Binance Coin is a cryptocurrency created by Binance. It functions as a means to trade cryptocurrencies and pay for fees on the Binance Exchange. This includes trading fees, exchange fees and listing fees.
Changpeng Zhao launched the Binance Exchange in 2017. BNB’s Initial Coin Offering (ICO) raised $15 million in funding within three weeks. The coin launched on the Ethereum Blockchain, but moved to its own custom chain with an original cap of 200 million tokens. The Binance Exchange scaled from 3 to 6 million users in its first 6 months of operation and consists of three distinct platforms: the spot market, the futures market, and the Decentralized Exchange called Binance DEX.
Binance started out in China but moved to Japan in 2017 as a result of the Chinese government’s strict ban on cryptocurrency trading. Binance then moved its headquarters to Malta in 2018 as a response to increased cryptocurrency regulation across East Asia.
BNB’s primary function is to serve as the underlying gas powering the Binance ecosystem. Users of the platform can pay trading fees using BNB which is a more efficient and less costly alternative for exchange users.
However, BNB also has additional features including mobile app functionality and the ability to use Visa cards that accept the token. You can also use BNB coins to invest in certain ICOs listed through Binance’s Launchpad program.
Changpeng Zhao , better known as ‘CZ,’ is the founder of Binance.
Zhao was previously a member of the team that developed Blockchain.info and also served as chief technology officer of OKCoin.
Binance Coin launched during an Initial Coin Offering (ICO) in July 2017. It offered 10% (20 million) BNB tokens to angel investors, 40% (80 million) tokens to the founding team, and the remaining 50% (100 million) to the various participants through the ICO process.
Approximately half the funds raised during the ICO process went towards a reserve for Binance branding and marketing. One-third went towards building the Binance platform and performing necessary upgrades to the Binance ecosystem.
- Binance Smart Chain
The Binance Smart Chain (BSC) launched in September 2020 as a parallel Blockchain to the original Binance Chain. Binance Smart Chain is a smart contract platform that is compatible with the Ethereum Virtual Machine (EVM).
This means that Ethereum tools, applications and other infrastructure is transposable and useable on Binance Smart Chain. Binance Chain and Binance Smart Chain are interoperable because they make use of similar architecture. Therefore, asset transfer is possible between the two chains.
Binance Smart Chain uses a type of Proof-of-Stake (PoS) called Proof-of-Staked-Authority (PoSA). PoSA on Binance Smart Chain consists of 21 validators.
This is a deliberate design choice which prioritizes scalability over decentralization.
Binance’s native token is BNB.
In order to maintain scarcity and value, Binance Coin holds quarterly ‘burns.’ During these burns, 20% of Binance’s profits go towards buying back BNB tokens which are subsequently destroyed. Binance will continue regular burns until 100 million tokens (50% of BNB’s 200 million total) no longer exist.
BNB serves a number of functions in the Binance ecosystem:
- Trading Discounts. Users that pay their trading fees with BNB receive a discount
- Account Tiers. Users that hold large amounts of BNB and have been trading for at least 30 days have access to ‘VIP’ tiers within the Binance ecosystem. This includes additional trading fee discounts.
- Cryptocurrency Trading. BNB is a tradable token and is exchangeable for other crypto tokens at market value via Binance DEX and on third-party exchanges.
- IEO Lotteries. Binance schedules Initial Exchange Offerings (IEO) as lotteries in which users can claim lottery tickets based on the amount of BNB tokens they hold. Each winning ticket awards a certain amount of BNB tokens to the holder.
- Governance. BNB holders have governance rights over the BNB Blockchain depending on the amount of BNB they have staked.
- Binance allows traders to convert their dust into BNB. Dust consists of tiny fragments of trades typically ignored and left on exchanges
- Binance Card is a crypto-powered Visa debit card that allows you to use BNB to pay for goods and services
- Binance also runs Binance Labs which is an initiative to identify and invest in promising new Blockchain entrepreneurs and start-ups that can benefit and grow the ecosystem
Read the Binance Whitepaper
Review the Binance Chain Documentation