Quick Facts

Approximate Market Cap$17,911,421,322
Year Established2017
FounderCharles Cascarilla, Rich Teo
Symbol/AbbreviationBSUD
UtilityUtility Token

Cryptocurrency volatility can be a double sword. Even if investors recognize the value in exchanging Bitcoin-altcoin pairings, Bitcoin still experiences significant fluctuations when contrasted to the US dollar.

This is why stablecoins were created. By integrating the security of blockchain technology with the peg of the coin’s worth to the US dollar, traders may protect against all of the cryptocurrency’s abrupt price swings, enabling them to precisely assess their profits.

BUSD functions as a digital equivalent of the US dollar and is tied to its value.

What is Binance USD – Definition

The stablecoin BUSD was established by Paxos and Binance. Paxos leverages blockchain technology to provide Stablecoin as a Service to third-party enterprises. Binance USD is tied 1:1 to the US dollar, and Binance, a digital asset trading firm, issues fresh BUSD.

BUSD transactions benefit from three essential characteristics:

  • Accessibility, 
  • Adaptability, 
  • Speed.

BUSD may be purchased with ease on Paxos or Binance. Users can obtain them by using Binance’s exchange or fiat gateway services. They can also transfer a sum in US dollars to Paxos in order for fresh BUSD tokens to be minted.

BUSD provides flexibility by allowing cryptocurrency users to rapidly convert their investments into reliable assets without leaving the Blockchain. The cryptocurrency may be found on three blockchains: Ethereum, Binance Smart Chain, and Binance Chain. 

Pros and Cons

Pros

  • Backed by USD
  • Verified  and regularly audited
  • Compliant with AML laws

Cons

  • Not suitable for trading
  • Cannot be mined
  • Can be bought with credit cards only

The History

On September 5, 2019, Binance and Paxos confirmed their collaboration to produce the Binance USD stablecoin. The BUSD has been approved by the New York State Department of Financial Services (NYDFS). Starting September 12, 2019, Paxos made the BUSD accessible for buying on a 1:1 basis with the USD.

In September 2019, the BUSD became accessible for trading with BTC, BNB, or XRP mostly on the Binance platform. As mandated by the NYDFS, the token is inspected on a regular basis by the financial company Withum.

How Binance USD Works

On a technological level, BUSD is a fiat-backed type of cryptocurrency that is pegged to the US dollar. Paxos holds a quantity of US dollars equivalent to the whole supply of BUSD in possession as balances in FDIC-insured US institutions. When the value of the US dollar grows or declines, so does the value of the British pound. This is the most frequent and conventional stablecoin structure.

In comparison to other forms of stablecoins, the method for maintaining BUSD’s peg is rather straightforward. Each BUSD can be exchanged for one USD from the reserves. Paxos will destroy user tokens and reward users with fiat cash if they provide them BUSD. This system maintains a constant 1:1 ratio of supply to reserves.

New York state officials have imposed certain requirements on Paxos, Binance, and how the token must function. Paxos must precisely oversee the production and combustion of BUSD tokens in addition to ensuring that the token is completely collateralized. 

While Paxos is in charge of the generation and deletion of BUSD coins, there are ERC-20 smart contracts that operate with BUSD tokens. Such smart contracts assist to secure the process by eliminating the necessity of third parties. They transfer transactions following the trustworthy features of the blockchain network.

Advantages & Disadvantages

Advantages

Regulated

The New York State Department of Financial Services has licensed and regulated Paxos and BUSD, assuring the highest level of user protection.

Audited

On a monthly basis, a leading auditing company will certify the matching supply of BUSD coins and actual US dollars.

Fixed value

The use of BUSD lowers the danger of profit loss owing to the currency’s reliance on the US dollar.

Disadvantages

3rd Party Audits 

Stablecoins should be evaluated by 3rd parties to avoid irreconcilable problems in a distributed, permissionless, or anonymous experience.

Less Growth

Unlike unpegged cryptocurrencies, stablecoins do not provide investors with the opportunity for significant ROIs.

Binance USD in the Global Crypto Market

BUSD is the second-largest stablecoin by market cap as of June 2021. Its market valuation is approximately $9,600,000,000. This number covers the coin’s worth in ERC-20 tokens as well as the BEP-2 and BEP-20 variants. While it has risen in importance, there is still a substantial disparity in market capitalization between it and its closest rival, Tether.

BUSD serves as a secure investment as well as a helpful instrument for traders and investors. The coin’s controlled status and inspected reserves kept in reputable financial institutions offer it a high level of trustworthiness.

According to Binance statistics, there were over 40,000 people holding BUSD on Binance.  Since the token’s debut, 416 million BUSD have been acquired. There are more than 45 exchanges where you may buy and sell BUSD.

FAQ

What’s the connection between BUSD and USDt?

There are significant distinctions between BUSD and USDt. The BUSD is the NYDFS’s first stable coin.
USDt, commonly known as Tether, is backed entirely by tether reserves.

Is the quantity of BUSD limited?

The circulating quantity of BUSD coins is 13 billion, with a total supply of 13 billion.

Is it possible to mint BUSD?

Any purchase or sale of BUSD is accompanied by a cash transfer into or out of the reserve account. BUSD tokens are either created or burnt based on these demands.