Binance is a chart-topping cryptocurrency exchange in the market. According to its website, it has more than 192 million users globally who buy Binance coins. Despite this iconic growth, few seem to understand the intricacies around its native token, Binance Coin (BNB).
In the cryptocurrency industry, it is habitual for companies to launch multiple offerings to appeal to a broader section of users. Crypto exchange Binance is one such example, having launched its blockchain and token.
Binance Coin is an asset that the Binance exchange sold to investors years back through an initial coin offering (ICO). It stands among the top ten largest cryptocurrencies in the market by market capitalization. Since its launch, it has been the best performer, with novice crypto investors always looking for ways to benefit from it.
This article will dive deep into the Binance world to understand how to buy Binance Coin. This article is thorough and elaborate to ensure that you will be included, even if you are a novice trader.
Understanding Binance Coin (BNB)
To comprehend the intricacies Binance Coin, we first need to look into the background of the Binance exchange. Binance Coin went live in July 2017 through an ICO. During this ICO event, Binance coins were distributed to participants, including angel investors and the team behind the Binance exchange.
According to the whitepaper, the chart below shows how BNB tokens were distributed during the ICO.
During the ICO, all 100 million BNB tokens available during the public sale sold at 15 cents each. Binance managed to raise $15 million during the event.
The amount raised during the ICO went towards solving multiple problems in the Binance ecosystem. 35% of the 15 million raise went towards upgrading the Binance platform and exchange. 50% went to branding, marketing, and education, while 15% was reserved for emergencies.
BNB went live on the Ethereum blockchain as an ERC-20 token. However, in 2019, Binance launched its blockchain known as BNB Chain, with BNB now the native token for this new chain.
One can buy Binance Coin like any other cryptocurrency in the market. The token is similar to other cryptocurrencies because the ebb and flow of price depends on demand. People can also hold BNB tokens in wallets and use the tokens as a form of payment.
You can buy Binance Coin on many cryptocurrency exchanges, including the Binance exchange. However, it is essential to review jurisdictional laws before purchasing.
BNB Token Burn
The Binance platform spends part of its quarterly revenue on buying back and burning Binance coins. The company has performed burns every quarter since 2017. Below are the recent token burn details, where 1.94 million tokens were removed from the circulating supply.
Binance will continue to burn BNB tokens each quarter until it buys and destroys 100 million BNB Coins, which is half the original maximum supply. The burn mechanism reduced the total supply of BNB tokens, which can potentially increase the asset’s value.
Uses Of Binance Coin
The use case is the other factor to evaluate before you buy Binance Coin. BNB tokens play a crucial role in the BNB Chain. This Binance blockchain seeks to offer better performance for those trading in-chain.
Transactions on the BNB Chain are settled using the BNB token. To perform transactions on the blockchain, you must pay gas fees, which, in this case, are recompensed using the BNB token. Those holding BNB tokens can also participate in different activities on the platform, including staking and voting.
The token also has a use case on the Binance exchange. Customers on the exchange also get to pay lower fees when they use BNB tokens to use the exchange. The token can also be used as collateral to take Binance loans.
Below are the critical uses of Binance Coin:
The Potential Of BNB As An Investment
The price of BNB fluctuates in the same manner as that of other cryptocurrencies in the market. Before we look at how to buy Binance Coins, it is essential to examine the pricing dynamics to determine whether it suits your investment portfolio.
BNB has a market capitalization of more than $89 billion and is the largest cryptocurrency in the market. During the Binance ICO, BNB sold for around $0.10 per token. Its value has soared over the years; at this publication’s time, it traded at $578.
The historical price appreciation only makes sense if you know the correct times to buy and sell the token. While the Binance ecosystem is one of the largest in the market, only the future will tell where the price of this token is headed.
How To Buy Binance Coin
Now that we have a background understanding of BNB, the other thing to look at is how to buy Binance Coins. Below is an articulate and well-detailed guide on how to buy Binance Coin.
Choose A Reliable Cryptocurrency Exchange
The first question you should ask yourself before investing in BNB is, “Where can I buy Binance Coins?” The best place to buy BNB tokens is a cryptocurrency exchange, a platform facilitating the buying and selling of cryptocurrencies.
There are multiple factors to consider when choosing a reliable cryptocurrency exchange to work with. These factors include the following:
- Security
The first thing to consider when exploring how to buy Binance coins is the security of an exchange. Over the years, the cryptocurrency industry has been the stooge of hacks, some of the most iconic being Mt.Gox and the Bitfinex hacks. Following these hacks, the users of these exchanges suffered significant losses.
Some security features you can check on an exchange include two-factor authentication (2FA) and end-to-end encryption. You should also verify that the exchange stores funds in cold wallets and has no security breach history.
- Fees
Fees are another critical factor to consider before settling on a cryptocurrency exchange. Exchanges usually charge fees for deposits, trading, and withdrawals. The amount of fees paid depends on multiple factors.
When looking for how to buy Binance Coin, ensure the exchange you are using charges low fees, especially if you are a frequent trader. The best exchange should give you the best value for trading activities.
- User experience
User-friendliness is also another crucial factor to consider when choosing a cryptocurrency exchange. The best trading platform should have an intuitive design that makes navigating and executing traders easy.
Also, check if the exchange has a reliable app that improves your trading experience. A mobile app makes sure you can access your account at your convenience.
- Liquidity
You should also assess your ability to enter and exit trades at the exchange you intend to use. Exchanges with high trading volumes offer better liquidity, allowing you to execute large trades efficiently.
An exchange with high trading volumes also ensures fast transactions. Assessing the trading activity on an exchange can also help you determine its reputation among traders.
Create an Account
After you pick a reliable cryptocurrency exchange, the next step in buying Binance Coins is to create an account. Despite the exchange you use, you will need an email address to create an account on an exchange.
The exchange’s sign-up page will prompt you to provide an email address and set up a password to secure your account. Ensure that you use a strong password. It is also best to activate two-factor authentication (2FA) to lower the chances of unauthorized access to your account.
Because of the growing concern about using cryptocurrencies to commit financial crimes, some exchanges will require that you verify your identity. You must submit a document like a government-issued ID to confirm your details.
Deposit Funds Into The Exchange Account
With an account, you are an inch closer to buying BNB Coins. However, you will need funds to facilitate your purchase. There are two ways you can go about funding your exchange account.
If you have already invested in cryptocurrencies, you can deposit your tokens from your crypto wallet into the exchange. You can then choose a trading pair to trade the other tokens for BNB Coin.
However, you can buy Binance Coins with fiat currency if you do not hold other cryptocurrencies. To do this, you can use a supported method of depositing funds from your bank into the exchange.
Many exchanges support debit cards such as Visa and Mastercard. Link these cards to the exchange, and the amount you want to spend will be deducted from your card. Some banks also allow you to deposit fiat from your bank account into the exchange directly.
If you do not want to use your card, you can use PayPal to buy BNB. Some of these options might not be supported on all exchanges.
Place An Order To Buy Binance Coin
After getting funds in your account, proceed to place an order to buy Binance Coin. Placing an order on a cryptocurrency exchange is similar to doing so on a stock brokerage platform.
You can place two main orders to buy BNB: Market and limit orders. A market order lets you buy Binance Coins at the prevailing market price. This order is settled instantly.
The other type of order is the limit order. This order type lets you buy BNB at a lower price. For instance, if Binance Coin trades at $550 but expects it to drop to $540, you can place a limit order that the exchange will fulfill when the price drops to your expected level.
If you want to limit your losses from holding BNB, you should impose a stop limit on your BNB holdings. A stop limit order permits the exchange to close its position if the price drops below a particular level.
Send BNB To A Crypto Wallet
After buying BNB, you should send the tokens to a crypto wallet. A crypto wallet holds your assets securely and is safe from hacks and scams.
You can use two main types of crypto wallets: hot wallets and cold wallets. Hot wallets are ideal if you are a frequent trader. They allow you to send crypto assets to and from an exchange easily.
Conversely, a cold wallet is ideal if you are a long-term trader and do not intend to sell your holdings for a long time. A cold wallet stores your crypto offline, making it less susceptible to malicious actors.
However, you should note that a crypto wallet is only as safe as the measures you take to secure your holdings. To avoid falling victim to scams such as phishing campaigns, avoid following suspicious links and visiting malicious websites. You should also ensure your keyphrase remains private.
Factors To Consider Before Investing In Binance Coin
Now that you know how to buy Binance Coin, the next thing to consider is the factors you should consider before investing in this asset.
For starters, you should always be aware of the risks coming from cryptocurrency investments. The price of these assets is highly volatile and can change by huge margins without notice. Consulting with a financial advisor is prudent before investing a considerable sum of money into BNB or any other cryptocurrency.
It is also good to set realistic investment goals. As we have seen, the price of BNB can change, and while some can make massive profits, it is also possible to make significant losses. Therefore, before investing, know that you can profit and lose.
It is also recommended that you follow the market trends. Any developments happening in the Binance ecosystem can impact the price of BNB.
It is also prudent to track the performance of your BNB holdings. Doing so will help you know when to enter and exit trades. This strategy is especially crucial when you are a frequent trader.
In Summary
BNB Coin plays a crucial role in the Binance ecosystem. The token is used for purposes such as staking, lending, and paying gas fees on the BNB Chain. It also comes with benefits such as reduced trading fees for those trading on the Binance exchange.
BNB tokens especially play a critical role in paying gas on the BNB Chain. This blockchain has a massive presence in the industry, having been behind some of the market’s largest decentralized applications (DApps).
If you want to buy Binance Coins, you can only do it through a cryptocurrency exchange. The first process involves opening an exchange account, funding the account, and then using crypto and fiat to settle your trades.
FAQs
How is BNB different from Bitcoin?
Binance Coin is the native token for the BNB Chain. The token is different from Bitcoin, as the developers know it. It also has yet to gain large-scale adoption as a means of payment.
What influences the price of BNB?
BNB token prices are influenced by factors such as market trends, market sentiment, geopolitical tensions, etc. The price can also increase and decrease depending on the regulatory landscape.
Can I Use BNB within the Binance ecosystem?
You can use BNB tokens within the Binance ecosystem to pay gas fees on the BNB Chain. The token is used to pay for gas on the blockchain. It can also come with additional incentives for the Binance ecosystem, such as reduced trading fees and staking activities.
Should I buy Binance Coin?
You should buy Binance Coin to become part of the Binance ecosystem. Since Binance is the largest exchange and crypto adoption continues to grow globally, buying BNB.
