The utility token for Binance, one of the biggest cryptocurrency exchanges by volume, is called Binance Coin (BNB). The token can be used by traders to cover platform fees and by programmers to power applications like smart contracts on the Binance Smart Chain (BSC).
BNB has created a wide variety of use cases and practical applications and is one of the top five cryptocurrencies by market valuation as of April 2022. But there have been regulatory challenges for this cryptocurrency platform both domestically and internationally.
How it works
The Binance platform has introduced a decentralized exchange (or DEX), a peer-to-peer (P2P) cryptocurrency trading option, and two alternative blockchains: Binance Chain (BC) and Binance Smart Chain over the years (BSC).
It should be noted that the DEX, which debuted in 2019 and allows users to trade with one another, is not considered a centralized exchange (CEX), but the original Binance exchange is.
So, what is BNB? The native token known as Binance Coin was created in 2017 to raise funds for the platform. Since then, it has grown along with the platform’s various iterations and evolutions. The majority of Binance-based transactions include BNB in some fashion.
Reduced Trading Charges
BNB offers users a significant reduction in trading expenses, first and foremost (when users hold BNB and pay platform fees in BNB). In reality, Binance stated in 2018 that the long-standing 25% trading fee discount would be extended through July 13, 2022, at 11:59 p.m. (UCT).
BNB has become a crucial component of paying for transactions — including dApps and smart contracts — across the Binance blockchains as Binance has evolved.
Advantages of BNB
Being affiliated with the Binance Exchange, the biggest cryptocurrency exchange in the world is extremely advantageous for it.
It implies that they have access to some of the best resources to create the coin whatever they want. Additionally, they are significantly faster than others at responding to market developments.
Additionally, the coin offers a high level of usability that other coins do not yet have and some of the best use cases in the cryptocurrency space.
For starters, the fact that the Binance Visa Card transforms the coin into fiat when used for payments might significantly improve the use of BNB. BNB is now practically useful everywhere.
These days, the best benefit is probably that Binance Coin is a less expensive version of Ethereum. Many developers switched to the BSC in February 2021 as Ethereum fees rose.
Disadvantages of BNB
The fact that the exchange allegedly owns 80% of the tokens is the Coin’s biggest drawback.
This demonstrates how immensely centralized it is. They can choose who can be a validator on their blockchain with these many tokens. This may be having excessive control over the cryptocurrency.
With the emergence of DEXs in the future, the Binance Exchange’s days may be numbered. DEXs are decentralized exchanges that connect buyers and sellers directly by eliminating the middleman.
One of the better instances of a DEX that is expanding quickly is Uniswap.
However, it is unclear exactly when the Binance Exchange might be devoured by DEXs. Even years from now may pass. However, it is something that traders should be aware of.
So, to sum up, centralization is Coin’s main problem in many different ways.
Real-world Payments
Like several other types of cryptocurrencies, businesses may accept payments in BNB for online services like booking travel or entertainment.
Investing with BNB
It can be used on some platforms to purchase equities, exchange-traded funds (ETFs), and other assets. BNB may occasionally be used as loan collateral.
Initial Coin Offerings (ICOs) that are listed through Binance’s Launchpad program can also be purchased using Binance Coin.
