Binance Coin: What It Is and Why It’s Important in the Crypto World
Written by
Chris Ozarowski
Edited by
Susan Kim
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If you’ve taken an interest in the cryptocurrency market, you may have heard of BNB, also called Binance Coin. While not as large as more mainstream cryptocurrencies like Bitcoin and Ethereum, Binance Coin has received a lot of interest from investors due to its utility on the crypto exchange Binance. But is Binance a good coin to buy? What exactly is it, and how does it work?
See: 3 Things You Must Do When Your Savings Reach $50,000
What Is Binance Coin Used For?
If you’re looking to invest in cryptocurrency, you will not be able to buy it on the stock market through a standard brokerage account like you would with an index fund or a share of Amazon. Cryptocurrency like Bitcoin is traded on special exchanges like eToro, Coinbase and BlockFi. The biggest exchange in the world by far is called Binance. It’s so big, in fact, that a native cryptocurrency called Binance Coin was developed just to make it easier to pay for the site’s services.
You Pay Fees To Trade Cryptocurrency
Crypto exchanges take fees for executing crypto transactions, and part of the reason Binance is so popular is that its transaction fees are among the lowest in the world. Users pay just 0.1% to execute each of their trades.
Binance Coin Makes Cheap Trading Cheaper
Binance reduces those already-low trading fees by a full 50% if you pay for them using the exchange’s native cryptocurrency, Binance Coin. That means that instead of paying 10 cents on a $100 transaction, you’d pay only 5 cents if you complete the transaction using BNB.
An Ethereum-based (ERC-20) token, BNB hit the market on July 21, 2017, when Binance made its initial coin offering of 100 million BNB tokens. It eventually moved to its own unique blockchain called Binance Chain and limited the BNB supply to 200 million tokens in total.
How Much Is a Binance Coin Worth?
As of June 6, 2023, one BNB is worth $279.16. However, like with all other crypto assets, the price of Binance Coins may fluctuate significantly in the future. The future price of BNB is in part linked to the success of the crypto exchange Binance. Since the total supply of tokens is limited to 200 million, if the exchange continues to grow, the value of BNB may increase as well.
There’s a Lot To Like About Binance Coin
In review, BNB was designed specifically for use in the Binance ecosystem, which offers juicy rebates to incentivize its use — but there’s more to Binance Coin than just the trading discount. According to CoinJournal, BNB:
- Provides lightning-fast transactions
- Can be used to buy and sell a huge variety of cryptocurrencies
- Is safe and secure
- Is accepted as currency by some service providers, mostly in the hospitality/travel industry
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Considering Investing? Look Before You Leap Onto the Bandwagon
Investors looking for a quick buck should tread lightly.
Beyond the crypto bubble, BNB is not yet widely accepted as currency outside the travel, accommodations and entertainment industries, although some investment platforms let you use it to buy mainstream securities.
It’s just as trustworthy as non-native crypto, but it’s not as anonymous since Binance traders must have registered accounts. In the end, it’s another altcoin that you can invest in if you choose, but like all crypto investments, expect a wild ride with ecstatic highs, terrifying drops and lots of drama in between. That, after all, has been the story of crypto investing so far.
Where Can You Buy Binance Coin?
The site you use to buy Binance Coin will depend on your country of residence. In late 2020, Binance stopped providing services to U.S.-based customers after encountering regulatory issues. Instead, the company opened a U.S.-based exchange: Binance.US.
U.S. customers will have to create an account on Binance.US to purchase BNB. International customers will have to create accounts on Binance.com. U.S. customers are able to deposit USD on Binance.US through ACH, domestic wire transfers, debit cards, Apple Pay and Google Pay.
Final Take
If you believe that the Binance and Binance.US exchanges will continue to grow, then the BNB coin may be a good investment for the future. Since supply is limited to 200 million coins, increased demand would cause the price of Binance Coins to go up.
However, it is important to consider the volatile nature of cryptocurrency markets before making any investment decisions. Cryptocurrencies can drop as much as 90% of their value during a bear market, even if some have grown exponentially in the long run. Consider talking with a licensed investment advisor before investing significant amounts of money in any cryptocurrency assets.
FAQ
- Is Binance Coin pegged to the value of the U.S. dollar?
- Unlike some other cryptocurrencies, Binance Coin is not pegged to the value of the U.S. dollar. This means that the price of BNB will fluctuate based on supply and demand and the success of the Binance platform. Binance does have another coin named BUSD, which is pegged and will always be worth $1.
- Does Binance have an official coin?
- BNB is the official coin of the Binance exchange and is used by customers to pay lower exchange fees when making cryptocurrency transactions. This utility gives Binance Coin its value. As long as people use the Binance and Binance.US exchanges, the BNB coin should keep its value.
- Can U.S. customers buy BNB?
- Even though the international Binance exchange, Binance.com, is unavailable in the U.S., American customers can still purchase Binance Coins through the U.S. exchange, Binance.US.
Andrew Lisa contributed to the reporting for this article.
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- CoinMarketCap. "BNB."
