What is BNB Coin?


Binance is the world's largest cryptocurrency exchange in terms of volume and active users, with more money changing hands daily than most of its largest competitors combined. With more than 90 million global users (including US citizens now, thanks to Binance.US), the exchange has created an entire crypto ecosystem under its umbrella. This ecosystem is powered by Binance’s proprietary digital token - BNB Coin.

What is The Purpose of Binance Coin (BNB)?

The Binance exchange coin, or BNB, was created to raise money for the exchange through an Initial Coin Offering (ICO) in 2017. With specific limits on the number of tokens that could be created, Binance distributed BNB coins to investors, founders, and the public. As per the language in the white paper, every quarter Binance uses a portion of its profits to buy back tokens and perform a BNB coin burn, permanently decreasing the supply.

The original purpose of the token was to provide users with discounts on Binance transaction fees. As a result, traders and investors buying and selling cryptocurrencies would receive discounts on fees if they used BNB in their transactions. For example, using BNB to facilitate trades will currently save users 25% on spot fees, 25% on margin fees, and 10% on futures trading fees.

Saving on Binance transaction fees was a big perk for new users, and the exchange expanded rapidly, even as the 2017-2018 crypto bull market began to fade. Not is Binance now the biggest exchange in the world, but the BNB token has the 5th highest market cap amongst cryptocurrencies, trailing only Bitcoin, Ethereum, Tether, and USD Coin.

What is a BNB Coin Burn?

Keeping a controlled supply circulating is a point of emphasis for many different cryptocurrencies and digital assets. Too many tokens will devalue individual holdings, but too few will prevent the network or ecosystem from growing. The developers at Binance took a unique step toward guaranteeing supply control with its scheduled BNB Coin Burns.

Binance uses 20% of its quarterly profits to buy back BNB coins on the open market, removing them from circulation. These coins are permanently destroyed by burning, so the amount of tokens currently in circulation is far less than the amount released during the 2017 ICO. Quarterly BNB burns will continue until Binance permanently removes 50% of the total maximum supply, which was 200 million tokens. As of this writing, around 161 million tokens remain in circulation, so 61 million tokens will be scheduled for burning over the next few years.

What is BNB Coin Used For Today?

Investors can still use BNB as a Binance exchange coin for discounted trading fees, but the growth of the exchange has enabled it to create its own crypto ecosystem. After years of running on the Ethereum blockchain, BNB now runs on Binance’s blockchain. The Binance chain itself is composed of two different chains, each with its own utility and use cases.

Binance Smart Chain

The Smart Chain is Binance’s answer to the Ethereum network, allowing developers to build projects and negotiate smart contracts on a chain secured by Binance’s own validators. Compatible with Ethereum’s Virtual Machine, Smart Chain enables users to purchase virtual land or gaming assets through Decentraland or Axie Infinity, mint and sell NFT collections, and many other powerful functions that dApps can bring. 

Binance Beacon Chain

The Beacon chain is used for trading and finance activities, emphasizing transaction speed and efficiency. One of the reasons the Binance Smart Chain and Binance Beacon chains were separated was to prevent the energy-absorbing dApps from affecting fast-moving BNB transactions. As a result, the network retains its powerful development potential without sacrificing speed or increasing fees. The Beacon chain also serves as a governance protocol where validators can vote on staking and other regulations. Smart contracts cannot run on the Beacon chain.

BNB coin has many use cases inside and outside the Binance crypto ecosystem. In addition to fee reductions, BNB holders can stake their coins and earn interest at the BNB vault, earn flexible yields through specific BNB smart contracts or dApps, or simply stake tokens to validators to help secure the Binance chain network. Coin holders also can use their tokens to borrow BNB or other cryptocurrencies through Binance Loan, send or receive crypto payments, or participate in new ICOs or lending programs through Binance Launchpad. You can even book travel accommodations through Trip.io or TravelByBit.

Binance has created a crypto kingdom, making the BNB coin an appealing asset. If you’re interested in developing applications for the BNB Smart Chain or want to add BNB coins to your crypto portfolio, check out Path Crypto for more info about this ever-evolving ecosystem.