BNB, also called Binance Coin, is a cryptocurrency token created in 2017 by Changpeng Zhao directly on the Binance cryptocurrency exchange platform.
At first, the BNB token had only a utility purpose, as it was used within the Binance ecosystem. It allowed users to pay lower transaction fees on the platform.
But since then, BNB has evolved a lot, and the token has become a central element of a complete blockchain ecosystem.
From ICO to BNB Chain: Evolution of the Ecosystem
BNB began in 2017 when the Binance platform launched a fundraising campaign through an ICO (Initial Coin Offering). During this fundraising, 100 million BNB tokens were sold at a price of $0.10 per unit. This allowed Binance to collect 15 million dollars. Thanks to this fundraising, the company was then able to launch the Binance exchange platform, founded by Changpeng Zhao, also known as CZ, a Chinese and Canadian entrepreneur.
At its launch, the BNB token was created on the Ethereum blockchain using the ERC-20 standard, but in April 2019, Binance decided to launch its own blockchain, which is called Binance Chain, and therefore transferred BNB to this new infrastructure.
Subsequently, Binance decided to launch a second, more advanced blockchain called Binance Smart Chain (BSC). This one, which is separate from the first, is compatible with Ethereum, which allows for better performance, lower transaction fees, and faster execution of operations.
Today, the two blockchains are grouped under the same name: BNB Chain. On this unified chain, the BNB token is the active token. It is used to pay transaction fees on the network and also powers decentralized applications (dApps).
Tokenomics, Price Rise, and Ecosystem Use
BNB’s monetary policy is unique. The mechanism behind BNB is called “Burn”, which means automatic destruction of tokens. Binance has committed to regularly buying back BNB tokens in order to destroy them, which reduces the amount in circulation. This process aims to make the token rarer over time.
Since 2021, this token-burning process has become automatic. It is calculated based on the volume of transactions on the blockchain, which helps to strengthen transparency as well as independence from Binance’s management.
The price of the BNB token has seen an incredible rise, which was hard to predict in 2017 when the token was worth only a few cents. During the crypto bull run in 2021, the token reached a record price of $646.82 on May 8. Thanks to this, its market capitalization reached 100 billion dollars, making BNB one of the most powerful digital assets in the world.
The global success of Binance explains this impressive rise. The rapid growth of different decentralized finance (DeFi) applications on the BSC, as well as the rise of NFTs, have been able to take advantage of the efficiency of the BNB Chain network.
BNB Chain is today in constant evolution and hosts thousands of applications. You can find different decentralized exchange platforms, lending platforms, stablecoins, and many others.
The BNB token is the currency used for all activities. It is used to pay transaction fees, to stake, to vote in governance processes, and to make various purchases in games. This versatility has allowed BNB to become much more than just a utility token, as it now plays a very important role in building decentralized digital finance.
Regulation, Centralization, and Future Outlook
But like many major projects in the world of cryptocurrencies, the BNB token cannot escape the various regulatory questions. In 2023, the U.S. Securities and Exchange Commission (SEC) placed BNB on the large list of cryptocurrencies considered as investment instruments. This cast uncertainty on the future of this token in the United States. However, despite these obstacles, the BNB ecosystem continued to evolve, which shows its strength and adaptability.
A major debate that surrounds BNB concerns its degree of centralization. Even though BNB Chain is presented as decentralized and progressive, it remains very influenced by Binance. Since it is the largest cryptocurrency exchange platform in the world, it holds a dominant position in the governance of the project, but also in its development and communication. Even if this influence draws many remarks, it allows for rapid technological evolution and great ease of use for different users.
To summarize, BNB has established itself as an essential element in the world of cryptocurrency. This token combines the power of a highly valued utility token, the solidity of a well-structured blockchain, a monetary policy based on token burning, and it also occupies a central role in the DeFi ecosystem. BNB continues to play a major role thanks to its proximity to the world’s largest exchanges. Its future is linked to the evolution of blockchains, the development of Web3 applications, and the progression of global cryptocurrency regulation.