Binance Coin (BNB), the platform coin of the crypto exchange Binance, has secured its place among the top cryptocurrencies by market capitalization. Thanks to the strong growth of Binance and its products and blockchains, the coin has surged in price in recent years.
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BNB can be purchased at crypto exchanges such as Binance, Bithumb, KuCoin, and FTX. But, as BNB is the native asset of the Binance exchange, several competitors have not listed the coin on their platforms. Coinbase, Huobi, Bitfinex, Bitstamp, and Kraken, among others, don’t offer BNB trading.
As Binance Coin is also the native blockchain asset of the Binance Chain and Binance Smart Chain (BSC), decentralized exchanges (DEX) like PancakeSwap and BakerySwap running on the BSC offer BNB swaps to other BSC-based tokens. Solely Ethereum-based DEXs like Uniswap don’t support BNB swaps on their protocols, as BNB is an asset that is foreign to Ethereum’s blockchain. Other DEXs such as SushiSwap and 1inch, which previously were Ethereum-only services, have switched to a multi-chain approach. They now offer their services on the Binance Smart Chain as well and allow for BNB swaps as long as users are connected to the protocol with a Binance Smart Chain wallet.
WHY BUY BNB?
Binance is one of the leading places for trading crypto assets. They were among the first ones to offer tokenized shares of publicly traded companies, which allow users to invest in stocks without having to move money out of the crypto-financial system.
Furthermore, Binance aims to be a one-stop-shop for financial services in the crypto financial system. Its wide array of services ranges from crypto futures and options to staking and NFTs to Binance Credit Card and Binance Pay. As BNB holders benefit from discounts and fee reductions on the platform, the demand for the token rises the more traders and investors use its services.
As the native token for the Binance Smart Chain, BNB is also used for every transaction on the Binance Smart Chain. Due to the huge transaction volume, the blockchain has attracted since its launch, having passed Ethereum with great margin, the demand for BNB has further increased.
For investors looking to benefit from the success of Binance, holding BNB tokens is an easy way to indirectly participate in the growth of the platform. As Binance attracts more users and expands its services, the demand for BNB is expected to grow accordingly, leading to a continuous increase in price.
Cautionary note: Binance has had some regulatory turbulence in recent years. Their ‘ask forgiveness, not permission’ approach allowed for fast-paced innovation and the offering of DeFi services to a broad audience. A good example of that was their launch of tokenized shares.
Binance has recently promised to do better and is growing its international compliance team. They have already started to tighten their verification process and further KYC and AML measures are expected to follow soon. Should they manage to cooperate with regulators worldwide, then their international growth is likely to continue. If they fail, then the exchange is expected to partly operate in legal grey areas, which could especially hurt their financial gateways to the fiat and banking systems.
How much is BNB Worth?
BNB was first sold in the summer of 2017 in an ICO event for about $0.11 per coin. Like most successful cryptoassets, the coin has experienced high volatility and a strong price increase. In the summer of 2020, just 3 years after its launch, BNB was already worth 200 times more (200x). A year later, the coin has jumped another 1,500% (15x), reaching a market capitalization north of $50 billion.
The BNB coin price is influenced by five major factors:
- Binance exchange (including coin burn)
- Binance Chain (DEX)
- Binance Smart Chain (DeFi)
- Overall crypto market
The Binance exchange not only grants discounts for paying trading fees with BNB, it also burns a share of the generated fees each quarter, which leads to a reduction of the overall coin supply. The decentralized exchange (DEX) requires BNB to pay for transaction fees. The same applies to DeFi applications running on the Binance Smart Chain. The higher the transaction volume on the two blockchains, the higher the demand for the BNB coin.
Lastly, as common with most cryptoassets, the BNB price is strongly correlated to the performance of the overall crypto market. If the market is bullish, then users and investors have an optimistic outlook on the future and are more willing to invest and take risk, which in return generates more trading volume and pushes prices up. The opposite is true for bear markets, which leads to lower trading volumes.
Surprisingly, the regulatory challenges Binance is facing don’t seem to have a strong influence on the BNB price development so far. But, should more and more countries ban Binance from operating in their jurisdictions, then this could pose a serious threat to their business. For BNB investors it is therefore recommended to keep an eye on the regulatory developments around Binance.
Where to buy BNB
The best place to buy Binance Coin (BNB) is its native platform, Binance, but other exchanges like Bithumb, KuCoin, and FTX do the job as well. Please note that several competitors such as Coinbase, Huobi, Bitfinex, Bitstamp, and Kraken have not listed the coin on their platforms.
In order to buy BNB on one of these exchanges, an account is needed that requires basic identification, and if larger amounts are traded, a complete verification.
The process is straightforward and similar to that of an online brokerage. Users will be asked to provide personal information such as their name, address, an official public document (passport) and a proof of address (utility bill). Usually, this process takes only a couple of minutes.
Once the documents have been submitted, it takes 1 to 2 business days for the account to be verified and fully operational. Be sure to enable 2-factor authorization and other safety features (such as delayed withdrawals and withdrawals only to white-listed addresses) when opening the account. This ensures that unauthorized access to your account and funds is significantly more difficult.
As already mentioned, BNB runs on its own blockchains. Investors wanting to buy BNB through DEXs have to use exchanges running on the Binance Smart Chain. The best-known options are PancakeSwap, BakerySwap, SushiSwap, and 1inch. To connect to these DEXs, wallets supporting the Binance Smart Chain (e.g. MetaMask or Trust Wallet) have to be used. Alternatively, some DEXs running on other blockchains offer synthetic versions of Binance Coin. These tokens represent tokenized BNB on a foreign blockchain that tracks the price of BNB.
Holders of BNB have the possibility to stake their coins to earn interest. The easiest way is to stake the coins directly through the Binance platform. Alternatively, PancakeSwap and other protocols allow for BNB staking as well.
How to safely secure BNB
BNB can be held on the exchange it was bought on. Once the coins are bought, they can be left in the exchange account — no extra transaction to an external wallet is needed. Of course, this bears a counterparty risk. Should the exchange be hacked, go bankrupt, or be fraudulent, then the BNB might be lost.
Whoever does not want to be exposed to this risk can alternatively store BNB in a personal wallet. Because BNB is a digital bearer instrument just like other cryptocurrencies, the option of taking self-custody is available for everyone. Popular wallets that allow interaction with the Binance Chain and the Binance Smart Chain are MetaMask, Trust Wallet and Binance Chain Wallet (Chrome extension). Note: MetaMask is, per default, set up as an Ethereum Wallet, but can be used for other blockchains. Instructions on how to set up MetaMask for Binance Smart Chain can be found here.
If greater security to store BNB is sought and needed, hardware wallet providers such as Ledger or Trezor are popular options that are compatible with BSC as well.
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