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It is hard to imagine a cryptocurrency fan, who doesn’t know about one of the largest and most successful exchange platforms called Binance. However, some of you might have no idea that the platform has its own token – BNB. Considering the fact that Binance’s popularity continues to increase, learning more about its native coin and the way it works might be a good idea.
BNB tokens were created by the platform developers and can be used for inner trading and outside market. Most of BNB features and principles of work are the same as BTC and ETH has, so you can think of this asset as if it was a traditional cryptocurrency that utilizes blockchain technology.
BNB coin uses Ethereum blockchain and ERC20 standard. This means that BNB is similar to ETH and other well-known altcoins that are based on the same technologies. Thus, Ethereum network is something that ensures stable and safe work of BNB. Ethereum has an advanced protection system as well as smart contracts that prevents coins from double-spending and other unlawful actions.
The main difference between BNB and other cryptocurrecnies is that this one allows you to stop paying additional transaction fees when using Binance. Considering the fact that Binance is a trusted and successful platform, an opportunity to use it without paying additional money is something most users would appreciate. And this makes BNB a valuable asset.
Binance provides trading fees discounts for those who possess BNB and trade on the platform. The discount is active during 5 years’ period and has a sliding scale, therefore you can pay 50% less during the first year of using BNB coins. Every next year a discount will decrease.
The main feature of BNB is a so-called Binance Coin Burn. Obviously, when your discount falls over time, BNB coins become useless. However, the platform developers found a way to keep the token from depreciation. In a certain period of time, they use 20% of exchange’s profit to destroy (“burn”) coins that are not currently in use. The experience shows that this makes active coins significantly costlier. The platform owners claim that “burn” sessions will take place until they destroy a half the supply.
The “burns” make BNB’s price grow in a rush. This happens every quarter and can be easily predicted by traders. This means that buying BNB before the “burn” can be a profitable investment, while this makes the coin price grow up to five-fold. While most cryptocurrency giants like BTC are falling in price, this might be an option.