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Binance Coin (BNB) is the native coin of Binance, the world's largest cryptocurrency exchange by volume as well as the native cryptocurrency of Binance Chain.
This guide explains what it is in more detail, how it works, what it's used for and how it's developing.
Icon | Symbol | Initial release date | Algorithm type | Max. supply |
---|---|---|---|---|
![]() | BNB | July 2017 | DPOS | ~ 150 million |
Binance Coin (BNB) is two things: It's the native cryptocurrency of the Binance cryptocurrency exchange, and it's the native cryptocurrency of the Binance Chain blockchain.
As an added bonus, it's also a cryptocurrency that can be spent in physical and online stores around the world.
Binance Coin has two groups of functions: It's an exchange token, and it's the native cryptocurrency of the Binance Chain blockchain.
As an exchange token, BNB provides the following functions:
How does the BNB trading fee discount work?
When you hold Binance Coin on the Binance exchange, you can opt to pay trading fees with BNB, regardless of which pair you are trading. When you do, you get a 25% discount compared to the normal trading fees.
You can switch the "pay fees with BNB" option on or off in your Binance account settings at any time.
How does BNB unlock higher trading fee volume discounts?
Like many other exchanges, Binance offers discounts for higher-volume traders. But unlike other exchanges, these high-volume traders are also required to hold certain amounts of BNB in their accounts to unlock these discounts.
How does BNB work as a major trading pair?
You can trade Binance Coin against all other cryptocurrencies on the Binance exchange, similar to the way Bitcoin or Ether are major trading coins on most other exchanges, making it a versatile trading cryptocurrency for Binance users.
As the native token of Binance Chain, BNB can be used in the following ways:
Binance Chain is a new blockchain, launched by Binance in April 2019. Its most distinctive feature is how tightly integrated it is with the Binance DEX and how tightly focused it is on financial applications.
In order to improve performance, Binance Chain does not support smart contracts.
Binance Chain also has its own token standard. Similar to the way Ethereum has the ERC20 token standard, Binance Chain has a token standard called BEP2.
The point of these standards is to ensure compatibility across an entire multi-token blockchain ecosystem.
At the time of writing (October 2019) Binance Chain is based on a delegated proof of stake (DPOS) consensus mechanism, with plans to migrate to proof of stake (POS) down the line.
Why is BNB needed to pay gas fees?
Sending transactions or performing other functions on Binance Chain will incur a small gas fee. These fees are paid to the validators who operate nodes, find blocks and process transactions on the Binance Chain.
These gas fees are required for two reasons.
On most blockchains, these fees must be paid with the blockchain's native token. But in the case of Binance Chain, these fees can be paid with any valuable cryptocurrency.
But, just like on the Binance exchange, paying your Binance Chain gas fees with BNB instead of another cryptocurrency will net you a 25% discount. This functionality comes thanks to the intrinsic connection between Binance Chain and Binance DEX.
Binance DEX is the decentralised exchange (DEX for short) arm of Binance.
DEXs differentiate themselves from typical exchange platforms by allowing transactions without ever holding user funds.
On a typical exchange, you deposit funds and then use those for trading. On a DEX, you don't deposit funds and instead just trade directly with other people from your own wallet.
DEXs are generally built directly onto a blockchain, often taking the form of a computer program rather than a concrete legal entity.
But in contrast to most DEXs, which are applications built on top of a blockchain, Binance DEX is baked into Binance Chain itself as one of the core functions.
This brings several benefits:
These benefits can give developers on Binance Chain a leg-up on the development of decentralised finance (DeFi) apps.
Binance Coin is naturally an integral part of the DEX. In addition to giving the same trading fee discounts as you'll find on the centralised exchange, it also acts as one of the few major trading coins available on the DEX – and by extension, the entire Binance Chain system.
At the time of its creation, the total circulating supply of BNB was 200 million. The circulating supply of BNB will be reduced at a rate of 20 million per year over the course of five years, through quarterly "burns" where Binance destroys a portion of its own tokens.
These burns are expected to complete by 2022, after which the total circulating supply will be 100 million BNB.
This assertive deflationary schedule and relatively limited total supply may account for some of Binance Coin's price action over the years.
Although it's a relative late-comer to the cryptocurrency space, since it hit the market in mid-2017, Binance Coin has enjoyed a similar price trajectory as heavy hitters like Bitcoin and Ether.
It was initially released at prices of US$0.10 each. Almost exactly two years later, it hit its all-time high price of $38 – equivalent to a tidy 38,000% price rise.
Like most other cryptocurrencies it's since fallen back down from its all-time high prices. But unlike most other cryptocurrencies, Binance Coin hit its all-time high in July 2019 instead of during the crypto-mania of December 2017.
Like other cryptocurrencies, Binance Coin is held in cryptocurrency wallets.
Binance Coin (BNB) can be held on BEP2-compatible wallets.
Popular options include the following:
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