BNB, or Binance Coin, is the native cryptocurrency of the Binance ecosystem, which includes Binance Chain and Binance Smart Chain. Initially launched as an ERC-20 token on the Ethereum network, BNB has evolved into a multi-functional asset with broad utility within and beyond the Binance exchange.
Beyond serving as a digital currency, BNB plays a vital role in fueling the growth and development of the entire Binance ecosystem. Its applications range from reducing trading fees to enabling participation in decentralized applications (DApps) and other blockchain-based services.
The Origins of BNB
BNB was first introduced through an Initial Coin Offering (ICO) that took place from June 26 to July 3, 2017. The Binance exchange officially launched just 11 days later. During the ICO, the issuance price was set at:
- 1 ETH = 2,700 BNB
- 1 BTC = 20,000 BNB
It's important to note that holding BNB does not equate to owning shares in Binance exchange. BNB holders have no ownership rights or claims to Binance's profits. Instead, BNB functions as a utility token within its expanding ecosystem.
Key Uses of BNB
BNB offers a wide range of applications, making it one of the most versatile cryptocurrencies available. Here are five major use cases:
- Pay for Transaction Fees: Users can use BNB to cover trading fees on Binance Exchange, Binance DEX, Binance Chain, and Binance Smart Chain.
- Make Purchases: BNB can be used to buy goods and services online and in physical stores through Binance Card or Binance Pay. It is also accepted on platforms like Travala.com for booking flights and hotels.
- Participate in Ecosystem Activities: BNB allows holders to engage in token sales on Binance Launchpad, interact with DApps, play games, and participate in other community functions on Binance Smart Chain.
- Donate to Charity: Binance Charity accepts BNB donations to support various global initiatives.
- Provide Liquidity: Users can supply BNB to liquidity pools on platforms like Binance Liquid Swap to earn rewards.
BNB Tokenomics and Supply
The total supply of BNB was initially set at 200 million tokens. Half of these (100 million BNB) were distributed during the ICO. A key feature of BNB's economic model is its periodic token burns. Binance uses a portion of its profits to buy back and permanently destroy BNB tokens, reducing the total supply over time. So far, Binance has conducted 15 token burns.
BNB exists in three main forms across different blockchain networks:
- BEP-2 BNB: Native to Binance Chain.
- BEP-20 BNB: Native to Binance Smart Chain (BSC).
- ERC-20 BNB: The original form on the Ethereum network.
Holders can swap between these versions at a 1:1 ratio.
Real-World Applications: BNB for Travel and Payments
BNB stands out as one of the few exchange-based cryptocurrencies with significant real-world utility. It is accepted by a growing number of merchants for payments, both online and offline.
For instance, users can pay for travel accommodations, book flights, and purchase virtual gifts using BNB. Millions of BNB tokens have already been spent on travel, goods, loans, rewards, smart contracts, and other transactions.
A major driver of BNB's utility is its use for paying trading fees. Over two million users on Binance use BNB to pay for transactions, benefiting from a discount. To date, these users have processed over 127 billion transactions, paying more than 40 million BNB in total fees.
How to Use BNB for Trading Fee Discounts
Trading on Binance typically incurs a 0.1% fee per transaction. However, users who choose to pay their fees with BNB receive a significant discount. The discount rate depends on the user's monthly trading volume and BNB holdings.
For high-frequency traders, these discounts can lead to substantial savings. It's important to regularly check Binance's official fee schedule for the latest rates, as the structure may differ for spot trading and futures trading.
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BNB's Role in Powering Binance Smart Chain (BSC)
Beyond fee discounts, BNB is the lifeblood of the Binance Smart Chain ecosystem. BSC is a blockchain network that runs parallel to Binance Chain and is designed for running smart contracts and building DApps.
BNB is used to pay for gas fees on BSC, stake in various DeFi protocols, and participate in governance for some projects. This utility means BNB holders can use their tokens far beyond the Binance exchange.
Today, BSC hosts over 180 digital assets and serves millions of users who interact with its vibrant DeFi and DApp ecosystem.
How to Buy BNB
Acquiring BNB is a straightforward process, similar to buying any other major cryptocurrency. The vast majority of BNB trading occurs on secondary markets. You can easily purchase BNB on Binance.com or other major digital asset exchanges.
Simply create an account on a supported exchange, deposit funds, and place a buy order for BNB.
Frequently Asked Questions
Is BNB a good investment?
BNB's value is tied to the growth and utility of the Binance ecosystem. Its periodic token burns aim to create scarcity, while its wide range of uses drives demand. As with any cryptocurrency, its price can be volatile, so thorough research is essential.
What is the difference between BEP-2 and BEP-20?
BEP-2 is the token standard on the original Binance Chain, designed primarily for trading. BEP-20 is the standard on Binance Smart Chain, which is compatible with Ethereum's ERC-20 and is used for smart contracts and DeFi applications.
Can I use BNB without using the Binance exchange?
Yes. While Binance is its home, BNB is used across the entire BSC ecosystem. You can use it in wallets, DeFi apps, games, and for payments at merchants that accept it, without necessarily interacting with the main exchange.
How do I claim my trading fee discount with BNB?
The discount is typically applied automatically when you have sufficient BNB balance and have selected the option to pay fees with BNB in your exchange account settings.
What happens during a BNB token burn?
Binance uses its profits to buy back BNB from the market and sends these tokens to a "burn address," from which they can never be retrieved. This process reduces the total circulating supply.
Is BNB a security?
The regulatory status of cryptocurrencies varies by jurisdiction. Binance has stated that BNB is a utility token designed for use within its ecosystem. However, always consult with a financial advisor regarding the regulations in your country.