BNB stands for Binance Coin. It is the native token of the Binance cryptocurrency platform. The token is mainly used by users for paying cryptocurrency trading fees on the cryptocurrency exchange. It is a deflationary digital currency. There are around 200 million BNB coins in circulation but Binance will employ a buyback of coins and reduce the number of coins to 100 million.
BNB-The currency of Binance coin
BNB tokens are somewhat similar to how ether works in the Ethereum blockchain. However BNB coins are ERC 20 Standard and were developed and launched on the Ethereum mainchain only. BNB tokens were launched after the BNB ICO. Investors purchased BNB tokens against Ethereum. This fund was raised by the company to meet expenses of Binance cryptocurrency platform.
Binance is the world’s biggest cryptocurrency exchange with a market share of almost 30 percent. In the whitepaper, Binance had provided a detailed explanation of its further plans for BNB tokens.
BNB is a deflationary currency
There were 200 million BNB tokens generated by the Binance team. 50 percent went to the ICO, 40 percent to the team and the remaining 10 percent to investors. BNB tokens would be used by users to pay for services across Binance platforms. Use of BNB tokens was incentivized by providing a discounted fee structure. This discounted fee structure would exist for five years until 2022. Users who use BNB tokens for paying charges on Binance will receive a 50 percent discount on the fees. This discount would drop to 25 percent in the next year. It would halve to 12 and then 6.75 percent in the coming years. Finally the discount would drop to zero.
The main aim of incentivizing use of BNB tokens was to raise more capital in the ICO. Also, BNB is a deflationary digital currency whose supply has to reduce from current 200 million to 100 million within the next few years. Binance would burn the digital tokens that come back to it through payment fees.
The repurchasing plan states that every quarter the company will use 20 percent of its profits to buy back BNB coins from the open market. This would continue until 50 percent of the total BNB coins in circulation have not been destroyed. The Binance team will also vest 20 percent of their reserved holdings every year for the next five years.