Binance: Exchange, BNB Coin, and the BSC Network – What Is It, and How Does It Work?
Binance is the world’s largest crypto exchange founded by Changepeng Zhao (CZ) in 2017. Since then, it has conquered the crypto market, outshining its predecessors to claim the highest rank as arguably the best crypto exchange globally. The exchange has many features, including the BNB coin, Binance chain, and the Binance Smart Chain (BSC) network.
The exchange stands out due to its wide range of services that most competitors do not offer. Also, it has a good team that finds out how to make the most out of its projects. It is progressively increasing its wingspan to provide services to more people even with its mouth-watering daily trading volume of around $2B.
In the expansion process, the company has gotten itself in some tough spots with regulators of certain countries for offering unlicensed and risky services. However, it is one of the most commendable crypto exchange platforms as it has strict KYC/AML regulations to keep financial foul players off the crypto space.
It is more than just an exchange due to the diversity in its services. It has the Binance Smart Chain network that allows people to create crypto tokens and host them there. This network is one of the best in the crypto space due to its high scalability, fast transaction speeds, high efficiency, and Ethereum compatibility.
Below is more information on the exchange, its BNB coin, and the BSC network.
Company Overview
Binance is a Malta-based company started by Changepeng Zhao, a Chinese engineer, in 2017. The company has grown to become one of the best crypto exchanges in the world even after joining the crypto space after other exchanges. It offers different services like staking, spot trading, and advanced trading like futures, margin, and other derivatives trading.
The company was launched in China but was relocated in 2018 to England due to regulatory issues. Since then, China has escalated its regulatory fight against the crypto market and installed a blanket ban on all cryptos.
The exchange’s name is derived from ‘Bitcoin’ and ‘Finance. It claims that its systems can process upto 1.4 million transactions per second without failure while maintaining its security protocols. It also says that its multi-tier and multi clustered architecture allows for maintaining its high-security standards.
The exchange is the best fit for experienced traders as it offers low fees and a wide selection of cryptocurrencies. It supports over 500 cryptocurrencies, most of which can be traded even in the advanced trading options markets. However, the exchange’s trading options are limited in the United States due to regulatory issues. Additionally, the exchange is under probe in the US.
The exchange requires every user to complete their KYC registration before accessing its services. Upon completing the account creation, users can add their crypto funds to their public wallet address and start trading. Below is more information on the platform.
The BNB Coin
Binance Coin (BNB) is the exchange’s native token. Its primary role is serving as the utility token in the exchange’s ecosystem. It was launched through an ICO in 2017 and originally ran on the Ethereum network as an ERC-20 standard token. However, the exchange introduced the Binance Chain (BC) and transferred it.
In 2019, the platform introduced the Binance Smart Chain network (BSC), which operates akin to the Ethereum network by allowing for the running of smart contracts. That network allows anyone to build and run their crypto project on it.
It has a limited supply of 200 million coins. Its tokenomics is as follows :
- 20 million BNB to Angel investors
- 80 million to the founding team
- 100 million tokens to the various participants of the ICO process.
The exchange planned on using almost half of the funds raised in the ICO for branding and marketing and a third f the remainder for necessary upgrades.
The coin has gained value over time to become one of the best ones in the market. Currently, it trades at $402.9 with a 24-hour trading volume of about $1.88B against a total market capitalization of $65B. The coin ranks at number 4 on coinmarketcap in terms of capitalization, showing how strong it is against other cryptos.
BNB Coin Price Prediction
BNB coin has a real-life utility within the Binance ecosystem, affecting its supply and demand dynamics. It also has an active burn mechanism which progressively reduces its supply.
Therefore, it is correct to project that if the Binance team continues increasing the company’s wingspan while maintaining or improving its services, the BNB coin will gain value in the long term.
However, it is best to watch the exchange and its competitors as the market keeps changing and more innovations are coming up almost daily. Also, remember to DYOR on the exchange and the coin since it can be risky to invest in the crypto space.
What is the BSC Network?
The Binance Smart Chain network (BSC) is a blockchain network that runs smart contract-based platforms and applications. It runs parallel to Binance’s original Binance Chain allowing its users to benefit from the high transaction capacity of BC and the smart contract capability of the BSC.
The network also implements the Ethereum Virtual Machine (EVM) that allows it to run ETH-based projects like the MetaMask applications. The network enables developers to build decentralized applications (DApps) and users to manage their digital assets across different chains with low latency and large capacity.
The network gained traction in 2021 after Ethereum, the largest network with smart contract capability, was hit by congestion, resulting in spiking gas fees. It offered the crypto space a more efficient, faster, and cheaper network to continue developing the DeFi sector through DApps. That year, the BSC network made it even more appealing by lowering its gas fee from 15 Gwei to 10 to counter BNB’s skyrocketing price.
Binance vs. Binance.US
Although they sound the same, Binance.com and Binance.US are two different platforms. The internationally available platform is Binance.com. Binance.US is a subsidiary of the main platform launched in the US to provide selected and regulatory compliant services there.
Binance had to launch a pure US platform since, at the time, the country’s regulators were not comfortable with offering risky trading options like futures, margin trading, and crypto derivatives to its citizens. The regulators also declined the offering of most of the cryptos that Binance had listed to the country’s citizens. Therefore, Binance had to launch a more regulatory compliant platform in 2019 there.
Although Binance owns the Binance.US name and intellectual properties, they are managed separately. The key differences between the two platforms are tied to the US regulations, as some of the assets offered by Binance cannot be offered in the US. The SEC is mainly very sensitive on matters regarding securities. It classifies some of the assets offered by the main Binance platform (e.g., Ripple’s XRP) as securities.
Below are some of the ways how Binance and Binance.US relate
- Supported cryptocurrencies:
Binance.com supports over 500 cryptocurrencies, including the top 20 cryptos by market capitalization. It also supports over 1200 trading pairs. However, this number is much smaller in Binance.US.
Binance.US supports upto 80 cryptocurrencies. This number is low compared to the main platform but is equivalent to the other US-based cryptocurrency exchanges.
- Trading fees
Binance.com offers some of the most user-friendly fees in the crypto space. The exchange has a good structure that favors traders with the highest trading volumes. It also has referral discounts for its users, i.e., if you refer a user and they trade on the platform, you receive a discount on your fees.
Although regulations separate the two platforms, they have the same fees. The reason is that US laws do not deter the parent company from setting a similar fee as it does not directly relate to the traded products. As a result, Binance.US is among the best crypto exchanges in America regarding low fees.
- Liquidity
After Binance resolved to start a US-only crypto exchange platform, the decision greatly impacted its liquidity pool. Most crypto exchanges use liquidity pools to collect crypto holdings and allow trades to draw and deposit in them. Since Binance.com was to serve the whole world, it was left with a larger liquidity pool than the Binance.US platform.
Also, the exchange had to establish a separate liquidity pool for Binance.US to ensure that the management of the two exchanges stayed separate.
Key Features of Binance
Low Fees
Binance has some of the lowest fees in the crypto space. It charges maker/taker fees in a range of 0.02% to 0.10% and gives discounts according to the trading volumes of individual traders. Although these fees are not the lowest, they are friendly to most traders.
Advanced Trading Options
Binance offers advanced trading options that harbor both experienced and new traders. It allows for the trading of futures, margins, and other derivatives. These options come with a trading view that enables users to track the market comfortably.
Binance Earn
Binance Earn is possibly the crypto space’s best solution for growing the value of crypto holdings. It offers different vehicles for people to multiply their wealth passively in the crypto space.
The Binance Earn protocol has different options like Locked Staking, Auto Invest, DeFi Staking, Dual Investment, and BNB Vault. These options can help grow the value of a user’s funds through the exchange.
How Does Binance Staking Work
Binance offers several ways of staking. Here is how they work:
Binance DeFi Staking
Binance vets its DeFi staking partners to minimize risks to its customers. However, it clearly states that it does not assume liability for losses arising from project on-chain contract security issues in case the contract used for staking gets compromised, Binance does not have to be directly responsible for the losses. However, it features some of the highest DeFi staking APYs in the crypto space.
This feature allows for earning rewards from staking specific cryptos over a specified amount of time. Its offers vary each month, meaning that the rates are never constant. But once a user locks their holdings in a given staking pool, the entry rate is maintained throughout the staking period.
ETH 2.0 Staking
Binance allows users to stake their ETH tokens for the long term and earn rewards through the ETH2.0 staking feature. The process of staking ETH on Binance is relatively simple.
- Click the (More) button on the Binance platform and scroll down to the “Finance) section
- Since ETH tokens will be staked on Binance, they will be converted to Beacon ETH (BETH), representing the staked Ethereum tokens.
- BETH allows its holders to do everything that the ETH token can do and can also be swapped to ETH.
- The interest rate that a user earns from staking ETH on the ETH 2.0 staking feature on Binance varies according to the number of people staking.
Locked Savings
The Locked Savings staking feature allows users to lock their funds on the exchange for a varying interest rate based on the days that the funds remain locked on the exchange.
Binance Vault
Binance Vault allows users to lock their holdings and earn APY. The APY is determined by the existing earning opportunities on the platform. The vault operates akin to a yield optimizer that takes a user’s funds and invests them in places that offer guaranteed rewards like the flexible savings protocol or the launch pool.
Binance Launchpad
Binance uses the Binance Launchpad protocol as an Initial Exchange Offering (IEO) mechanism where crypto startups can generate capital through exchanges. The Binance Launchpad hosts several projects from time to time to allow its users to stake their holdings and earn rewards. Since it is for startups, the projects available on the launchpad change constantly.
Is It Safe to Use Binance?
Binance has some of the best security features in the crypto space to safeguard the crypto holdings of its users. It has features like 2FA that are required upon every login to keep hackers off the account. The platform also warns its users if a new device or IP address is used to access the Binance account for the first time through emailing the user.
It also offers to send email notifications if key functions are performed like withdrawals. Despite having such strong security features, users should follow the exchange’s guidelines while using it to enhance the security of their transactions.
How Does Binance Compare to Other Competitors?
Most crypto exchanges use Binance as their role model while restructuring their services owing to its groundbreaking success. Some even try to edge it out by capitalizing on its misdoings.
This is how Binance compares to kits competitor Coinbase.
Binance vs. Coinbase
Coinbase is one of the best crypto exchanges in the world. It is also one of the largest and thus a key rival to Binance. It has two versions of its platform, the normal one, and the Coinbase Pro version.
Here is how Coinbase Pro compares to Binance
- Binance.com offers more cryptocurrencies than Coinbase pro, but its US counterpart Binance.US has fewer cryptos.
- Binance edges out Coinbase Pro in offering the maker-taker fees. While Binance ranges at 0.02% to 0.10% fees, Coinbase Pro ranges from 0.00% to 0.60%.
- Coinbase allows users to access a native digital wallet that Binance does not offer.
- Coinbase is also better than Binance in terms of stability and security as it has been caught up in fewer issues than Binance. Also, Binance has had legal tussles with governments over compliance and has a pending case with the US government.
Final Word
Although Binance is the largest crypto exchange globally, its current tussles with the world’s governments are not doing it a favor. Several governments have banned it, with others like the US having pending cases against it. These developments may tarnish the exchange’s name and give its competitors an edge against it.
However, the exchange retaliates by accepting the terms issued by the governments other than challenging them, which may also be a major regulatory score. For instance, it has paid several fines without challenging the involved governments directly. Also, it started the Binance.US platform to comply with the United States laws.
Therefore, it is best to research such developments as they are key when choosing crypto services providers at this time since the crypto space is on the verge of regulation.
Additionally, Binance offers highly detailed crypto services that better fit experienced traders than new traders. Therefore, crypto investors should explore it and other alternatives, including crypto DEXs like Uniswap, as Binance is a CEX. These DEXs also offer competitive services like passive earning.
Every crypto enthusiast should learn how to interact with the market closely, invest, and protect their investments. To watch the market closely, traders should learn to use tools like Trading Views to understand the market dynamics. Such tools are offered by several exchanges like Binance in the futures and other derivatives trading section. Also, they should learn how to invest in crypto exchanges by exploring different investment methods and, finally, how to protect their investments.
Additionally, it is best to approach the crypto space with a cautious mind since it comes with risks.
