What is BNB and How Does It Work?

BNB (Binance Coin) is the native token of Binance’s blockchain called BNB Chain. But what’s the purpose of BNB in the Binance ecosystem? In this article, we will explain everything you need to know about BNB. Keep reading to learn more.

Exploring BNB

BNB was introduced by crypto exchange Binance in 2017. It serves as a utility token within Binance’s ecosystem. The exchange customers can use BNB to pay transaction fees. Also, the token allows them to participate in cryptocurrency sales.

BNB is a top 4 crypto asset based on market capitalization, only behind Tether, Ethereum, and Bitcoin. BNB is an abbreviation for “Build N Build,” symbolizing Binance’s commitment to collaborating with other industry players to enhance its ecosystem.

Before BNB launched, Binance managed to raise more than $15 million via an ICO (Initial Coin Offering). One hundred million BNB tokens, or half of the total supply, were sold through the ICO. At the time, each BNB coin traded for $0.11.

How BNB Works

Originally, BNB entered the market as an ERC-20 token, meaning it was deployed on Ethereum. However, Binance later migrated the token to the BNB Chain, which consists of two interconnected chains:

BNB Smart Chain: Facilitates the development and deployment of smart contracts. Several decentralized applications, including Binance decentralized exchange, have already been built on this blockchain.

BNB Beacon Chain: This network enables governance activities, allowing users to stake and vote on various proposals. Moreover, the BNB Beacon Chain is also compatible with EVM (Ethereum Virtual Machine).

BNB’s use cases have increased over time. Besides being used to pay trading fees, the token gives holders access to Binance Launchpad, a feature that allows them to invest in various crypto projects that are yet to be launched. It is worth mentioning that BNB holders are able to save 25% on both spot and margin trading fees.

How BNB Chain Works

The BNB Chain adopts two consensus mechanisms to secure the network: Proof-of-Authority and Proof-of-Stake. To become a validator, you are required to stake a minimum of 10,000 BNB.

What Makes BNB Special?

Here are features that set BNB apart from other digital currencies:

Reduce Trading Fees: With BNB, holders are able to enjoy discounted trading fees on the Binance crypto trading platform.

Token Sales: BNB allows holders to invest in soon-to-be-launched crypto projects, most of which have been successful.

Staking Rewards: You can delegate your BNB holding to a validator to earn staking rewards.

Regular Token Burns: Binance regularly reduces BNB supply through burning to boost the token’s value.

Tokenomics of BNB

As mentioned, BNB has a total supply of 200 million tokens. Half the supply was sold via an ICO, while 20 million tokens were distributed to investors. Eighty million BNB tokens were allocated to founders.

BNB Token Burning

Binance integrated an Auto Burn functionality into BNB’s code in early 2018. Since then, over 35 million BNB tokens have been burned. Binance seeks to continue the burns until half of the tokens are destroyed.

How to Buy BNB on Binance

Purchasing the BNB token on Binance is super simple. You only need to create an account and fund it with USDT. After that, go to the spot market and search for the BNB/USDT trading pair. Next, place a buying order using “Market” as your order type. BNB will arrive in your Binance account shortly.

Other trading platforms where you can buy BNB include KuCoin, OKX, HTX, Bybit, and BingX.

BNB Wallet

If you wish to transfer your BNB out of Binance, it is important you pick a secure crypto wallet to store your tokens. There are several reliable cold and hot wallets for storing your BNB tokens. If you would like to maintain the crypto asset offline, go for SafePal, Trezor, or Ledger. Trust wallet is the best option for storing BNB online.

Final Thoughts

Considering the developments happening within Binance’s ecosystem, BNB’s future looks bright. But like any other digital asset, BNB is subject to volatility, so keep that in mind when buying this token.