What is BNB

Whether you have some experience in the space and have been investing in crypto for a while, or you’re new to the sphere, you’ve probably come across the name Binance, and it’s not surprising. It is the largest cryptocurrency exchange in the world.

The name “Binance” is a combination of two words, “Binary” and “Finance.” If you’ve ever used the platform, you may already know it has its own cryptocurrency called Binance Coin (BNB).

Binance Coin is a digital currency issued by the crypto exchange Binance, which powers all operations on Binance.com.

Users use Binance Coin to pay the exchange fees for using their services. These fees include, but are not limited to, trading fees, exchange fees, and cryptocurrency listing fees. In addition, like any other cryptocurrency, BNB may also be traded on supported crypto exchanges.

BNB growth

Binance was created in 2017 by its CEO, Changpen Zhao, and co-founder and CTO, Roger Wang. Changpen Zhao, also known as “CZ” in the crypto community, previously served as the CEO of BijieTech. In addition, CZ is also the co-founder and CTO of OKCoin.

Binance has issued a total of 200 million BNB tokens. The company conducted its initial coin offering (ICO) between July 14 – 27, 2017. The total token offering was distributed in a certain percentage among different entities:

  • 100 million (50%) BNB tokens were reserved for the ICO.
  • 80 million (40%) BNB tokens were distributed to the team behind the project.
  • 20 million (10%) BNB tokens were reserved for the business angels who invested in Binance’s cryptocurrency.

One of the key aspects of Binance Coin is the plan to redeem the tokens and burn them, which happens every 3 months. This process is explained in the Binance white paper. To summarize, Binance will use 20% of each quarter’s profits to redeem and then burn BNB.

The exchange will continue this process until the supply of BNB is 50% of the original amount, with 100 million BNB remaining. Any buyback transaction made by Binance to burn BNB will be announced through the blockchain for more transparency.

What are the benefits of Binance Coin?

As mentioned earlier, Binance uses the BNB token to collect various fees charged for using the platform, such as trading, withdrawals, registration, etc. As of August 2018, the platform charges a trading fee of 0.1% for each transaction, but if users pay into BNB, they can claim an additional discount on trading fees.

Although the main purpose remains to pay transaction fees on Binance.com, Binance DEX, and Binance Chain, BNB is used for payments, hotel and airline ticket bookings, various online services, and even financial purposes.

BNB is also used to invest in various ICOs, which can be found in Binance’s Launchpad program.

Unlike Bitcoin, Binance Coin’s functionality is not limited to peer-to-peer payments. It is an integral part of the Binance ecosystem. The BNB token is essentially a revenue collection vehicle for the platform.

The BNB token has some unique advantages for its use on the platform. Through BNB, users are eligible for additional discounts that are otherwise not applicable to any other cryptocurrency.

Burning BNB

Although 100 million Binance tokens were initially offered in the ICO, the current total supply is less. Each quarter, Binance uses one-fifth of its profits to buy back and permanently destroy or “burn” the BNB tokens it holds in its vault.

Lost BNB in eligible cases can also be recovered through the ‘BNB Pioneer Burn Program.’ It counts users’ lost coins towards the official burn count and restores them with BNB.

In addition, BNB uses a real-time burn mechanism based on gas charges. A fixed ratio of collected charges is burned in each block, with the ratio determined by BNB validators.