Its growing in popularity, it has a real use, but what is Binance coin? You’ve heard of it but want to know what the heck it is. Well then you are in the right spot because in this short post I’ll be going over all things Binance coin. This includes what it is, the purpose of it, how it can benefit you, whether or not its worth buying, and how to store it if you do end up buying it.
Find out what all the talk about this mysterious Binance coin is below… Enjoy!
What Is Binance Coin?
Binance coin, which goes by the symbol BNB, is an ERC20 token (aka coin) that Binance created. It runs on the ethereum blockchain which works fine for its use.
The good thing about this coin is that it has a real use… right now. It isn’t some fancy coin that has plans of being usable in 5 years from now.
That Purpose of BNB
From scouring the internet and reading various posts of information I see that there are some people wondering what the heck the purpose of BNB is. They know that its a coin created by Binance and that they can make/save money with it but don’t really understand its purpose.
The truth is that Binance doesn’t really give you any information on this but I’ll tell you what I see the purpose as being.
As far as I see the purpose of BNB is mutually beneficial to both investors/crypto traders as well as the Binance exchange. As you will see in the next section the BNB coin is used to attract new users and to keep them. So Binance is able to grow their customer base with this coin and you, the trader/investor are able to make and/or save money with it, all of which I’ll go over.
*And of course another purpose was fund raising.
Whats In It For You?
Reduced Trading Fees
If you hold BNB you will be able to get your trading fees reduced by up to 50%. Binance already has an extremely low trading transaction fee of 0.1%, but you can cut that down to 0.05%.
The way it works is like this: When you join Binance you have 5 years to get this trading fee reduction. The first year you will be able to receive a 50% discount on your trading fees if you hold BNB and this will reduce every year after as you see here…
- 1st Year = 50% off = 0.05% fee
- 2nd Year = 25% off = 0.075% fee
- 3rd Year = 12.5% off
- 4th Year = 6.75% off
- 5th Year+ = No discount
How much can you save with this? Of course this depends on the amount of trading volume that you have. The more trading volume you have the more you will save.
Without BNB vs With BNB
Normally your trading fee would be a 0.1% of whatever you are trading. So if you buy/sell ethereum or another coin you will be charged 0.1%. As an example: if you buy $1,000 worth of ethereum you will be charged $1 worth of ethereum. And the same goes for whatever coin you are trading.
When you have BNB they calculate the exchange ratio of BNB to whatever coin you are trading and apply the fee discount. So instead of paying your fees in the cryptocurrency that you just traded, you will be paying it with your BNB and will get the discounted fee price.
*Note: BNB can also be used for other fees on the platform.
Another way that you can benefit from owning BNB is from an investment standpoint. As BNB adoption grows so does the price. BNB is trade-able just like any other coin. You can trade it in at any time and potentially reap the rewards of a price that has grown since buying it.
Binance lists their total supply at 200,000,000. If you go look on CoinMarketCap it will tell you a lower number and this is because Binance is “burning” coins, which they are taking into account. There’s a fairly high supply but not nearly has high as some coins out there. As long as Binance continues to grow BNB should grow with it.
Early investors of BNB have already seen massive value increases.
The “burning” of coins
Binance is buying back BNB that is in circulation until 50% of all the coins are taken off the market. They are doing this every quarter with 20% of their profits. Once they buy the coins back they then “burn” them, aka destroy them.
This is good for investors because it means they are decreasing the amount and this will cause the price of the BNB that you own to increase.
Is BNB Worth Buying?
You could look at this question from both a trading and investing standpoint.
If you are a trader then it depends on how much trading you actually do. If you just go onto Binance a couple of times to buy several different coins that you plan on holding onto for the foreseeable future then it might not be worth it. But if you are a daytrader or someone trading frequently then it is worth it in my opinion, especially if you are trading large volumes.
From an investment standpoint I would also say its worth it to some degree. While I don’t expect BNB to skyrocket or “moon”, the value should increase. If you believe in Binance itself then BNB is something you might want to consider.
Storing Your BNB
Of course you can keep your BNB right on the exchange if you want to but this isn’t something that I would suggest doing if you are looking to hold onto it longterm as an investment. However, you will need to hold your BNB in your Binance wallet if you want the trading fees discount.
For longterm investment holding I would suggest MyEtherWallet (MEW) or a hardware wallet like TREZOR. This way you can keep them secure and off of the exchange.
Since BNB is an ERC 20 token that runs on the Ethereum blockchain you can store it just as you can any other ERC 20 token.
Questions? Comments? Concerns? Leave them below and I’ll get back to you soon 🙂