Binance Coin (BNB) – What is it and how to use it?

No, not AirBNB, just BNB, Binance Coin!

If you’ve been trading cryptocurrencies at the famous Binance exchange, this name might ring a bell. Binance Coin is the only official coin of this famous crypto exchange.

In this article we are going to discuss whether BNB is just a Binance milking cow or a potential good investment. Continue reading to find out!

What is Binance Coin?

Let’s start off by explaining what Binance Coin exactly is and what it does. Binance Coin can be seen as Binance.com‘s own digital currency. Binance Coin (BNB) gives users of the platform unique features and advantages. The most interesting one being receiving discount on transaction fees.

During the first year of having a Binance account, users receive 50% discount on transaction fees within Binance. The second year this discount reduces to 25%, the third year the discount reduces to 12.5%, 6.25% from the fourth year and from the fifth year no more discount is given. This discount on transaction fees only counts for traders and investors who hold BNB in their crypto portfolios. It works as following:

Jack wants to trade a part of his Bitcoin holdings for a different cryptocurrency, let’s say NEO. Normally he would receive X amount of NEO for his X amount of BTC. However, he needs to pay transaction fees. Because of these transaction fees, he received 0.1% less NEO. If he would own Binance Coin, he would have gotten discount on his paid fees. The fees aren’t deducted from the coin he wants to trade, but from his BNB balance in his portfolio. The average trader doesn’t pay more than $5 in fees a month. This shows that you don’t have to have to many BNB in your account to profit from this discount.

bnb-fees

Explanation of BNB Discount Structure

What is Binance?

Binance is world’s most famous cryptocurrency exchange known for it’s low transaction fees (0.1% per transaction) and lightning fast order execution. Each second, more than 1.4 million transactions take place at Binance, making it the cryptocurrency exchange and broker with the highest trading volume. Binance is until this day one of the fastest growing crypto platforms.

In our complete, unbiased Binance Review, updated for 2020, you find everything you need to know about this cryptocurrency exchange.

Binance Review, updated for 2020

Binance Coin (BNB) Specifications

The Binance Coin is an ERC-20 token, works on the Ethereum blockchain and has more than 200 million coins in circulation. Binance stated to use 20% of their quarterly profit to buy back Binance Coins (BNB), to destroy or ‘burn’ them afterwards. They will continue doing so until 100 million BNB are left in circulation or half of the initial supply. Binance Coins cannot be mined.

Binance Coins can, of course, be deposited on the Binance Exchange. The Binance Coin as ERC-20 token, as said before, relies on the Ethereum blockchain. Because of this, it’s also possible to send the coins to an ether wallet, like MyEtherWallet.

Update 2020: Binance Coins are now migrated from the Ethereum blockchain to their own developed Binance Chain. This means BNB tokens are no longer ERC-20 tokens but native tokens on the Binance Chain (BEP2 tokens). Binance financed the entire migration and there’s a big fat chance if you owned BNB tokens they didn’t automatically migrate.

The latest news about Binance Coin can be found mainly on the official Binance website and social media channels.

 

Binance Coin (BNB) Expectations

My personal thought is that the Binance Coin or BNB will rise in value. For traders that invest bigger amounts, the offered discount for holding BNB is great. Binance Coin is also a way of solving the ‘Binance Dusting Problem‘. This is a term I created myself with a bit of inspiration from Hearthstone, but you’ll get what I mean if you’re either a Binance Affiliate or trade small amounts.

As stated above, Binance will buy back Binance Coins the next couple of years and burn them, so the price of Binance Coins (BNB) will rise almost guaranteed. On the very long term it’s arguable if BNB will keep rising. The discount each year decreases and after five years they won’t really be any incentive to keep the coins, apart from them being a sort of Binance stocks.

Buying Binance Coins (BNB)

If you’ve read until here, you know Binance Coin is a good investment. You can choose to buy Binance Coin (BNB) by credit card / debit card at Binance directly or by Paypal, Neteller and other options trough Bitpanda or Coinmama. Follow the steps below to buy Binance Coins trough Bitpanda:

1. Register a free Bitpanda account
2. Buy Binance Coin using your preferred payment method
3. Sign in at Binance or create a Binance account
4. Click ‘wallet‘ and then click ‘Spot Wallet‘ (Deposit and Withdraw)
5. Search for BNB and click ‘Deposit
6. Send your bought BNB coins to your Binance Wallet. This process takes up to half an hour

You now have BNB in your Binance wallet and enjoy discount on your paid transaction fees.

Special Promo! If you sign up for a free Binance account via our links, you’ll receive an additional 20% discount on your paid transaction fees. You can read more about this in our extensive and unbiased Binance review, updated for 2020.

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