- In this article, we will try to give you the answer to the question of what is Binance Coin. We will also discuss whether BNB is a good investment or not.
- What is Binance Coin?
- Binance Coin: The best utility token of 2021?
- Does Binance Coin have the best use case?
- How does Binance Coin work?
- Verifying nodes that verify transactions
- Burning coins
- Is it worth investing in BNB in 2021?
- Binance coin is not very volatile
- How did Binance Coin perform?
- Events that affect the price of Binance Coin
- Binance Coin still has great growth potential
- How much will the BNB be worth?
- Should I invest in BNB?
In this article, we will try to give you the answer to the question of what is Binance Coin. We will also discuss whether BNB is a good investment or not.
What is Binance Coin?
Binance Coin (BNB) is a highly popular cryptocurrency created by the famous and leading Bitcoin exchange Binance.
BNB Coin can be used to pay fees on the exchange and also to trade crypto. Let’s not forget that Binance, created by Changpeng Zhao, is the largest cryptocurrency exchange in the world. They also offer the most crypto currencies and have a daily transaction volume of $ 1.5 billion.
Binance Coin went public for the first time on July 25, 2017 and has the BNB symbol. Interestingly, BNB was launched as an ERC-20 token on the Ethereum blockchain. On Binance Coin’s first Coin Offerings (ICO), they raised 15 million coins in three weeks. Since then, BNB has moved from the Ethereum blockchain to its own Binance blockchain.
We should also note that Binance Coin has a capability of 200 million. This means that Binance Coin will eventually surpass Bitcoin in volume, which will make trading easier. According to CoinMarketCap, there are 144,406,561 supplies in circulation and a market cap of $ 5,499,814,566 at the time of writing. This makes it the 9th largest cryptocurrency.
Binance Coin: The best utility token of 2021?
While many believe that Binance Coin is a good investment and one of the safest cryptocurrencies on the market (mainly because of its relative stability), no one can say this for sure. Therefore, it’s up to you to decide if investing in BNB in 2021 is worth it.
However, BNB is one of the best cryptocurrencies for 2021. It is primarily used to pay fees at the Binance cryptocurrency exchange. Fees paid in Binance Coin on the exchange receive a discount. Interestingly, the different types of exchange fees that can be paid with BNB include transaction fees, voting fees for new Coins, commissions, and also fees for launching new instruments.
Perhaps the most attractive aspect of investing in BNB is that investors trading with Binance Coin receive a 25% discount. This discount increased even more in 2017, to be 50%. We have to agree that this approach is a very clever way to keep traders coming back to the platform, and in a way Binance Coin is like a discount coupon.
However, it is worth wondering how long this discount will continue. It may continue to decrease or even stop in the future. In fact, according to their reports, in 2019 Binance was supposed to cut this discount by half to 12.5%, but so far this hasn’t happened.
It is believed that Binance did not lower the 25% discount as they wanted to remain popular and remain in good faith with traders. For now, it’s still something to watch out for in the future. It is worth noting that the promotional bulletins also indicate that the discount will be reduced to 6.75% in the 4th year of 2021. In such a situation, interest in Binance Coin may stall – unless the developers behind Binance offer another reason to trade or hold BNB.
Does Binance Coin have the best use case?
Speaking of BNB as a utility token, we should also point out that some experts comment that Binance Coin has perhaps one of the best user positions in the cryptocurrency world. Compared to other coins, there is a real reason to use BNB; it can also feed a community around it. Let’s not forget that the value of Binance Coin is supported by a public exchange.
Many cryptocurrencies lack this. In fact, many make promises that they will do something over time or that people will be able to use smart contracts. They rarely offer tangible features that they can use today. Therefore, utility tokens can become really popular.
As mentioned above, BNB has multiple use cases such as facilitating transactions, paying transaction fees on the exchange, making payments, paying for trading services.
How does Binance Coin work?
Technically speaking, there is nothing particularly unique about Binance Coin. That said, there are some important things to know about Binance Coin.
As mentioned earlier, BNB was created on the Ethereum blockchain but its own blockchain was moved to the Binance Chain.
Interestingly, this blockchain uses the Tendermint Byzantine fault-tolerant consensus mechanism and has three different node types:
Verifying nodes that verify transactions
Witness nodes witnessing the process and broadcast operations
Accelerator nodes that belong to organizations and speed up the process
Note that fees are distributed among all validators.
Since BNB is built on the Ethereum blockchain, it can be assumed that most of the technology behind it is very similar. There may be more important differences after Binance migrates to its own blockchain. Ethereu
An important difference with m is that Binance Coin cannot support smart contracts. However, BNB can be used as ‘gas’, which is a similarity in Binance blockchain. It should also be noted that the Binance Coin network is centralized and will always be closed for some crypto enthusiasts. Simply, decentralization is one of the main advantages of cryptocurrencies over fiat money. However, Binance Coin has a much better image compared to other centralized cryptocurrencies. The exchange has numerous financial support that can increase the use of BNB.
Some of the benefits of BNB are fast transactions, smooth experiences and high security. If we talk about security, we have to note that since BNB is mostly used in the Binance ecosystem, someone will need a verified account. As such, BNB – compared to privacy coins like Monero – limits anonymity and leaves a digital footprint.
Speaking of technical issues, perhaps money burning is the most notable aspect of Binance Coin. Due to the artificial scarcity of cryptocurrencies, BNB sellers have found a way to ensure the asset’s value is steadily increasing: BNB Coins are removed through a process called incineration. In other words, Binance destroys coins where they call ‘burning’. This is stated in the Binance whitepaper. Burning is the opposite of pressing. Every three months (3 months) Binance plans to destroy Binance Coin in accordance with the transaction volume on the Binance trading platform. All transactions are recorded on the Binance blockchain. Binance performs this burning process using a smart contract. Once destroyed, coins cannot be returned. Eventually they plan to destroy 100 million coins, which means that 100 million tokens will exist when 200 million capacity is reached. They will stop when there are 100 million left. For Binance to perform a burn, they must use 20% of their profits to buy back BNB. The team behind Binance owns about 40% of the total supply, and burning also means rewarding the Binance team for their work.
Interestingly, about 9 out of 10 employees at Binance receive some of their salary in BNB. The result of this is that the supply decreases rather than swells. Shifting the supply and demand curve can increase the price of the coin over time.
This is similar to stocks where companies buy back their stocks from initial investors. Equivalent to dividend distribution. You can find more information about Binance’s burning process and when these burnings occurred on the Binance website. Knowing when to burn the coin, traders can know when to sell the coin, because lowering the number of coins (tokens) will increase the value of BNB and give them a profit.
Is it worth investing in BNB in 2021?
With a market value of over $ 5 billion and various advantages, it is definitely worth investing in BNB in 2021. Let’s not forget that BNB is one of the best utility tokens and has a wide variety of advantages over other digital currencies. Also, keep in mind that BNB is an asset with a high risk and high reward rate of investment. Therefore, if you decide to invest in BNB, always do your research and proceed with caution.
Binance coin is not very volatile
If you decide to take risks and invest in BNB, remember that Binance Coin is a relatively safe cryptocurrency as mentioned earlier. It doesn’t have the volatility that other cryptocurrencies have.
However, Binance Coin is technically not a stablecoin, but it is quite stable. Binance Coin can more accurately be called a utility token. Therefore, finding key entry and exit points and profiting from volatility can be more difficult. However, it can be useful to keep BNB as a trader to put in your value as the crypto market is falling.
It’s worth noting that traders often take cash from their crypto when they finish trading or the market is very unstable. However, the problem with making fiat money is costly and time consuming.
Using Binance Coin, traders can temporarily store their money there until it is safe to trade again. If you want to do a long trade with Binance Coin, the Binance exchange must be successful for you to make a profit. Otherwise it can negatively affect the currency.
Ideally, you want BNB to remain stable and not move too much if you want to use it as a discount on the Binance exchange or as a stable place to store your crypto at variable times.
How did Binance Coin perform?
Binance Coin has performed very well since its introduction: It was mostly slow in the beginning but soared until 2019-2020.
After a disappointing end in 2018, Binance Coin increased by 5% in price at the end of January 2020 tti.
Binance Coin price increased by 57% in February 2020 and continued to rise by 55% in March. Of course, these are huge moves!
By the second quarter of 2020, prices became more static, with huge increases as well as decreases in prices. In April, Binance Coin changed over a period of time, but on the 17th, the price rose again and continued to rise, ending the month with a 25% rise.
So far, Binance Coin seems to be able to continue this uptrend. Of course, no one can guarantee this, and some believe there could be a major correction to the price.
Events that affect the price of Binance Coin
“What affected the BNB prices?” you might ask. Generally speaking, when most cryptocurrencies fall, Binance Coin rises, but this is just a generalization and will not always be.
Let us remind you that in May 2019, the Binance exchange fell victim to a large-scale security breach and lost $ 40 million in Bitcoin. It is natural to assume that the hack had a negative effect on Binance Coin, but it actually had little effect.
Binance claimed that all users’ funds will be returned. How secure is the Binance exchange and how safe is Binance Coin from theft? It seems that the performance of the Binance exchange is good enough that it will not be affected by a negative situation like hacking. In fact, Binance’s transaction volume exceeded $ 60 billion in June 2020.
However, not all news about Binance Coin is pink. There are developments in the studies that will affect the coin negatively. To give an example, more than 15% of the website’s traffic comes from the United States, much more than any other country. US traffic is four times higher than India, which ranks second. However, Binance is said to have created a new platform for US investors in line with US legislation. At this point, however, no one knows what this will look like and whether it will include Binance Coin. Due to US law, a new US version of the Binance exchange is in the market and may not be tradable as BNB will be seen as a security.
On top of that, news about the Binance exchange or Changpeng Zhao could affect the value of Binance Coin. Changpeng Zhao is known to be very influential in the cryptocurrency world. Before Binance, Zhao was also working on OKCoin. However, after the ICO, Binance left control of the exchange to a new CEO.
Binance Coin still has great growth potential
As the cryptocurrency market continues to evolve, leading crypto exchanges such as Binance have the potential to grow. As explained, if institutional investors and large banks enter the cryptocurrency market in the coming years, this entry will cause an increase in demand on the purchasing side of Binance Coin.
An additional factor is that Binance promises to use about 20% of its profits to buy Binance Coin around 50% back. This will also lead to a huge increase in prices in the future if Binance fulfills its promise!
Finally, let’s not forget that digital currencies tend to follow bullish and bearish cycles. Therefore one should always pay attention to technical indicators, fundamentals, crypto news and market sentiment.
How much will the BNB be worth?
While no one can accurately predict the price, you may want to know how much BNB it will be worth in 2021. With a strong community of supporters and a positive market image, the value of BNB can rise.
Wallet Investor, for example, claims that BNB will grow 17.31% in 2021. Gov Capital gives an estimated price of $ 57.53, meaning that if it now invests $ 100, it will earn $ 161.34 in December 2021.Digital Coin Price also predicts that BNB will reach new highs in 2022 and rise to over $ 100 per token.
Should I invest in BNB?
Given its positive future and advantages over other cryptocurrencies, BNB offers some great opportunities for investors.
However, this does not mean that you should invest in Binance Coin. Remember it is not a 100% profitable investment.
Before opening an account and investing in any asset, you should consider the risk-return balance and decide on a risk management strategy to achieve success.