What is Binance Coin (BNB) Crypto Beginner’s Guide
Everyone who has ever traded, bought, and/or sold cryptocurrency is familiar with the many different cryptocurrency exchanges. One such cryptocurrency exchange is the Binance exchange. A popular altcoin exchange that is used by many different cryptocurrencies. Now you might be wondering how these cryptocurrency exchanges operate.
How do they provide the altcoin trading services? What makes them so reliable to make such transactions? Learning about every cryptocurrency exchange can be tedious, but Binance tends to keep it simple for most users. As a cryptocurrency exchange platform that is based out of China, it offers more than just an easy method for buying, selling, and trading cryptocurrency.
The Binance platform has made its own place among the many cryptocurrencies thanks to its handy BNB altcoin. So what makes this altcoin useful? Why does a cryptocurrency exchange even need its own altcoin?
Binance Coin: The Altcoin of Choice on the Binance Cryptocurrency Exchange
The Binance Coin was created by the same developers that are behind the Binance cryptocurrency trading platform. The main intentions behind introducing its own cryptocurrency stem from the whole purpose of Binance – binary and financing.
The binary aspect stems from the fact that Binance only trades various cryptocurrencies against each other. This means you won’t be able to trade your Bitcoin, Etherum or a lesser known altcoin for fiat currency.
While this platform isn’t the best choice for those looking to exchange their earnings into cryptocurrency and vice versa, it is a reliable exchange for those looking to invest into lesser-known altcoins and make basic exchanges of one cryptocurrency for another.
The Binance coin comes with a small limitation. That limitation is within its distribution. 50% of Binance coins were sold during the initial coin offering. The remaining 50% was then divided up between the developer team (40%) and their Angel investors (10%). What are Angel investors?
Angel investors are simply people who bought a large number of the Binance coins at once.
How Does Binance Coin Work?
The Binance coin is an ERC 20 token based off of the Ethereum blockchain. These coins are used to pay for trading fees, listing fees, transaction fees, and all other fees on the Binance platform. But fees aren’t the only use for Binance coins. These altcoins are used as an intermediary between cryptocurrencies to simplify all trades.
Another purpose of the Binance coin, is the developers use their returns to buy back the Binance coin so that it can be destroyed. This is to ensure that Binance coin’s value as a tradeable asset remains stable.
Matching all cryptocurrency orders
The Binance platform makes sure to match up users with their specific parameters. This means if one user wants to sell their digital assets for a certain price, the platform will then seek out another user who is willing to buy those digital assets for that price. For users to complete the exchange they must first pay the require transaction fee and any other fees associated with that exchange.
These fees are all handled in Binance coin or Bitcoin. The goal of Binance is to provide cryptocurrency users with a fast and reliable exchange service so that they can capitalize on their investments without delay.
Liquidity of assets
Binance has one of the busiest order books out of the many different cryptocurrency exchanges. This means all cryptocurrency assets are traded quickly and frequently. This means users can expect to get an instant exchange of all cryptocurrencies they intend to trade, sell, and/or buy.
What are the Benefits of Using Binance Coins?
Those who use the Binance exchange can pay their fees using Bitcoin, but there are a few perks to using Binance coins. Below are a few advantages you can reap by using the Binance cryptocurrency exchange for most, if not all, of your cryptocurrency trading needs.
Low trading fees
Unlike many other cryptocurrency exchanges, Binance makes sure to have low trading fees. Funding an account on Binance is free and the trading fees are 0.1% for each transaction conducted on the Binance platform.
Binance will charge withdrawal fees for anyone who wants to move their digital assets from their account and onto a private digital wallet. These fees are flat fees and are based on the type of cryptocurrency you are moving.
Rebates for paying fees in BNB instead of other cryptocurrencies
Since Binance doesn’t deal in decimals, paying your fees in Bitcoin can actually cost you in the long run. So to prevent that kind of loss, you can pay in Binance coin. To encourage users of the Binance exchange platform to use the Binance coins, they offer all users discounts. Over a period of four years, you will see a certain discount percentage.
The discount by year are as follows:
Year 1: 50% discount on all Binance fees
Year 2: 25% discount on all Binance fees
Year 3: 12.5% discount on all Binance fees
Year 4: 6.75% discount on all Binance fees
By the fifth year, you will not see any more discounts.
Has a fast execution speed
The Binance platform is fast when it comes to processing all trades on its platform. This is due to the fact that it is the powerhouse behind 30+ different exchanges within Asia.
Has a strong developer team and community
The developer team is built of people who have experience in trading, finance, and blockchain technology. The developers are driven to make sure its users get a reliable cryptocurrency exchange service. It also makes it a point to reward loyal customers who consistently use Binance coin and other Binance services.
Can be used to trade at least 50 different altcoins on top of Bitcoin, Ethereum, and NEO
Binance is a well-known cryptocurrency exchange platform. This is primarily due to the fact that it is fast, reliable and offers a wide selection of cryptocurrencies to trade in. Not all cryptocurrency exchanges offer lesser-known altcoins which can definitely hinder those who want to invest in new frontiers.
What are the Drawbacks of Using Binance coins?
The limited amount of Binance coins
Binance keeps their coins capped at 200 million. All extras are immediately bought back and destroyed by the developer team. This cap can definitely put a damper on anyone wanting to invest into the Binance exchange platform.
No fiat currency exchange
The lack of fiat currency exchange limits the users’ ability to immediately exchange their assets into fiat currency. It also makes it hard for users who don’t already have digital cryptocurrencies to use the Binance platform.
Limited documentation and mistranslation issues
Since the exchange is based out of China, this means most documentation is recorded in Chinese. This can lead to limitations in what is documented and how those documents are translated into the users’ native language.
Final Thoughts on Binance Coin (BNB)
Binance does offer many opportunities with its platform. Combined with the Binance coin, and you have a truly efficient cryptocurrency exchange. However, this platform is best for users who don’t intend to trade in fiat currency and already have some type of altcoin on hand.