What Is Binance Coin and Is Binance Coin A Good Investment?
Is It Worth Investing In Binance Coin (BNB) In 2022?
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In this article, we’ll take a look at what Binance Coin actually is, the ins and outs of Binance Coin investing, how BNB works, and also how you can potentially make a profit from trading or using BNB.
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What Is Binance Coin?
Binance Coin (BNB) is the highly popular cryptocurrency created by the well-known Binance Exchange .
The Binance Exchange is by far the largest cryptocurrency exchange in the world and was created by the influential Changpeng Zhao (often referred to as ‘CZ’).
Note that CZ is known to be very influential in the cryptocurrency world. Before Binance, Zhao also worked on OKCoin . However, after the Binance ICO, he relinquished control over the coin to a new CEO.
Binance offers the most crypto to crypto pairs and has a daily trading volume of approximately $15,840,708,435. They are so huge, they dwarf all other exchanges, including their biggest rival, Coinbase.
The history of BNB is more than curious. Binance, the parent company, was mostly funded by its ICO in 2017, mostly from China. Many of the earlier investors before the ICO have already cashed out (perhaps that wasn’t their wisest decision!).
Binance Coin was made available to the public for the first time on 25 July 2017 and has the BNB ticker symbol .
BNB can be broken down into ‘Jagers’, in the same way that Bitcoin can be broken down into Satoshis. 1 Jager = 0.00000001 BNB.
Interestingly enough, mapinduzi ya binance BNB was launched on the Ethereum blockchain as an ERC-20 token (just like Tron and a swath of other big-name cryptos).
In Binance Coin’s first Initial Coin Offering (ICO), they raised 15 million within three weeks. Since then, BNB has moved from the Ethereum blockchain to its Binance blockchain in 2019.
We should also note that Binance Coin has a cap of 200 million . That means that eventually, Binance Coin will surpass Bitcoin in terms of volume, which will make it easier to trade.
At the time of writing, there is a circulating supply of 166,801,148 BNB and a market capitalisation of $85 billion, according to CoinMarketCap - making it the third-largest cryptocurrency.
What is Binance Coin used for?
Binance Coin has two primary functions, 1) to function as a ‘discount token’ to pay for fees on the Binance Exchange, and 2) fuel for the Binance Smart Chain .
At first, in 2017, Binance Coin was strictly a ‘ utility token ’ that when used on the Binance Exchanged would give a trader a discount on trading fees. For a few years, there was not much use for BNB besides this.
Then, in September 2020, Binance launched the Binance Smart Chain, a parallel chain purely for smart contracts , dApps and DeFi services.
Why is BNB Rising so Much ? How Did BNB Price Go more than 300% in 2021 ?
Why did BNB gain so much value in 2021, though? Well, that takes us straight back to what BNB is primarily used for. Let us explain.
BNB primarily started going up in February 2021 and this was almost entirely because of the Binance Smart Chain (BSC).
Because the BSC was so much cheaper to work on than the Ethereum network, it became a viable alternative and many projects started moving over.
According to YCharts , average Ether transaction fees peaked at $39.49, which is incredibly high.
Following that peak, Ether transaction fees continued to be highly volatile, a headache for most DeFi developers. On 11th May they even hit $62.51.
In short, the more projects on the BSC, the more BNB is in use, increasing demand and increasing its price.
Today, the BSC is the second-largest DeFi platform, according to DeFi.prime with 44 DeFi projects , عندما الاكتتاب بينانس which is 19 more than third place, Bitcoin. However, it still has a while to get to Ethereum’s 214.
And the DeFi market is expected to grow tremendously for years to come. As Christine Kim of CoinDesk points out, in the first quarter of 2021 DeFi applications have grown from $20 billion to $50 billion, an increase of 150% .
The Binance Exchange is very busy.
As mentioned earlier, the Binance Exchange is the most popular and largest crypto exchange in the world. It has the most diverse selection of coins to buy/sell and the most crypto to fiat pairs.
In 2021 crypto trading volume increased overall because of the current boom and Binance managed to make money - lots of money - from this action.
And BNB benefited hugely from this too. As it is still used on the binance razmjena bitcoina razmjena kripto valutawww.binance.com
Exchange for a discount on fees, demand likely increased for the coin to be used when Bitcoin began to surge to $60k.
Some crypto experts think that Binance Coin may continue to go up in value, possibly outpacing Bitcoin price.
And it’s not so far-fetched when you compare BNB’s market capitalisation growth to that of bigger rivals Ethereum and Bitcoin.
Binance Coin growth in comparison to Ethereum and Bitcoin. Source: bloomberg.com.
While Binance Coin is not going to replace Bitcoin as the leader of global digital currency, but it was one of the big winners in 2021.
All in all, BNB has an advantage over most coins because we can already see its use cases. First as a utility token, then as fuel for the BSC. Meanwhile, taariikhda ganacsiga binance investing in other coins is purely speculative as they are yet to deliver results.
Binance Coin: The Top Utility Token of 2022?
Though many believe that Binance Coin is a good investment and one of the safest cryptocurrencies out there (mainly because of its relative stability), no one can say this for certain. Thus, it’s up to you to decide if investing in BNB in 2022 is worth it.
For the average trader, perhaps the most appealing aspect of investing in BNB is the fact that you can get a discount of 25% on the Binance Exchange . In 2017, this discount was even greater, 50%.
Interestingly, there are a variety of different types of exchange fees that can be paid with BNB. They include transaction fees, voting fees for new tokens, commissions, and also fees for launching new instruments.
We have to agree that this approach is a very clever way to keep traders coming back to the platform and in a sense, Binance Coin is like a discount coupon .
It is worth wondering, however, how long this discount will continue to be offered. In the future, it may continue to decrease or even stop.
In fact, according to their white paper, in 2019 Binance was supposed to half this discount yet again to 12.5%, but so far, this has not happened .
It is believed that Binance has not reduced the 25% discount because they want to remain popular and in good faith with their traders. For now, though, it is something to look out for in the future.
It is also worth mentioning that their white paper also points out that in the 4th year, 2021, the discount is to be reduced further to 6.75%.
How Does Binance Coin Work?
From a technical point of view, there isn’t anything particularly unique about Binance Coin . That said, there are some important things to know about Binance Coin.
As stated earlier, BNB was created on the Ethereum blockchain but has moved to its own blockchain Binance Chain.
Interestingly, this blockchain uses the Tendermint byzantine-fault-tolerant consensus mechanism and has three different types of nodes:
Validator nodes that validate transactions Witness nodes that witness the process and kulawulwa i-binance broadcast transactions Accelerator prekybos binance tinkleliu apžvalga nodes owned by organisations and binance australia tshuaj xyuas reddit that speed up the process.
Note that fees are distributed among all validators.