What is BNB? An introduction to Binance Coin
Binance Coin (BNB) entered the crypto scene in 2017 and has since become the fourth largest coin by market cap. Here's what you need to know about the Binance exchange’s native coin and how it helps fuel the Binance Smart Chain.
By Geoffrey Lyons
Binance (“Bitcoin” + “finance”) is by far the world’s largest cryptocurrency exchange, with nearly 40 million weekly visits and $17 billion in daily trading volume. Its founder Changpeng Zhao, better known as “CZ”, is a living legend in the crypto space, boasting nearly three million Twitter followers and crowned by Forbes as a ‘Prophet of Boom’ along with 19 other ‘crypto’s richest.’
That’s Binance the exchange, so what is Binance coin?
This article will explain the history of Binance Coin (BNB), what it is, and where it can be purchased.
Why was Binance Coin created?
Binance Coin was created in June-July 2017 to fund the launch of the Binance exchange. Half the tokens were sold to the public, with the other half distributed to angel investors and Binance’s founding members. BNB’s initial use was to serve as a token for discounted fees on the exchange (as we’ll see, its use cases have since grown), with users initially enjoying a generous 50% off trading fees. The BNB discount is scheduled to ultimately decline to zero, and currently sits at 25%.
Largely due to the success of the coin’s ICO, the Binance exchange propelled to the top three exchanges in just 143 days after its inception. It now towers above its competitors, with Coinbase a very distant second. BNB therefore isn’t merely a byproduct of the exchange, but was instrumental to its meteoric rise. If there was no BNB, Binance may not have attained the name recognition it commands today.
What is BNB?
Binance Coin, also known as BNB, has evolved considerably since its 2017 launch. Moving beyond being a utility token for trade discounts, the coin is now also used as “gas” for the Binance Smart Chain.
Launched in September 2020, the Binance Smart Chain (BSC) is a blockchain network built to run smart contracts, and is a major competitor to Ethereum. By using the Ethereum Virtual Machine as well, BSC is also able to run Ethereum-based applications.
So where does BNB fit into this? The consensus model for BSC is proof-of-stake, so validators on the smart chain have to “stake” their Binance Coins. This has seen the demand for BNB explode, with today’s price currently over 1500% what it was at BSC’s launch. At the time of writing, BNB has a market capitalisation of $54bn, the fourth largest behind Bitcoin ($707bn), Ethereum ($273bn), and Tether ($62bn).
As the DeFi and crypto markets continue to grow, and more projects are run on BSC, the demand (and therefore price) of BNB is expected to rise, though nothing is certain. Undoubtedly, CZ will throw his weight behind the smart chain in an effort to challenge Ethereum’s market dominance and attempt to win what some are calling the smart chain contract wars. It’s definitely a space to be watched, with BNB serving as a barometer for how Binance is faring.
What is BNB used for?
Like other cryptocurrencies, BNB can be held as a store of value or used as a currency by accepted providers. This is in addition to its role as a discount token on the Binance exchange, which offers holders of BNB opportunities they can’t get elsewhere. For example, BNB can be used to acquire coins introduced on the Binance Launchpad, Binance’s exclusive ICO platform.
Outside the Binance ecosystem, BNB can be spent on a wide range of goods and services. According to the Binance website, BNB is accepted by hundreds of online shopping merchants, gaming sites, and the blockchain-based travel booking platform Travala, where it can be used to pay for flights, rental cars, and hotels.
Again, BNB is also used to fuel the Binance Smart Chain. Validators on the smart chain power the network by staking BNB and processing transactions. Just like Bitcoin miners, who earn BTC for mining, a validator’s work is rewarded with BNB tokens. BNB is therefore the bread and butter of the Binance Smart Chain. It’s the economic incentive that keeps the networking running and growing.
Where to buy BNB
You can buy BNB directly on MoonPay or through one of our many partner wallets using a credit card or bank transfer. MoonPay's simple widget allows you to purchase Binance Coin quickly and securely, using your preferred payment method and is soon to be supported for our US customers as well.