پنجشنبه 26 مهر 1397
Binance Coin (BNB) is the in-house cryptocurrency token used on the Binance exchange trading platform—one of the world’s largest cryptocurrency exchanges in terms of trading volume.
Binance Coin’s Initial Coin Offering (ICO) token sale ran from July 1st to July 21st 2017 and helped to raise funds for the launch and establishment of the exchange. Within just nine months of BNB’s introduction as a tradable token, it has crested the Top 20 on CoinMarketCap in terms of total market capitalization.
(Looking to learn more about the Binance Exchange? Check out our Binance Exchange Review)
In this article we’ll explore more about what this means, what the coin is used for, and the currency’s present status by looking at the following topics:
- What is Binance Coin?
- The Technology Behind Binance Coin
- Binance Coin Strengths & Advantages
- Binance Coin Weaknesses & Disadvantages
- How to Buy Binance Coin (BNB)
- How to Store Binance Coin (BNB)
What is Binance Coin?
Before going into the ins and outs of Binance Coin, we should take a closer look at the Binance exchange organization.
Binance launched its live exchange platform in mid-July, 2017. Originally headquartered in China, the Binance exchange recently moved its head operations offices to the European island of Malta.
The Binance company is headed by its founder and CEO, Changpeng Zhao (aka “CZ”). With an extensive background in the tech industry, CZ previously established BijieTech, which provides cloud-based exchange systems to many exchanges throughout Asia including the underlying execution engine used by Binance.
Among CZ and the other members of the Binance team, they have had experience with BijieTech, OKCoin (one of the largest Bitcoin exchanges in the world), Blockchain.info, Nomura Securities and Fusions Systems.
The Binance team also has close links with the developers of the NEO
blockchain protocol, which was similarly founded in China. This may
explain why there are currently no withdrawal fees of NEO and GAS from
the Binance exchange.
The BNB Token
The BNB token is designed to be the underlying gas that powers the Binance ecosystem.
Currently Binance Coin runs natively on the Ethereum blockchain as an ERC-20 token. However, according to the Binance whitepaper, there are plans to migrate the token over to a decentralized exchange platform, where BNB will be the platform’s primary exchange currency — more on that later.
Being an exchange token, the primary function of Binance Coin is to serve as a token that can pay for transactions fees charged on the exchange. These transactions include trading fees (currently set at 0.1%), withdrawal fees, listing fees and fees for the purchasing of ICO tokens launched on the exchange.
By using Binance Coin for these purposes, you are rewarded with a discount on the fees involved. This discount is most beneficial in the first year of the exchange with a 50% discount on all fees. Fee discounts are scheduled to scale back each year for the next three years: from 25% in the second year, to 12.5% in the third year, down to 6.75% in the fourth year. By the fifth year of the exchange, BNB will no longer offer any discount value for any of its fees.
Binance Coin Discount Roll-Out Schedule
Source: Binance Whitepaper
It is assumed that the first year commenced when the exchange was launched on July 15th, 2017 and will conclude on July 14th, 2018 and so on.
Binance traders have the option to select BNB token as the currency to pay for all of their exchange fees in their profile “User Center” setup by selecting “use BNB for fees”.
Now that we have a firm grasp of who is
behind Binance Coin and what it is intended to do, let’s take a closer
look at the technology behind Binance Coin.
The Technology Behind Binance Coin
As stated above, Binance plans to
transfer its BNB token from the Ethereum ERC-20 platform over to its own
“Binance Chain” platform protocol. The Binance exchange itself is also
expected to transition from being company-run to community-driven and
become a truly decentralized exchange. On the Binance public blockchain platform, BNB will be used as one of the key base assets and also act as the gas spent for transactions.
Technical details about Binance Chain are scant, but the Binance Team recently published a statement giving some insight into what the platform will look like:
As a public blockchain, Binance Chain will mainly focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets. Binance Chain will focus on performance, ease-of-use, and liquidity. Binance Coin (BNB) will be upgraded to exist on its own blockchain mainnet, becoming a native coin. At the same time, Binance will transition from being a company to a community.
Repurchasing Plan / “Coinburn”
The Binance Team has also scheduled a BNB repurchasing plan (also known as a “coinburn”), which is similar to when a company buys back its own shares and re-absorbs that portion of its ownership. Binance have announced that every quarter, they will use 20% of their profits to buy back BNB tokens at market value and essentially dissolve or “burn” them.
This will continue until Binance have bought back 50% of the 200 million BNB tokens currently in supply. This process has already started with Binance announcing several BNB token burns. In October, 2017, 986,000 BNB tokens were burned, a further 1,821,586 BNB was destroyed in January, 2018, and 2,220,314 BNB was removed from circulation in April, 2018. Eventually 100 million BNB will be destroyed leaving 100 million in its remaining supply.
Monaco offers a cryptocurrency credit card that can be used for a variety of crypto transactions. It has included support for Binance’s BNB token to its MCO platform which includes the Monaco Visa Card and mobile app.
In late December, 2017, the Uplive social media app – with over 20 million users and 60,000 broadcasters — announced a partnership with Binance Coin. The Uplive platform and related GIFTO wallet will support BNB tokens to buy virtual gifts.
On April 22nd, 2018, Binance CEO, CZ announced via Twitter that Binance will form a partnership with Crypto Savannah, Aggie Konde, CEO of Msingi East Africa and Helen Haiyu, CEO of the Made in Africa Initiative. The partnership will aim to support Uganda’s economic transformation and youth employment through blockchain. This will have an impact on the circulation and use of Binance Coin.
Binance Coin Strengths & Advantages
Exchange Discount: An obvious major factor that drives Binance Coin’s use is the discount it offers on all Binance fees. However, as mentioned previously, this discount will reduce gradually over the coming years.
Available Pairs: Binance Coin has a rare advantage by having trading pairs with every other coin listed on the Binance exchange. At the time of writing, Binance currently has 58 coins listed on its exchange which equates to 57 currency pairings to BNB.
Accessibility: The Binance exchange and BNB cryptocurrency platform are supported on a range of devices: from desktops to Android and iOS Smartphones. The exchange also offers convenience by supporting multiple languages on its platform.
Strong Development Team: The Binance platform and exchange is backed by a group of skillful personnel with a vast amount of experience in this emerging industry.
Technology: With the support of the Binance team, the platform benefits from superior technology which is constantly being upgraded while also consistently offering an easy to comprehend, user-friendly interface. The Binance platform is capable of processing nearly 1.4 million orders per second. This can only help to assist BNB traders in having a seamless trading experience.
Coinburn: Reduced supply drives
higher demand. By gradually reducing the total amount of BNB in
circulation through buyback burning (as mentioned above), the value of
the token is expected to rise due to an increase in scarcity.
Binance Coin Weaknesses & Disadvantages
Limited Exposure: While Binance Coin does have a high number of cryptocurrency pairings and accessibility as mentioned above, one of the limitations of being an exchange coin is that it can only really be traded on the Binance exchange and is listed in very few other places. This could potentially leave it open to the risk of market manipulation.
Security Risk: As a popular exchange handling vast amounts of cryptocurrency, Binance attracts many hacking attempts and malicious cyber activities. There have been no successful hacks of the exchange to date, however, a recent attempt prompted Binance to issue a bounty reward of $250,000 worth of BNB for finding the unsuccessful culprits. This is a risk that Binance Coin will have as it is inextricably linked to the success and the security of the exchange platform.
While this is listed as a possible
disadvantage, the fact that the exchange to date has not been hacked or
had any major security breaches is actually a core strength and an
advantage for BNB.
How to Buy Binance Coin (BNB)
The obvious place to buy Binance Coin would be on the Binance exchange. However, Binance does not currently accept fiat currency purchases. As a result of this, it is necessary to purchase a cryptocurrency like Ethereum (ETH), Bitcoin (BTC) or Litecoin (LTC) before trading it for BNB on Binance.
For a more in-depth look at the Binance exchange, check out our Binance Review.
It should be noted that Binance does have
plans to introduce USD and Euro trading pairs on its exchange in the
future (along with other possible fiat currency pairings). This should
make BNB more accessible to currency markets and increase liquidity.
How to Store Binance Coin (BNB)
The most obvious place to store BNB would be on the Binance exchange itself, given its primary use case is to take advantage of fee discounts. Generally speaking, however, it is unadvisable to store cryptocurrencies on exchanges because they are potentially vulnerable to being hacked.
As an ERC-20 token, BNB can also be stored in any wallet that supports ERC-20 tokens. The safest choice for storage would be a cold or hardware device such as the Ledger Nano S or the TREZOR wallet. Software wallet options include Jaxx or Exodus as well as MyEtherWallet (MEW).
When Binance launches its own protocol
network platform, planned for release in the near future, it could
potentially release its own wallet as well.
Binance Coin’s $1.7 billion market capitalization shows that there is significant demand in the cryptocurrency market for exchange-based tokens. Like many other cryptocurrency tokens, BNB is still in its early stages and it remains to be seen whether the token can continue to flourish.
Given Binance’s popularity, it is fair to assume that many traders will continue to rely on BNB to pay for their exchange fees. The reliance on BNB may lessen somewhat as the fee discount is gradually rolled back, but this may be offset by increased demand resulting from the coinburn and the Binance exchange’s growing popularity.