What is Binance Coin (BNB)? Initially, BNB was created only as a means of paying fees on the Binance exchange and on the Binance Smart Chain network. Now the coin provides the operation of the entire Binance ecosystem, and also gives a discount on the payment of commissions.
BNB is a “official coin” and is only used for domestic payments. In fact, its rate directly depends on the development of the Binance exchange, which even resembles the mechanism of how shares work. Unlike other cryptocurrencies, such as Bitcoin, for example, BNB does not have the goal of replacing fiat money and becoming a ubiquitous means of payment.
Initially, Binance Coin was a token: the coin was based on the ERC20 standard using the Ethereum(ETH) blockchain. But three years ago, Binance made the decision to move the coin to its own network.
Binance Coin is used to pay fees on:
⁃ Binance DEX (decentralized exchange)
⁃ on Binance Chain
⁃ on Binance Smart Chain
⁃ Binance Launchpad
⁃ Binance Liquid Swap
Benefits of Binance Coin
⁃ Fee discounts.
This, of course, encourages investors to use BNB when paying fees, which means it increases the demand for the coin. It is a pity that the discount is not valid forever: after 4 years of use, it will disappear
⁃ There are many different currency pairs with BNB.
This is truly a competitive advantage. All coins available on Binance can be purchased with BNB.
⁃ Transaction speed and high technology.
The exchange processes more than 1.4 million transactions per second. This, in turn, fuels the demand for BNB.
⁃ Destruction of coins.
It directly affects the rate of the cryptocurrency: burning reduces the volume against the backdrop of growing demand for BNB and thereby creates a shortage that increases the rate of the cryptocurrency. It also helps to stabilize the course in a bear market during a downtrend.
Disadvantages of Binance Coin
⁃ Limited functionality.
Here again we return to the original whole BNB – internal payments. Although the cryptocurrency is available and traded with a huge number of currency pairs, it cannot be used outside of a crypto exchange. BNB was not and will not be a means of payment
⁃ Exposure to hacker attacks.
The Binance exchange itself is subject to hacker and phishing attacks every day. It is worth noting that the exchange has never been hacked – the security system on the platform is so powerful.
What conclusion can we draw?
There are more advantages than disadvantages and at times. BNB is about low commissions, high transaction speed, low volatility and fairly wide functionality.
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