Hello crypto pioneers, adventures, and people who will push the world to the next stage of adoption. Today, we are going to be looking at an extremely exciting digital asset that officially hit the market on April 2019 as a stand alone blockchain. That project is non other than Binance Coin. We are going to cover what Binance coin is, what a utility token is, benefits of holding BNB, and then ultimately let you know my opinion on if BNB is a good buy or not. Speculatively speak of course.
Without further delay, lets dive into what a utility token is by definition, so you can see how BNB stacks up against this general definition.
Nothing should be considered investment or financial advice. Enjoy the ride.
What is a Utility Token
For those that are unfamiliar with the terms, lets quickly discuss. A token is basically a digital asset that is hosted on top of a blockchain. For example, the most popular Dapp platform, Ethereum, has a ton of tokens that are offered across the market, all are hosted on the Ethereum blockchain. That means, they do not have their own blockchain, but rather use the Ethereum chain to confirm transactions, host data, and service their applications to users across the globe.
The tokens also have classifications. One of which is referred to as a Utility Token. For a token to become a utility token, it must follow these rules below:
- Finite supply of the tokens
- There needs to be a clear function for the token
- The token needs to bring value to the holders.
Now that we know what a utility token is, we can start looking into Binance coin, and I’ll let you see for yourself how it stacks up to these requirements.
What is Binance Coin
Binance coin or BNB is the crypto currency that represents the top exchange on the market Binance.com. It was initially launched as an ERC-20 token on the Ethereum blockchain during the Binance ICO, and in April 2019 became its own blockchain.
Lets look at four ways holders can use BNB within the Binance ecosystem.
Benefits Of Holding BNB
- The best use for BNB coins is for trading fee discounts on the Binance exchange. This is a huge use-case and amazing for most traders across the market. In total, BNB holders that are trading on the Binance exchange could potentially reduce trading fees up to 75% in some cases.
- Initial exchange offerings (IEO) are the second largest benefit for holding BNB. Binance initiated their Launchpad for new startups in the crypto industry in early 2019. Instead of the traditional ICO where users are required to do their due diligence and VET projects, Binance does all of that for you only offering the best projects to their launchpad users. Most importantly, all investments have to be made in BNB, and only holders with a certain amount of BNB will be considered as investors through lottery systems.
- The third feature of BNB we will mention is a supply and demand benefit through Binance profit buy backs. Binance preforms these buy backs every quarter. What happens is the main exchange creates a certain amount of exchange revenue. Within this revenue, the company spends 20% of it to purchase BNB tokens back from the community and burn them. What this does is over time decreases the total supply and raises the price of their token through the laws of supply and demand. The company aims to buy 50% of the total supply back which is around 100 million tokens in all.
- The last use case is Binance community votes for new listings. Holders of BNB are allowed to vote on which coins the exchange adds onto the platform. This has sparked some huge debates due to voting fraud, but it still offers some great utility for the coin.
Another utility for the BNB token besides the discounts, is the dust implementation that the exchange added. If you have ever traded on Binance, then you know that over time you accumulate small fractions of multiple coins in your wallet that are sometimes too small to even trade. This can add up especially for active traders, and Binance enables traders to turn all of that into BNB tokens through a simple backend conversion.
In addition, there are plenty of marketplace use cases like lending, purchasing, and sending on the Binance platform and their affiliates for the BNB token.
In addition, the BNB token is hosted on top of its own blockchain – Binance Chain. The main purpose of this blockchain is to be a source for issuing and exchanging decentralized assets, in a decentralized way.
The Binance chain uses a Tendermint BFT consensus algorithm and has an implemented application layer as well. In addition, the chain has three main types of nodes:
- Validator Nodes – Responsible for maintaining the chain, data, and validating transactions. Fees are collected and dispersed amongst the validators.
- Witness Nodes – Responsible for receiving the transactions, and broadcasting them out to the network. These nodes do not not validate the transactions.
- Accelerated Nodes – Provide a more secure and quicker access point of entry to the chain if need be.
Sadly, Binance chain does not offer smart contracts for development, so developers will have to go to other chains like Ethereum or EOS to build upon them.
Is BNB A Good Buy
The main question then turns to – is BNB a good purchase in the crypto industry?
Well, if you take the coin from a pure utility stand point, with the laws of supply and demand taken into consideration from the coin burns, and you believe that the Binance exchange will maintain a top spot for traders, then the answer is yes.
Now, I would never tell anyone to purchase a cryptocurrency, but if you are simply looking at fundamentals and speculating on what is a good buy versus what isn’t on the market, then BNB would be considered a good buy.
Binance has pulled out all the stops making their BNB token a fully functional utility asset, and marketing it for long-term success through multiple venues. The largest hindrance to this coin and the exchange long-term can only be the governments and powers at be trying to shut down the crypto economy by targeting the largest exchanges which Binance would be considered as one.
Given that the crypto industry continues its growth, and the world does not turn on Binance, then that should not happen. In the next 10 years, we will probably see both the exchange and the token experience huge growth and use-cases. Clearly, this is a great token to consider.
Full disclosure, I do not currently own BNB myself.
Binance Token Overview
Thanks for reading this post on What is Binance Token. BNB is a wonderful addition to the crypto industry and really shows what a utility token should be. I hope I did a good job of giving you useful information. This should allow you to make your own informed decisions on this digital asset.
If you want to learn more about crypto, check out our post here on – what is Tezos.