Those who have been in the world of cryptocurrencies for a short time have probably come into contact with information related to Binance Coin (BNB). However, what they probably don’t know is that it is a relatively new token compared to the better known and larger market capitalization digital currencies, such as bitcoin and ether.
Binance Coin, or BNB, saw the light of day in 2017, along with the exchange bearing the same name and founded by its current CEO, Chinese Changpeng Zhao.
Changpeng is quite a character in the crypto ecosystem. Recognized as “CZ”, he permanently exposes his opinions on social networks, especially on Twitter. But that’s a separate story.
Back to Binance Coin, Binance’s native token, in less than four years it has experienced exponential growth, going from being just another asset to positioning itself among the top five cryptocurrencies with the largest market capitalization.
Obviously, much has had to do with the backing of Binance, today considered the exchange with the largest number of operations in the world (it has 15 million users), along with Coinbase and Huobi.
To have a parameter of Binance Coin’s capitalization, suffice it to say that in January 2021 each BNB token was trading at $43 and in July of the same year, at $320. This is an impressive 644 percent growth in a few months.
However, if we take into account the peak values it reached at the beginning of May 2021, when all cryptocurrencies increased their valuation remarkably, Binance Coin was trading at $675: 1,469 percent higher than in January.
According to data from CoinMarketCap, its current ranking is fourth in the rankings, with a market capitalization of $47.401 billion and circulating and peak supplies of 153 million and 170.5 million coins, respectively.
Investing in Binance Coin (BNB): what you need to know
Where to buy and sell Binance Coin? The easiest place is Binance, of course, its exchange by nature. But you can also trade on CoinTiger, BitINKA, and BitWell, among others. Binance Coin.
One of the reasons interest in investing in Binance Coin has grown so significantly is that Binance, with the idea of accelerating its use, offers discounts on commissions when trading with this token.
When buying or selling bitcoin with tether or USDC, for example, you pay fees. However, if you have BNB in your wallet, the native exchange offers discounts that can be as high as 50 percent.
BNB saw the light of day via an initial coin offering a week before Binance began operations. In the first few months, it operated as a so-called ERC 20 token, which runs over the ethereum network. A total supply of a maximum of 200 million coins was offered, with another 100 million being sold in the initial offering.
Then, in the first quarter of 2019, Binance Coin left the ethereum network to run on its own blockchain, the exchange’s native network: Binance Chain. Thus, the ERC 20 BNBs were changed directly to BEP2 BNB.
To contain customers within the exchange, in addition to commission discounts if paid with BNB, Binance also offers other advantages, such as the ability to participate in token sales or exchange them on the platform’s decentralized exchange: Binance DEX.
An important point is that you cannot mine BNB. This is because it is not a proof-of-work (PoW) crypto, but rather uses a consensus model called Byzantine Fault Tolerance (BFT). It is a hybrid system between proof-of-stake and proof-of-authority.
Why Binance Coin left the ethereum network
Many are asking why did BNB leave the ethereum network? The main reason was congestion. The ethereum network was growing in transactions, advertising, community, and trust, but not to the same extent its support, which has meant that delays and, especially, the cost of transactions, have grown exponentially.
Binance Chain, on the other hand, a model based on 21 nodes, achieves a more than attractive agility for those looking for speed and low commissions..
But it’s not all roses. The most discussed point on the Binance token is precisely that it is under the umbrella of a centralized exchange that could in the future decide a change of course in the currency and, therefore, change the rules of the game, something to which bitcoin, for example, is not exposed.
Naysayers of Binance and those who recommend against buying Binance Coin say that one day Changpeng Zhao may wake up with different ideas than today and decide to generate more tokens, which would cause the price to fall sharply.
Not to be left out, those defending ethereum say that Binance deliberately smothered its home network to lure more users to its own platform.
Beyond the explanations, what is certain is that the volumes traded clogged the network and the “gas” of transactions rose more than 20 times in a few months.
In short, to explain it simply: the Binance Smart Chain works with a testing model that is centralized (Binance chooses the authorities that run each node). This is a diametrically opposed approach to the decentralization proposed by ethereum. In that dispute lies the core of the discussion.
Binance Coin burning
How does BNB keep the coin from depreciating? They burn. That’s right, at one-fifth of the profits made every three months from transactions on the exchange, Binance uses them to buy back BNB and burn them.
Previously, until 2019, it did this on the ethereum network, using burn functions via smart contracts.
Since the Binance Chain was launched, the burning of Binance native tokens is based on a BSC prop command. The idea is the same one that guides bitcoin, scarcity: as there are fewer coins circulating, the price should tend to stay the same or go up.
A complicating advantage
As we explained before, one of the main advantages of Binance Coin is that it has the backing of a true giant such as Binance. However, in recent months this could be a burden.
Why? The leading cryptocurrency exchange is under the magnifying glass of regulatory bodies around the world and almost every week there is news about new conditions being endured by the “CZ” company.
One of the latest news that was related to this issue is that the financial watchdog of the United Kingdom banned its operation in its territory, so the exchange had to suspend the purchase of cryptocurrencies with British pounds.
It is not minor data what happens in Britain, as the exchange had gained a lot of popularity: the app has been downloaded 1.8 million times in 2021 alone, according to statistics from mobile data firm Sensor Tower.
UK authorities frown on Binance’s corporate structure remaining opaque. In fact, the U.S. does not allow Binance on its territory, and other countries have recently joined in, such as Italy.
And one more fact: in July, Binance announced that it will stop offering stock tokens. This happened barely two months after launching the system. It did not give a reason. In fact, it said it is to “dedicate itself specifically to other business segments.” However, many understand that it has to do with pressures from governments and Wall Street.
Wallets to store Binance Coin
Binance Coin tokens can be stored in numerous e-wallets, such as Trust Wallet, which was purchased in 2018 by Binance in a million-dollar deal. Also in Ledger Wallet, Enjin Wallet, Atomic Wallet, Coinomi, among others.
While the Binance ecosystem is growing and, with the exchange, BNB tokens, the self-promotion of its own tools makes many wary.
In the midst of the discussion, the debate between advocates of decentralized exchanges versus those who prefer the backing of centralized exchange houses is still present (and will be for a long time to come).
For now, there is no definition in this regard, the only certainty is that, ultimately, the utility of the systems will determine who wins.
How to buy Binance Coin (BNB) right now and with a regulated broker?
If you want to invest in Binance Coin (BNB), the favorite option recommended by El País Financiero is the broker eToro.com, an investment platform used by more than 20 million users, based in London and authorized by CySEC and the FCA (the UK regulator).
When it comes to buying cryptocurrencies like Binance Coin, eToro offers us a great advantage: It is one of the few regulated brokers that invest in real cryptocurrencies and not in derivative products (such as CFDs, which have higher risks and commissions).
Another important point in favor of eToro is that it allows you to add funds to your account immediately by credit card, Paypal, or bank transfer (among others).