All You Need to Know About Binance Coin (BNB)
What is Binance Coin?
Binance Coin (BNB) was designed as a cryptocurrency that can be used to trade and pay fees on the Binance cryptocurrency exchange. The Binance Exchange is considered the largest cryptocurrency exchange in terms of volume and carries approximately 1.4 million transactions per second. The primary benefit of Binance Coin was the users of this coin get a discount on their transaction fee. As the Binance exchange is the largest exchange, this incentive gave a lot of investors to buy Binance coin to avail this offer. However, BNB can also be exchanged or traded with other cryptocurrencies, namely Bitcoin, Ethereum, Litecoin, etc.
If you look at the history of Binance Coin, it was created in July 2017 and initially worked on the Ethereum blockchain with the token ERC-20. Later on, it became the main currency of Binance’s own blockchain, called the Binance Chain.
There are many uses and reasons to invest in Binance Coin, and we will discuss the primary services in detail. Firstly, Binance Coin has the ability to be traded against various other cryptocurrencies, depending on the restrictions imposed by the exchanges. Secondly, there is an incentive of using Binance Coin on the Binance exchange as mentioned above. Apart from this, BNB can act as a payment form for crypto credit card bills. The BNB has gained popularity to become a commonly used crypto, and it can be used to book hotels and flights on selected websites. Furthermore, BNB can be used to purchase virtual gifts to buying lottery tickets. Above all, several platforms allow investors to invest in stocks, ETFs, and other assets using the BNB token.
Can you consider BNB real money?
The main reason for BNB is to boost the Binance exchnage’s ecosystem. Binance Exchange has many financial and strategic backing, which can help the token take off in value in the coming years. If the coin’s value takes off, it can dominate the alt-coins universe. It will not be a viable option to bet against the coin as it has a sound business model, unlike other minor cryptocurrencies. As of now, it is a possible currency replacement, but it’s not close to Bitcoin or Ripple in terms of institutional acceptance.
Binance Coin Pros
As BNB is extremely popular, there are many advantages attached to it.
- BNB considered a great utility token
Apart from BNB’s use to trade and pay fees on the Binance exchange, it has many practical benefits beyond this. BNB can be used as a payment method across various services such as credit crypto card bills, online purchases, travel, entertainment, etc.
- Unique burndown policy
Burning is an essential feature of BNB to maintain its growth and stability. Binance will use 20% of its profits to get BNB tokens and burn them to reduce the total supply until 100 million coins are left. This may lead to an exponential increase in the value of the BNB token.
- Used as a discount option
One of the significant reasons why Binance Coin is highly regarded is the incentive it gives to its users. Users get a discount on the fees they are paying on the exchange, and this is an excellent approach to build a solid community and customer loyalty.
- Fast transaction and low fees
Binance offers fast transactions and low fees. They charge their users a fee of 0.1% per trade. Apart from this, Binance frequently gives out vouchers and prizes to their regular users.
Binance has gained endorsement from various partnerships such as Uplive, one of the biggest social video entertainment platforms. Furthermore, due to some security breaches in the past, they have made security a top priority. This has built credibility and acceptance across the platform, and users feel safe to carry out their trades.
Binance Coin Cons
However, there are some disadvantages linked with Binance Coin, and it is essential to study them before investing in the coin.
- The discounts are decreasing
Binance exchange is decreasing the discount rates they provide to their users, which can harm the established reputation and unique selling point. The main incentive of purchasing the coin was to avail of the discount while carrying out a trade.
- BNB is only limited to Binance Exchange
The only thread holding the value of BNB is the popularity and reputation of the Binance exchange. BNB is not a diversified coin that is available on major exchanges like Coinbase.
- It does not support smart contracts
As mentioned in the beginning, BNB was launched on the Ethereum blockchain but later moved to its blockchain. Unlike Ethereum, Binance Chain does not support smart contracts as they have massive benefits for businesses and investors.
- Regulation concerns
The regulatory country of Binance is China, which may cause problems for the token in the long run. The relationship with Binance US is also complicated and may harm US passport holders, with more than 15% of the website’s traffic being previously from the US.
- Major target of cyber attacks
In March 2018, an unsuccessful attempt was made to hack the system, which led to Binance offering $250,000 for any information regarding the hacker. Later on, in May 2019, another attempt was made, which led to an approximate loss of $40 million. These events led to a negative mark on Binance’s reputation.
With all the background information about the cryptocurrency and the pros and cons mentioned, it is up to you as an investor to decide whether this is a good investment opportunity for you to invest.
Binance Exchange is undoubtedly a great platform to purchase cryptocurrency and the BNB coin has a lot of advantages in its pocket that helps the crypto differentiate from others. Binance Coin is amongst the top five cryptocurrencies and has shown tremendous returns of 2,993% over the past year. However, it is essential to note that the buying and selling of BNB come with certain risks, as mentioned. As an investor, it is vital to weigh the pros and cons and make a final decision according to your risk appetite.