Update 14-02-23: Paxos has been ordered to stop minting BUSD. They will in theory remain redeemable through at least February 2024 for U.S. dollars or Paxos own stablecoin, Pax Dollar.
BUSD is the native stablecoin of cryptocurrency exchange, Binance. The BUSD token is pegged at a 1:1 ratio will the US dollar – for every token, there’s a U.S dollar held in reserve.
Current Binance USD (BUSD) Price
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Binance USD (BUSD) Exchange Rate Calculator
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Please enter Coingecko Free Api Key to get this plugin works- 350+ Cryptocurrencies Listed
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Essentially, the supply of BUSD is equal to the U.S dollar amount of assets held in reserve. BUSD tokens are issued by Paxos, which releases monthly evidence of BUSD’s reserves.
BUSD is one of the most common trading pairs offered by Binance – BTC/BUSD is the most traded pair.
How BUSD Works
Some stablecoins have quite complex mechanisms – UST, for example, had a hybrid consensus mechanism that is rather complicated (and is the reason it crashed).
However, BUSD’s peg is achieved by a relatively simple mechanism. Every Binance USD (BUSD) token is backed by a U.S dollar equivalent held in reserves.
Essentially, individuals can exchange their BUSD (redeem BUSD) by sending it to Paxos – which will “burn” (remove from the supply) the tokens. You’ll then receive the fiat currency in return for the exact equivalent. E.g., $50 BUSD is exchanged for $50 fiat.
This mechanism ensures that the 1:1 peg is constant and the minting of Binance USD (creating new BUSD tokens), and the redemption of BUSD remains balanced and transparent – backed by the reserves.
If you’re wondering what incentivizes people to keep the price stable – arbitrage trading. When the price fluctuates even just a tiny amount, traders purchase large quantities of BUSD to sell to Paxos. The more people purchase BUSD, the greater the demand, and the faster the peg is restored.
What Is BUSD Used For?
The crypto industry has seen exponential growth in the number of stablecoins available. But, not all stablecoins in the crypto space are equal.
Some are more transparent than others and are regulated by registered financial services. BUSD is regulated by the New York State Department of Financial Services (NYDFS).
In technical terms, Paxos hold the amount of U.S. Dollars that equates to the BUSD total supply in custody in its reserves – in registered and FDIC-insured U.S. banks. Sequentially this means that the tradable price of BUSD fluctuates as the U.S. dollar strengthens or weakens.
BUSD is often opted for by customers because it is easily accessible on Binance. It is easy to trade BUSD for another asset and vice versa on Binance. Only Binance can support BUSD trading with other cryptocurrencies at the moment.
Individuals also buy BUSD because they can convert their crypto holdings into stable assets. This can be done without the need to move assets off the blockchain. This is especially convenient in a highly volatile crypto market.
Binance USD (BUSD) also allows users to send money globally with incredibly low fees. This is one of the most common uses for Binance USD (BUSD).
Additionally, there is versatility in BUSD tokens – they can be sent and swapped between major blockchains such as the Ethereum blockchain (BUSD ERC-20) and the BNB Chain (BUSD BEP-20).
The abovementioned reasons keep BUSD secure, but this doesn’t mean it isn’t susceptible to regulations or impermanent loss – like any other digital asset, it can be extremely risky to buy, trade, or send BUSD.
Where To Buy BUSD?
Now that you’re familiar with what BUSD tokens are used for let’s look at where BUSD can be bought. Individuals are required to use fiat currencies to buy Binance USD tokens on the Binance crypto exchange.
- 350+ Cryptocurrencies Listed
- <0.10% Transaction Fees
- 120 million Registered Users
- Secure Asset Fund for Users
- Earn On Deposits
- US Based
- Start with as little as $10
- Buy and sell 200+ cryptocurrencies
- Pro Solution for larger traders
- Available in 190+ countries
The below-mentioned exchanges are safe places where you can buy, sell, transfer and store BUSD.
Binance USD (BUSD) is only available from:
- Binance
- Binance.US (US citizens)
- Paxos
After using a fiat currency to purchase BUSD tokens, the Binance USD tokens will reflect in your personal Binance BUSD digital wallet (which is stored and can be accessed on the Binance crypto exchange).
Individuals can use their debit or credit card to purchase BUSD directly from the Paxos platform or the Binance crypto exchange.
The BUSD price is pegged to the U.S dollar, but exchanges still charge fees and have varying exchange rates.
How long has BUSD existed?
Binance USD (BUSD) was created in September 2019. It was a collaboration between Paxos and Binance.
What’s controversial about BUSD?
There has always been controversy surrounding stablecoins, and BUSD is no exception. Let’s take a look at the top controversy surrounding Binance & BUSD.
- UK Watchdog Clamped Down On Binance – Recently, the UK watchdog clamped down on Binance, which sparked concern in the community. Binance was issued a warning by the financial regulator. It also confirmed that Binance could not conduct any regulated activity in the UK.This has led to many people choosing to use different exchanges. Individuals are also wary of purchasing assets such as BUSD and other crypto assets because they may be lost or frozen should there be a clampdown.
How many BUSD are there?
There are currently 17.79 billion BUSD tokens in circulation.
The number of tokens has increased in recent years. The more traditional currency is used to buy BUSD, the more the amount of BUSD in circulation increases.
Can you mine BUSD?
It’s not possible to mine BUSD. It can only be purchased on the Binance exchange or directly from the Paxos platform.
Only the Paxos can mint and burn BUSD tokens.
What is the market cap of BUSD?
The market cap of BUSD is currently $17.79 billion.
BUSD Market cap = total amount of coins in circulation x $1
Eg. 17,790,000,000 x $1 = $17.79 billion.
The market cap of BUSD will increase so long as more tokens are minted than redeemed.
Biggest Competitors Of BUSD Tokens
Binance USD is currently the 3rd largest stablecoin globally by market cap. It is only behind Tether USDT and USDC.
It is smaller than USDT and USDC, which means these two stablecoins could be considered BUSD’s biggest competitors. Although, it should be noted that those stablecoins are available on most exchanges – BUSD is only available on the Binance exchange.
Another fast-emerging stablecoin was TerraUSD (UST) which had grown exponentially but then crashed when it lost its peg.
What are the future plans for BUSD?
The future of Binance USD relies on the growth of Binance.
Binance is currently growing rapidly, having tied up partnerships as the main sponsor of the Argentinian Football Team and the main sponsor of the 64th Grammy Awards.
The road forward involves growing the number of people using BUSD and becoming the most common stablecoin trading pair on Binance.
Crypto markets are volatile, and stablecoins alleviate much risk when trading – BUSD aims to be the preferred stablecoin choice on Binance.
Pros and Cons of BUSD:
BUSD differs from volatile cryptocurrencies because it’s a stable coin. Let’s take a look at the pros and cons of Binance USD (BUSD).
Pros
- It Has a Stable Price – BUSD is pegged to the dollar and doesn’t appreciate nor depreciate value as other volatile cryptocurrencies do.
- 100% backed by Fiat Assets – Unlike some other stablecoins which claim to be fiat-backed stablecoin pegged – a monthly audit of BUSD’s assets proves it is backed by fiat assets.
- Lucrative Way To Send Money – BUSD transactions are fast and cheap. BUSD can also be sent via major blockchains, including the Ethereum blockchain (BUSD ERC-20) and the BNB Chain (BEP-20).
- Backed By The Largest Exchange In The World – BUSD is the native stablecoin of the giant exchange, Binance. This helps give it exposure to millions who already use the exchange and trust Binance. Similarly, Coinbase is another major exchange that garnered significant attention and investment for USDC.
- There Aren’t Any Liquidity Restrictions – There isn’t any risk of insufficient liquidity when trying to redeem BUSD – the tokens are fiat-backed, and liquidity will therefore not be an issue.
Cons
- BUSD Can’t Be Mined – As some look at Binance USD (BUSD), unable to be minded a con; it can also be seen as a pro. A stablecoin that could be mined would have its value diluted exponentially. However, there are some ways to earn passive income by staking BUSD on Binance.
- Not Profitable To Invest Only In BUSD – BUSD is a stablecoin that doesn’t yield the same significant returns that volatile cryptocurrencies do.
- Only Available On Paxos and Binance – Binance USD (BUSD) is only available on the Binance exchange, unlike other stablecoins available on most platforms. This limits the potential for growth on other exchanges because there would be no incentive for them to list the Binance USD (BUSD) stablecoin.
- Lacks Anonymity – People who want to purchase BUSD are required to make a bank deposit in most cases, which puts exposes their identities and puts their sensitive information in the hands of companies.When signing up for Binance, you’re required to submit a KYC (Know Your Customer) where you provide proof of identification. This is the only way you can trade cryptocurrency and buy BUSD. Many other exchanges don’t require proof of identification to open an account.
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