What is Binance Coin (BNB)? Is It Still Worth Investing In?

what is binance coin

Binance Coin (also referred to as BNB) is the native crypto asset of BNB Chain. Although the coin was initially issued by the leading cryptocurrency exchange, Binance, it has evolved significantly in the past few years. Out of the thousands of cryptocurrencies that exist today, BNB is the third-largest coin, trailing only Bitcoin and Ethereum.

If you’ve ever wanted an in-depth guide to BNB, or need to choose whether or not to invest in it, you’re reading the right article. This Binance Coin guide discusses¬†the following topics:

What is Binance Coin?

Binance Coin (BNB) is a cryptocurrency released in 2017 through an Initial Coin Offering (ICO) conducted by the then-young crypto startup, Binance. The token sale took place from late June to early July of 2017. The issuance price was one ETH and one BTC for 2,700 BNBs and 20,000 BNBs respectively.

Binance Coin has a fixed supply of 200 million tokens allocated towards three main purposes during its launch. 40% of the coins, or 80 million BNBs, were allocated to the Binance founding team, 10%, which is 20 million BNBs to angel investors, and the remaining 100 million tokens (50%) sold during the public sale.

For beginners, angel investors are individuals or companies that provide the initial capital (financial backing) for small startups or businesses to begin operations.  They typically provide funding in exchange for ownership equity or a reasonable share of what the company looks to offer its customers.

In the case of Binance, angel investors received BNB tokens at a discount to the price it was eventually sold during the public sale. Meanwhile, the 100 million BNBs released to the public were all sold during the ICO at a price of $0.15 per coin. The exchange raised $15 million from this public sale.

Like most ICOs at the time, Binance released BNB as an ERC-20 token on the Ethereum blockchain. However, the project had clear visions and included in its whitepaper plans to launch a native blockchain network sometime in the future.  That future did arrive and brought more utility to the BNB token.

The Evolution of BNB

Two years after going live, Binance fulfilled its promise to launch a native blockchain network for its token. In 2019, the Binance team launched its own blockchain mainnet, calling it the Binance Chain (BC).

Following the move, Binance enabled users to swap Ethereum-based BNB tokens in exchange for BC-native BNB. This switch moved the existing BNB supply on Ethereum from the legacy network to the new Binance Chain Evolution Proposal-2 (BEP-2) standard used on Binance’s new network.

Notably, the Binance Chain design focused solely on supporting asset transfers. It did not enable support for smart contracts or complex programming languages. This limited its ability to onboard users in new fields in the decentralized world such as NFTs and Web3 games. Getting a foothold in this emerging market required a network that could support smart contracts.

The Birth of Binance Smart Chain (BSC)

Eager to capitalize on the soaring adoption of blockchain-based applications, Binance launched another blockchain in 2020. They called it the Binance Smart Chain (BSC) and fashioned it in a way that mimics how the Ethereum network operates. The slight advantage was that it processed transactions faster and cheaper than Ethereum, albeit while sacrificing decentralization.

Unlike the Binance Chain, this new network featured the Ethereum Virtual Machine (EVM), hence accommodating decentralized applications (dApps) to be developed on it. BNBs issued in the Binance Smart Chain follow the Binance Smart Chain Evolution Proposal-20 (BEP-20) standard.

Fast forward to February 2022, the Binance team announced that the names of both chains had been rebranded and should both now be referred to as Build-and-Build Chain (short for BNB chain). This, however, does not dispute the fact that Binance Coin has and runs on two chains. 

For clarity, BNB is just a single token even though it has two native networks.

Standards are a sub-division of smart contracts that can simply be defined as a set of rules and conditions that a crypto token must obey before it can function in the blockchain it is being issued on. The BEP-2 and BEP-20 standards were both created by Binance for the Binance Chain and the Binance Smart Chain respectively.

So BNB is not of two types. It only functions differently depending on which of its two native chains it is being issued on. For instance, users can only stake BNB through the Binance Chain. 

Binance Coin Use Cases

Initially, BNB served as a tool to raise the capital needed to launch the Binance crypto exchange. Additionally, holders enjoyed discounted trading fees and received higher bonuses for referring other users to the Binance platform. 

But that was in the early days. Binance Coin evolved to be more than a token that offered its holders lower trading fees on Binance. As the Binance empire expanded, more use cases emerged for BNB Coin.

BNB Coin is now the native token for both networks launched by Binance. Users must hold BNB to pay gas fees for token transfers and also to access decentralized applications built on the network. 

Many merchants that accept crypto payments enable support for BNB. Additionally, some platforms allow their customers to use BNB to invest in products such as Exchange Traded Funds (ETFs). BNB holders can also use their coins as collateral for loans on Binance or other platforms that support the asset.

Binance Coin Price History (Overview)

As noted earlier, Binance Coin’s first sale price was $0.15 which was in 2017. That year’s December ended with the token selling at an average price of $9.21.

Fast forward to five years later, which is 2022, BNB has recorded a significant rise in value. The token which sold at an average price of $44 in January 2021, more than quadrupled its worth a month later when it rose as high as $227. May 10, 2021, saw BNB reach an all-time high (ATH) price of $690.93.

(BNB Historical Price Chart)

Although BNB started the year on a good note, it has not been immune to the current crypto bear market (in 2022). BNB trades under $300, representing an over 60% decline from its ATH.

Why Does Binance Burn Coins? Binance Coin Burning Explained

Coin burning generally involves the process of reducing the total fixed supply of a cryptocurrency by steadily removing some coins from circulation. Coin burning is an irreversible process that is usually done periodically.

Once destroyed, these coins cease to exist. What coin burning does is make the currency in question a scarce commodity, thereby increasing its value to the advantage of investors.

BNB Burn Target

The long-term objective behind the Binance Coin burning is to destroy 50% of the total number of BNBs ever issued on the network. This gives an entire figure of 100 million BNB to be removed from the maximum supply. The process also works towards boosting deflationary shock and ensuring that the supply of the currency remains fixed and becomes more valuable over time.

The burn occurs once every three months (four times a year). The Binance team allocates 20% of its quarterly profits to buy and burn BNB tokens.

The last BNB burn took place on July 2022, the 20th so far. It saw the total supply of BNB reduced by some 0.97% as 1.96M BNB (worth close to $445 million at the time) was destroyed. Over 4K additional BNBs were also burned through the Pioneer Burn Program, an initiative introduced by Binance to help users who have lost tokens through errors made on the BNB Chain. 

Since late 2021, Binance has used an Auto-burn formula to conduct its quarterly burns. The formula determines the amount of BNB to be burned based on the price of the token and the number of blocks created on the BNB Smart Chain (BSC) during the quarter. 

Considering that it is a quarterly event, the next burn (the 21st quarterly burn) is expected to take place sometime in October 2022.

So far, the total amount of BNB removed from circulation is approximately 39 million. The periodic burning process will continue as scheduled until the maximum supply drops to 100 million BNB. 

How to Buy Binance Coin (Step-by-Step Guide on Binance)

As a¬†centralized crypto exchange, you’ll need to have an account on Binance before you can buy BNB through the trading platform. You can do this directly on the exchange’s official website or on the Binance app which is available for download on the Google Playstore and Apple store.¬†

The steps are relatively straightforward. Register on the platform and complete their identity verification process. Depending on the submitted documents, you may have to wait as quick as five minutes to as long as two days to become a valid user. But once you’re all set up, you’ll receive a set of emails confirming your verification.

Now log in to your account and let’s go buy BNB:¬†

Buy BNB on Binance Website Using a Credit or Debit Card

Binance supports Visa cards and Mastercard.

  • Step 1: Click on “Buy Crypto” in the top left corner of your screen and select the second option captioned “Credit/Debit Card.”
  • Step 2: Select your preferred fiat currency and enter the amount of BNB to purchase. After this, the platform automatically shows the number of units or fractions of the tokens you can buy.
  • Step 3: Click on “Continue” and then on “Add New card.” Click on “Next” after which you will enter your card details in the provided boxes such as the name on the card and its number amongst others. Again, press “Next.”
  • Step 4: Input your billing address which includes the name of your country, city, and street.¬† Then click on “Add Card.”
  • Step 5: Click on “Continue,” after which you will be presented with your payment details for confirmation. Within a minute, cross-check the data you entered for your order to ensure that it’s correct, and then click “confirm.” A minute after confirmation, the amount of BNB your fund can get will be recalculated based on current market prices.¬†
  • Step 6: Click on “Refresh” to see the latest market prices and then on “Continue.” After this, your bank’s transaction page will pop up. Fill in the provided boxes with the appropriate bank details to verify your payment.
  • Step 7: Click on “Submit.” The transaction has now been completed and you should receive your BNB tokens soon. Click on “Go to Wallet” to view your BNB balance. If you wish, you can leave the coins on your Binance account or choose to transfer them to your personal wallet address.

Buy BNB on the Binance App Using a Credit or Debit Card

  • Step 1:¬†Download the Binance app and log in to your account. Click on the box labeled “Buy with USD” (The currency that will appear on the page as a suggestion to buy your BNB will be a local one and so depends on the country you are in at the time.)¬†
  • Step 2: Using the search bar, type in “BNB” and click on it. Type in the fiat worth of the Binance Coin you want to purchase. On this page, you can choose to change the type of fiat currency you want to use if the one by default isn’t what you want.
  • Step 3: Click on “Buy BNB” and then on “Confirm.” The next thing is to input your card information and your billing address.
  • Step 4: Click on “Pay now”¬† and recheck your purchase details to see if they are correct. Select “Confirm” and you should receive your BNB tokens soon.¬†

Buy BNB Using Bank Deposits 

To buy BNB through bank deposits, ensure that the name on your bank account is the same as the name on your registered Binance account. The trading platform supports SEPA and SWIFT networks for USD and EUR transfers respectively, so if your bank uses them, you’re good to go.

This guide will however focus on transferring funds (USD) to your Binance account via SWIFT and then using the funds to buy BNB.

  • Step 1: Log into your account and go to the menu bar. From there, click on “wallet” and select “Fiat and Spot” among the presented options.
  • Step 2: In the top right corner of your screen, select “Deposit.” On the page that appears next, you’ll see a box under the title “Select Currency and Payment Method.” Now select USD among the other listed fiat currencies and click on “Bank transfer (SWIFT).” Press “Continue.”¬†
  • Step 3: Input your desired deposit amount and click on “confirm.” Now, enter your bank account details (your account name, bank name, and bank account number.) Click on “Continue.”
  • Step 4: You will then be provided with the bank details that you’re to transfer the funds. Instruct your bank to process a remittance instruction.

Note: Make sure you enter your reference code. A field captioned “Reference”, “Remarks”, “Message to the receiver,” or other similar expressions is where the code will be inputted. This code is important because it’s the only way your fund deposit will not be unnecessarily delayed.

If you strictly follow the steps above, the deposit request will go through within one to three working days. To use the deposited funds in your account to buy BNB, do the following:

  • Step 5: On the homepage of the Binance website, click on “Buy Crypto” and select “Cash Balance.” Then select your fiat currency (USD) from the top and BNB from the bottom.
  • Step 6: Click “Continue,” review the order details and complete the purchase.

Is Binance Coin Worth It in 2022?

From the section Binance Price Overview in this article, it is clear that the Binance Coin has come a significant way in terms of value. Only Bitcoin and Ethereum are worth more, and the Binance team has continued to expand the ecosystem since its launch. 

At the time of writing, BNB has already gained 250,251.44% from its initial sale price. The high returns make some wonder if Binance Coin is still worth investing in. The argument is that the coin has little upside left compared to new and upcoming projects.

In either case, it is worth noting that BNB underpins a thriving ecosystem and the industry’s largest cryptocurrency exchange. While returns may not be as high as in the past, the asset has a proven track record. It has thrived for half a decade in an industry where many projects end up dying within a year. BNB Coin also still has some room for growth, especially as crypto adoption increases.

It goes without mentioning that there are still potential reasons that could cause the fall of BNB. For instance, a regulatory action that significantly harms Binance’s businesses, or a blockchain security issue that affects the BNB Chain networks.

If you choose to invest funds in BNB, remember that investing in itself is a colossal risk one must take to own cryptocurrencies generally. Do your own research about the project and invest only when you’re satisfied with its potential to become more valuable in the future.

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