What is a Binance Coin?
Binance coin is the cryptocurrency that is offered by the popular exchange platform known as Binance. Situated in China, Binance coin is supported by Ethereum’s blockchain thanks to a code known as ERC 20. Its primary use is to pay transaction fees made on the exchange platform and also benefits from a reduced transaction cost.
The History of Binance Coin
Launched in July 2017, Binance was developed by a team led by Changpeng Zhao, co-founder of OKoin and director of Blockchain.info. The company was funded by an ICO in which only 50% (100,000,000 tokens) were sold. The rest was broken up and 40% (80,000,000 tokens) went to the development team and the other 10% (20,000,000 tokens) were reserved for a special team of investors known as “Angel Investors”. This brings the total number of Binance coins to 200,000,000.
Not long before their ICO was launched, the development team released the following statement, “We know that we are in an extremely competitive industry. There are probably hundreds, if not thousands of teams who want to or are trying to develop similar exchange platforms. The competition will be fierce, but it’s a risk that any startup company must face. The question is: with our team, our experience, our resources and our products, do you believe that we have a better chance than the rest?”
This statement shows that the team behind Binance was passionate about their project and it’s no surprise that today, they have gained notoriety and now, even offer their own cryptocurrency. Binance’s long-term goal is to, one day, create a decentralized exchange platform that only uses the BNB.
Since its humble beginnings, Binance has now grown to be one the most popular exchange platforms in the world. It has seen phenomenal growth and has managed to climb its way to the top of the competition.
Despite its success, Binance is still a rather young company and buying Binance coins means that you are investing in the development of the entire company. Still, if the platform ever fell prey to cyber-attacks or theft, its value could easily crash. This means that buying Binance coin carries with it certain risks. But, still, it would be wise for crypto-investors to dedicate some of their portfolios towards this cryptocurrency.
How Does Binance Coin (BNB) Work?
Before getting into how Binance coin works, it is important to note that the primary use of this currency is to pay the transaction fees on their exchange platform. With Binance coins, users can pay for both their transaction fees and listing costs at a reduced price. However, this reduced cost is only for a limited time.
During the first year, investors benefit from a 50% reduction on all costs. The second year, this drops to 25%. The third year, 12.5% and the fourth year, 6.75%. By the fifth year, investors no longer benefit from any reduction in cost. The goal of this reduced payment plan is to attract new investors to buying their coins and then exchanging them on their platform.
It should also be noted that Binance coin is a deflationist currency since it is limited to 200,000,000 coins. The development team, over time, plans to decrease this number to only 100,000,000, which will cause the remaining tokens to increase in value.
The company also organizes ICOs for other companies and offers a reduction in price to any who use the BNB token as an investment.
Should I Buy Binance Coin?
Investing in any cryptocurrency is not an easy decision to make. The choice to invest must be thought out and requires an in-depth analysis of the market. When it comes to Binance, the cryptocurrency does possess a certain level of potential, even if, for now, it is only used on the company’s own exchange. Here are a few reasons to invest in Binance Coin.
- For those who use the exchange, having BNB in their portfolio will allow them to benefit from reduced transaction costs for a period of 4 years.
- After the fifth year, when the cost reductions no longer apple, users can sell their BNB to other investors on Binance.
- Binance’s development team wants to reduce its limit from 200,000,000 to 100,000,000 through a process that involves purchasing their own tokens and then burning them off, as opposed to conserving them. This will, in turn, cause the value of a BNB to sky-rocket. Owning Binance Coins in the future could prove to be rather interesting, especially when you consider that, since January 2017, its value has not stopped climbing the charts.
- Benefitting from fundraisers organized by Binance. When a user participates in an ICO and invests their BNBs, they will benefit from discounted costs.
- Since Binance’s long-term goal is a decentralized exchange platform, this allows those who invest in their ICOs to become shareholders of the company.
The Course of Binance Coin
Since its Initial Coin Offering, BNBs have had a rather irregular evolution. Its evolution saw a lot of ups and downs up until October 30th, 2017, when its value reached $1.31. Then, things started to get better. Throughout November 2017, its value climbed up to $1.59 and then throughout December, it got up to an impressive value of $2.55.
So far, 2018 has shown a lot of strength for the BNB. Its value climber to a staggering $8.10, which is almost four times more than its original value. As of January 22nd, 2018, a single unit of Binance Coin was worth $14.20.
How Do I Buy Binance Coin?
As previously mentioned, investing in Binance Coin mostly benefits those who frequently use the Binance exchange platform to buy and sell cryptocurrency. Still, since the market is plagued by volatility and instability, it’s important to fully consider the implications before making any investment.
If you have weighed the risks and still wish to proceed in investing in BNB, the rest of the process is relatively simple, and will all take place on the Binance platform itself. Binance deals strictly with crypto-to-crypto transactions, which means that you will not be able to purchase BNBs with your fiat currency. Users must use other cryptocurrencies to buy a BNB. Here’s how to purchase BNBs:
- Create an account and follow the step to verify the account.
- Make a deposit of Bitcoin, Ether or another supported cryptocurrency by clicking on the “Deposits/Withdrawal” tab. If you do not own any other cryptocurrency, you can buy some on other platforms such as Coinbase.
- Next, click on the tab that says “Market” and you will be able to begin making trades.
Still, it’s important to remember that investing in Binance Coin carries more risk than other cryptocurrencies since the exchange is situated in China. This is because the Chinese government has threatened to impose restrictions on the trade of cryptocurrency, which could affect Binance’s expansion. Moreover, the Bank of China has also decided to restrict the use of cryptocurrency and has banned all ICOs on Chinese territory.