Binance Coin (BNB): What is this cryptocurrency and what is it used for

There are currently a large number of centralized exchange who seek to offer different solutions for the purchase, sale and exchange of cryptocurrencies. Binance is one of these platforms, which has also deployed the Binance Coin token (BNB) to add value to the platform.

What is Binance

Is a centralized exchange that allows the purchase, sale and exchange of different cryptocurrencies. Binance has become one of the most important platforms in the ecosystem with great growth in a short time. It is characterized by including a great variety of cryptocurrencies and tokens, and very low transaction fees.

Binance was created by Changpeng Zhao, a Chinese-Canadian businessman. The exchange began operating in July 2017 in China after having obtained 15 million dollars of financing through an ICO round. Shortly after that same year, it had to relocate its operations to Japan due to restrictions on cryptocurrency trading imposed by China.

If you want to buy cryptocurrencies, we recommend doing it with Binance, with this link you get a 20% discount on fees.

The exchange de Zhao en March 2018 it was already the one higher volume of operations registered and already had a second headquarters in Taiwan. It currently has several alliances with projects in Bermuda, Malta, Israel and Europe.

Now that we know the platform that gives rise to the BNB token, which would later become its own cryptocurrency.

What is Binance Coin (BNB)

Is token of type ERC-20 built within the Ethereum blockchain and launched right with the launch of the centralized exchange. A total of 200 million BNB tokens in an ICO to finance the development of the exchange. Subsequently the coins were transferred to the own blockchain of the platform called Binance Chain.

This cryptocurrency incorporates a mechanism that gradually reduces the amount of BNB in ​​circulation. The burning 100 million BNB (50% of the initial issue) which will mean an adjustment in the price of the currency. The long-term idea is that the price becomes more stable.

Note that BNB cannot be mined, as all the coins have been issued. Right now what is happening is the reverse process, the gradual burning of BNB until only 100 million remain.

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What is Binance Coin (BNB) for

This cryptocurrency is created to be able to pay for transactions within the platform’s exchange. The value and capabilities of BNB have increased as the exchange has grown and the ecosystem has expanded. Binance Coin can be used on the blockchain, on exhcange of third parties, for make payments everyday, for different research projects and developments, for the recently launched Binance Smart Blockchain (BSC).

The current uses of Binance Coin are:

  • Transaction fees: Carry out operations within the Binance Chain has a discount on the fees of the operations.
  • Discount on trading: During the launch the trading commissions within Binance with the BNB cryptocurrency had a 50% discount. Currently the discount offered on transactions is 25%.
  • User levels: Those users who have large amounts of BNB and that they have been operating for a 30-day period have access to the VIP level. This level, among others, offers additional discounts on tranding fees.
  • Commerce: BNB can be exchange for other cryptocurrencies, both in the own exchange and in a third-party exchange.
  • Non-tradeable conversion: Those who have cryptocurrencies on your Binance account that you already cannot be exchanged (called “dust”), can be converted to BNB.
  • IEO Lottery: Binance has a program called Initial Exchange Offerings (IEO). This system allows users request a kind of lottery tickets according to the amount of BNB tokens that have. The winning tickets allow the winner to obtain a certain amount of BNB tokens.
  • Governance: Those who have BNB, have right on the governance mechanism of the Binance Chain. The level of entitlement depends on the amount of BNB leveraged
  • Payments: Physical stores can accept payment for goods and services using the BNB cryptocurrency.
  • Binance Smart Chain (BSC): Launched in September 2020 as a blockchain parallel to the Binance Chain. BSC is a smart contract platform that supports Ethereum EMV. It allows tools, applications and anything else created through smart contracts on Ethereum to be ported and deployed on BSC. Binance Chain and BSC can exchange assets and information as they have a very similar architecture.

BNB features

We can highlight the following benefits that BNB offers us thanks in part to its Binance Chain blockchain. These are:

  • Quick transactions: This cryptocurrency can theoretically support up to 1.4 million transactions per second.
  • Security: Binance utiliza un cluster system and tiers to safeguard funds. Additionally, these funds are backed by a User Asset Insurance Fund (SAFU)
  • Discounts: If we operate BNB exchanges with any other cryptocurrency or token we will have a 25% discount.
  • Payments: Merchants can support Binance Coin, like any other cryptocurrency, for pay for goods and services.

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Privacy at BNB

One of the characteristics of Bitcoin and Etuereum, among other cryptocurrencies, is the high Privacy. Privacy is only “broken” when we carry out a transaction in these cryptocurrencies. To preserve privacy in transactions, it is recommended to use an address for each transaction, since the possibility of generating addresses is almost infinite.

Binance Coin at this point it is much worse, since this cryptocurrency is within the Binance exchange. To operate in the Binance exchange You must go through a process called “know your customer” (KYC) and “anti money laundering” (AML) They suppress the privacy feature.

We must bear in mind that any incoming, outgoing or intra-platform transaction will be recorded by Binance and by the governments with which it “collaborates”. This eliminates the privacy of the user in an irreparable way.

Binance Coin (BNB) -vs- Bitcoin (BTC)

Let’s now see the differences between both cryptocurrencies:

  • Amount of coins: BNB has 200 million issued that will be reduced up to 100 million units. Bitcoin by cons is a increasing emission with a limit of 21 million. BNB has an initial issue against BTC, which has a gradual issue.
  • Processability: Nowadays Bitcoin supports between 5-8 transactions per second, which is very little. As indicated, Binance Chain, the blockchain on which BNB works, has the capacity to support up to 1.5 million transactions per second.
  • Privacy: The use of Bitcoin is free and does not require permissions or disclose personal information for your use. BNB operates on Binance, a centralized exchange that requires verification of our identity, which suppresses privacy.
  • Decentralization: Bitcoin works the way decentralized In its whole. The problem of BNB is that it has been developed for a decentralized exchenge, so its decentralization is really limited.
  • Consent: Both cryptocurrencies have consensus rules for their use that must be respected. Bitcoin bets on a consensus based on the proof of work and BNB bet on a consensus called proof of authorized participation, which is a variation of the proof of stake.

Palabras finales de Binance Coin (BNB)

This cryptocurrency shares some properties with respect to the rest of the cryptocurrencies on the market. The particularity of Binance Coin is that this has been developed to be used in the centralized exchange from Binance. Although it can be used by third-party exchanges or by merchants to accept payments, the offer in these respects is still scarce.

We explain you what is and what are the characteristics of cryptocurrencies

Which BNB is tied to Binance is a privacy issue for users. To use Binance we must prove our identity, a mandatory requirement by the regulators where the exchange is based. So to use BNB we must identify ourselves, which eliminates the privacy layer present in Bitcoin, Ethereum, Dogecoin …

We would like to say thanks to the author of this article for this remarkable content

Binance Coin (BNB): What is this cryptocurrency and what is it used for

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