How does Binance Coin work

BNB is a cryptoasset similar to other digital assets in the market in that its value rises and falls as people use and trade it. People can store BNB in compatible wallets on crypto exchanges and send the coins directly to others for payments or other means.

People can buy BNB through a variety of avenues, such as Binance’s own cryptocurrency exchange. However, as always, be sure to research and comply with any applicable governing laws.

On a more technical level, BNB works with two specific blockchains – Binance Chain and Binance Smart Chain (BSC). BSC is an independent blockchain built outside of Binance Chain that runs in parallel with BC and has different functions such as smart contract functionality.

When building BC, Binance customized the blockchain for optimal performance when trading on-chain, basing the Binance DEX (Binance’s decentralized exchange (DEX)) on BC. However, BC is limited in terms of the potential for blockchain developers to build solutions on top of it. BEP-2 tokens are assets built on Binance Chain.

Binance has added more features to its ecosystem and launched Binance Smart Chain in 2020, providing developers with more features when building blockchain projects on BSC and BC. BEP-20 tokens are assets made on Binance Smart Chain.

For example, BSC hosts smart contract functions, while BC does not. Binance Smart Chain is a separate blockchain from Binance Chain, but the two chains run parallel to each other. BSC is also able to work with the Ethereum Virtual Machine (EVM).

Interacting with the blockchain (BSC or BC) requires paying network fees in BNB.

Binance spends a portion of its revenue each quarter to buy back and burn Binance Coins, eliminating them entirely. Binance has been on a quarterly burn since 2017.

Binance will continue to burn BNB coins quarterly until it has purchased and burned 100 million Binance Coins, or half of the original maximum supply. This process reduces the supply of Binance Coin and affects its rarity, which can affect the value of the asset.

Binance also has something called the BNB Pioneer Burn Program, which assesses certain situations where a BNB holder loses BNB irretrievably, and repays them, deducting the amount from the next BNB burn.

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