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22 Oct 2021

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What is Binance? – Definition, 5 Works
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What is Binance? – Definition, 5 Works

Definition of Binance

Binance coin creates with the intent of operating a native crypto asset called BNB. And it means offering an alternative way to pay for fees charged to traders using the exchange.

BNB can use to pay Binance’s 0.1% per trade fee in addition to its withdrawal fee, which charges when users move their cryptocurrencies from the exchange to a private wallet. BNB can also trade for other cryptocurrencies.

How does Binance Coin Work?

1. Vision

  • Binance coin is an ethereum-based (ERC-20) token that can trade cryptocurrencies and pay for fees on the Binance exchange.
  • And BNB tokens can use it pay fees on the exchange, with the incentive being that Binance offers a rebate as an incentive for up to five years of membership.
  • Binance is distinct from other crypto exchanges in that it transacts purely in cryptocurrencies instead of businesses that deal in fiat currencies.
  • And the Binance coin competes with the other exchanges by offering solutions to the numerous problems he saw with the cryptocurrency trading infrastructure.

2. Launch and Issuance

  • All BNB tokens were created before the ICO and were sold within 20 days, raising approximately 15 million dollars.
  • The funds’ high use in three different ways: 35% of the funds used to build the Binance platform and perform system upgrades. And 50% uses for Binance branding and marketing, and 15% were reserve as emergency funds.

3. Network design & security model

  • BNB started as the Ethereum-based (ERC-20) token that eventually moved to its custom blockchain called Binance Chain. Unlike Ethereum, however, Binance Chain does not support smart contracts.
  • And the system involves several different types of nodes: Validator nodes, select community members who vote to validate transactions, witness nodes.
  • Also, which witness the consensus process and broadcast transactions to other nodes; and accelerator nodes, which own by organizations and speed up the transaction validation process.
  • Once blocks produce, the fees collected distributes among all validators.

4. Monetary policy/ token policy

  • It capped the BNB supply at 200 million tokens. One hundred million tickets release to the public during the ICO, while 80 million allocates to the founding team and 20 million to angel investors.
  • Also, to combat the depreciation of value that will happen with the yearly decreasing discount. Also, plans to burn half of its total supply, 100 million tokens, over time. The final goal of “The Burn” stabilize the price of BNB over time.

5. Transaction processing

  • Validator nodes vote to process transactions in the network as part of Binance Chain’s Tendermint byzantine-fault-tolerant (BFT) consensus mechanism. Users can speed up transaction processing by choosing an accelerator node, which works in tandem with validator nodes.

    Also Read:
    What is Ethereum? – Definition, Decentralized Internet

Also Read: What is Bitcoin? – Definition, Works, Use

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