Binance (BNB) Token Review: The Most Widely-Used Exchange Token
|Available Discount||50% for BNB holders|
|Withdrawal fee||Varies Per Token|
|White Paper URL||https://www.binance.com/resources/ico/Binance_WhitePaper_en.pdf|
The BNB coin is the ERC20 token for the Binance cryptocurrency exchange, one of the most popular cryptocurrency exchanges and one of the first exchanges featuring its own currency. The BNB token was a key part of funding the Binance exchange via its ICO, and also developed for the sole purpose of lowering transactions fees for users on the Binance exchange.
- Why the BNB Token is Unique
- How the Binance Exchange Works
- BNB Token Special Features
- How to Purchase BNB
- How to Store BNB
- How the Value of BNB May Steadily Increase
- Future Aspirations of Binance Exchange and BNB
Why the BNB Token is Unique
The Binance exchange developed its own BNB coin for a number of purposes. First, it wanted to make it the currency used in their exchange for fee payment. It did this by encouraging participants to use BNB in exchange of a discount of 50% on their transactions fees in the first year of use. Second, it is used by participants in the exchange to invest in Binance. Lastly, it is used to pay for services needed on the platform, such as advertising.
The Binance tokens are unique in that it buys the tokens back from the market each quarter at the current price. It will continue doing this until half of the tokens are completely burned out. This will stabilize the token and assure its appreciation.
How the Binance Exchange Works
Binance has the largest trade volume to date of all of the exchange in the cryptocurrency market. It has a number of advantages, including: an excellent user experience, a matching engine that allows 1.4 million trades a second, cross-platform trading for iOS, web, Android and PC devices, and multilingual support (including Japanese, Korean, Chinese, and English).
The Binance exchange has a number of partnerships, including:
- QUONIE –The exchange entered into a strategic partnership with QUOINE, a leading global fintech firm and the first registered fiat-enabled exchange in Japan, at the end of 2017. The partnership offers QUOINE improved liquidity and a larger selection of altcoins.
- Uplive – In addition, Binance entered into a partnership with Asia’s leading live video platform, Uplive, and offers its 20 million users the option to use BNB for virtual gifting.
- Changelly – As competing with Binance is difficult, Changelly announced a partnership with Binance in April. The partnership will integrate Binance’s API and allow Changelly’s users to exchange a range of coins on the website faster and at better rates.
The Binance exchange’s accomplishments thus far are impressive: it was ranked as one of the top three cryptocurrency exchange platforms less than three months after its launch on Coinmarketcap.com. The company reported a profit of $7.5 million in commission fees in its first quarter alone. Binance has also succeeded in earning more profit than many major financial institutions such as Germany’s largest bank, Deutsche bank, in Q1 2018. The exchange made almost three times more profit than Twitter in this same quarter of 2018, according to unofficial sources. Binance exchange has even teamed up with African Blockchain Innovation Hub Crypto Savannah to work towards transforming the economy of Uganda through blockchain.
Read our Guide How to use Binance Exchange
BNB Token Special Features
The BNB token has special features regarding its value, allocation, repurchasing plan and funds usage.
The BNB token can be used for payment of fees on the Binance exchange, including exchange, withdrawal, listing, margin, and other additional fees. The Binance exchange gives those who trade with the token the incentive of a 50% lower transaction fee for the first year. For the second year, the discount is 25%, halving every year for two more years until the discount is cancelled in the 5th year. As the volume of trading on Binance increases, the token will also grow in popularity and it will develop additional features and programs that use the BNB token.
The BNB token, also known as the Binance coin, is set to have a limit of 200 million tokens. Half of the tokens, 100 million, will be allocated during the ICO to participants; another 40% to the founding team and the remaining 20 million to the Angel investors.
Binance will use 20% of the profits from the exchange to buy back BNB and destroy them, with a goal of buying back 50% of them, a total of 100 million. These buy-back and destruction transactions will be announced on the blockchain. After all of the buy-back and destruction transactions 100 million BNB will be left remaining in circulation.
Binance will allocate 35% of its funds to build the current Binance platform as well as upgrades (this includes funds spent on human resources and development); 50% for branding and marketing; and a final 15% will be reserved for emergency purposes.
The BNB Price History
The token launched in August of 2017 after raising over $15 million in its ICO. Half of the tokens were sold during the ICO, with the remainder distributed among the team and investors.
The tokens reached a high of $24.46 in January and has leveled off at $12 in April of this year.
Since the ICO of BNB in August 2017, its value has risen quite quickly and it has succeeded as maintaining its rank as one of the top 20 cryptocurrencies by Coinmarketcap.com.
Another factor that influences the price of the BNB token are its quarterly burns. Each quarter Binance uses 20% of their profits to buy back and burn BNB.
Here is the schedule of the quarterly burns so far:
- 1st Quarter burn – 986,000 BNB were burned according to 1st quarter profits
- 2nd Quarter burn – 1,821,586 BNB were burned according to 2nd quarter profits
- 3rd Quarter burn – 2,220,314 BNB were burned according to 3rd quarter profits
Although the long-term goal is stability and maintaining the value of the token in the long term, prices of BNB fell nearly 9% after the announcement of the 2nd quarter burn.
How to Purchase BNB
At the present, you can purchase the Binance token BNB through the Binance exchange.
The current trade volume of BNB is $68 million at the time of this writing. The token is available for purchase with the following coin pairs:
- USDT, BTC, BCC, ETH, ONT, ADA, NCASH, VEN, YOYO, XLM, NEO, ICX, NANO, LTC, AE, IOTA, ZIL, CMT, AION, WAN, STORM, CTS, VIA, BAT, BLZ, DLT, OST, LSK, ADX, RPX, NEBL, QTUM, POWR, QSP, CND, BRD, PIVX, POA, WAVES, STEEM, WABI, APPC, QLC, XEM, BCPT, AMB, GNT, XZC, WTC, RDN, TRIG, NULS, MCO, SYS, RCN, NAV, RLC, BNB
Although it is free to add money to your account, Binance has order fees of 0.1%. Withdrawal fees are flat fees that vary according to the coin. Of course, you can reduce your fees by up to 50% on the Binance exchange by paying these fees in BNB in the first year. The discounts are reduced in following years and are nonexistent in the 5th year of use of the exchange.
How to Store BNB
BNB tokens are the native currency of Binance exchange therefore most people will find it convenient to store them on Binance. For security purposes, however, it is best to store your BNB off of the Binance exchange.
You can store it in any wallet that supports ERC-20 tokens such as Coinomi, MetaMask and MyEtherWallet. The safest alternative, however, is a hardware wallet such as Ledger Nano S and Trezor.
How the Value of BNB May Steadily Increase
BNB has several methods for maintaining the valuation of their currency. First, it offers trading fee reductions, giving an incentive for more and more people to use their token, increasing the demand for BNB.
As a result, it is currently the biggest source of demand for BNB. Second, it is dedicated to burning 20% of the profits each quarter on BNB tokens, which results in keeping excess coins out of circulation, which in turn ensures that each token is more valuable. Finally, Binance exchange has a number of functions that are only available with payment through BNB, such as withdrawal fees. Although these features are relatively minor, they hint that Binance exchange is interested in widening the use of BNB in the future, which will also contribute to a rise in demand and the value of the coin.
Future Aspirations of Binance Exchange and BNB
Recently Binance announced that it will create its own decentralized exchange, with the goal of transforming the company into a community.
Once the decentalized exchange is launched, the BNB token will become a native coin on the new blockchain mainnet. The advantage of creating its own decentralized exchange is that it provides anonymity and can be more difficult to hack than a centralized exchange.