What is Binance Coin (BNB)? Is it worth buying?

Charlie Taylor

THE Binance Coin is one of the most surprising assets in the history of cryptocurrencies, created by the world's largest crypto broker just as a utility token to raise funds and encourage the use of its trading platform, the BNB became something much bigger. In this post we will talk about BNB, from its history, uses, risks and future potential.

What is Binance Coin BNB?

THE Binance Coin, whose ticker is BNB, is the crypto created by the brokerage Binance in 2017 as an incentive token for those who participated in its ICO. Initially, Binance Coin was used to reduce Binance's trade, listing and withdrawal fees. The trade discount rate started at 50% in the first year and will halve every year until it ends at the 5th since the broker's founding in 2022. 200 million BNB were created, divided as follows:

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100 million of the BNB tokens (50%) were allocated to ICO participants. 80 million of BNB (40%) to the founding team. 20 million (20%) to angel investors.Binance Coin resource allocationHowever, today there are only 153 million tokens due to the token repurchase and burning plan described in the whitete. In it, Binance is committed to repurchasing 50% of all tokens issued with 20% of the quarter's profits, these purchased tokens are destroyed forever. This buyback system, in addition to taking currencies out of the market, increasing the relative value of each investor with BNB, also encourages users to create a loyalty relationship with the exchange. For many, this was the formula for success to make Binance the largest crypto broker on the planet and the fastest unicorn (company with more than $ 1 billion in valuation) in history.

How does Binance Coin work?

Binance Coin is currently its own cryptocurrency using the Binance Smart Chain blockchain and also the Binance Chain, in conjunction with DEX (decentralized broker). The BNB can still be found in the form of an ERC-20 token, from the Ethereum network, but if you have this token you can exchange it for BNB at Binance itself, simply by having ether (ethereum) to send the transaction. The advantages of using BNB in ​​Binance's blockchains are many, such as lower transaction fees, use in decentralized finance, in addition to the possibility of using it as a discount on the broker's own fees.

What are the risks of investing in Binance Coin?

Unlike Bitcoin, BNB has great points of centralization and, therefore, weakness. The concentration of tokens in the hands of Binance is one of those points, in addition to the centralization of Binance Smart Chain (BSC) and Binance Chain. BSC, for example, has only 21 active validators while Binance Chain has only 11. Most validators have a close relationship with the broker itself, as is the case with the Trust Walle portfolio – whose exchange is owned. Main validators of BSC and Binance ChainBut the main concern for this asset is the judicial risks. It is still debated whether it is a utility token, a security or even a mixture of the two, according to an eToro report: “In the case of BNB, it can in fact be used as a medium of exchange, but this it is arguably not the main use that has been intended for the currency since its inception.BNB does not offer exclusive access to Binance, but it does entitle the holder to a number of benefits on the platform, such as lower trading fees. In this sense, a strong case can be made for being a utility token. Finally, the fact that the value of BNB is paired with the company's performance (Binance) could lead to its classification as an asset token and, therefore, a security token. As well, the token burning process detailed above can be compared to a buyback program that we see in stocks. ”If any large government oversight organization (SEC, CVM and others) understands that BNB is a security, it would be possible that Binance would pay huge penalties for illegally launching a highly regulated asset. As a consequence, the price could collapse as it did with Ripple's XRP, which was accused of launching the crypto without authorization from the SEC.

What is the potential of BNB?

Binance Coin is the currency of the largest cryptocurrency broker on the planet and for many it has great potential, despite the risks. According to data from Coingolive, if BNB reached the market value of Ethereum it would grow 241%, that would mean – with today's values ​​- a token with a price of US $ 1689.50 per BNB,Binance coin compared to Ethereum's market value.We also did an analysis of the crypto price using Coinbase's valuation of US $ 100 billion. In short, Binane Coin has room to grow despite legal challenges, fierce competition with similar blockchains and over-centralization.

How to buy Binance Coin?

You can buy Binance Coin at Binance, with P2P sellers (from person to person) or from competing brokerages. Through Binance it is possible to use the credit or debit card for direct purchase of BNB, as well as PIX or bank transfer in reais. The currency is also available on FTX, KuCoin, Poloniex and Binance DEX paired with other crypto.

And now, where to store?

You can store BNB in ​​the Trust Wallet, Binance Chain Wallet, Exodus and in hardware wallets like Ledger and Trezor. Each of these portfolios has unique features and advantages, it is up to you to test them and see which one best suits your needs.

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