The impressive performance of cryptocurrency and great returns on investments have attracted many investors into the crypto space. But in a market flooding with exchange platforms and tokens, Binance holds its reputation as the leader .
Among crypto enthusiasts, Binance has become a household name. Founded in 2017, it is the world’s largest cryptocurrency exchange . Over the last year, the value of BNB coins has increased by almost 250% , giving long-term buyers a massive advantage.
But, what is Binance? What is Binance Coin or BNB? How does a crypto platform coexist with a cryptocurrency? And finally, how can you potentially earn money from trading or using BNB?
What is Binance?
Currently holding the position of the largest cryptocurrency exchange globally, Binance rules the crypto market, with a trading volume of over 16.03 billion USD.
Binance is a crypto-to-crypto exchange platform where users can only trade using cryptocurrencies. However, if you don’t own any crypto-token, you will need to buy some from another platform before switching to Binance.
Cryptocurrencies on Binance
At the beginning of 2022, the Binance ecosystem had more than 365 cryptocurrencies. However, only a fraction of cryptocurrency pairs is available, depending on the users’ location. For example, U.S. users can trade about 65+ crypto tokens on Binance.
Other than USD, BSC also supports a variety of fiat currencies, including EUR, GBP, AUD, INR, and HKD.
Some of the most popular cryptocurrencies available on the platform are:
- Binance Coin (BNB)
- Harmony (ONE)
- Dogecoin (DOGE)
- VeChain (VET)
- Matic Network (MATIC)
- Litecoin (LTC)
- Cosmos (ATOM)
- Dash (DASH)
- Cardano (ADA)
- Ethereum (ETH)
- Bitcoin (BTC)
- Compound (COMP)
Binance Compared to Other Exchange Companies
Binance has a wide range of supported assets and trading options accessible to global traders, and its rates are among the lowest in the industry. However, although this platform has some positive aspects, its compliance issues remain a constant cause for concern for users.
If Binance doesn’t sound like the right choice, you might want to consider Coinbase Pro, one of its main competitors.
Coinbase Pro v/s Binance
Coinbase Pro and Binance are the two largest crypto exchanges worldwide. They also provide active traders with a range of option and asset trading possibilities. Below is a comparison between the two:
- Coinbase Pro offers more cryptocurrencies than Binance International.
- With Binance’s spot trading fees, you’re paying a lower price than Coinbase Pro’s maker-taker fees.
- Coinbase Pro rewards holding digital assets on its platform, while Binance offers tips for holding BUSD.
- A native digital wallet is available to Coinbase Pro users but not Binance users.
- The most stable and secure cryptocurrency exchange is Coinbase, whereas Binance has run into numerous security and compliance problems.
The trading experience on Binance and Coinbase Pro is both sophisticated. Though Binance generally offers lower fees and more global trading options than Coinbase Pro, the Binance.US platform is less feature-rich and offers fewer choices, which may make Coinbase Pro a better choice for U.S. investors. The same may be true for citizens of other countries.
Moreover, while Binance’s fees are lower, the company has compliance issues in other countries and faces U.S. regulators’ scrutiny. Therefore, in the generalized trader’s view, Coinbase is considered a more stable and secure platform than Binance.
What is a Binance Coin or BNB?
Binance Coin, or BNB, is the base cryptocurrency or digital currency on the Binance exchange. The Binance platform allows investors and traders to trade crypto using BNB.
Originally, this coin-operated on the Ethereum blockchain using the ERC-20 standard, but it is now the native coin of Binance. Approximately 1.4 million transactions are carried out on the platform every second, according to stats released in January 2022. Furthermore, from the start of April to mid-January 2022, BNB’s value increased multiple folds.
Company management offers 10% of the shares to angel investors, 40% to founders, and the rest to the general public.
Using this coin, users can pay for transactions and trading fees on the Binance exchange at a lower cost than they would with other tokens.
Binance uses manual token-burning to repurchase BNB and burn (destroy) them after profit from token sales.
Why is Binance Coin Price Plummeting?
BNB was ranked ninth by market capitalization at the beginning of 2021. However, BNB climbed to third place by the end of the year.
In all, BNB gained more than 1,250% in 2021. While it’s a great price gain, it doesn’t value more when compared to the best of the year. However, 2022 appears to be shaping up differently. As of January, BNB was down over 30% from its all-time high and fell almost 10% since the start of this year.
Here are the top three reasons behind the plummeting price of Binance token:
Increased Regulation
Crypto-related industries are facing increased regulation across the world. Crypto controls are on the agenda for many countries this year, including the U.S. However, it is unclear what shape those new rules will take — and if they will be helpful or detrimental to the industry.
Binance exchange had significant regulatory issues in 2021. Japanese officials, the U.K., Germans, Italians, Hong Kong, Malaysian, Lithuanian, and Thailand administrators have restricted its activities. Earlier, U.K. customers couldn’t deposit or withdraw money from their Binance accounts.
The company is constantly trying to obtain international regulatory approval for its popular cryptocurrency exchange. However, the pressure is mounting.
Tightening Monetary Policies
To limit COVID’s economic damage, the Federal Reserve implemented a number of measures. This included reducing interest rates and implementing fiscal stimulus measures. But, inflation is skyrocketing, touching all-time highs. For example, it rose by 7% in the USA, reaching the highest in the last 40 years. In response to the spiking financial crisis, governments are looking towards reducing economic boosters.
As a result, interest rates will likely rise as soon as March, along with other monetary tightening measures. These developments are happening faster than expected and have unsettled the stock market and cryptocurrencies alike. Because of this, some investors are withdrawing from riskier asset classes like crypto.
The Crypto Market is Low
Cryptocurrency prices have fallen across the board in recent months, not only Binance Coin. A majority of the best-known cryptocurrencies have suffered losses as well.
CoinMarketCap reports that the total amount invested in crypto has dropped from almost $3 trillion in November to about $2 trillion.
How to Use the Binance Application?
Binance application is praised globally for its beginner-friendly interface. In addition, the company has ensured the user’s ease of creating an account and trading through the app.
Following five simple steps guide will teach you how to use this crypto exchange application:
Step 1: Registration Account
Sign up for a Binance account with your email or phone number using the Binance App, Binance website, or Binance Desktop App.
Step 2: User Verification
You are now eligible to unlock the fiat deposit and withdrawal limits on your Binance account by completing Identity Verification. It typically takes a few minutes to submit this information, including verifying your account information, uploading I.D. documentation, and taking a selfie/portrait.
Though Binance does everything in its power to ensure the security of your account, you can also take a few measures to enhance the security of your Binance account. You can go through the additional security measures provided from the company’s end for more information.
Step 3: Crypto Deposit
Binance Wallet users who already hold crypto can deposit them into another wallet and transfer them to the Binance Wallet.
However, the company advises you never to share the password, private key, or 2FA code for your Binance Account/Wallet with anyone.
Please Note: Binance will never request any sensitive information from you.
Step 4: Buy Crypto
You can now buy and trade cryptocurrencies in three ways:
- Depository Fiat: Binance accepts bank transfers and bank cards for deposits of up to 50+ fiat currencies, such as EUR, BRL, and AUD. Once you complete the funds’ deposition, you can use them directly to buy crypto.
- Debit/Credit Card: On the Binance website or the Binance app, you can purchase crypto now using your credit/debit card.
- Peer-to-Peer (P2P): P2P is another way to buy crypto on Binance. By using this, you get to purchase cryptocurrency directly from other users on the platform who are also interested in crypto.
Is Binance a safe investment?
Assessing crypto assets for investment opportunities can be difficult. However, if we analyze the decentralization of Bitcoin or Ethereum, it becomes easier to assign value to them.
For example, Bitcoin has had over 11 years of ups and downs and has many geographically distributed nodes and miners. Bitcoin offers a high degree of assurance that no single company, government, group, or individual controls its value. Its users determine its future, which means that a free and open market will only determine its price.
While Ethereum has half the number of nodes as Bitcoin, it is still exponentially more distributed than Binance Coin. This is due to the Binance exchange’s PoA model that gives it complete control over-trading.
But why does it matter to you? Binance has lower trading fees than Ethereum and is also much faster? So, what if it is centralized?
Because Binance exchange has such a strong grip on the PoA model, assets issued through it seem much closer to securities than anything else. Many chains are ungoverned by their creators regarding nodes, miners, validators, stake pools, etc. However, such a structure could even raise regulatory concerns.
Binance is currently the largest crypto exchange platform globally, but the lengthy list of countries banning or restricting its services causes concern. Furthermore, new cryptocurrency investors may also find its platform complicated.
Binance may be a good choice if you are an experienced global trader looking to explore a variety of tokens and trade options. Binance.US offers some opportunities for traders based in the U.S., but only a small number of cryptocurrencies are supported compared to the global platform. However, consider comparing platforms before getting started with Binance and doing your due diligence before trading.
Should You Buy BNB?
Speculative investments are perfectly permissible, especially in the crypto world. However, as a reformative technology, cryptocurrencies themselves are generally considered speculative.
Thus, it can be helpful to understand why cryptocurrency exists in the first place — to empower individuals and give them economic autonomy and self-determination while removing control from the few and placing it back in their hands. Binance Coin is the direct opposite of that.
Among all the cryptocurrencies out there, BNB is one of the most popular and successful. BNB has shown continuous growth over the years, and many experts predict that it will continue to do so in the years to come. Currently, this cryptocurrency is looking up.
Nonetheless, BNB can be an excellent investment for long-term investors . The high volatility of the crypto market, on the other hand, means that short-term investors are at risk of losing their investments quickly. BNB investments, therefore, are a good idea for long-term investors.