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What is BNB Coin if it's not a Cryptocurrency?

Emma MarroneVerified
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Summary：BNB Coin is not a traditional digital currency and is not decentralized or fixed in supply. It serves as a utility token for the Binance platform, offering discounts and payment for services.

BNB Coin, or Binance Coin, is a token created by the popular cryptocurrency exchange Binance. Despite being often referred to as a cryptocurrency, BNB Coin is actually not a traditional digital currency. In this article, we will explore what BNB Coin is, its function, and why it is not a cryptocurrency.

What is BNB Coin?

BNB Coin is autility tokenthat powers the Binance ecosystem. It was launched in 2017 as an ERC-20 token on the Ethereum blockchain, but later it migrated to its own blockchain known as the Binance Chain. The token is used for various purposes such astrading fees, listing fees, and other transaction fees on the Binance platform.

Function of BNB Coin

BNB Coin serves as the native token of the Binance exchange, and it has several use cases. One of the primary functions of BNB Coin is to reduce trading fees on the Binance exchange. By using BNB Coin to pay for trading fees, users can enjoy a discount of up to 25%. Additionally, BNB Coin can be used to pay for other services on the Binance platform, such as listing fees for new tokens.

Why is BNB Coin not a cryptocurrency?

BNB Coin is not a cryptocurrency in the traditional sense because it does not have all the features that cryptocurrencies typically have. For instance, BNB Coin is not decentralized since it is issued and controlled by Binance. Moreover, BNB Coin does not have a fixed supply, and its value is not solely determined by market demand and supply. Binance regularly uses a portion of its profits to buy back and burn BNB tokens, which reduces the total supply of BNB Coin and increases its value.

Investment factors to consider when trading BNB Coin

When trading BNB Coin, there are several factors to consider. One of the most important factors is the performance of the Binance exchange itself. Since BNB Coin's value is largely tied to the success of the Binance platform, any negative news or events related to Binance could affect the price of BNB Coin. Additionally, traders should pay attention to thetoken burn scheduleof Binance, as it can affect the supply and demand of BNB Coin.

Conclusion

In summary, BNB Coin is a utility token that powers the Binance exchange. Despite often being referred to as a cryptocurrency, BNB Coin is not a traditional digital currency due to its centralized nature and lack of a fixed supply. When trading BNB Coin, traders should consider the performance of the Binance exchange and the token burn schedule of Binance.

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