It is common now for Cryptocurrency exchanges to offer an in-house coin which can be used for trading on the exchange. Binance Coin, commonly known as BNB in the Cryptocurrency world, has become popular enough to be used not just as a means of trading on Binance but also as an investment or an instrument of speculation. The ICO, short for Initial Coin Offering, for Binance was very successful and the coins that were offered at $0.1 per BNB are now valued much higher.
About the coin
Launched through an ICO conducted by Binance in 2017, BNB serves the primary purpose of being used as a method of payment when you trade on Binance. Benefits of using BNB as your payment method on Binance are:
- Lower transaction fees
- Ease of conducting transactions using the exchange’s in-house coin
- Binance buys back a certain amount of coins every quarter to burn the coins. It will continue to do this till it burns 100 million BNB. The idea is to maintain higher demand and increase the value of the token by cutting down the supply.
According to an article from Insidebitcoins.com, Binance can be used on other platforms as a method of payment as well. A total of 200 million BNB tokens were distributed among different groups. 100 million tokens were assigned to the investors while 80 million were reserved for the founding team and 20 million belongs to the private angel investors.
Use this step by step guide to buy a Binance Coin:
Create a wallet to store Binance coins
The first step in making any Cryptocurrency purchase is to create a wallet where you will be able to store your coins. If this is the first Cryptocurrency that you will be buying,then find out about various wallet types before you buy Binance coins. The main types of wallets that you can create or use for storing Binance coins are:
- Cold storage or hardware wallets – If the total value of the coins stored in a wallet is very high, then you must consider using a hardware wallet. These look like a flash drive and can be connected to your computer any time you would like to use the coins stored in the wallet. Users find cold storage wallets to be a good way of minimizing the risks of hackers getting into their wallets.
- Hot wallets – Also known as web wallets, these are online wallets. The most common hot wallet for storing Binance coins is the Binance exchange itself. Once you register and buy the coins on the exchange, you can leave the coins on the exchange wallet and use it for trading on the exchange. While it removes the problem of using a flash drive every time you conduct a transaction, it increases the risks of hacker attacks. This is why it is ideal to store small sums of money on your hot wallet.
- Mobile wallets – These are used by Cryptocurrency traders who want easy access to their wallets while they are on the go. Mobile wallets are in the form of an app which will be compatible on various operating systems. The level of risk of mobile wallets is the same as that of hot wallets since mobiles are always connected to the internet. There is a second risk of the app getting hacked or going rogue.
- Desktop wallets – You can also store your Binance coins on a desktop wallet which is available in the form of installable software. Make sure that your computer is free of viruses and malware when using a desktop wallet.
Your hot wallet will be assigned automatically to you when you register on Binance. While storing small sums of BNB coins on the exchange will make it easy for you to conduct transactions, you must consider using a second wallet, ideally a cold storage wallet to store excessive amounts of BNB coins on this hard wallet.
Sign up on Binance and buy the coins
Once you have decided on the wallets you will be using and have created your wallets then the next step is to register on Binance.
- Visit the official website of the exchange.
- Register on the exchange
- Your exchange wallet will automatically be created during the registration process
- Binance supports a number of payment methods for purchasing Binance coins. Use any of these options which include Cryptocurrencies as well as credit cards. You may end up paying a higher fee if you use a credit card.
- Once the BNB coins have been bought. Keep part of the coins that you will require for trading in your Binance wallet and move the rest to a hard wallet for safekeeping.
A second way of buying Binance coins is through eToro,which is an online trading platform which works like any other brokerage firm. Consider this option for buying BNB coins only if you are planning to invest in BNB for speculative purposes and not for trading on the Binance Cryptocurrency exchange.
The advantage of using eToro is that you will be able to purchase BNB using traditional payment methods at low fees. On the con side, eToro does not provide you with access to the coins to make other purchases, theyare deemed as a financial instrument for speculation.
Use your coins to trade, speculate or make payments
Once the coins have been bought, you can use them according to your requirements. The most popular reason for buying BNB coins is to trade on the exchange’s platform. For this, you must keep adequate BNB coins in the exchange wallet. As advised earlier, move any excess amount of coins to a cold wallet.
For trading, you can use the hot wallet, while for making payments using the BNB coins at whatplace where they are accepted, you can use a cold wallet. Lastly, you can sell the coins on the exchange as well if you want to profit from a surge in the value of the coins. Since BNB offers you a considerable amount of discount on the transaction fees, you can end up benefitting from the coin in more than one way.