What is BNB and how does it work on Binance?

Binance coin is denoted by the symbol BNB, which stands for 'build and build.' It uses the standard ERC-20 protocol to run on the Ethereum blockchain.

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Numerous projects and assets aimed at various goals comprise the cryptocurrency and blockchain industry. It is not uncommon to come across projects that aim to address similar problems.

There are several cryptocurrency exchanges, for example. Although each exchange's design and features vary, they all aim to provide crypto traders with a place to exchange their assets in a broader sense. A cryptocurrency exchange may occasionally have its own asset that is used for specific purposes on its related exchange, such as fee reductions on the trading platform.

One such crypto exchange asset is Binance Coin (BNB) of the Binance exchange. What exactly is a Binance Coin? BNB began as an asset sold in Binance's initial coin offering (ICO), and later evolved into a way for Binance exchange users to pay lower trading fees on the platform once the exchange launched.

BNB has remained a part of Binance's expanding ecosystem since then, as the company has evolved beyond being just a digital asset exchange.

Binance Coin’s history

Without discussing the history of the Binance exchange, it would be difficult to tell the story of Binance Coin's origins. Binance Coin debuted in July 2017 with an initial coin offering (ICO). As part of the ICO, BNB tokens were distributed to various participants, including angel investors and the Binance founding team.

Here's a quick rundown of how BNB tokens were initially distributed:

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During the ICO, each of the 100 million BNB tokens available for public purchase was sold for 15 cents. This ICO netted Binance $15 million in Bitcoin (BTC) and Ethereum (ETH).

The $15 million raised was divided as follows: 35% was used to upgrade the Binance platform and exchange system, 50% was used for Binance branding, marketing, and education of new innovators, and 15% was set aside as a reserve in case of any emergencies or unusual circumstances.

BNB was an ERC-20 token built on the Ethereum blockchain during its ICO and early days. Binance launched its crypto exchange platform just days after its mid-2017 ICO concluded.

Binance launched its own native blockchain, Binance Chain, in 2019. (BC). BC introduced the blockchain's own native BNB coin. In 2019, users received the new BNB coin in exchange for their BNB ERC-20 tokens through a token swap.

How does Binance Coin work?

BNB is a crypto asset that, like other digital assets on the market, fluctuates in value as people use and trade it. People can keep BNB in compatible wallets obtained from crypto exchanges and send it directly to others for payments or other purposes.

One may also wonder how to purchase Binance Coin. People can purchase BNB through a variety of channels, including Binance's own crypto exchange. But, as always, make sure to research and follow any applicable jurisdictional laws.

On a more technical level, the Binance layer-1 blockchain is merged to form the BNB Chain (previously the Binance Smart Chain and the Binance Chain).

Binance tailored the blockchain for optimal performance when it came to trading on-chain when building the BNB chain, and Binance DEX, Binance's decentralized exchange (DEX), is based on this newly formed chain. Furthermore, BNB chain transactions are powered by BNB, a blockchain gas token that stands for "Build and Build" (previously known as Binance Coin).

The BNB chain is made up of two parts: the BNB beacon chain and the BNB Smart Chain. The former is concerned with BNB Chain governance, in which BNB holders can participate in staking and voting. The latter is a consensus layer that is Ethereum Virtual Machine compatible and has multi-chain hubs.

BNB Burning

Binance spends a portion of its revenue each quarter to buy back and burn Binance Coins, effectively eliminating them. Binance has been performing quarterly burns since 2017.

Binance will continue to burn BNB coins every quarter until it has purchased and destroyed 100 million Binance coins, or half of its total supply. The process reduces the supply of Binance Coin and affects its rarity, which may affect the asset's value.

Binance also has a program called the BNB Pioneer Burn Program, which evaluates cases where BNB holders have unrecoverably lost BNB and repays them by deducting the amount from the next BNB burn.

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What is Binance Coin used for?

Binance Coin usage is increasing in tandem with Binance's growth. The asset began as a means of raising funds for the Binance exchange. Following its 2017 launch, Binance quickly gained traction as a cryptocurrency exchange. Under the Binance brand umbrella, Binance evolved from an exchange platform to more of an ecosystem.

Binance has launched a DEX, two blockchains, a peer-to-peer (P2P) crypto trading option, a crypto borrowing option, and more over the years. BNB has expanded in tandem with Binance.

BNB coins can be used to pay for transactions on the Binance Exchange. The BNB coin has historically been used to reduce fees on the Binance crypto exchange, with customers paying lower fees by holding BNB and paying platform fees in BNB. Binance will extend the ability to receive a 25% discount on trading fees when paying with BNB until July 13, 2022, at 11:59:59 pm UTC. Furthermore, BNB has become a component of other Binance products.

Furthermore, merchants can accept BNB as payment, providing customers with more payment options. Furthermore, BNB is used in the entertainment industry for a variety of purposes, including paying for virtual gifts and purchasing lottery tickets.

Binance Coin can be used on a variety of platforms to invest in stocks, exchange-traded funds (ETFs), and other assets. BNB can be used as collateral for loans on some platforms. Some apps allow users to split expenses and pay friends and family with Binance Coin.

BNB pricing and dynamics

In general, the price of BNB has historically fluctuated in line with other crypto assets traded on the market. Binance Coin's market capitalization has risen over time, surpassing a valuation of $70 billion. During Binance's initial coin offering (ICO), BNB sold for around $0.10 per token.

Since Binance's ICO, BNB has increased significantly in value, reaching more than $600 per coin at times. Is it wise to invest in Binance Coin? Its previous price rises most likely resulted in profit if buyers entered and sold at the right times. However, only time will tell where the price of BNB will go in the future.

Binance and regulation

Binance, which began operations in 2017, has grown to become one of the largest players in the cryptocurrency space. However, regulatory issues surfaced against Binance in 2021. In 2021, Binance faced regulatory action from the Cayman Islands, Japan, Malta, the Netherlands, Malaysia, the United Kingdom, and Thailand.

Binance, for example, was ordered by the United Kingdom Financial Conduct Authority to cease all U.K. regulated operations in June 2021 because it lacked the necessary authorization, registration, or license. The following month, Malaysian authorities responded by filing a criminal complaint against Binance for operating as an unauthorized virtual asset service provider (VASP).

Is Binance prohibited in the US? Prior to its 2021 headwinds, Binance announced the removal of US customers from its main exchange in 2019, despite the fact that the same year, Binance launched Binance.US, a platform compatible with US users.

Binance has stated that in response to increased regulatory scrutiny, it intends to open additional offices around the world and seek licenses in each jurisdiction where it operates. Binance is also strengthening its compliance capabilities and resources, as well as discontinuing or restricting a number of high-risk items.

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