BNB, previously known as Binance Coin, is one of the largest cryptocurrencies by market capitalization
. Created in 2017, BNB primarily powers the Binance ecosystem, which includes the world’s largest cryptocurrency exchange, but a small number of vendors have begun accepting BNB as a form of payment.
Here are some ways that BNB and Binance are related:
On the Binance exchange, users receive discounted trading fees when they pay with BNB — making it a popular option for traders
BNB is used to transact on the two blockchain networks associated with Binance, including the BNB Smart Chain
BNB has a supply cap of 200 million tokens, and Binance has committed to destroying half of that amount
, which can boost BNB’s value.
However, buying BNB can be risky, as is the case with most cryptocurrencies. Despite the sector’s popularity, crypto investments are volatile, meaning the price of a coin today may not be a strong indicator of what it will be in the future.
How to buy BNB
There are four basic steps to follow for purchasing BNB:
1. Decide whether to invest in BNB
Given the volatility of cryptocurrencies like BNB, there are some factors to consider before making an investment.
Although some investors have made a lot of money in cryptocurrency, others have lost significant amounts, since the price of a coin or token can fluctuate suddenly. It is helpful to maintain a balanced investment portfolio that isn’t heavily weighted toward a single asset class, especially a high-risk one like cryptocurrencies.
Once you’ve decided to invest in crypto, you’ll also want to consider whether BNB specifically is right for you. For some, it may be an easy choice with benefits like the discounted trading fees on the Binance exchange. It also helps that BNB is closely linked to the world’s largest cryptocurrency exchange, and the BNB Smart Chain processes a significantly higher volume of daily transactions than the Ethereum network
But it’s also worth factoring in that Binance has run into regulatory hurdles in the U.S. In order to comply with U.S. regulations, it partnered with an outside organization to launch a separate exchange called Binance.us, which offers a limited number of cryptocurrencies compared to the global exchange. The U.S. version is unavailable to residents of Hawaii, New York, Texas and Vermont
2. Find a place to buy BNB
Because BNB is already linked to an exchange, it may not be as readily available as other popular cryptocurrencies on non-Binance platforms. However, several centralized exchanges — one of the easier methods to trade crypto — allow you to buy BNB.
You can also trade BNB on decentralized exchanges, such as Binance DEX, which facilitate peer-to-peer transactions. That option can help you save on costs, but these exchanges are typically more complicated to navigate.
3. Decide how to pay for BNB
People typically purchase cryptocurrencies using these two methods:
Paying with cash. Most crypto exchanges will let you pay for cryptocurrencies using fiat currencies, such as the U.S. dollar. This is considered the simplest way for new investors to get into the crypto space. You can connect your bank account, or use a debit or credit card. (Be wary of using something like a credit card to pay for highly speculative investments, which can lead to high-interest debt if not paid off on time.)
Paying with cryptocurrencies. Some exchanges let you trade cryptocurrencies you currently own for different ones. This method is helpful if you’d like to make a trade without having to use cash, which can sometimes take a few days to process with your bank. And if you use a coin associated with an exchange, you could also receive discounted trading fees (such as paying with BNB on the Binance exchange).
However, keep in mind that crypto prices can rapidly fluctuate — especially relative to one another — so make sure you’re aware of the exchange rates at your time of purchase.
4. Purchase and store your BNB
Once you’ve purchased your BNB, you’ll need to have a place to store it. You have the option of keeping your coins in the custody of the exchange where you purchased them, or you can move them into your own digital wallet.
Keeping it with the exchange: For investors who are new to this sector, it is easiest to store your crypto holdings with the exchange where you purchased them, in a hosted wallet. You won’t have the hassle of remembering your private key (usually a long auto-generated string of letters and numbers), but there are some security considerations to keep in mind if you choose this option.
Because the exchange is a third party, you’ll need to assess whether their security protocols and business practices are up to snuff. Centralized crypto exchanges have been popular targets for hackers, given the large amounts of money they store on their platforms.
Using your own digital wallet: For an extra layer of security, crypto owners can opt to get their own digital wallet to store their holdings. The downside is that if you lose your private key or password, you permanently lose access to your crypto.
There are two main types of wallets to choose from:
Hot wallets: These are connected to the internet, which makes them the more convenient of the two options. However, because they are online, they are also more vulnerable to being hacked.
Cold wallets: These are offline physical storage devices, also known as hardware wallets. They provide the most security, but are complex and can be expensive at around $100.
You’ll want to make sure that any wallet you choose is compatible with BNB.