In the old times, before the intervention of digital computing elements and a more advanced banking system, all modes of finance and investment were controlled from centralized locations that we today call banks. The stock market, forex market, and financial institutions are the old games of the past that still exist because it elevates the existential value of money, and people are drawn to it just like a moth to the flame. Today you shall still find these institutes working at full capacity, but a lot has changed too.
No one uses a physical book or list to cross off transactions that are taking place or keep track of how money is leaving or entering the system. All of that and more is done digitally now with the help of computers, servers, and proper banking channels and networks that not only can transact money from one place to another, but a lot more can be done today. You can trade directly on the stock market from the comfort of your home with the help of an Internet connection, a laptop, and a trading account. Things have gotten so much more convenient and efficient nowadays.
All of these institutions are strictly centralized, which means that they have a central governing body that takes care of not only all the decisions and policies for that particular financial element, but each and every decision is taken care of by the centralized command. To propose a contrast or a competition to this centralized system, blockchain technology and decentralization has come a long way. Today you shall find decentralized exchanges dealing with cryptocurrencies of all coins; you can convert your Fiat currency into crypto and then store it off into a particular wallet for the sake of using it only later. One such decentralized exchange that we shall be talking about in this article is Binance.
It is a decentralized exchange having BNB as the native coin of not only the BNB chain ecosystem but also of the BNB beacon chain. BNB has multiple use cases, which include but are not limited to decreased trading fees for transactions that take place on the Binance exchange. You can also use this native token for the sake of paying for all trading and transaction fees taking place on the Binance decentralized exchange.
You can use the token to pay for transaction fees that take place on BNB smart chain, whereas the native token can also be used for purchasing goods or services both online and in-store at a retail agency that supports the Binance card or Binance pay. You can use the native currency to book flights, hotels, and travel internationally without having the need to convert your crypto token into a Fiat alternative. Community utility tokens can also be bought with the help of the main or native token of Binance. Other than that, you can take part in the token sales that are directly hosted over the Binance Launchpad. These are the main use cases of the native token for Binance, which is BNB; other than that, you can use it to donate directly to Binance charity or provide liquidity for one of the mining pools active on the decentralized exchange.
What is BNB?
As explained earlier, it is the native token of the Binance crypto exchange, and it was launched back in 2017 as an ICO (initial coin offering). And it was even before the exchange opened for business; the purpose of the early release of the native token was that the exchange needed to have a native token of its own to facilitate all types of exchanges taking place from fiat to the native token and then from native token to the dedicated cryptocurrency that the user has chosen for the exchange. The starting price was 1 Ether for 2700 BNB tokens or 1 BTC in exchange for 20K BNB tokens. You might be thinking that because BNB was launched in the form of an ICO or initial coin offering so the investors should be getting a huge chunk of profits made by the crypto after its initial release, but that is not the case. It does not offer users any sort of claim for the profits and is neither any kind of representation of investment done in the Binance crypto exchange.
Initially, BNB was programmed that way that it could run on the Ether network having a total supply of about 200 million coins, and it was an ERC-20 token to begin with. About 100 million BNB tokens got offered in the ICO, and therefore the present supply is lower because of the consistent burning of these tokens and the burning mechanism put in place by the Binance crypto exchange.
Coin burning is a process in which the overall supply of tokens is reduced to half after some time or as per the policies of the crypto exchange or project to which the coin belongs. Although the journey of BNB began as an ERC-20 token over the network, later on, it got swapped with BEP-2 BNB conserving a one-to-one ratio, and now the latter is the native token of the Binance crypto exchange.
The BNB chain was launched in 2020; it is a blockchain network belonging to the Binance crypto exchange which runs parallel with the BNB beacon chain, which means that one can find the native token of the Binance crypto exchange, which is BNB, in three different formats as per your requirements or practical use case of the token.
You can use this very token for the sake of developing a mining pool on the Binance crypto exchange to whom you will be providing extreme liquidity in the form of the native token. This will allow you to earn multiple rewards from the network itself in the form of native tokens, and you would also get the staking options. It means that you would be able to stake a particular amount of native token into a mining pool, and you will continue to receive transaction fees and further rewards in the form of the native token, but the catch here is that you can’t withdraw that specific amount of crypto until unless the time period to which you earlier submitted your consent has come.
After that time period is done, you can either ship out the whole deck of tokens that you earlier submitted or staked within the project, or you can continue with staking after all that, still earning a handsome return on your investment. Other than the native token of Binance, BNB can also be used for governance-oriented aspects of the network. This means that based on the total number of tokens that you are holding at the moment, you would get to take part in multiple decisions of the crypto exchange, where you would be able to cast your vote based on an opinion you prefer.
The voting right is subjected to how many tokens you are holding at the moment and your previous track record with the exchange itself. You can also become a node operator if you wish to do so; there is no requirement of staking a particular amount of crypto if you wish to become a node operator. You would be tasked with validating transactions as a request submitted by the user and making sure that the user itself is legitimate and the request can be fulfilled in a real-time frame. For this service of yours, you will be receiving particular rewards and a transaction fee, preferably in the native token, which you can either subject to your crypto wallet or withdraw right away.
Use Cases of BNB
It has been explained earlier that BNB has multiple use cases within the BNB ecosystem and across the length of the Binance crypto exchange. That is why it is completely on you to decide what you want to do with BNB and in what narrative you want to use this particular token. You can utilize BNB for the sake of paying for your travel arrangements, such as plane tickets, hotels, and communications, or else you can use it to buy digital gifts or use it for the sake of shopping either online or at a retailer that presently supports the Binance pay. According to an estimate done by the Binance crypto exchange, millions of these BNB tokens have been used by people for the sake of payment of products purchased online, for lending purposes to claim the rewards by the blockchain, or for the sake of developing smart contracts and in other various transactions as well.
For most people, the practical use case of BNB is to pay for the transaction fee. They can use a Fiat currency to do so, but that would have to be first converted into the native token, and that incurs a transaction fee in itself. Therefore instead of going for that specific route, people prefer using the native token BNB to pay for the transaction fees on the Binance crypto exchange. According to a survey, about two million users have utilized BNB tokens for the sake of paying for their transaction fees.
To be able to understand the functioning of the BNB token when it comes to paying for transaction fees, you would have to first take into account the working mechanism of trading fees over the Binance crypto exchange. When you transact or trade-in any cryptocurrency, a standard fee of about 0.1% in trading fees is incurred to you by the Binance crypto exchange. This is determined on the basis of your monthly trading volume over the crypto exchange.
There are two potential ways for the sake of paying this transaction or trading fee; you can either use the asset that you are trading, such as if you were purchasing Ether, you could pay the transaction fee in Ether, which then would be converted into the native coin to clear your fees or you can use the native token BNB itself for paying these fees. You will also get a special discount if you choose to pay the transaction or trading fees with the help of the BNB token because it is one of many marketing schemes that Binance is presently running to increase the overall acceptability of its token within the users so they should consider using BNB from time to time.
You might not want to pay the transaction fee that you incur on the Binance crypto chain from the asset that you are trading or transacting with because it might incur a conversion fee, as stated earlier, which is why if you trade on the Binance crypto exchange then the best thing here to do would be to convert or get your hands on a lot of BNB tokens which you then can use to pay for your transaction fees.
There is a specific schedule in place when it comes to the deduction of trading fees which is why it is important that you first check the most present spot trading fee schedule at hand to get a clearcut idea of the fees that would be implied to you. With that being said, you should know that different domains of BNB follow a different spot trading fee schedule; that is why don’t expect a single number to be effective everywhere, do your research to find out about the exact fees that you might owe in terms of performing a transaction or executing a trade.
BNB doesn’t only support the idea of paying for transaction and trading fees; there is so much more than this token is capable of. At the moment, BNB is also powering the decentralized exchange of Binance on its own, and not only this but hundreds of decentralized applications are also being controlled and orchestrated by the token itself. This also implies the fact that you don’t have to deal with Binance itself for the sake of buying the token, as it can be bought from other crypto exchanges out there. BNB smart chain can be used for this purpose, it is a completely different domain of Binance but you can easily locate and buy BNB tokens over here without any issues whatsoever.
How to Purchase BNB Token?
It might not have been discussed at length before that if you choose to purchase the native token or some other asset in particular from Binance in larger quantity, then we get to become not only a validator for the BNB ecosystem, but you can also become part of the permanent governance committee as well. We will cover each and every step individually so that you can better understand the concept and how you can measure and ascertain the opportunity presented here.
If you wish to become a validator within the BNB ecosystem, you have to provide yourself with a particular number of BNB tokens which would be taken up by the network as a token of trust regarding the validator. This means that you are serious regarding your job as a validator and would not dare double-cross the network because your own money is invested here; it is an exemplary technology that ensures that you would act in the best interest of the network and would not succumb to your own particular sense of agenda when it comes to becoming a validator.
Next on, if you amass a certain number of BNB tokens, you get to become a part of the governance oriented aspects of the network, which means that you would be provided with multiple opportunities where you can cast a vote regarding the future policies of the network along with which aspects would be considered a part of the network in the next update and which specific elements would be discarded for good. You get to cast your vote and voice your concerns regarding this particular matter.
However, it is important to note that the overall capacity at which you can cast a vote or the power of your vote will ultimately depend upon the number of BNB tokens you hold at the moment; the higher you hold, the more intense your voting capacity be. Next up, you can stake your BNB tokens within the Binance ecosystem for the sake of becoming a staker, and you would continue to earn rewards on the investment made in a consistent fashion. The terms and conditions for staking your crypto into a definitive pool might change from time to time which is why you must at first understand the requirements of a definitive mining pool so that you are not jumping in on it due to the lack of knowledge or data.
You must understand your options at length, such as the overall transaction fee that you would have to pay or the trading fee on the Binance network; on the other hand, you must also be aware of the depreciation aspects of the network along with the liquidity which the mining pool in question provides.