The cryptocurrency BNB was created as a service token of Binance. Coins were launched simultaneously with the exchange itself in 2017. The rapid growth of quotations is due to the demand for the site itself and its ecosystem, including various DeFi and CeFi projects. By 2021, BNB was used as a utility coin and as a means of settlement in its own right.
The Binance blockchain on which BNB runs uses a consensus mechanism, Tendermint BFT. It is a simplified version of a protocol called Byzantine Fault Tolerance, and the security of the blockchain is guaranteed. Instant crypto exchange services allow you to exchange this token without any problems.
Using this consensus mechanism means that it is impossible to mine tokens using the principle of bitcoin mining. The blockchain on which BNB operates has a high transaction speed, which is achieved through a minimal set of features. The developers even sacrificed the ability to support smart contracts. At the same time, third-party blockchain projects are allowed to be deployed on the base chain.
Binance Coin in 2021 has about 200 use cases. For example, tokens are used for the following transactions:
- Paying trading commissions for buying cryptocurrency on the Binance and Binance DEX exchanges. This is more profitable than paying the commission with the coins the user trades because of the exchange discounts.
- Payment for transactions made in Binance Chain and Binance Smart Chain.
- Buying goods and paying for services using Binance Card or Binance Pay.
- Purchases and bookings on sites that accept cryptocurrency (e.g., Travala.com, Axie Infinity, etc.).
- Steaming at Binance Liquid Swap.
- Lending and trading, such as on Nexo or Bitcoin Suisse platforms.
Having this cryptocurrency in a person’s account entitles them to participate on Binance Launchpad. In addition, on the Binance exchange itself, you can buy almost any other coin for these tokens.
Binance is constantly burning its coins. This is done to protect against inflation and to raise the exchange rate. A new batch of tokens is destroyed once a quarter. Its size depends on the number of transactions made on the exchange during that time. Usually, it is about 20% of the profit received on commissions. It is planned to continue the procedure until only 100 million tokens remain.
History of BNB tokens creation
The founder of Binance exchange and the creator of BNB was Changpeng Zhao. He is a programmer from China, and he is known for his work with Bloomberg and the Tokyo Stock Exchange. Zhao became interested in investing in cryptocurrency in 2014. SOL to BNB exchange is available on many reputable services.
The tokens were placed through an ICO, but their purchase is not an investment in the Binance exchange. Initially, 200 million BNB were issued, running on the ERC-20 protocol. In 2019, there was a replacement for BNB BEP-2. In 2020, another variety, BNB BEP-20, appeared.
Only 50% of the coins were distributed to ordinary users at the time of issuance, with another 10% going to venture capitalists. The exchange was left with 40% of the coins, and of this share, 15% were reserved.
BNB has one recognized disadvantage, and it is the lack of decentralization. Because of this, cryptocurrency is considered potentially vulnerable. Over the years, Binance has been subjected to numerous hacking attacks. And although it is considered to be quite stable, it does not guarantee complete security in the future.