Know Your Crypto: Binance Coin (BNB)
Launched in July 2017 and sold in an Initial Coin Offering for the Binance exchange
Initially deployed on the Ethereum Blockchain as an ERC-20 token, BNB has a market cap of 45,519,036,643, a 24hr trading volume of 1,482,439,946, and the current price standing at $282.43 currently
Binance Coin (BNB) launched in July 2017, first being sold in an initial coin offering (ICO) for the Binance exchange. It was initially deployed on the Ethereum blockchain as an ERC-20 token. Binance created 200 million tokens, selling half the supply to investors at the ICO. Each token went for 15 cents ($0.15) at the sale. 40% of the supply, or 80 million tokens, went to the founding team, with 10% (20 million BNB) going to angel investors in the project.
From the ICO, the exchange raised $15 million in Bitcoin and Ethereum from the sale of the 100 million BNB tokens. Half the funds were channeled towards branding, marketing and education initiatives; 35% of this was used to upgrade the exchange’s systems and platform; and 15% was set aside as reserve in case of unforeseen disruptions.
Less than a week after completing the ICO, Binance launched its exchange. Later on, the exchange launched the Binance Chain, its own blockchain network. BNB would become the native token on the new network. However, it was already deployed on Ethereum. To solve this, the exchange conducted a token swap in which users exchanged their ERC-20 BNB tokens for the new Binance Chain-based BNB tokens in 2019.
It didn’t end there for BNB. Binance exchange recognized that there was a great need in the market for a blockchain network that could rival Ethereum but without the restrictive fees or slow transactions. Its Binance Chain was limited in terms of transaction processing and its ability to handle smart contracts.
The exchange built Binance Smart Chain in 2020, a new network that offered additional capabilities, the key one being smart contract support. BSC is compatible with the Ethereum Virtual Machine, allowing developers to easily port their applications between the two. BNB thus became the native token of a new network, BSC, with which it has become mostly associated.
Being the native token on Binance Chain and Binance Smart Chain, BNB is used to pay the transaction fees on both networks. Just like Bitcoin, it’s also used for payments to supported merchants, transfer value and even as a speculative asset.
Uniquely, BNB offers an incentive to traders who use the Binance exchange. Paying for trading fees in BNB earns users discounts, going as high as 25%. This gives it an extra appeal to traders over many of its rivals and leads more people to hold it.
Additionally, Binance holds a quarterly BNB token burn in which it uses its profits to buy back some of the BNB in circulation and eliminates them from the ecosystem permanently. This reduces the supply and aims to give the price a boost. The goal for Binance is to eliminate 100 million BNB, which is half the total supply.
Since it was sold on the ICO for $0.15, BNB has shot up over the years to become one of the top five biggest cryptocurrencies.
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