It’s been announced! With a price tag of $560, BNB tokens will once again be burnt this week. A Burn Coin takes place every three months, and the CEO of Binance has announced the 15th Burn Coin session. Here you can find out more about the Burn Coin process and, more specifically, how the BNB Burn works.
Binance coin
BNB (source: Binance.com)
The Burn Coin
The Burn Coin is a very common technique in the crypto currency world. It literally involves burning coins, in other words destroying them for good. The CEO of Binance, Changpeng Zhao, intends to reduce the number of tokens on the market by almost 50%, or 100 million BNB. There are a number of consequences, the first of which is a drastic reduction in the total supply of coins on the network and in circulation.
Supply and demand are values that work in tandem. They set and vary the price of the crypto currency on the stock exchange. So when demand exceeds supply, the value of the BNB increases, and vice versa. We can see that since the start of this Burn Coin operation, i.e. 4 years ago, the value of the BNB has only increased.
The Burn objective
Why was this decision taken? The aim of this process is to reduce the volatility of the BNB price. Like all the other crypto currencies on the market today, bitcoin has a highly volatile price. They are therefore influenced by many factors, with both positive and negative consequences.
The burn coin is also a way of arousing the curiosity and interest of many investors. However, the results are not immediately visible… In fact, the value of the NBB does not increase immediately after the burn operations are carried out. You have to wait, and even then there is no guarantee that the burn will be a success. This operation therefore remains risky in principle, especially if demand does not increase.
How Burn Coin works
This coin burn operation is carried out every quarter. This process is unique to Binance and was included in the specifications when the currency was created. The burn is a system derived from a well-known share buyback technique on the stock market. When companies have excess cash, they buy back shares. In this way, they preserve the price of the crypto currency by creating a large proportion of demand, thereby reducing the number of tokens in circulation.
BNB token owners activate the coin burn function and select an amount. The contract then verifies the operation and, above all, that the chosen number of coins is present in the holder’s wallet. Please note that a negative number or an invalid number cannot be taken into account. Once the process has been carried out, there is no way of going back and recovering your chips.
Each Burn operation is recorded on the Blockchain server and is therefore visible in its entirety to everyone. So you can check for yourself whether your coins have been destroyed. When the operation is completed, Binance announces the quota of tokens destroyed. This amount varies according to the size of the transactions carried out in the last quarter. It can be consulted at any time on an Ethereum blockchain site.
Changes in the value of the BNB
As mentioned above, the value of tokens continues to rise. The BNB very recently reached a record value of $560. Let’s look back at the evolution of the BNB price over the last three years.
In September 2019, its value was €18.63, but the year ended with a value of €12.64.
In 2020, the BNB was not particularly affected by the Covid 19 crisis. Instead, there was an increase, ending the year at a handsome €33.59 for 1 BNB.
Finally, it was during 2021 that the price of BNB exploded. On 14 February, BNB reached its first peak at 242.41 euros. It then fell slightly, and 8 days later the price of the token was recorded at €173.33. Since then, the rise has been meteoric, and the price of BNB has never been so high.
Binance and the burn coin
The Binance coin is a cryptocurrency issued by the Binance network, whose acronym is BNB. This network was created in July 2017 and the first tokens were put up for sale on the Ethereum blockchain. There are now a total of 200 million tokens on the network and in circulation around the world. The crypto-currency is showing great promise and performing well. On 12 April, the value of the BNB increased by almost 25%. This is the continuation of a rise in the value of the currency that has already been observed for several months.
What is BNB used for?
You can carry out quick and easy transactions on a daily basis. Rest assured, many sellers accept it as a means of payment. It is also a solution for paying any transaction fees in the Binance network. You can also use any other cryptocurrency of your choice as an exchange currency. A direct competitor of Ether, Binance offers very low transaction fees.
The Binance Smart Chain
Launched a few months ago, Binance Smart Chain is a fork of Ethereum. Very simply, a fork is a separation of the main chain due to divergences or the desire to create another network close to the original. This new network was created to be compatible with the Binance Chain. It is a new blockchain designed with programming software enabling DApps to be deployed. Binance Chain, created in April 2019, already had this functionality, but was not at all efficient or scalable enough to cope with demand and competitors. That’s why this new blockchain was created, and it’s doing a marvellous job of fulfilling its mission.
Smart contracts
DApps are decentralised applications also known as smart contracts. One of the major crypto-currencies that uses smart contracts is Ethereum. However, compared with its direct competitor, Binance offers much lower fees for these contracts and guarantees fast processing.
This is something that many businesses and individuals are delighted about. Indeed, speed is the watchword of the blockchain, with a new block added every 3 seconds. This is made possible by the Proof of Stake algorithm. No NBBs are generated to reward the validation of blocks, but instead they are reduced thanks to the burn coin. Users can easily transfer their crypto currencies from one blockchain to another.
Despite the fact that Binance Smart Chain has won over more and more users, it is increasingly seen as too centralised. There are currently 21 active validators. These 21 active validators change every day, but only 11 Binance Chain validators select them. These 11 validators do not change, which reinforces the idea that the Binance Smart Chain is not all that decentralised…
