Binance Coin (BNB) is the native cryptocurrency used on the Binance blockchain. It is denoted with the symbol BNB and was launched in 2017. 

BNB has developed into an asset frequently used by the Binance blockchain users. They use BNB tokens to pay fewer transaction fees in the network. 

1

The Binance Coin Network

When we talk of the Binance Coin network, there are many things to be understood in detail. Firstly, there are the two blockchains: Binance Chain and Binance Smart Chain.

Binance Chain was a blockchain developed to offer high-quality performances when on-chain transactions occur. In 2020, Binance launched an improved version of the blockchain, called the Binance Smart Choice (BSC).

BSC allowed more functionality for the users. Moreover, it enables smart contracts, making it an excellent platform for building optimum solutions.

Another crucial part of the BNB network is the process of “burning.” Every year, Binance spends a part of its profit to “burn” Binance Coins, destroying them forever. The goal is to destroy 100 million Binance coins, half of the total BNB tokens.

Without understanding these two concepts, you cannot comprehend how the whole system works.

2

Maintaining the Blockchain

Binance Coin works on a decentralized blockchain, which uses the Proof of Authority consensus mechanism to verify its transactions.

A blockchain is a technology that helps store information and is used for most cryptocurrencies. As new transactions take place, new blocks are created.

The blocks store the information regarding each trade. As more blocks are made, they connect, resembling a chain. Finally, each data block is connected, so all the info remains secure.

After the block is made, various nodes within the network need to verify the information before it can alter the blockchain. There is no central authority to verify the transaction. Instead, it can be verified by anyone with the proper tools. Hence, Binance Coin is a decentralized system.

Proof of Authority is a consensus mechanism where the nodes have to stake their identity to verify the information. Compared to other mechanisms, the number of validators in Proof of Authority blockchains is lower. These validators have to reveal their identity and put it at stake to become a trustworthy entity.

3

Mining Binance Coin

Binance capped their BNB token creation at 200 million units. So, the total number of Binance Coins to be created is fixed.

Binance started with an Initial Coin Offering. 40% of the tokens stayed with the founding teams. Then, 10% of the tokens went to angel investors who funded this ambitious project. Finally, 50% of the total coin supply went to the public.

So, there were 100 million BNB tokens in circulation among the public. But Binance burns or destroys a number of its tokens every year. The last token burn took place in January 2022, when around 1.6 million tokens were burned.

Since BNB tokens are systematically destroyed from time to time, it is clear that BNB mining is impossible. Mining, after all, refers to the process of creating more tokens. But with Binance Coins, that process need not take place.

4

Binance Coin's Value

A part of Binance Coins is destroyed regularly. Therefore, the number of tokens in the market decreases as time goes by. The decrease in supply leads to an increase in demand, thus affecting the rarity of the tokens. Hence, the value of tokens increases.

Obviously, Binance Coin is a cryptocurrency, so its price fluctuates wildly. But it is a deflationary coin, meaning that BNB’s buying power will increase as time progresses.

The highest value of BNB was $690.93 in May 2021. On the other hand, its lowest value was $0.096 in August 2017. You can see the range of price fluctuation and how the value of the BNB tokens increased compared to 2017.

FAQ

What is a Binance Coin?

Binance Coin, or BNB, is the native cryptocurrency of the Binance blockchain. It was launched in 2017 and can be used to make payments on the network. 

What is a blockchain?

A blockchain is a technology that uses blocks to store information. These blocks combine further, like chains, to keep the data secure.

Is Binance Coin a deflationary cryptocurrency?

Yes, Binance Coin is a deflationary cryptocurrency, meaning that its buying capacity increases over time. 

Can you mine Binance Coins?

No, Binance Coin cannot be mined. The number of BNB tokens is capped at 200 million, and no more tokens can be created. 

What is the highest value that Binance Coin has reached?

Binance reached an all-time high of $690.93 in May 2021.

What is an Initial Coin Offering? 

An Initial Coin Offering is an unregulated way to raise funds for a new cryptocurrency that is to be launched in the market.

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