantine-fault-tolerant (BFT) algorithm, is used by Binance Chain.

The utilization of Binance Coin by the broader community is growing. In reality, when you purchase BNB, you are purchasing a piece of the Binance ecosystem as a whole. This belief will be reflected in the value of the BNB, allowing you to resell it for a significant premium over what you paid for it when you first purchased it. 

BNB is otherwise identical to every other cryptocurrency now available on the internet. On the Binance exchange market, BNB can be swapped for any other cryptocurrency. Aside from that, if you pay in BNB instead of other currencies, the organization will give you a discount on transfer and exchange expenses. 

Per the additionally defined utilities, the Binance Coin may be used to make investments in a range of assets, including stocks, ETFs, and other assets, on a variety of websites, amongst others. BNB may or may not be accepted as collateral for loans, depending on the location. It is possible to use Binance Coin to both share content and pay fees on some apps.

The Binance platform offers a digital wallet where you can keep your BNB tokens or any other digital currency that can be traded on the Binance platform, similar to those found on other cryptocurrency exchanges.

The cryptocurrency exchange Binance acquired Trust Wallet, a mobile wallet for Ethereum-based coins. Binance tokens can be stored in other wallets asides from the Ethereum-compatible wallet, provided it is considered compatible. A number of them include MyEtherWallet, Metamask, Nano S, and Trezor among others.

BNB Pricing and the Burning Mechanism

The pricing structure of BNB and the way it is organized. Since its inception, the price of the Binance Coin (BNB) has moved in lockstep with the price of other cryptocurrencies sold on the market.

Its worth has skyrocketed in recent years, and it is currently valued at a price of $420 atop a market capitalization of over $70 billion per data from CoinMarketCap. Each BNB token sold for approximately $0.10 during Binance’s initial coin offering (ICO). 

A significant increase in the value of Binance’s BNB occurred after the company’s initial coin offering. Each coin has sold for more than $600 on various occasions in the past year. 

Binance spends a percentage of its income each quarter on the purchase and burning of Binance Coins. In order to keep BNB’s value rising, Binance has created a technique that increases the cryptocurrency’s scarcity. The official Binance whitepaper explains how this is done via quarterly burnings. 

A program known as the BNB Pioneer Burn Program is also available on Binance, which looks into specific cases in which BNB holders have lost BNB and compensates them by lowering the amount of BNB that will be burned in the next BNB burning event.

Conclusion 

It is one of the most essential characteristics of the BNB token’s ability to stimulate the expansion of the Binance ecosystem which is one of its most crucial features.

Anyone, regardless of where they live or whether they are employed by Binance, can become a shareholder in this ecosystem, which is in keeping with the decentralized principle of the broader cryptocurrency market.

Ayo Alabi
Ayo Alabi is an experienced writer and Fintech enthusiast, passionate about educating people and helping businesses that want to see their Google search rankings surge. Her articles have appeared in a number of e-zine sites, with focus on balancing informative with SEO needs–but never at the expense of providing an entertaining read.

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