What is Binance coins?
- Posted by
- Comments Off on What is Binance coins?
The purpose of creating the Binance coin is to operate a native crypto asset, called BNB, which is provided to offer an alternative way of paying fees charged to traders using the exchange.
BNB can be used to pay a 0.1% fee per Binance transaction in exchange for its withdrawal fee. Fees charged when users move their cryptocurrency from an exchange to a personal wallet. BNB can also be tied to other cryptocurrencies.
How do Binance coins work?
Binance Coin is an ethereum (ERC-20) based token which is used to trade cryptocurrencies and pay fees on the Binance exchange. BNB tokens can be used to pay fees on exchanges, with the incentive that Binance offers rebates as an incentive to study for up to five years.
Binance itself differs from other crypto exchanges in that it transacts purely in crypto currency as opposed to an Iranian exchange for fiat currency. Changpeng Zhao’s vision for Binance coin was to compete with other exchanges by offering solutions to various problems he saw with the cryptocurrency trading infrastructure.
Binance coin security model & network design
BNB started out as an Ethereum based token (ERC-20) which eventually moved to its own custom blockchain called the Binance Chain. Unlike Ethereum, however, Binance Chain does not support smart contracts.
For its security process, Binance Chain uses a Tendermint byzantine-fault-tolerant (BFT) consensus. The system involves several types of nodes: Node validators, selecting community members who vote to validate transactions; watch nodes, which watch the consensus process and broadcast transactions to other nodes; and accelerator nodes, which belong to the organization and serve to speed up the transaction validation process. Once produced, fees are collected directly to all validators.
Monetary policy / token policy
Binance has limited the BNB supply to 200 million tokens. 100 million tokens were released to the public during the ICO, while 80 million were allocated for founders and 20 million for angel investors.
To calculate the depreciation in value that will occur at a declining annual discount, Binance plans to go away from its total supply, 100 million tokens, over time. The ultimate goal of “The Burn” is to stabilize the BNB price over time.
The node validator provides a voice for processing transactions in a part network as part of the Binance Chain byzantine-fault-tolerant (BFT) Tendermint consensus.
Users can speed up transactions by selecting an accelerator node, which works in tandem with the validator node.