What is Binance? How Can You Buy It? CoinFlip Explains
Cryptocurrency Explained: Binance
2020 has been a big year for cryptocurrency. Today, as we approach the end of this year, the crypto market is worth more than $560 billion. As the US dollar weakens in the face of the COVID-19 crisis, the crypto market stands strong. Even Wall Street has acknowledged the emerging asset class and plans to incorporate crypto in its indexes beginning next year.
If you've been thinking about investing in some bitcoin, ether, or litecoin, then there is no better time than the present, and it’s easy to do. To buy crypto, you can visit your closest CoinFlip ATM, check out CFPreferred, or you can use a cryptocurrency exchange.
Exchanges help people trade cryptocurrency and digital assets for other assets. One example of this is trading cryptocurrency for fiat currency or money printed by governments like the dollar, euro, or yuan. Another example is trading crypto for another crypto—for instance, you could trade BTC for LTC or ETH.
Among the most popular crypto exchanges is Binance. Created in 2017 by Chanpeng Zhao (referred to as CZ in the crypto space), Binance is known for its crypto to crypto trading as it does not support fiat currency. It offers fast trades by processing 1.4 million orders every second. It ranks as the number one exchange by trading volume, with more than $5 trillion in crypto traded every day.
When using Binance Exchange, you can trade, list, fundraise, or withdraw crypto. Binance also provides public wallets for its users. Additionally, those wishing to launch a coin can use Binance for raising funds through Initial Coin Offerings (ICOs).
Binance established this level of popularity based on its low transaction fees, high liquidity, and the ability for additional discounts when paying transaction fees with its native cryptocurrency Binance Coin (BNB).
Binance Coin (BNB)
Binance Coin is the native coin of the Binance Chain and is used to fuel the Binance Ecosystem. Binance Coin was initially hosted on the Ethereum network but moved to its own network, the Binance Chain, after its inception in 2019.
Binance launched BNB through an Initial Coin Offering in 2017. During the ICO, Binance issued the coins at 1 ETH for 2,700 BNB or 1 BTC for 20,000 BNB. All BNB tokens were sold within 20 days, raising approximately $15 million.
The total supply of BNB is capped at 200 million coins - all of which were released during the ICO. One hundred million of those coins were released to the public, 80 million were allocated to the Binance team, and 20 million were given to angel investors. However, currently, only a little more than 144 million BNBs are in supply due to periodic coin burning events.
What is coin burning?
Coin burning is the process of permanently removing coins from circulation, reducing the total supply. Essentially, burning is the opposite of minting. Binance does this periodically to increase the scarcity of the coin, which theoretically pumps up the price. Binance has scheduled BNB burning events every quarter until 50% of all BNB are finally destroyed. Once Binance has completed all coin burning events, there will be 100 million coins left.
As of October 2020, there have been 13 BNB burns. The most recent burn destroyed more than 2.2 million BNB, which was the highest-ever burn in terms of dollar value and the fourth highest in terms of BNB burned.
Why invest in BNB?
Binance Coin consistently ranks among the top ten cryptocurrencies by market value, making it relatively stable compared to other coins. Binance Coin has had a strong year - since the beginning of the year, the price of BNB has doubled. Currently, BNB is worth around $30 per coin.
Investing in BNB is worth considering If you often use Binance Exchange because you get a 10% discount on trading fees if you pay with BNB. Additionally, BNB is an accepted form of payment by a growing number of merchants.
Binance Smart Chain
Binance Chain is the home of the BNB token and is designed for fast trading. However, this design makes the blockchain inflexible compared to other blockchains like Ethereum, which support decentralized applications (DApps). To solve this problem, Binance created Binance Smart Chain, a separate blockchain that you can use to develop DApps similar to Ethereum.
Binance Smart Chain was built with cross-chain compatibility with Binance Chain to ensure the two blockchains run independently and in parallel. If the Binance Chain were to go offline, the Binance Smart Chain would continue to run without any hindrance and vice versa.
Binance Smart Chain has a 3 second block time and uses Proof of Stake Authority (PoSA). PoSA is where participants stake BNB (or put up funds for collateral) to validate transactions. If they propose a valid block to add to the chain, they receive the transaction fees from the block's transactions.
With PoSA, there are no miners, specialized computers, or massive energy consumption - all that is needed to stake is a regular computer and a minimum amount of cryptocurrency to offer as collateral, which is called a stake. PoSA is secure because If you try to cheat - you will lose the currency you staked. Therefore, in PoSA, acting honestly is more profitable than acting dishonestly.
Binance Decentralized Exchange (DEX)
Currently, Binance Smart Chain's most prominent DApp is Binance Decentralized Exchange (DEX). Released in 2019, Binance DEX is an extension of the central Binance.com exchange. It allows users to trade cryptocurrencies while retaining full control over their funds with limited to no input from a third party.
Are you interested in buying BNB? You can easily and safely purchase BNB by using a CoinFlip ATM. Find your closest location!