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What Is Binance Coin Used For?

Binance Coin (BNB) is an ERC-20 token which means it is a project that utilizes the Ethereum blockchain. It does not have it’s own blockchain network.

BNB has become extremely popular because of the meteoric rise of the Binance cryptocurrency exchange over the last year and a half (more on that later). Binance Coin can be considered a utility token because it allows users to access certain features in a specific environment. In this case Binance Coin can be used to pay for a variety of different things. Here is a snippet from the whitepaper:

Binance is also in the midst of developing a decentralized exchange (Dex for short) and Binance Coin could play a pivotal role in the operation of this project.

As you can see this coin is quite useful. By allowing investors and traders to receive discounts by utilizing Binance Coin the exchange incentivizes the use of the token. Traders and investors will gladly use it and this has been a main driver of the exchange’s success over the last year or so. It doesn’t hurt that the exchanges UI is easy to use, it lists most of the relevant tokens available, and its customer service is top notch.

How Is Binance Coin’s Supply Controlled?

Binance held an ICO for BNB, originally selling 100,000,000 coins to those that wanted to participate. The founding team was allocated 80,000,000 coins and the other 20,000,000 went to angel investors. You can see the breakout below:

Each quarter the Binance exchange uses 20% of its profits to buy back BNB. Think of this like a share buy back that a traditional company would engage in. Binance will then destroy these coins, in turn reducing the supply until 100,000,000 BNB remains outstanding. All in all, half of the originally issued coins will be destroyed.

This means that the amount of BNB outstanding will be reduced over time. Based on basic economic principles this should increase the value of each Binance Coin. If Binance becomes more popular as an exchange and its decentralized exchange is a success then the reduced supply should increase the value of each token as well.

Who’s Behind the BNB Project?

The Binance exchange, as previously mentioned, is behind the Binance Coin project. The team is led by Changpeng Zhao (aka CZ) who is the CEO of Binance.

CZ got his start in the cryptocurrency and blockchain industry with the OKCoin project where he served as a co-founder and CTO of the project. OKCoin is one of the most popular digital asset trading platforms in the world. It mainly provides spot trading services between the US dollar, Euro, and Japanese Yen as fiat currencies, and Bitcoin, Litecoin, Ethereum and other digital assets to customers around the globe.

CZ went on to creare BijieTech, which is a company that provides software services to traditional exchange operators. The company was founded in the fall of 2015 and has brought on around 30 exchanges in Asia under its umbrella. The company has been quite successful, bringing in revenue of over $5M per year.

He now exclusively focuses on the Binance and Binance Coin project, having relinquished the position of CEO of BijieTech to his successor. Changpeng has extensive experience in both the exchange and cryptocurrency industries and he is considered one of the most respected figures in the industry known for his cool head and his logical approach to solving problems.

To learn more about the members of the Binance Coin please refer to the Team section of the white paper.

Should I Invest in Binance Coin?

BNB is a very intriguing project because it’s indirectly based on the success of the Binance exchange which is the number one exchange based on daily volume. It continues to grow within Asia and other parts of the world. Any cryptocurrency trader or investor has heard of or used the exchange. And the customer service provided to customers of the exchange has been fantastic which is unusual in this industry.

If you trade frequently on Binance then holding BNB is a no-brainer. Not only can you bet on the long term growth of the exchange, but you can also receive reduced trading and withdrawal fees on all the trades that you make. Don’t forget that the decentralized exchange project could be a game changer and BNB stands to gain even more utility value if it is successful.

Binance Coin is one of the few projects that has (1) proven it has utility value and (2) is indirectly backed by the growth of an actual business. This makes it a very exciting investment opportunity but, of course, please do your own research before investing.