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What is Binance Coin (BNB)?

Binance Coin (BNB) is a cryptocurrency created and issued by the Binance cryptocurrency exchange to promote its own operations and ecosystem. BNB can be used for various purposes within the Binance ecosystem, including paying transaction, withdrawal, listing and exchange fees. BNB can also be used to invest in new IEOs listed through the Binance Launchpad programme.

Users who complete transactions in BNB will receive a discount according to the preset schedule. The details are as follows: A 50% discount on all transactions in the first year; a 25% discount on transactions in the second year; a 12.5% discount on transactions in the third year; a 6.75% discount on transactions in the fourth year; and no discount thereafter. These discounts are intended to encourage traders to use Binance Coins.

Some partnerships have also helped to increase the use of the token. One such partnership is with Uplive, Asia’s number one high-end live video platform. Uplive sells virtual gifts of BNB tokens to its 20 million users. Another platform supporting Binance Coins is Monaco, a pioneering payment and cryptocurrency platform offering BNB tokens on its mobile apps and Visa cards.

How does BNB work?

Binance Coin was initially launched on the Ethereum blockchain and adopted the ERC-20 standard. However, it was eventually migrated to Binance’s proprietary blockchain, Binance Chain. Unlike the Ethereum blockchain, Binance Chain does not support smart contracts. Binance Chain uses the Tendermint consensus mechanism and Byzantine fault tolerance (BFT).

Various types of nodes are involved, including verifier nodes, which are members who vote to verify or invalidate transactions; accelerator nodes, which accelerate the transaction verification process; and witness nodes, which broadcast the transaction to other nodes as part of the consensus process. After each block is generated, the cost is distributed among the verifiers.

Advantages & Disadvantages of BNB

Binance, as the world’s most well-known exchange, has helped BNB grow in popularity. But an exchange and a blockchain are two different things. Success in one of these areas doesn’t indicate perfection in the other. Let’s explore what advantages BNB Chain brings to potential investors, along with some disadvantages that it could improve upon.

Advantages

• Low Fees: Because of the unique PoSA consensus mechanism, the BNB Chain processes more transactions with less validator participation and computational energy. As a result, fees are quite low when compared to other smart contract blockchains like Ethereum.
• Great For Binance Users: If you already use the Binance exchange, having BNB on hand is comparable to having airline reward points. You can use BNB to reduce fees on every trade, for payment on various supported platforms, and to gain access to exclusive NFT drops.
• Unique Burning Mechanism: BNB’s auto-burn feature works to ensure that the coin can deal with the ongoing pressures of supply and demand. Auto-burning will continue until 100 million BNB remain in the market.
• Programmability: Although in its early stages, the use of smart contracts means that the BNB Smart Chain is highly programmable. Any app or protocol built on the network can interact with one another. If the network’s community continues to grow, we may see innovative use cases arise from this programmability.
• Tokenisation: Any item that can be registered in a digital format can be tokenised on the BNB Chain. While tokenisation is commonly used in the NFT space, it has real-world applications in real estate, art, and even gold. Think of it as a digital certificate of ownership for an asset.

Disadvantages

• Centralized: The Binance chains are attached to a private company, Binance. It also uses the PoSA consensus model. In this model, transaction verification is concentrated in the hands of a small group of validators who can afford to participate in the process. These validators also need to give up information that could be used to identify them. When compared to other networks, the BNB Chain leans more towards centralisation, which flies in the face of some of the foundational ideas of crypto. This set-up also creates a very centralised point of failure since attackers only need to target a few key nodes to compromise the system.
• Target for Cyber Attacks: While the BNB Chain itself is safeguarded by cryptographic blockchain technology, Binance the exchange has frequently been targeted by hackers seeking to penetrate hot wallets. This could be a concern for security-conscious investors. In 2022, a Binance bridge’s vulnerability saw $570million stolen.

How to buy BNB?

The easiest way to buy BNB is through a crypto exchange like BTCC. BTCC makes purchasing BNB easy and accessible whether you use fiat currency or crypto. Trusted by over 9.1 million investors across 100 countries, BTCC is dedicated to offering excellent crypto trading service for all trades. If you’re ready to dive in and make your first BNB purchase, register with BTCC today.