You’re probably already familiar with Binance, the hugely popular crypto exchange, but how much do you know about Binance Coin? Is the Binance ecosystem’s native coin a worthy investment in its own right? Let’s take a look.
Compare where to buy Binance Coin, and open an account
Read on to find out more about Binance Coin in 2020 or skip ahead to our step-by-step buyers guide if you’re up to speed and ready to buy Binance coin.
What is Binance Coin?
The Binance exchange ended 2019 with an average daily trading volume of nearly $3 billion and a global user base of 15 million. Not too shabby considering the platform was launched in mid-2017. Binance Coin (BNB) effectively started out as a token for paying fees on the exchange, but the Binance team clearly has more ambitious plans for it and traders can already speculate on its market value.
How does Binance Coin work?
As the Binance platform’s native coin, BNB was introduced as a utility token that can be used to receive discounts on Binance exchange fees. The discount traders could initially expect when using BNB on the exchange started at 50% but will decrease year-on-year until, in year five, it will sadly be no more.
You might expect this schedule to negatively impact BNB’s value, as its usefulness incrementally dwindles, but Binance is countering devaluation by burning 20% of its profits every quarter to decrease the token’s availability.
BNB’s role in the ever expanding decentralised Binance ecosystem should see its use cases continue to increase.
How to buy Binance Coin online – step-by-step guide
Step 1. Get a suitable wallet
To buy Binance coin you will need to get a crypto wallet. There are loads of BNB-compatible wallets to choose from, so we’ve listed our top three to narrow down your search:
- Ledger Nano X: One of the safest options for storing your BNB tokens is the Nano X hardware wallet from Ledger. It’s not the cheapest wallet out there, but if you’re serious about security, it’s one of the best.
- Trust Wallet: Since Trust was acquired by Binance last year, the Trust Wallet has become the platform’s official wallet. Already available as a mobile app, a desktop version of the wallet has recently been launched for MacOS. Windows and Linux versions shouldn’t be far behind.
Step 2. Find a Binance Coin exchange
The next step to securing those BNB funds is to find an exchange. The natural choice must surely be Binance, the world’s biggest exchange and the platform BNB is native to. Other exchanges are available however, including Changelly, which combines slick, highly convenient design and speedy transactions.
Step 3. Withdraw your Binance Coin
It’s a good idea to withdraw your BNB funds from the exchange as soon as you’ve acquired them – it’s much safer to keep cryptocurrencies in a digital wallet than on an exchange.
How to trade Binance Coin – step-by-step guide
If you’re only interested in trading rather than buying and owning Binance Coin, there’s really no need to set up a wallet as you’ll simply be predicting whether the price of BNB will go up or down.
Step 1. Find a broker
Finding a broker is easy if you know where to find them and what you’re after. However, it’s well worth having a look around and doing some research before you commit to one as they all offer different perks and levels of support.
We tend to go for more established brokers such as Plus500 or eToro as they have been around for a while and are easy to get to grips with.
Step 2. Deposit money
Once you’ve chosen a broker, you’ll need to put some cash down as a deposit. The process is fairly straightforward and minimum deposit requirements are usually pretty low, so you can start with a relatively small bankroll.
Step 3. Decide how you’d like to trade
There are two main ways to trade cryptocurrencies: using a cryptocurrency spread betting broker or CFDs (contracts for difference). While there are some differences, both methods require you to take a position on whether you think the price of your chosen cryptocurrency will rise or fall over a set period of time. If you’re just starting out, it might be worth doing some research on spreads and CFDs before you jump in.
Step 4. Start trading
Once you’ve put down a deposit, you’ll no doubt be raring to go, but we recommend you set up a demo account with your broker before you start trading for real. It’s easy to win and lose money very quickly when trading, so it makes sense to get a feel for the platform you’ve chosen as well as the ebb and flow of the cryptocurrency market.
In essence, all you need to do is take a position on whether the price of your cryptocurrency will increase or decrease. If you think it will increase take a long position (buy) and if you think it will decrease, take a short position (sell).
You may opt to take advantage of leveraged betting, which is a feature of most trading platforms. Leverage enables you to put down a fraction of your trade’s total value as a type of deposit called a ‘margin’. However, this is a high-risk strategy, so it’s probably not for beginners. Experienced traders understand this, and use stop loss orders to mitigate risk.
- The enormous success of the Binance exchange has to bode well for BNB’s prospects
- Frequent coin burns should increase value
- Can be used to reduce Binance trading fees
- BNB holders gain entry into Binance Launchpad lotteries
- Some consider BNB to be overpriced
- Prospects will be less rosy if Binance loses its towering market position to competing exchanges