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BNB Coin – The Cryptocurrency From Binance
Since opening its doors in July 2017, Binance has quickly grown into the biggest cryptocurrency exchange on the planet. Did you know that Binance has its own cryptocurrency called BNB coin? We’ll tell you what it’s all about and how BNB coin is used.
What You Need To Know About Binance
Before jumping to the ins and outs of BNB coin, there are a few things you will need to know about the Binance exchange. Binance is the world’s largest cryptocurrency exchange and is a favorite amongst cryptocurrency investors. However, unlike Coinbase and many other exchanges, Binance does not currently support regular currency deposits. Instead, it is a crypto only exchange.
Being a crypto only exchange does not seem to have put anyone off. Over five million cryptocurrency investors call Binance their home and the exchange can process around 1.4 million orders per second. At the time of writing, the Binance exchange is processing around $1.2 billion of trading volume every single day.
At the end of April 2018, it was widely reported that Binance was now more profitable than Deutsche Bank. Between January and March 2018, the exchange managed to bank a staggering $200 million in profits. How did Binance make all this money? Well, every time a Binance customer trades any cryptocurrency or makes a withdrawal, Binance will charge you a small fee. When you have millions of customers this all adds up.
Before you think that Binance is being greedy with customer fees, they actually charge some of the lowest fees for any cryptocurrency exchange. The good news for Binance exchange users is that you can significantly reduce the fees you pay by using BNB coin.
What Is BNB Coin?
BNB coin is a digital token issued by the Binance exchange. The token is actually built on the Ethereum blockchain and is, therefore, an ERC20 token. This means that BNB coin can be stored in popular Ethereum wallets like MyEtherWallet.
Unlike cryptocurrencies like Bitcoin, BNB coin is actually a utility token. This means it can be used on a platform operated by the company that issued it; in this case, Binance.
How Is BNB Coin Used?
It’s no secret that cryptocurrency exchanges make big money by charging fees. This can range from charging customers to trade or withdraw cryptocurrency or charging cryptocurrency projects to list their coins on the exchange.
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The good news for Binance customers is that they can enjoy a discount of up to 85% on all fees paid to the exchange. How do you enjoy these savings? Well, every time a fee is paid, you have the option to pay in Binance coin instead. This automatically allows you to reap the discounts enjoyed by BNB coin users.
#1 How To Save On Fees By Using BNB Coin?
Binance actually launched a new discount program on 20th July 2018 and we have used all the updated figures in this article. The first and simplest way of getting a discount on your Binance fees is by directly using BNB coin to pay for them. You can automatically pay Binance fees with BNB coin by heading over you our account area and turning on the option ‘Using BNB to pay for fees’.
Binance fee discounts for using BNB coin do go down over time. The thing to know is that the clock starts from the first time you use BNB coin to reduce your exchange fees.
- 1st Year: 25% discount.
- 2nd Year: 25% discount.
- 3rd Year: 12.5% discount.
- 4th Year: 6.75% discount.
- 5th Year: no discount.
This means that for the first year of using BNB coin to pay for fees, you will enjoy a 25% discount. However, over time this discount does reduce to nothing. So you might want to be tactical when it comes to the first time you use BNB coin.
With this method of using BNB coin, coins are exchanged for lower fees every time you take an action that would usually result in a fee. This means your BNB coin balance will dwindle down over time and you may need topping up with Binance coin from time to time.
Binance Coin & The New VIP Program
The Binance VIP program has only been active since the 21st of July 2018. This gives exchange users the option of enjoying a discount of up to 85% on trading fees. How does it work and how can you get started on reducing your fees today?
There are two criteria that determine your VIP level on the Binance exchange. The first is your BNB coin balance. The second is the amount of trading volume you have done in the past 30 days. To qualify for a higher VIP level tier, you must fulfill both of the criteria requirements for the VIP level.
From the VIP breakdown above, you can see that an 80% discount is possible for maker fees and 60% for taker fees. The truth is that we doubt many people are going to be doing 150,000 bitcoin in trading volume in 30 days. Also, it is exceptionally expensive to purchase 11,000 BNB coins. Binance coin is currently trading at $11.93 a coin and to buy 11,000 of them, you will need to shell out $131,230. Somehow, we don’t think there are many people out there willing to spend $131k on getting lower Binance fees.
With the Binance VIP program, you should know that you can take advantage of the 25% fee discount by using your BNB coins to pay for fees. Both discounts will stack on top of each other. This is how we have arrived at a maximum discount of 85%.
#2 Help Get Your Favourite Crypto Listed On Binance With BNB Coin
As Binance is the largest crypto exchanges in the world, it is commonly viewed as the holy grail of exchange listings. The thing to know is that almost every cryptocurrency ever listed on Binance has seen a steep increase in price once the listing announcement is made. Not surprisingly, cryptocurrency investors have been searching for ways to get their coins listed on the exchange. In June 2018 Binance gave their community what they wanted by introducing ‘Community Coin of the Month’ competitions.
How Does It Work: The Binance Coin of the Month Competition?
The first step is getting your cryptocurrency nominated for the Binance vote. Unfortunately, applications can only be made by core team members of the coin itself. However, the investor community can exert pressure in the cryptocurrencies public Telegram channel to get an application sent into Binance.
If your cryptocurrency is successfully nominated for a vote, you can head over to the Binance Coin Of The Month voting page and cast your vote. The rules of the game are as follows:
- The coin with the most votes will be listed on Binance.
- All votes must be submitted within the time-frame specified (usually four days).
- Voters can only submit votes once.
- Multiple candidates can be voted for. The cost of voting is 0.1 BNB coin per candidate.
- A voter will have their votes multiplied by the number of BNB coins they hold (up to a maximum multiple of 500). This means that if an investor wants to vote for ‘cryptoX Coin’ and holds a balance of 300 BNB coin, they will cast 300 votes for the coin. Essentially, the more BNB coin you have, the more voting power you have.
- Partial BNB coin is always rounded down. This means if you had 2.9 BNB coin, you would only receive an x2 multiple on your vote.
- Top Tip: When it comes to using BNB coin for Binance Coin of the Month votes, there is no point in having more than 500 BNB coins. This amount of coins gives you the maximum voting power possible.
#3 Buy & Sell Cryptocurrencies Using BNB Coin
The third way BNB coin can be used is as a trading pair to buy and sell different cryptocurrencies.
Binance offers only four different trading pairs and BNB coin is one of them. The other three trading pairs available on the exchange are:
- Tether (tokenized USD)
Over 75 different cryptocurrencies can be traded using BNB coin. That’s actually more cryptocurrencies than most exchanges even offer.
#4 Participate In Token Sales Using LaunchPad
The fourth and final way that users can use BNB coin is through Binance’s LaunchPad product. This allows cryptocurrency projects to raise additional funding by selling their tokens to investors. How do investors buy into these investment opportunities? Well, with BNB coins of course.
This means that if there are great investment opportunities offered through LaunchPad, then this should drive up demand for Binance coin.
What Is BNB Coin Burn?
Although BNB coin does have some very valuable ways in which it can be used, some of you may have spotted that fee discounts for using Binance coin fall annually. This means that BNB coin should technically become less valuable as fee discounts shrink. However, this only holds true if the coins supply stays the same.
To combat this, Binance has committed to spending 20% of their profits every quarter to buy back BNB coins and destroy them forever. This will happen until they have bought back 50% of all Binance coins (100 million). There are still a lot of BNB coins for Binance to buy back and burn.
This means that after every BNB coin burn, the coins supply decreases and this mechanism should support the price of the coin. The last coin burn was done on the 18th July 2018. Usually, the price of BNB coin rises before the start of a coin burn. This makes it a key event, watched by every Binance coin holder.
The exchange has already established itself as the largest cryptocurrency exchange in the world. But who exactly is behind this phenomenal growth? There is little doubt that the top brass at Binance is exceptionally talented. For example, their Chief Architect, James Hofbauer having co-founded BijieTech and gaining significant Silicon Valley experience in big data analysis. However, the star and captain of the Binance ship is undoubtedly CEO Changpeng Zhao.
Although we are exceptionally impressed by the Binance team and its glittering list of advisors, (including NEO CEO Da Hongfei), we have decided to focus on Mr. Zhao due to space considerations.
CEO & Founder – Changpeng Zhao
We try to be as objective as possible when reviewing cryptocurrency projects. However, the TotalCrypto Team cannot help being massive fans of Mr. Zhao and what he has achieved.
Changpeng’s entrepreneurial journey has its roots all the way back in his childhood. As a teenager, he moved with his family from China to Canada. Money was exceptionally tight and the family struggled to make ends meet. What did Changpeng do? Well, he decided to do something positive and do his best to ease his family’s financial problems. By day Mr. Zhao worked at McDonald’s and by night he worked in a gas station. These formative years shaped Mr. Zhao forever and his legendary entrepreneurial drive and determination can be traced all the way back to flipping burgers at McDonald’s.
Education was taken seriously by Mr. Zhao and he studied computer science at McGill University. Here, his obsession with financial markets grew. After graduating in 2001, Changpeng followed his passion and took a job as Head of Tradebook Futures at Bloomberg. There is no doubt that working at Bloomberg is a pretty solid career option. However, that is not the way of entrepreneurs. After four years, Mr. Zhao decided to do something different and founded Fusion systems. This business created financial trading solutions and it was during this time that Changpeng discovered he had a love for poker, which then led to him finding out about Bitcoin.
Mr. Zhao then traded in his business at Fusion Systems for the cryptocurrency industry. He even worked as Head Developer at Blockchain.info before taking the role of CTO at OKCoin. It was at OKCoin that Zhao learned how to run a cryptocurrency exchange. Naturally, after learning the trade, Zhao went on to found Binance.
The Future Of Binance Coin
Binance CEO Changpeng Zhao has already shared some of his thoughts about the future of the exchange publically. Given that Binance is a centralized exchange, it is interesting that Mr. Zhao believes the future is in decentralized exchanges. Obviously, Binance is keen to keep up with developments in the industry and are currently working on building their own decentralized exchange. How will fees for the new Binance decentralized exchange be paid for? We bet it will be though using BNB coin.
Binance has also acknowledged that the cryptocurrency space is ripe for fund managers to play a vital role in generating returns for crypto investors. In reaction to this emerging trend, Binance has already set up a fund and are looking to work with more fund managers who have experience in managing asset pools in excess of $100 million. Will these crypto fund managers be given Bitcoin to kickstart their crypto investments? We think not. Instead, it is likely the BNB coin will be used.
Binance has already set up a ‘Community Influence’ fund. This project is also known as Binance Labs and is a $1 billion fund with the sole purpose of backing crypto and blockchain startups. The funds in this incubator are denominated in BNB coin of course.
The use of BNB coin is actually expanding. The coin is set to play a pivotal role in crypto startup funding and crypto fund management. When this is considered alongside regular BNB coin burns, a new decentralized exchange and the potential for Binance LaunchPad to become an alternative to an ICO, then the future of BNB coin appears very bright indeed.
The BNB Coin ICO
The Binance ICO was held on the 14th July 2017. 100 million BNB coins were sold at a price of just 10 cents each. Although Binance coin is currently trading for around half of its all-time high price of $24.46, it has still rewarded ICO investors with over 100x returns.
Should You Invest In BNB Coin?
- BNB coin has four compelling use cases: discounted trading fees, voting for cryptos to be listed on the exchange, use as a trading pair and participating in LaunchPad fundraising opportunities.
- 20% of the exchange’s quarterly profits are used to buy back BNB coins. These are then destroyed forever in a BNB coin burn. This reduction of supply should increase the price of the coin if demand remains constant.
- The coin is the best way to get exposure to the biggest cryptocurrency exchange in the world.
- There plans for BNB coin to be used in even more ways in the future. For example, in the new decentralized exchange that Binance is building.
- Cryptocurrency exchanges are one of the most profitable businesses in the world right now. You can personally use your BNB coins to save you money on the exchange.
- Binance is creating their own blockchain to ensure that exchange transactions are even more secure. When this is complete BNB coin will be moved to this new blockchain and be one of the most secure cryptocurrencies in the world. This should be positive for the coins price.
- The coins main use is for reducing fees. However, the fee savings reduce to nothing in year five. This means that in say 10 years time the main purpose of the coin could be completely obsolete.
- BNB coin burns will not take place forever. Binance has only committed to buying back and destroying 100 million BNB coins. The question is what happens once all the coin burns have been done? If the demand for BNB coin cannot support the price, then it will fall.
- Although Binance is an extremely popular exchange right now, their success has shown that new cryptocurrency exchanges can come from nowhere and become the biggest in the industry within months. New competition will enter the market and they could potentially offer a better product and be more popular than Binance.
How Can I Buy BNB Coin?
Not surprisingly, the best place to buy BNB coin is on the Binance exchange. However, the problem for cryptocurrency newcomers is getting funds on Binance to buy your BNB. We show you how to do this in our straightforward guide.
Cryptocurrency exchanges are one of the most profitable businesses on the planet. With BNB coin you are investing in the cryptocurrency of the biggest exchange. This makes it perhaps the safest exchange backed coin out there.
Not only are there many useful ways to use BNB coins right now, but there are set to be even more in the future. The exciting thing about Binance is that it is set to massively benefit from the next wave of cryptocurrency investors. What happens when cryptocurrency prices go up? New investors are attracted to the market. Which cryptocurrency exchange are these new investors likely to use? We bet it will Binance. This stream of new investors will likely come across BNB coin and see the benefits of using it on the exchange. This new demand should significantly benefit the BNB coin price.
The TotalCrypto Team cannot wait to see what new and innovative ways of using the BNB coin will be dreamed up in the future. For now, we will just have to be satisfied with things like a new decentralized exchange.
Below we’ve listed some key resources relevant to BNB coin.
? Safest BNB Wallets
Hardware wallets are the safest crypto storage solutions available. These wallets store your private keys and do not expose them to the outside world, making your crypto as safe as possible. Maybe you should treat your crypto like the million dollars it could well be worth one day?
Can’t decide if Trezor or Ledger is best for you? Just check out our Ledger Vs Trezor comparison guide.
? Best Free Wallets
BNB coin is an ERC-20 token. This means you can store it in an Ethereum wallet.
? Best Crypto Tracking App For BNB Coin
The Binance team outline their vision for the world’s most popular cryptocurrency exchange in their white paper. Unlike other documents in the cryptocurrency space, it’s a pretty straightforward and easy read.