What is Binance Coin (BNB)? How it Works & Where To Buy It?

Binance Coin (BNB) initially served to allow users to pay less in trading fees. In recent years, it has grown into one of the most prominent cryptocurrencies on the market.

BNB is the native exchange token that powers the Binance Exchange – the world’s second-largest crypto exchange.

BNB (formerly known as Binance Coin) recently rebranded to Build and Build – is currently the 4th largest cryptocurrency by market capitalization.

How BNB Works

Binance exchange processes more than 1.4 million transactions per second. Users that have BNB coins pay lower trading fees on the Binance exchange – initially, this was the only utility BNB had.

Since their creation in 2017, BNB tokens have grown significantly as utility tokens that are now functioning at the heart of the Binance Chain blockchain.

BNB is required when interacting with decentralized applications (DApps) in the Binance ecosystem. When processing payments or facilitating transfers on the Binance Chain (formerly Binance Smart Chain) users also require BNB to execute transactions.

Similarly, the Ethereum blockchain requires users to have ETH which is used as ‘gas’ when interacting with DApps or executing transactions. BNB is used as the ‘gas‘ for network fees on the Binance Chain & Binance Smart Chain (now BNB chain).

BNB is similar to most crypto assets in terms of volatility – the price of BNB coin fluctuates drastically and as such many people choose to buy BNB tokens and wait for them to appreciate in value.

What Is BNB (Build and Build) Used For?

BNB coin is used in several ways. Individuals can use BNB to receive discounted trading fees on the Binance exchange.

BNB tokens can also be used when interacting with decentralized applications in the Binance ecosystem. For individuals seeking to engage in decentralized finance applications, NFT marketplaces built on the BNB chain (formerly Binance Smart Chain) and other DApps in the Binance ecosystem are required to use BNB coins to pay for network fees.

The Binance ecosystem continues to grow and the total value locked in DeFi in the Binance ecosystem currently exceeds $30 billion. Many developers continue to use the BNB chain because it’s secure, has low transaction fees, and is easier to build on than other blockchains.

Binance exchange also uses a portion of its revenues to buy Binance coins and then ‘burn‘ Binance coins (remove them from supply permanently). This may seem counterintuitive but by ‘burning’ the tokens, the supply is reduced which makes the remaining coins more scarce and valuable.

Binance has performed a quarterly burn every year since 2017 and announced it will continue to burn Binance coins until 100 million BNB tokens have been burnt.

This has also incentivized individuals to purchase BNB tokens because the burning makes the remaining supply more scarce and essentially inflates the price.

Where To Buy BNB?

BNB is the native Binance exchange token that individuals purchase on cryptocurrency exchanges. Crypto is simple to buy – Binance Coin, or a fraction of it, is also relatively easy to purchase.

The BNB token is used on the Binance exchange for discounted trading fees, to interact with decentralized apps (DApps) within the Binance ecosystem, and to pay for network fees on the Binance Chain.

BNB can be purchased on several centralized crypto exchanges. Before you’re able to purchase, you’ll need to deposit funds on the crypto exchange and purchase the tokens by placing an order.

These crypto exchanges are the safest place where you can buy, sell and store your BNB tokens.

Five of the most popular crypto exchanges are:

1. Binance
2. Binance.US (US citizens)
3. HTX
4. Gate.io
5. KuCoin

All of the above exchanges allow users to buy, sell, transfer and store BNB in a personalized digital wallet, on the exchange. You can simply use your debit or credit card to purchase BNB on these exchanges.

If you want to interact with decentralized applications in the Binance ecosystem, you need to use Trust wallet, Metamask, or a wallet that is compatible with BNB and has functionality with the Binance chain.

What’s controversial about BNB?

Let’s take a closer look at what controversy has surrounded BNB and Binance in general. Assessing controversies surrounding crypto projects is necessary and often presents valuable insights. Let’s take a look at 2 of the top controversies surrounding Binance.

1. Binance Has Been Under Investigation By The U.S Government – Binance company has been under scrutiny recently by the U.S government for money laundering, tax fraud, and insider trading. It should be noted that the legal framework surrounding crypto is lacking significantly, which leads to a substantial amount of investigations.
2. Binance Says It Has No Official Headquarters – A major concern for the longevity of the exchange and its native BNB token is the fact that the company has no headquarters. This became especially concerning when the exchange experienced an outage that lead to investors losing substantial amounts of money in March 2020. Having no headquarters made it extremely difficult for investors to take the company to court.

How many BNB coins are there?

When the BNB coin was created in 2017, there were initially 200 million tokens. During the initial coin offering in 2017, 100 million coins (50% of the supply) were available to the public to purchase. The total supply has reduced substantially as a result of quarterly burning.

At the time of writing, BNB has a circulating supply of 165 million tokens.

BNB has a total supply of 165 million.

The circulating and total supply of BNB coins will fluctuate because BNB will continue being burned until 100 million BNB coins remain.

Can BNB be mined?

BNB can’t be mined. It uses a proof of stake model which makes it incapable of being mined.

Because BNB is not a proof of work (mineable) coin, individuals are incentivized to stake BNB to earn BNB rewards.

What is the market cap of Binance?

The market cap of BNB is:

Market cap = total amount of coins in circulation x current market price of BNB

BNB market cap = 165,000,000 x $435 = $77.7Bn

The market cap fluctuates according to circulating supply and market price. The price of BNB typically increases after every burn which compensates for the reduction in supply and maintains its massive market cap.

Biggest Competitors Of BNB

Binance is the second-largest crypto exchange in the world and logically the largest amount of BNB tokens are traded on Binance’s exchange. This poses a significant risk should anything happen to the exchange – such as regulations, outages, and anything else that can have an adverse effect.

Essentially the BNB token has unique utility and isn’t rivaled by other exchange tokens. It serves fundamental functions that are unique to the token.

Binance exchange keeps growing exponentially, as does the Binance ecosystem and the number of daily active users on the BNB chain exceeds 2 million.

The single-largest hindrance would be if the Binance crypto exchange was subject to setbacks, that in turn led to reduced users and activity.

What are the future plans for the BNB and BNB Chain?

There is currently a lot of financing support being made available to projects on the Binance Smart Chain (now BNB chain). Most notably, a $100 million liquidity support fund that aims to accelerate the growth of the BSC ecosystem.

Binance coin is also likely to be affected positively by the growth of the ecosystem – more users will use BNB tokens to pay network fees and interact in the ecosystem.

All upgrades to the Binance chain are attempts to encourage mass adoption by creating products that people need and value.

Binance has also tied up some major partnerships that continue driving exposure, most notably Binance has partnered with the Argentine Football Association and will become the main sponsor of the national soccer team.

Pros and Cons of BNB: BNB Coin, BNB Chain (Formerly Binance Smart Chain), BNB Beacon Chain & Binance Exchange

Pros

• BNB Chain Is Growing Rapidly – The number of active unique addresses currently exceeds 134 million.
• BNB DeFi TVL Has Seen Significant Growth – The total value locked in DeFi in the Binance ecosystem is more than $50 billion.
• BNB tokens Are Burned Each Quarter – The BNB supply is reduced every quarter until the total supply reaches 100 million (50% of what it was initially ). The token burns create scarcity and typically drive up the price of the token.
• Binance Cryptocurrency Exchange Is The Second-Largest In The World – The number of people exposed to the BNB token continues to grow as the Binance platform keeps growing. More people are likely to invest in BNB tokens because of their utility. Additionally, the biggest Binance decentralized exchange, PancakeSwap, also requires users to pay for transactions using BNB tokens. A flourishing Binance exchange, an ecosystem that keeps growing rapidly, and the leading trading volume for tokens ensure continuous progress.

Cons

• BNB Is Only Necessary For BNB Chain – BNB tokens are the native tokens that power the Binance ecosystem, which means it is limited to the BNB chain specifically. Other blockchains like Ethereum don’t require BNB tokens to power Ethereum’s ecosystem.
• Doubt Surrounding Company Legitimacy – Binance branding may be everywhere but there are continuous investigations taking place. The non-existent company headquarters remains a major concern for many.

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