FINTECH | CRYPTOCURRENCY
Although BNB is the native crypto coin for Binance, the world’s largest cryptocurrency exchange and BNB is the fourth largest coin by market cap at 61,707,973,546 USD behind BTC, ETH, and USDT, you don’t have to use it to buy other cryptocurrencies on the Binance exchange.
In fact, there could be some disadvantages to using BNB as a median to purchase other crypto coins and tokens, such as its volatile price.
There are at least two Binance exchanges, Binance International and Binance USA. If you’re legally obligated to the US Tax Code, you should use Binance USA; if not, you should use Binance International. In 2019, Binance stopped allowing those with a US tax liability to trade on its international exchange; you must use Binance US.
Binance has a Trust Pilot 2.1-star rating out of a possible 5. However, if you think Coinbase is better, theirs is 1.6. Many crypto exchanges get an unwarranted blackeye due to users who lost money on their investments or didn’t comply with the know your customer (KYC) requirements.
Much like your local bank, you have to fill out paperwork and prove who you are when you want to deposit or withdraw money. It’s the same with cryptocurrency exchanges.
All countries and international exchanges must meet Anti-Money Laundering Laws. In the USA, if you don’t want to garner the attention of the Homeland Security folks, you better comply or risk a trip to Guantanamo Bay. Though I’m sure it wouldn’t go that far depending on your background, it could be very inconvenient. There are some people still in Gitmo because of who they were related on 9/11.
I would suggest before you deposit a lot of money in any exchange, you first use it with smaller amounts and comply with the identification verification. My wife and I have been using Binance for years without problems, though we spread our investments around with e-Toro, Coinbase, and others.
Plus, we always move our crypto to a cold wallet after purchase. It just makes sense. Read my article, Which Is the Best “Cold” Wallet for Your Crypto. A cold wallet is peanuts compared to losing your investment.
“Cryptocurrency-linked crime surged to a record high last year in terms of value, with illegal addresses receiving $14 billion in digital currencies, up 79% from $7.8 billion in 2020. — Reuters.
What is BNB?
“Binance Coin is the cryptocurrency issued by the Binance exchange and trades with the BNB symbol. BNB was initially based on the Ethereum network but is now the native currency of Binance’s own blockchain, the Binance chain.” — Investopedia.
NOTE: I never use Investopedia or Wikipedia for other than definitions, as just about anyone can add to or edit the information there — these should not be considered worthy references. You should always attempt to find the original or source document.
The Binance website defines it as:
“BNB is the cryptocurrency coin that powers the BNB Chain ecosystem. As one of the world’s most popular utility tokens, not only can you trade BNB like any other cryptocurrency, you can also use BNB in a wide range of applications and use cases.”
Most investors think of BNB as a transfer mechanism like Tether (USDT) or US Dollar Coin (USDC). However, USDT and USDC stay right around $1.00. Whereas the going price for BNB was $372.00 at the time of publication.
That could point to it being more of an investment vehicle than those other two. It also could serve as a warning not to use it to buy another currency unless you plan to complete the transaction all at once.
Let’s say you buy $1,000 worth of BNB to buy an altcoin, and you wait a day to complete the transaction. If BNB drops 10% overnight, as is apt to happen, you could lose $100 without completing your buy.
According to the website, what are those other “…applications and use cases” mentioned by Binance above?
- Staking — you can reportedly earn as much as 27.49% APY with BNB. However, always check the in-and-out fees and don’t forget the tax liability.
- Referrals — you could earn up to 40%.
- The VIP Program offers smaller trading fees.
- Send & receive money at a much lower rate and faster than many other vehicles like banks and Western Union.
- Crypto loans.
- BNB Vault to earn rewards.
The Annual Percentage Yield (APY) of BNB is very attractive. The Motley Fool describes “staking” as, “Staking rewards are an incentive that blockchains provide to participants. Each blockchain has a set amount of crypto rewards for validating a block of transactions. When you stake crypto and you’re chosen to validate transactions, you receive those crypto rewards.”
However, you do not have to “validate transactions” to stake your cryptocurrency on most exchanges, though you’d get a better return if you do.
How to Make Money by Staking on Binance (Tutorial)
#Binance #Staking #Blockchain
The BNB Price Data from Coin Market Cap
“The live BNB price today is $372.17 USD with a 24-hour trading volume of $1,320,068,425 USD. We update our BNB to USD price in real-time. BNB is down 0.75% in the last 24 hours. The current CoinMarketCap ranking is #4, with a live market cap of $61,451,433,956 USD. It has a circulating supply of 165,116,761 BNB coins and a max. supply of 165,116,760 BNB coins.” — Coin Market Cap — 27 FEB 22.
BNB All-Time Chart to USD from Coin Market Cap
As you can see in the above chart, it is not a “stable coin” by any means. The past year has seen BNB range from a low of $195.85 to an all-time high (ATH) of $690.93 in early May of ’21. This volatility makes it attractive to traders, though some “buy-and-hold” investors might think it is a bargain at its current price considering the ATH of nearly $700.
Final thoughts on BNB & Binance
BNB could be a worthy buy-and-hold investment if you consider its ATH and using dollar-cost-averaging (DCA). Traders could find it interesting though the high price could be a detractor. You could find much cheaper altcoins and tokens with as much volatility if that’s what you’re looking for in trading.
Most consider investing due to its lower tax liability, but the lure of significant gains is also attractive. I don’t mind paying taxes because not earning enough to have a tax liability is not attractive to me. Besides, no matter who savvy you are, you will likely incur some losses, and those can still offset your gains tax-wise.
NOTE: Always consult a tax advisor and financial consultant.
DISCLAIMER: This article is for entertainment and informational purposes only. It should not be considered financial or legal advice. Not all information will be accurate. I am not a financial adviser, and anything I propose should be considered friendly banter to show you what is possible if you invest your money in these vehicles. However, there are no guarantees. Consult a financial professional before making any significant financial decisions.
Note: This post contains affiliate links. Read my disclosure statement for additional information.
Stephen Dalton is a retired US Army First Sergeant with a degree in journalism from the University of Maryland and a Certified US English Chicago Manual of Style Editor. Also, a Top Writer in Nutrition, Travel, Fiction, Transportation, VR, NFL, Design, Creativity, and Short Story.
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This news is republished from another source. You can check the original article here