What Is Binance Coin (BNB)?

Binance Coin (BNB) is the cryptocurrency issued by the Binance decentralized exchange (DEX), which is one of the largest cryptocurrency exchanges by volume. The whitepaper explains that Binance is a portmanteau for “binary finance” and offers various decentralized finance (DeFi) services on a user-friendly platform. Users can earn yield or trade with cryptocurrency using the exchange's support services.

Before Binance, crypto exchanges were created by developers who lacked experience in finance or running a decentralized exchange. Those were simple exchanges incapable of dealing with large volumes of trades. The lack of liquidity on exchanges compounded traders' troubles, which affected both retail and institutional participants. All these factors seriously hampered the development of a robust crypto exchange for the masses. With a vision to provide a secure, efficient, quick, and user-friendly decentralized exchange, Binance's team brings a wealth of experience to the table. Security has been thoroughly tested and validated on the platform. Binance jump-started through its extensive network of cryptocurrency partners to effectively serve the global market.

Catering to this goal, Binance created a decentralized exchange and aims to execute 1,400,000 orders per second. Initially, the exchange rolled out the following features:

• Spot trading

• Margin trading

• Futures trading

• Anonymous instant swap

• Decentralized exchange

Gradually, Binance has evolved into a multi-faceted DeFi platform that aims to offer its users many financial solutions in addition to trading and exchange. One such feature of the platform is Binance Earn. The Binance Earn service aspires to be a one-stop shop for DeFi on the platform. The service offers multiple benefits, including a funds account where users may deposit cryptos and earn interest.

Another notable feature of the platform is the Secure Asset Fund for Users (SAFU). Binance established the SAFU as a contingency insurance fund to secure users' assets. Essentially, this fund was created to compensate users in case fraudulent elements stole their funds from the exchange. It doesn't end there, though. A liquidity pool, a staking account, and a debit card with improved security features are also available through Binance.

BNB is an acronym for "build and build." BNB is the native utility token of the platform. BNB was created for lesser trading fees on the Binance Exchange and is also used to pay for transaction fees on the platform. In addition, BNB is also used to:

• Pay fees to activate smart contracts on the chain. Smart contracts are just like regular contracts; however, instead of being drafted on paper, these contracts run in the form of protocols on the blockchain.

• Stake on selected validators and receive rewards

• Perform cross-chain operations

BNB was initially launched on Ethereum but was later switched to the Binance Chain, designed for ultra-fast trading. However, due to the intrinsic constraints of blockchain systems, the chain does not have much flexibility to use smart contracts. As a result, scalability was limited. To address this, developers designed the Binance Smart Chain, a new blockchain that is fully equipped to produce high-performing decentralized applications (DApps). The Binance Smart Chain runs alongside the Binance Chain but uses smart contract functionality and is Ethereum compatible. The objective was to retain Binance Chain's high speed while incorporating smart contracts into its ecosystem.

To stay relevant in the ever-evolving crypto space, Binance Chain and Binance Smart Chain (BSC) became BNB Chain in February 2022. The goal is to build the infrastructure to power the Metaverse, the world's parallel virtual ecosystem. MetaFi is a combination of two words: "meta" stands for "meta ecosystem," and "Fi" stands for "DeFi." MetaFi is a concept that brings together several projects such as Metaverse, DeFi, and NFTs under one umbrella.

Along with powering transactions on BNB Chain, BNB also acts as a governance token. Holding BNB tokens on the platform also enables users to participate in the platform governance framework in order to ensure complete decentralization of the Binance Coin platform. The platform, through stringent governance measures, seeks to benefit users, projects, and developers connected to the BNB Chain community.

History of Binance Coin (BNB)

Changpeng Zhao, a veteran of traditional Wall Street finance and cryptocurrency, launched Binance in 2017. Changpeng is famously known as CZ in the crypto community. He is the founder and CEO of BijieTech, a company that supplies exchange operators with cloud-based exchange solutions. CZ was previously the cofounder and CTO of OKCoin and the cofounder of Fusion Systems.

Binance's cofounder and CTO is Roger Wang, who has over a decade of experience in the financial industry.

James Hofbauer is a cofounder of BijieTech and its chief architect.

Binance funded its initial operation through an initial coin offering (ICO), a crowdfunding mechanism where financers received BNB tokens. The team conducted the ICO in three phases from July 1 to July 21, 2017. Binance distributed 10% of the total BNB tokens to initial financers, 40% to founders, and the remaining 50% to the various participants through the ICO process.

How Are New Binance Coin (BNB) Tokens Created/Staked?

Binance Smart Chain uses the proof-of-stake consensus algorithm. The platform leverages the proof-of-staked-authority (or PoSA) technique, in which participants stake BNB to become validators. If they propose a legal block, they are paid from the transaction fees. Unlike many other protocols, there is no block reward for newly created BNB that is not minted continuously. On the contrary, as the Binance team burns coins periodically, the amount of BNB decreases over time. Cryptocurrency burning is when a fraction of tokens are sent to a wallet with no private key. Tokens are usually burned to reduce availability and increase market value.

How Many BNB Tokens Are There?

There were 200 million BNB tokens at genesis. According to the whitepaper, Binance aims to use 20% of profits to repurchase BNB from holders and burn each quarter. This continues until the network repurchases 50% of all BNBs. Eventually, 100 million BNBs would remain in circulation.