What is Binance Coin (BNB)? Everything you need to know

What is Binance Coin (BNB)?

Binance Coin (BNB) is a digital currency created by Binance, the company behind the Binance cryptocurrency exchange platform. Initially built on Ethereum, BNB later transitioned to its own blockchain. Led by Changpeng Zhao, Binance Coin plays a pivotal role in the Binance platform. Is Binance Coin a viable investment option for speculative purposes? Curious about BNB's price evolution since its inception in 2017? Stay calm—we've got you covered with all the details!

What are the advantages of Binance Coin (BNB)?

Purchasing Binance Coin (BNB) provides users registered on Binance with cost-saving benefits. By utilizing this platform-specific token, they enjoy discounts on transaction fees, withdrawal fees, and more. This feature is particularly advantageous for small investors keen on minimizing fees associated with such transactions!

Binance Coin also enables platform users to convert their small amounts of cryptocurrency, often referred to as "dust," into BNB. This feature, accessible with a single click and at no cost, proves highly convenient for reclaiming negligible amounts of virtual currencies that would otherwise not cover withdrawal fees. Given the reluctance to pay withdrawal fees for such small sums, converting them into BNB is a practical solution!

What are the reasons to opt for Binance Coin?

The initial coin offering (ICO) of the Binance platform contributed to the surge in the value of BNB, aligning with the growth of the exchange platform itself. Consequently, BNB has secured a spot among the top 10 cryptocurrencies by market capitalization, enhancing its adoption rate. It's important to note that BNB is primarily intended for fee reduction purposes on the trading platform.

Our assessment of Binance Coin also considers its extensive range of over 100 existing use cases. Notably, significant partnerships like TravelbyBit enable users to book hotel accommodations and flights using BNB. Additionally, platforms like Bitcoin Rewards offer BNB as cryptocurrency cashback on purchases through their browser extensions. Binance Coin has become widely accessible, with options even to donate BNB to Binance Charity.

What risks come with investing in Binance Coin?

Investors should begin with a well-defined strategy when dealing with any cryptocurrency. Understanding the risks and unique attributes of each virtual currency is crucial in establishing such a strategy.

What impact does the restricted supply of BNB tokens have?

The quantity of BNB is capped at 200 million tokens, after which no more BNB will be generated. Additionally, a portion of BNB will be periodically destroyed. Furthermore, the fee discount provided on the Binance platform decreases by half each year. Consequently, after July 2021, no discounts will be applicable on the platform. This reduction in discounts may potentially influence the token's value negatively. To counter this devaluation, Binance implements a buy-and-burn mechanism, wherein the platform uses 20% of its profits every quarter to destroy an equivalent amount of BNB held in reserve. This strategy aims to stabilize the value of BNB over time by reducing the token's supply.

What are the historical price trends of Binance Coin (BNB)?

In October 2018, Binance Coin was valued at approximately £8. It then experienced a notable surge in the first half of 2019, contrasting with a general market correction affecting other cryptocurrencies. By the end of June 2019, it reached its all-time high (ATH) of nearly £30. However, it subsequently entered a downward trajectory, hitting a low point of £11 in December 2019.

During the cryptocurrency bubble burst, Binance Coin demonstrated resilience, experiencing a decline of around 67.5% from its peak in January 2018, compared to Bitcoin's drop of 83%. This resilience is attributed to the robustness of the Binance platform, which plays a significant role in determining its value, akin to how stock performance is influenced by company activity.

Our insights on Binance Coin: Reviews and observations

Our perspective on Binance Coin emphasizes caution, given its reliance on the Binance ecosystem for value. Its performance is closely tied to the exchange's activity and its ability to sustain user engagement and transactions over time. Additionally, the future trajectory of Binance Coin hinges on its adoption as a payment method in e-commerce, making it essential for investors to monitor its value alongside Binance platform activity for correlation signals.

Currently, BNB boasts clear advantages like transaction speed, low fees, and global accessibility. Led by Changpeng Zhao, the Binance team has a track record of developing effective technology solutions, expanding programs, and features, creating a positive cycle of growth. Despite the volatile cryptocurrency landscape, Binance managed to report substantial profits in 2018, showcasing the resilience of its economic model.

While rumors of potential acquisitions, like Union Bank AG, circulated in December 2019, Binance's CFO Wei Zhou refuted such claims. As one of the premier cryptocurrency platforms, Binance remains a solid investment option, although the expiration of fee reductions in July 2021 may impact its appeal to investors.

Binance continues to innovate, recently introducing a loan feature in late 2019, which could enhance its deposit-taking capabilities. Considering these factors and broader market events, 2020 could shape Binance's future performance significantly, particularly following the acquisition of CoinMarketCap.