Binance is a platform for the trading and exchange of virtual currencies that, today, is positioned as the most important of its kind in the world, as it is estimated that Approximately 1.4 million transactions are carried out on its network every second. As expected for such an important exchange, Binance has its virtual currency, which can be used for different uses on and off the platform.Understanding what a Binance coin is will unlock the benefits of instant and profitable transactions. 

What is a BNB cryptocurrency?

Binance Coin, also known as the BNB cryptocurrency, is a crypto asset used for exchange and payment of fees within the Binance exchange.

The token offers multiple advantages to its users within the platform, for example, discounts on transaction fees when using it and the possibility of exchanging it for other virtual currencies such as Ethereum, Litecoin or Bitcoin.

The BNB cryptocurrency was launched to the public in July 2017, a few days before the platform enabled exchange options. At the time of its release, its value was around 0.107579 USD. Since then, its cost has increased considerably to around 645 USD. Now, it is worth 510 USD. At the beginning of its lifespan, the cryptocurrency behaved as an ECR-20 token residing on the Ethereum blockchain.

However, it was later moved to the Binance blockchain, becoming its native cryptoasset.

Regarding its total supply, at the time of its launch, it was 200 million units, of which 100 million were offered in its initial offer. However, Binance plans to destroy 50% of the existence of the BNB cryptocurrency through a procedure called “Burn”. 

What is Binance BNB Burning?

The Binance platform uses 20% of its quarterly profits to acquire the BNB cryptocurrency. The sums repurchased by the exchange are subsequently destroyed in their entirety.

This process will continue within the Binance platform until 50% of the total supply amount of the token has been destroyed.

In this way, the scarcity of the crypto asset increases by making it increasingly finite, which could have exciting consequences on its future price.

How to buy BNB?

There are different ways to buy the BNB cryptocurrency on Binance, although the most straightforward and fastest method is using the Binance converter.

1. To do this, you must have a balance in your Binance Spot Wallet in some cryptocurrency, such as USDT, BTC, ETH or others.
2. Then, access ‘Trading’ / ‘Convert’.
3. Select above the cryptocurrency you will use for the conversion and the amount.
4. Below, choose 'BNB'.
5. Finally, click the 'Preview conversion' yellow button and then click 'Convert'.

Ready. You will now see the balance of BNB purchased in your Spot Wallet.

Can I mine the BNB cryptocurrency?

Due to the nature of the Binance blockchain, which uses the Byzantine Fault Tolerance method to achieve consensus, it is impossible to mine the BNB cryptocurrency.

This means that, for now, the only way to acquire this crypto asset is to buy it through the Binance platform through money order, bank transfer, or a credit or debit card. If you want more information regarding this crypto asset's market pairs, you can consult the CoinMarketCap platform.

How to use Binance cryptocurrency?

In addition to serving as an exchange asset within Binance, the BNB cryptocurrency presents a wide variety of additional uses. Among these, it is worth mentioning:

How did Binance Coin (BNB) come about?

Binance Coin, like Binance Smart Chain, emerged through the technology team of the broker of the same name, led by the company's CEO.

BNB emerged as a utility token on the Ethereum blockchain under the ERC-20 standard in 2017. Its objective was to give the broker's users advantages, mainly in trading fees.

The supply of BNB coins was limited to 200 million units, of which 10% (20 million) of the tokens were offered to angel investors (who invest in the project in its initial phase), 40% (80 million ) to the founding team and 50% (100 million) to the ICO (Initial Coin Offering) participants. As time passed, BNB gained new features and stopped being just a utility token in the company's ecosystem, which created it to own its blockchain, the Binance Smart Chain.

The relatively more centralized development allowed the network to evolve very quickly, bringing greater malleability to its Blockchain and quickly reaching the top of cryptocurrencies by market capitalization. Despite having a limited supply of 200 million, Binance has committed to burning a certain amount of tokens linked to its profits, meaning that the asset's price is somehow linked to the company's performance, a fact that we will explain further throughout the text.

What is BNB Crypto for?

The Binance Smart Chain (BSC) network provides an architecture for executing decentralized protocols through smart contracts, which are currently in high demand in the market. A great example is the Pancake Swap network, which uses the BSC for its execution.

BNB usage soared in late 2020 and early 2021 with the growth of Decentralized Finance (DeFi), as several projects sought alternatives to the Ethereum network, which until recently dominated this market.

Due to its ease of implementation and low transaction costs, many projects today use BSC for tokenization, a trend that seems inevitable across the economy.  of assets

Experts point to consolidating a future scenario called “Tokenization of Everything”. Following the trend of this expanding market, many believe it is inevitable that virtually all elements of financial markets and the traditional economy, such as stocks, bonds, contracts, documents, insurance and mortgages, will be tokenized and recorded on Blockchains.

This trend is happening quickly, and BNB should occupy an important space in this market alongside its main competitors.

How Binance Coin (BNB) works

The BNB protocol, despite being inspired by Ethereum, works based on the Proof of Stake Authority (PoSA) consensus protocol, a variation of Proof of Stake (PoS), a validation method used by several other cryptocurrencies, such as Cardano and Chainlink, and which was implemented in Ethereum.

With PoSA, as with PoS algorithms, validators stake tokens to secure the network and earn fees. However, the number of validators in PoSA is limited to 21, these being the ones with the most staked tokens.

In comparison, other networks, such as Bitcoin and Ethereum, often have tens of thousands of block validators. This decrease in the number of validators makes transactions cheaper, as fewer people or companies compete for the profit from transaction fees but are more centralized.

According to Binance, PoSA, despite being a “semi-decentralized” consensus method, as the company’s CEO himself likes to say, is what guarantees and allows BSC to offer low transaction fees for the use of the network.

Although decentralized Blockchains have been a true technological revolution, an important issue is that decentralization is expensive, and this provides an advantage to semi-decentralized networks that can guarantee security, such as BSC.

Main differences between Binance Coin and Bitcoin

Consensus protocol

Bitcoin has used the Proof of Work consensus protocol since its creation, in which mathematical calculations are performed by trial and error to find the block of subsequent transactions, thus creating the chain of blocks, the so-called Blockchain. Using the process described above, miners lend their computational power to validate transactions on the network.

This method has been widely criticized, especially by investors in the traditional financial market, due to its high energy consumption, which, despite making the network safer, is a concern within ESG (Environmental, Social and Governance) policies.

In this sense, both the Proof of Stake and Proof of Stake Authority protocols, used at BNB, present solutions for this high energy consumption, as they allow the distribution and validation of transactions to occur through the staking (bet) of the tokens.

First layer scalability

Bitcoin is designed to scale globally through layers. We initially have layer 1, which is the Blockchain itself, producing blocks in a highly secure manner every 10 minutes. Second or third-layer networks are built on top of the Bitcoin Blockchain. An example is the Lighting Network, which allows fast and cheap BTC transactions. This is how the base internet protocol, TCP_IP, develops.

Now Binance Smart Chain (BSC) has the advantage of already having an optimized network with a low transaction cost right at its layer main, which could make cryptocurrency adoption much easier, as second-layer networks, like Bitcoin's Lighting Network, can be too complicated for most users at the moment.

Faster development

Because the development of the BSC network is more concentrated in the hands of the company that created it, the network can be implemented much faster than Bitcoin.

A major update to the BTC network could require years for the community to reach a consensus on the protocol change, which, despite reducing the risks of implementing a possible bug or malware, could cause the network to remain behind in relation to other Blockchains, such as BSC.

Key Advantages of Binance Coin (BNB)

Cheaper transactions

This is one of the great advantages of BNB, which sets it apart from its main competitor, Ethereum. Because of this, many developers are using BSC for their projects, as high fees can drive away new users. Network transfer fees are typically less than 1 cent and vary depending on the level of blockchain congestion. 

Developed by a well-known company

Many semi-decentralized projects, like Binance Smart Chain, are created by anonymous developers or little-known companies. Binance's involvement in the BSC network is a strong point of trust that brings greater security to the investor since a large person is responsible for the network.

Ease of tokenization

The BSC network allows tokens to be created much more easily than on the Ethereum network, a significant advantage for the development of this sector, that has been growing at an impressive speed. The growth in the use of the network increases its adoption since its native token, Binance Coin, tends to be used more to pay fees for token transfers, thus increasing its demand and, consequently, its price.

Binance Coin and token burns

One of Binance Coin's biggest differences is that its supply is directly linked to Binance's profits. The exchange has committed to using 20% of its profits to buy BNB tokens and burn, destroying them and making the asset more scarce and valuable.

For this reason, BNB's earnings are linked to the exchange's performance, making it a good asset for those who want to expose themselves to the company's earnings. It is worth mentioning that Binance is not publicly traded on the stock exchange, which means it is impossible to buy the exchange's shares openly.

How do you mine Binance Coin (BNB)?

With the Proof of Stake Authority protocol, just like traditional Proof of Stake, validators stake tokens to perform network security and receive transaction fees rather than mine.

However, as explained previously, the number of active validators, those eligible to receive transaction fees, is limited to the 21 stakers with the highest number of coins staked. This causes less competition between validators, resulting in lower transaction fees. This method is significantly more ecological but centralized, as few validators provide network security. However, this is the price paid to have a more efficient network.

Becoming a validator and receiving transaction fees on the BSC network is not easy, as you must become one of the 21 biggest stakers of the currency, which is certainly very costly.

How to buy BNB?

Broker

The first way to invest in Binance Coin (BNB) is also the safest and most reliable way, through a broker like Coinext.

In this option, the broker carries out the entire process of intermediating transactions between the parties involved and provides its virtual wallet to store your cryptocurrencies. It also offers a more complete interface, with other currency options, different types of operations and important data that can help the trader make a successful investment.

Coinext offers a safe and easy-to-use platform to trade the best cryptocurrencies.

Token extraction

The second way is by extracting tokens using the Proof of Stake Authority protocol, in which you are rewarded with BNB units for validating transactions. Similar to what occurs in the mining process of other cryptos, but in a more simplified and accessible way.

P2P (peer-to-peer)

The third way is through the process of P2P, peer-to-peer, which is one way to carry out transactions directly with the other party involved, and no intermediary, such as a broker, is used.

The risk of this type of transaction is that there are no guarantees that you will receive your tokens or your money since the relationship between the parties occurs purely based on trust.

How to store BNB in the wallet?

As stated above, if you purchase your coins from a broker, they can be stored directly on the broker's platform. However, there is also the possibility of storing coins in wallets, which can be digital or physical.

• Online, which store data in the cloud;
• Mobile (apps) for cell phones;
• Software (desktop) for computers;
• Hardware (offline), usually on USB devices;
• Paper (paper) is usually printed on metal plates.

The main wallets on the market for storing BNB are:

• Trust Wallet (mobile)
• Binance Chain Wallet (browser)
• Exodus Wallet (desktop)
• Ledger (hardware wallet)

Frequently Asked Questions

What distinguishes Binance Coin (BNB) from other cryptocurrencies on the Binance platform?

Binance Coin (BNB) is the native cryptocurrency within Binance, offering users multiple advantages, such as reduced transaction fees, the ability to trade for other virtual currencies, and diverse uses beyond the platform.

Are there alternate methods to acquire BNB beyond purchasing on Binance?

Besides buying on Binance, users can acquire BNB through processes like staking tokens for rewards, peer-to-peer transactions, or brokers offering BNB.

What diverse uses does BNB offer besides being a payment method on Binance?

BNB has versatile applications, including payment for transaction fees, credit card bill settlements, trading for other cryptocurrencies, travel reservations, entertainment purchases, and as an investment asset.

What role did Binance Coin (BNB) play in the evolution of Binance Smart Chain?

Initially an ERC-20 token on Ethereum, BNB transitioned to form the backbone of Binance Smart Chain, facilitating smart contract execution and contributing to the platform's growth.

What sets the consensus protocol used by BNB apart from other major cryptocurrencies like Bitcoin?

Unlike Bitcoin's Proof of Work, BNB operates on a Proof of Stake Authority (PoSA) protocol, allowing for lower energy consumption and faster, cheaper transactions by limiting the number of validators in the network.