The BNB coin is an Ethereum ERC20 token for the Binance cryptocurrency exchange, one of the largest cryptocurrency exchanges in the world, and the first to feature its own currency. The BNB token was used as part of the platform’s funding platform via an ICO, and was delivered to lower transaction fees for users on its exchange.
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What is Binance's BNB Coin?
The Binance exchange created its BNB coin to fulfil a number of roles. Firstly, it intended to create a currency used in their exchange for paying fees and other network costs. The exchange achieved this by allowing its participants to use BNB in return for a 50% discount of their transaction fees over the first year of their membership. Also, the BNB coin is used by users in the exchange to invest in the Binance platform itself. And last, the coin is used to pay for products and services on the platform, like advertising.
The Binance tokens also have a special value; they let buyers purchase the tokens back from the market during each quarter at the current price. This will continue until half of all tokens are burned. The mechanism is used to stabilize the price of the token and ensure its appreciation of value.
How Does the Binance Exchange Work?
At present, Binance has the largest trade volume of all crypto exchanges in the market. There’s a number of benefits to using Binance too, like its matching engine that allows for 1.4 million trades per second, cross-platform trading for iOS, web and Andriod, as well as support for multiple languages.
Binance has also achieved a number of accomplishments. It was ranked was one of the top 3 crypto exchanges in the world less than five months after its launch. During this time, the company reported a profit of $7.5 million in commission fees. Also, Binance succeeded in earning more profit than any other financial institution, including Deutsche bank, the largest bank in Germany in Q1 2018.
BNB Tokens Special Features
The token can be used to pay fees on the exchange, like withdrawals, listing, margins and other fees. The exchange gives those who trade with the token a deal of 50% lower fees during the first year. In the second year, this discount is reduced to 25%, and will halve every other year until the discount is discontinued in the 5th year. It’s expected that as the volume on Binance increases, the token will also grow in popularity and value and more features will be introduced in future that use the BNB token.
Allocation and number of tokens
The Binance coin will have 200 million tokens. Half of that 200 million will be allocated during its ICO to participants, while 40% will go to the team and 20 million to its angel investors.
Binance will allocate 20% of the profits from the exchange to buy back BNB tokens and destroy them to increase scarcity. The team has a plan to buy back 50% of all tokens sold, a total of 100 million. These buy back and other transactions will be announced on the Binance blockchain. After all of the repurchases and destructions, 100 million will be left as the total supply.
Binance will set aside 35% of its funds to create the Binance platform as well as for future upgrades. An additional 50% will be used for branding and marketing, while 15 will be reserved in case of emergencies.
How to Purchase BNB Tokens
Right now, you can buy the Binance token through the Binance exchange itself.
Although it costs no money to add funds to your account, it should be noted that Binance has order fees of 0.1%. These withdrawal fees are flat fees that are based on the price of the coin. You can always reduce your fees by up to 50% on the exchange by paying these fees in BNB for the first year. These discounts are reduced in the following years and will discontinue in the 5th year of the exchange.
Storing BNB coins
BNB tokens are the internal currency of the Binance exchange. Therefore, most people could find it easy to store them on the exchange itself, although this is not recommended. For best security practices, it’s advisable to store your BNB in a hardware wallet off the exchange itself.
Why BNB Tokens Could Increase in Value
BNB has several avenues for maintaining and increasing the value of its currency. Firstly, it offers reduced fees for trading, giving people a reason to use the token, thus appreciating its value.
The other reason is that the platform is dedicated to burning 20% of its profits during each quarter, which helps to keep excess coins out of its total circulation. This then allows each token to rise in value. Lastly, the Binance exchange has a few functions that are only available for purchase when made through BNB, like withdrawal fees. Although these features are minor in nature, it’s suggested that the Binance exchange is looking to widen the scope of the tokens in future, which will also appreciate the price of the coins.
Future of Binance and BNB Tokens
Binance has announced that it will create its own decentralized exchange, with the long-term goal of transforming its platform into its own community. Once the new exchange goes live, the token will become the native currency on its blockchain mainnet The benefits of creating its own decentralized exchange (DEX) is that will help provide anonymity and decentralization, to privacy-conscious users of the platform.