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Cryptocurrency is red hot, but if you’re looking to get in on the action, you can’t buy it on the stock market through a standard brokerage account like you would with an index fund or a share of Amazon. Cryptocurrency like Bitcoin is traded on special exchanges like Etoro, CoinBase and BlockFi. The biggest exchange in the world by far is called Binance. It’s so big, in fact, that a “native” cryptocurrency called Binance Coin was developed just to make it easier to pay for the site’s services.
You Pay Fees To Trade Cryptocurrency
If you’re not familiar with crypto exchanges, the following numbers might not mean much to you, but the 1.4 million transactions that are executed on Binance every second and the site’s 2 billion in average daily volume are truly astounding statistics. Exchanges take fees for executing crypto transactions, and part of the reason Binance is so popular is that its transaction fees are among the lowest in the world. Users pay just 0.1% to execute each of those billions of trades.
The Economy and Your Money: All You Need To Know
Binance Coin Makes Cheap Trading Cheaper
Binance reduces those already-low trading fees by a full 50% if you pay for them using the exchange’s native cryptocurrency, Binance Coin (BNB). That means that instead of paying 10 cents on a $100 transaction, you’d pay only 5 cents if you complete the transaction using BNB.
An Ethereum-based (ERC-20) token, BNB hit the market on July 21, 2017, when Binance made its initial coin offering (ICO) of 100 million BNB tokens. It eventually moved to its own unique blockchain called Binance Chain and limited the BNB supply to 200 million tokens in total.
There’s a Lot To Like About Binance Coin
In review, BNB is the native app for Binance, the world’s largest cryptocurrency exchange. It was designed specifically for use in the Binance ecosystem, which offers juicy rebates to incentivize its use — but there’s more to Binance Coin than just the trading discount. According to CoinJournal, BNB:
- Provides lightning-fast transactions
- Can be used to buy and sell a huge variety of cryptocurrencies
- Is safe and secure
- Is accepted as currency by some service providers, mostly in the hospitality/travel industry
Considering Investing? Look Before You Leap Onto the Bandwagon
On April 6, Forbes reported that the cryptocurrency market had topped $2 trillion in value. It was a huge moment for crypto, and Forbes cited BNB specifically as one of the smaller altcoins (Bitcoin alternatives) that are driving so much of that incredible growth.
But investors looking for a quick buck should tread lightly.
Beyond the crypto bubble, BNB is not yet widely accepted as currency outside the travel, accommodations and entertainment industries, although some investment platforms let you use it to buy mainstream securities. It’s just as trustworthy as non-native crypto, but it’s not as anonymous since Binance traders must have registered accounts. In the end, it’s another altcoin that you can invest in if you choose, but like all crypto investments, expect a wild ride with ecstatic highs, terrifying drops and lots of drama in between. That, after all, has been the story of crypto investing so far.
This article is part of GOBankingRates’ ‘Economy Explained’ series to help readers navigate the complexities of our financial system.
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Last updated: April 9, 2021