What is Binance Coin and how does it work?

If you’ve scrolled through any crypto market tracker in recent times, you would have run into “Binance Coin (BNB)” in the top ten rankings↗︎. Binance Coin has gained significant popularity and has become a prominent player in the world of cryptocurrencies. In this article, we will explore what Binance Coin is and how it works.

Binance Coin (BNB) is the native cryptocurrency of the Binance exchange↗︎, one of the largest and most popular cryptocurrency exchanges in the world. Launched in 2017, Binance Coin was initially issued as an ERC-20 token on the Ethereum blockchain. However, with the launch of Binance Chain in 2019, BNB migrated to its own blockchain, becoming the primary asset on the Binance Smart Chain (BSC).

What is Binance Coin used for?

One of the key features of Binance Coin is its utility within the Binance ecosystem. BNB can be used to pay trading fees on the Binance exchange, providing users with discounts when using BNB for transaction fees. The use of BNB for fee payments also helps to increase liquidity on the exchange and promotes the adoption of Binance Coin.

Furthermore, Binance conducts regular token burns, where a portion of the BNB supply is permanently destroyed. The token burns help to decrease the overall supply of BNB, thereby potentially increasing its value over time. Binance commits to burning a specific amount of BNB each quarter until 50% of the total supply is burned.

Binance Coin and DeFi

In addition to its utility on the Binance exchange, Binance Coin has seen widespread adoption in various other applications and use cases. It serves as the fuel for decentralised applications (DApps) built on the Binance Smart Chain, enabling users to pay for transactions and interact with smart contracts.

Binance Coin has also gained popularity in the world of decentralised finance (DeFi). Numerous DeFi projects have integrated BNB into their ecosystems, allowing users to use BNB for lending, borrowing, and yield farming. This integration has further solidified Binance Coin’s position in the cryptocurrency space.

As for its technical aspects, Binance Coin operates on a Proof-of-Stake (PoS) consensus mechanism, which means that users can stake their BNB holdings to participate in the network and earn staking rewards. This incentivises users to hold and stake their BNB, thereby supporting overall network security and stability.

Market Capitalisation

Binance Coin (BNB) is a versatile cryptocurrency that serves as both a digital asset and a utility token within the Binance ecosystem and has a substantial market capitalisation of $47 billion (June 2023). With its wide availability on exchanges and growing market capitalisation, BNB offers liquidity and investment opportunities for traders and investors alike.

Takeaway

Binance Coin (BNB) has gained widespread popularity in recent years by offering fee discounts and promoting liquidity. BNB has also found applications in various decentralised applications and DeFi projects, expanding its use cases beyond the exchange. With regular token burns and a PoS consensus mechanism, Binance Coin continues to demonstrate its potential as a valuable and versatile digital asset in the cryptocurrency market.