In the previous two posts on Binance, we covered Binance Chain and the Binance DEX. Here we want to explain in a bit more detail what BNB is, the nature of the ecosystem Binance is building, and the vision behind it.
What is BNB?
BNB stands for Binance Coin. It was initially launched on the Ethereum blockchain but has since been moved to Binance Chain.
The coin can be used to pay for trading fees on the Binance exchange, to participate in token sales held on the Binance Launchpad, to make payments, and it is used to power the Binance DEX.
As part of its initial coin offering (ICO) Binance launched BNB on the 26th of July 2017, raising $15 million. At that time, there was a total supply of 200 million coins: 100 million were offered to investors, 80 million were kept by the team to grow the platform, and 20 million were distributed to major investors.
BNB currently stands at $16 dollars with a market cap of $2.6 billion. Considering the coin initially sold for $0.10, this is a significant achievement. But what makes BNB special, is how this growth was achieved and how it fits into Binance’s larger plan.
What are some of BNB’s unique features?
Ever three months, Binance burns (i.e. destroys) a portion of its BNB reserves relative to the amount of trading volume of the BInance exchange. This strategy is set to continue until half of the total supply will have been burnt. This is one of the methods in which Binance drives the value of BNB - by creating demand and reducing supply.
Binance DEX is Binance’s decentralised exchange and BNB is used for all transactions that occur on the blockchain.
Binance was one of the first exchanges to offer the possibility of purchasing tokens directly on their platform. Using BNB, new tokens such as BTT, FET, CELR, MATIC, and ONE, have been launched, and what’s special is that with trading pairs becoming available less than a week after these sales, Binance is able to provide clients with near-instantaneous liquidity.
What’s behind Binance’s success?
Binance is more than just an exchange - it operates an entire ecosystem, which is comprised of an academy, a foundation, an incubator, a platform to launch tokens, a research house, a decentralised hot wallet, its native token, and its custom-built blockchain.
It’s driven by a vision to increase the freedom of money, globally, and by creating an ecosystem Binance is effectively telling the world they can choose to participate, contribute or stay out of it - but not to stop it.
In line with this vision, Binance makes it easy for beginners to participate in trade. While KYC is part of the onboarding process, it is not as thorough as some of the other bigger exchanges. Furthermore, as the company is expanding in terms of its provision of fiat on and off ramps, it’s become easier for people to move from fiat into crypto, and back.
Part of Binance’s success can also be attributed to CZ - as the founder is known. He maintains an active presence on social media, and interacts with users and enthusiasts in a down-to-earth manner.
For us at Bitspark, we believe companies such as Binance are crucial in driving the industry forward and in a similar way have set out to build an ecosystem that allows for multiple points of differentiation from and integration with conventional financial infrastructures.
For example, with our mobile app it is possible to deposit crypto into Binance bought with cash like Hong Kong dollar, or withdraw funds from Binance and convert them back into cash.