What is Binance Coin?
Binance has its own crypto called Binance coin (BNB) which fuels the Binance Ecosystem. It has a price of $138 and a market cap of over $20,000,000.
You can store Binance Coin in Binance, Trust Wallet (a subsidiary of Binance), Ledger Wallet, Exodus, Magnum Wallet, etc. You can use it to pay your crypto.com credit card bill, to buy smartphones such as the HTC Exodus or to pay Monetha merchants.
Binance Coin (BNB) used to run on the Ethereum Blockchain ERC-20 standard but now it is the native coin of the Binance blockchain.
The sole purpose of Binance Coin is to stop paying transaction fees in Binance as it charges a transaction fee for payments. Although the transaction fee is less for Binance ($1 for $1000 in payments), this will be really important for frequent users. For the first year, you get a discount of 50%, for the second year - 25%, third year - 12.5%, fourth year - 6.75% and no discount on the fifth year.
What is Token Burning?
On 17th October 2020, Binance completed BNB (Binance Coin)’s 13th quarterly token burn of 2,253,888 BNB (approx. $68,000,000).
But what are token burns and why is its purpose?
A token burn is the process of permanently removing cryptos from circulation, that is reducing the total supply of that crypto. A major advantage of token burning is that it causes deflation.
Inflation is the gradual depreciation of the value of a particular currency in a period of time. Many different currencies have declined due to inflation.
To explain this in simple terms, food, say a loaf of bread, cost less dollars before. But now that value has increased. So, that means that the value of a dollar has also decreased. This is because fiat currencies, currency that are run by the government and are not backed by a commodity, do not have a fixed money supply. Thus, these currencies inflate.
On the other hand, cryptos have a maximum supply. Their source code points out the number of that specific crypto and so, as the requirement of that crypto increases, so will its value. Thus, it will prevent inflation of the currency. As these cryptos become rare, their price will increase and thus cause deflation.
Token burn causes deflation as more coins are ‘burnt’. This decreases the number of that particular crypto, which in turn causes deflation – increases the value. Some cryptos like Bitcoin and Ethereum do not use this.
Binance Coin will continue to make quarterly token burns until the number of tokens burnt is approximately 50% of the max supply, i.e. 170,000,000 BNB. So, Binance coin will burn 100,000,000 BNB.
Binance’s quarterly token burns –
- 986,000 BNB
- 1,821,586 BNB
- 2,220,314 BNB
- 2,528,767 BNB
- 1,643,986 BNB
- 1,623,818 BNB
- 829,888 BNB
- 808,888 BNB
- 2,061,888 BNB
- 2,216,888 BNB
- 3,373,988 BNB
- 3,477,388 BNB
- 2,253,888 BNB
These token burns have gotten the expected result as Binance Coin’s price is surging up. Five days ago (Feb 8 2020), the price of BNB was ~$73 and now it is ~$130!
Coins and tokens
You might have heard the words ‘tokens’ and ‘coins’ when talking about crypto assets. These words may be considered the same amongst a few, but they are totally different.
So, let’s start by looking at what a digital coin is.
Cryptos run on blockchains. When the crypto is the native asset of that company, you call it a coin. For example, Binance Coin (BNB) runs on the Binance Blockchain and thus it is the native asset of the Binance Chain, although it used to run on the Ethereum Blockchain as an ERC-20 token. A few other examples of digital coins are Bitcoin, Ether, NEO, Litecoin, Ripple, Monero, Bitcoin Cash, etc.
A token, however, is a crypto asset that runs on another company’s blockchain. A token that runs on the Ethereum Blockchain is called an ERC-20 token.
Examples of tokens are Tether, Chainlink, etc.
Binance Coin Stats (as of 13-02-2021)
- Price: $129.71
- Rank: 7
- Market Cap: $20,318,718,391.88
- Fully Diluted Market Cap: $22,422,475,819.60
- Trading Volume: $2,441,688,922.28
- Market Dominance: 1.39%
- Circulating Supply: 154,532,785 BNB
- Total Supply: 170,532,785 BNB
- Max Supply: 170,532,785 BNB
- Binance Coin RoI (Return on Investment – Approximate profit earned if purchased at time of release or earliest known price) – 114033.17%
Disclaimer: Digital Wallets News does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
