What is Binance Coin? The Beginner’s Guide

Binance is the leading cryptocurrency exchange and Binance Coin is its own cryptocurrency. Binance Coin has been a big hit since its inception, just like the Binance exchange. Nowadays, BNB has also use cases outside the exchange. This is a Binance Coin beginner’s guide.

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Binance Coin is created by Binance

Let’s first put Binance Coin to the right place in the crypto universe, so it’s easier to understand the purpose of this coin.

Cryptocurrencies can be placed into three major categories: currencies, platforms, and tokens. The currency category has popular coins such as Bitcoin, Litecoin, and Bitcoin Cash. The purpose of these cryptos is to function as P2P digital cash.

Ethereum and EOS are the most known platform category products. They can be also called ecosystems or operating systems, like iOS and Android. They are platforms for decentralized apps and smart contracts.

Tokens are built on these platforms (mostly on Ethereum) and they have utility inside a specific application. Chainlink and Basic Attention Tokens are probably the best-known examples.

Binance Coin (ticker: BNB) was created during the ICO boom of 2017 as a utility token for the Binance exchange. This is not the whole story anymore, though.

binance front page july 2020

The front page of in July 2020.Binance is not just an exchange anymore. They have launched their own blockchain in 2019 and 2020. This has given new use cases for the Binance Coin too. BNB is now a utility token (Binance exchange) and a platform coin (Binance Smart Chain & Binance Chain).

One could say Binance Coin is a hybrid. It also runs on two blockchains using two different standards: BEP-2 (Binance Chain) and BEP-20 (Binance Smart Chain).

Next, we’ll go through the history of Binance Coin. Why has it become so popular?

The history of Binance Coin

As mentioned earlier, Binance Coin is created by Binance. It is the leading cryptocurrency exchange in the world. Binance has a very popular founder and front figure: Changpeng Zhao a.k.a CZ.

Zhao was born in China, but he moved to Vancouver at the end of the 1980s. He attended the McGill University in Montreal and majored in computer science. After this, he worked in Shanghai and Tokyo with different trading platforms.

Binance founder has lots of experience from cryptocurrencies as well. He joined the industry in 2013. Zhao worked for and he was the CTO of OKCoin exchange for several years.

Zhao left his post at OKCoin in 2017 to build Binance. He has told in various interviews that the idea behind Binance was developed for many years. This is the reason Binance was better equipped for the crypto boom of 2017 and didn’t crash constantly like its competitors.

The video below: CZ being interviewed on Bloomberg in February 2021.

Binance organized an ICO in the summer of 2017 and raised 15 million dollars. This is quite a small amount when you compare it to a multi-billion ICO of EOS.

Binance Coin was born as a result of this ICO. It was first launched as an ERC20 token on the Ethereum platform like almost all ICO-born tokens at the time. There were 200 million BNB coins created: 100 million was sold to ICO investors, the Binance team had 80 million and angel investors had 20 million.

Binance exchange opened its doors quickly after the ICO was completed. It gained popularity fast in 2017 and hit the mainstream at the peak of the altcoin bubble. Binance had millions of new customers due to the fact it was the only major exchange functioning properly.

Binance Coin has had a clear utility from the beginning: when you hold BNB on your Binance account, you’ll receive a 25% discount from trading fees.

The success of Binance has been breathtaking. The exchange became the global market leader in just six months. Binance also became the fastest unicorn in history. A unicorn means a startup with a billion-dollar valuation.

Binance founder Changpeng Zhao is now one of the most followed figures in the industry. He is known for his hands-on approach to Binance; Zhao is often the first person to report both good and bad news on Twitter.

CZ even made it to the front page of Forbes in February 2018.

Binance’s success didn’t end when the altcoin bubble crashed, and the long crypto winter of 2018 started. They have kept building and getting new customers, which has also created a demand for Binance Coin. This is the major factor, why BNB held its value better than any other altcoin during the long downtrend of 2018.

In 2019, Binance Coin became the first cryptocurrency to reach new ATH since the previous boom. While BNB was reaching new record valuations, its competitors were still 85-90% down from ATH. This run was a result of the short-lived IEO boom.

After the spring of 2019, Binance Coin was actually doing pretty poorly for one and a half years. Poorly, considering how successful the Binance exchange has been. BNB kept its top 10 status, but it should have been higher.

The volcano finally erupted in early 2021.

Binance Coin “mooned” from 40 dollars to 400 dollars in just one month (Jan-Feb 2021). Since that, it has broken even higher valuations, close to 600 dollars. This has moved BNB to 3rd place in cryptocurrency rankings.

The reason behind this run is the massive DeFi boom on Binance Smart Chain. Even if the demand for BNB might not have risen 1000 percent, many investors have woken up to the potential and invested in it.

The blockchains of Binance

When Binance was founded in 2017, it was just an exchange. This changed in 2019 when Binance launched its blockchain. It was not some secret project or a big surprise since Binance announced such plans in the original white paper of Binance Coin.

Binance Chain MainNet was officially launched in April of 2019. After this, a token swap was completed. All Binance Coins moved from Ethereum blockchain to the Binance blockchain. Binance Coin became a BEP-2 standard coin in the process.

Binance Chain is a third-generation blockchain, which can match the capacity of EOS, Tron, and other similar platforms. It can reach up to 1000 transactions per second. New blocks are created every second, which makes transactions practically real-time.

The launch of the Binance Chain has also changed the company strategy. Earlier, Binance was just an exchange, but now they are acquiring projects from other blockchains to Binance Chain. This recruiting process has focused especially on the Ethereum blockchain.

Mithril was the first project to move from Ethereum to Binance. There have also been other projects, which have some added benefits when moving to Binance Chain. First, the network capacity is much better. Second, Binance can offer the tokens more visibility in their exchange. This will help to boost the entire project financially.

Binance Chain (BC) was just the beginning. Binance announced in 2020 that it’d soon launch another blockchain called Binance Smart Chain (BSC). This would be an extension to BC creating a dual-chain ecosystem.

The reason for creating another blockchain was to keep Binance Chain as fast, scalable, and a simple solution. If smart contracts were enabled on BC, this would have changed the structure of the blockchain.

Binance Smart Chain was launched on the 1st of August in 2020.

Binance Coin is the native token of both blockchains. It is the coin validators use for staking and users use for paying transactions. It’s important to remember that Binance Smart Chain uses a different token standard, BEP-20. It means that Binance Coin is running on both chains using two different standards.

Binance Smart Chain has been a massive success. It started slowly, but the DeFi boom of 2021 has been unbelievable. BSC has managed to lure many useful and popular apps and users. The top DeFi apps have TVL (Total Value Locked) values close to 10 billion dollars. You can check the DeFi rankings at

Binance Chain technology

All 3rd generation platforms use a Proof of Stake based consensus. The term “3rd generation” refers to blockchains, which have solved the scalability issues of Bitcoin (1st gen) and Ethereum (2nd gen).

A Proof of Stake consensus algorithm differs greatly from Proof of Work, which is used by Bitcoin and Ethereum. PoS requires no physical mining machines and the blockchain validators are chosen among those who stake the native token.

More cryptocurrency you stake (= lock) to the blockchain, higher voting power you have when it comes to data validation. This is all logical because the users who have the most to lose have the highest incentive to keep everything working correctly as well.

Binance chain is using a Proof of Stake variation called Tendermint BFT. You can find more information on that from this article. The name Tendermint has become quite well-known due to the Cosmos project. The video below will give you a short introduction.

The Binance Chain is run by three different nodes: a validator node, a witness node, and an accelerated node.

Validators are the nerve centers of the Binance blockchain. There are only a dozen of them, and each is hand-picked by Binance. This is quite a strong statement against Binance DEX being decentralized as well.

A validator node is validating transactions and collecting transaction fees, which are paid in Binance Coin.

An accelerated node works like a turbo boost:

Accelerated Node is special infrastructure built around Validator to facilitate accelerated transaction routing and provide richer, faster user interfaces. There are always several Accelerated Nodes running at the same time around the world (owned by different organizations) and you are encouraged to choose one of them to use, or allow your Wallet choose one randomly. For rapid API access, you’d better stay with one Accelerated Node to get better performance. (Source)

Witness nodes are like the nodes in the Bitcoin blockchain. Their task is to record the blockchain and pass transactions forward. Witness nodes have no part in block creation.

You can read more of the technical side of the blockchain from Binance’s FAQ.

Binance Smart Chain technology

Binance Smart Chain (BSC) is the new blockchain, which was launched in August 2020. It’s an expansion to the Binance Chain and offers full support for smart contracts and complex Dapps. Since BSC was launched, Binance Chain hasn’t really made the news anymore.

The governance model of BSC is more decentralized. The consensus algorithm is quite similar to the Delegated Proof of Stake (DPoS), which is used by EOS and Tron. In DPoS, there are 21 validators chosen to create blocks and run the network.

Binance Smart Chain works exactly like this. However, Binance is calling its version Proof of Staked Authority (PoSA). Each Binance Coin holder can participate in a validator election and delegate coins for block rewards.

Perhaps the most important feature is the support for Ethereum Virtual Machine (EVM). This means that Ethereum-based Dapps can be easily moved from Ethereum’s blockchain to Binance Smart Chain. This might have a big impact in the future if Ethereum’s 2.0 version launch is delayed.

In general, BSC is a fully scalable 3rd generation blockchain platform. It will match the capacity of its competitors for sure. The block time will be only around 5 seconds.

binance smart chain vs binance chain

Image: Binance

See the image above for a comparison between BC and BSC. These chains will be communicating with each other seamlessly.

BSC is yet another use case for the Binance Coin. Each validator of the chain will have to stake Binance Coin, which will give BNB a nice staking boost later in 2020. Staking gave many cryptocurrencies a boost of hundreds of percentages in 2019 and 2020.

Tens of millions of Binance Coins are also locked into the liquidity pools of Binance Smart Chain DeFi apps. This will reduce the supply in the market, which drives up the price.

You can read more about Binance Smart Chain from the white paper.

Binance Smart Chain and DeFi

Binance Smart Chain (BSC) has made Binance an important player in the platform race. Binance Chain (BC) was very limited with its features, but BSC is challenging all 3rd generation platforms. Especially in the DeFi sector.

The EVM compatibility has been a key factor. This has made it very easy for software developers to clone popular Dapps from Ethereum to BSC. One of such examples is PancakeSwap, which is a clone of the popular Uniswap DEX.

In February 2021, it was announced that the popular 1inch DeFi app moved to Binance Smart Chain. The app has a simple option for users to select the network they want to use (Ethereum or BSC).

The growth of the Binance Smart Chain DeFi has been amazing. In January 2021, almost nobody cared. One month later, the Total Value Locked (TVL) of all BSC DeFi apps was more than 11 billion dollars. You can follow this progress from

Using Binance Smart Chain DeFi is not difficult either. The popular MetaMask wallet can be easily switched from Ethereum to BSC once the network details have been added. You just need to have some BNB to pay for the transaction fees.

Binance Smart Chain has benefited a lot from the clogged Ethreum network. It’s impossible for an average Joe to use Ethereum’s DeFi apps when one transaction can cost anything from $20 to $100. On BSC, transactions are less than one dollar.

Ethereum is not going to solve all of its scalability issues in 2021, even if there are Layer-2 solutions and EIP-1559 coming fast. Now is the time for Binance Smart Chain to gain market share. This will also drive the price of Binance Coin higher.

Binance has also its own DEX. This can be found at It was an important app for the Binance Chain, but Binance DEX was never a hit. The volume has been low from the beginning. Now, Binance DEX has very little relevance when more popular DeFi DEXes have landed on the Binance Smart Chain (such as PancakeSwap).

Binance Coin as an investment

Binance Coin has been a great investment so far. The rally of 2021 rewarded investors, who held the token during 2020 despite rather poor gains. Binance Coin has truly cemented its position as one of the top cryptocurrencies in the market.

The company behind Binance Coin is also doing great. Binance is the leading exchange and it never stops expanding. New features are added all the time.

One bonus feature we haven’t mentioned is coin burning. This is done after every quarter.

binance coin burn

Coin burning means in practice destroying coins. Binance has promised to burn BNB until there are just 100 million of them left. This means, that Binance will destroy 50% of the supply over time.

After Q1 of 2021, Binance burnt a record amount of BNB tokens: worth over 165 million dollars at the time. There are over 30 million BNB tokens burnt (Q1 / 2021), which means about 170 million is still left.

Many cryptocurrencies have an inflationary supply. For Binance Coin, there is constant deflationary pressure, which is very important in token economics. The laws of supply and demand simply state, that if the demand stays static but supply goes down, the value has no other way but up.

We know that all Binance Coins have been created in the ICO and there won’t be new ones minted.

It’s also important to remember, that Binance Launchpad is also using BNB (staking). Launchpad is the IEO platform of Binance, which has become very popular since 2019. You can only participate in the IEOs by holding enough Binance Coins.

All this looks very positive for BNB. The coin has many use cases and deflationary pressure on top of the fast-growing DeFi sector.

Binance Coin price and How to buy Binance Coin

If you want to invest in Binance Coin, you’d buy it from Binance (Note for US citizen: you have to use the Binance US). Binance Coin can be bought with fiat currencies, Bitcoin, Ethereum, and many stablecoins.

If you want to convert your fiat money to Binance Coin, you can make a direct bank deposit or credit card deposit to Binance and purchase BNB.

Even if Binance is the leading exchange and probably one of the safest out there, it’s always recommended to store your cryptocurrency in an external wallet for the long term.

Ledger Nano X, Ledger Nano S, and Trezor support Binance Coins and offer ultimate safety. You can also use Exodus wallet (desktop & mobile) or TrustWallet on mobile.

Follow Binance exchange @binance, Changpeng Zhao, @cz_binance, and Binance DEX @binance_DEX. On Twitter. Reddit threads can be found at /r/binance and /r/BinanceExchange.

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