As the world of cryptocurrencies continues to evolve and mature, more and more people are looking for ways to get involved. One of the most popular ways to do so is through trading and Binance is one of the most well-known and respected exchanges in the industry. Binance Coin (BNB) is the native token of the Binance platform and while it’s primarily used for paying trading fees, it has a variety of other use cases that make it a valuable asset to hold.
Binance, the world’s largest cryptocurrency exchange by trading volume, introduced Binance Coin (BNB) through an Initial Coin Offering (ICO) in July 2017. The primary objective of BNB was to provide users with discounted trading fees on the Binance platform. By holding and using BNB, traders could enjoy reduced fees, creating an incentive for users to adopt and utilize the token.
During the ICO, Binance issued a total of 200 million BNB tokens, with 100 million allocated to the founding team and angel investors, and the remaining 100 million sold to the public. The ICO raised approximately $15 million, and the funds were used to develop and enhance the Binance exchange platform.
The purpose of this article is that, we’ll get into some of those use cases and why you might want to consider investing in BNB. If you are interested in Bitcoin trading, you may also consider knowing about the Fiat Currency.
Contents
Utility on the Binance Platform
Let’s start with the most obvious use case for BNB: paying trading fees on the Binance exchange. Binance charges a 0.1% fee for all trades, which is already significantly lower than many other exchanges. However, if you use BNB to pay your fees, you’ll receive a 25% discount, which can add up quickly if you’re a frequent trader. In addition to trading fees, BNB can also be used for other services on the platform, such as purchasing certain tokens in token sales, paying for transaction fees on the decentralized exchange, and more.
Discounts and Bonuses
Here’s the information presented in a table format with explanations:
| Year | BNB Trading Fee Discount | Explanation |
|---|---|---|
| 1 | 50% | In the first year of Binance’s operation, users who paid their trading fees using BNB received a significant discount of 50% compared to paying with other cryptocurrencies or fiat currencies. This high discount rate was designed to incentivize the adoption and use of BNB on the Binance exchange. |
| 2 | 25% | In the second year, the discount rate for paying trading fees with BNB was reduced to 25%. This reduction was part of Binance’s plan to gradually decrease the discount rate each year to ensure the long-term sustainability of the BNB token and prevent excessive inflation. |
| 3 | 12.5% | The discount rate for paying trading fees with BNB was further reduced to 12.5% in the third year. Despite the lower discount rate, using BNB to pay trading fees still offered significant savings for frequent traders on the Binance platform. |
| 4 | 6.75% | In the fourth year, the discount rate for paying trading fees with BNB decreased to 6.75%. Although the discount rate had diminished over time, it still provided an attractive option for users looking to save on transaction costs and maximize their profits when trading on the Binance exchange. |
The declining discount rate for paying trading fees with BNB is part of Binance’s strategy to make sure the long-term sustainability and value of the BNB token. By gradually reducing the discount rate, Binance aimed to prevent excessive inflation and maintain a healthy balance between the benefits for users and the overall stability of the token’s ecosystem.
BNB Burn
BNB Burn is a that reduces the total supply of Binance Coin (BNB), the native cryptocurrency of the BNB Chain ecosystem, including BNB Smart Chain (BSC) and the BNB Greenfield blockchain. The primary goal of this initiative is to create a deflationary effect on the BNB token, which can potentially increase its value over time. This is achieved through two main mechanisms: Auto-Burn and Real-Time-Burn.
Auto-Burn is a quarterly process that automatically adjusts the amount of BNB to be burned based on the coin’s price and the number of blocks generated on the BNB Chain during the quarter. This mechanism was introduced to provide greater transparency and predictability to the BNB community. The Auto-Burn will stop once the total circulating supply of BNB falls below 100 million.
Real-Time-Burn, on the other hand, is a continuous process that burns a portion of the BNB spent as gas fees on the BNB Chain. This mechanism was introduced in the BEP-95 upgrade and ensures that BNB tokens are removed from circulation in real-time.
The BNB Pioneer Burn Program is another initiative that reimburses eligible users who lose tokens due to mistakes while trying out the newly-launched Binance Smart Chain. The lost tokens are counted towards the official burn count, effectively removing them from circulation.
The BNB Burn process is part of a larger commitment to reduce the total supply of BNB from 200 million coins to 100 million coins, with the aim of increasing the value of the remaining tokens through scarcity. The burn events have been taking place on a quarterly basis since 2017.
Investment Potential
While B&Bs utility on the Binance platform is certainly a major selling point, it’s also worth considering BNB as an investment in its own right. Binance has a track record of success and innovation in the industry, and as the exchange continues to grow and expand, demand for BNB is likely to increase as well. Binance also uses a portion of its profits to buy back and burn BNB tokens, which can help to drive up the price over time. Of course, as with any investment, there are always risks to consider, so it’s important to do your own research and make an informed decision.
Other Use Cases
Beyond its use for discounted trading fees, Binance platform has gained traction as a payment method both within the Binance ecosystem and among external merchants and service providers. The growing acceptance of BNB as a means of payment showcases its versatility and potential for widespread adoption.
Within the Binance ecosystem, BNB can be used to pay for various services, including:
- Binance Launchpad: BNB is the primary token used to participate in token sales hosted on Binance Launchpad, a platform that allows users to invest in new blockchain projects.
- Binance Card: BNB can be used to top up the Binance Card, a cryptocurrency debit card that allows users to spend their crypto holdings at merchants worldwide.
- Binance Savings: Users can earn interest on their BNB holdings by participating in Binance Savings, a service that enables users to earn passive income on their idle cryptocurrency assets.
Beyond the Binance ecosystem, a growing number of merchants and service providers have begun accepting BNB as a payment method. These include:
- Travel booking platforms: Several travel booking websites, such as TravelbyBit and Travala, allow users to book flights, hotels, and other travel services using BNB.
- Online retailers: Some e-commerce platforms and online stores have integrated BNB as a payment option, enabling customers to purchase goods and services using the token.
- Cryptocurrency exchanges: Many cryptocurrency exchanges have listed BNB, allowing users to trade the token against other cryptocurrencies and fiat currencies.
Conclusion
Overall, Binance Coin is a versatile and valuable asset that offers more than just a discount on trading fees. From its utility on the Binance platform to its potential as an investment, there are many reasons to consider adding BNB to your portfolio. Of course, as with any investment, it’s important to do your own research and make an informed decision based on your own risk tolerance and investment goals.
