Binance Coin (BNB) - a utility token of the largest cryptocurrency exchange

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Tokeneo
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2 min reading

Binance Coin (BNB) is a utility token of the largest cryptocurrency exchange - Binance. Read this article to learn more about Binance native token.

bnb binance coin

Binance Coin (BNB) is a digital token based on Ethereum's blockchain technology (ETH) created by the Binance crypto exchange, which currently has the largest trading volume in the world. Binance Coin acts as a utility token on the exchange, serving not only to raise funds for the development of the exchange platform during the ICO in July 2017, but also to reduce transaction fees for customers who use the BNB to pay for operations on the Binance. The maximum supply of the BNB  was set at 200 million units, but it is systematically reduced through so-called 'burning' (Proof of Burn), which makes the BNB deflationary. Binance Coin was the first utility token created by the crypto exchange and proved to be a successful idea.

The creators of Binance (and thus also BNB) are Changpeng Zhao and Yi He from China, who in a few months managed to build the largest crypto exchange in the world.

The name of the exchange Binance is a combination of the words "binary" and "finance".

BNB functions - what is Binance Coin for?

BNB is a utility token of the Binance exchange, initially used to raise capital for the development of the platform during the ICO ($15 million). The main function of the Binance Coin is for users to pay fees on more favourable terms, thanks to the discounts.

For the first year since the launch of the stock exchange (until August 1, 2018), the discount for paying fees with the BNB was 50%, in the second year it was halved to 25%, in the third year it will be reduced to 12.5% and in the fourth (last) year to 6.75%.

Types of exchange fees that can be paid with the help of the BNB are: transaction fees, commissions on the withdrawal of funds, fees for listing new instruments, voting for new tokens.

An extremely interesting and unique function of BNB tokens is their regular "burning", i.e. irretrievably reducing the maximum number of available units, which initially amounted to 200 million BNB. Each quarter, the board of the Binance exchange buys BNB tokens from the market for 20 % of the proceeds of the transaction fees and then 'burns' them (Proof of Burn), that is, it permanently removes from the market. 

Thanks not only to the limited but also decreasing maximum supply, the prospects for Binance Coin quotation growth are extremely promising, due to the strong deflation phenomenon.

In August 2018, Binance's CEO, Changpeng Zhao, revealed that more than 80% of his employees receive remuneration in the BNB. 

Binance Coin (BNB) ICO 

The  Binance Coin's ICO was ultimately to raise funds to launch the exchange platform. The sale of BNB tokens started on 1 July 2017 and lasted three weeks, until 21 July. Of the maximum number of 200 million tokens created, half (100 million) was allocated for public sale, 80 million for developers and the stock exchange's founding team and the remaining 20 million for advisors and angel investors. During the ICO, all of the 100 million tokens were sold at a price of about 15 cents (USD), raising USD 15 million in bitcoin (BTC) and ethereum (ETH). Meanwhile, on July 14, 2017, the Binance platform launched beta, initially trading BTC, ETH, LTC, NEO and BNB itself.

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