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Price (USD)$ 1.0017
Circulating SupplyBUSD 84.51145M
Volume (24h)$ 14.67585M
Market Cap$ 84.65705M
Low/High 24h$ 1.00 - $ 1.0036
Change (24h)-$ 0.001098
A number of cryptocurrency exchanges have launched their own currencies. These include Crypto.com and its Cronos (CRO) coin, Huobi and its HT coin, and KuCoin and its KuCoin Token. Binance, the world’s largest cryptocurrency exchange, has also launched its own crypto, Binance USD or BUSD. BUSD has positioned itself as one of the most popular stablecoins after rising to the top-ranking cryptocurrencies in several years. Is this cryptocurrency, however, genuinely useful? Let’s take a closer look at Binance USD.
BUSD is a fiat-backed stablecoin issued by Binance and Paxos. Each BUSD token is backed by one US dollar in reserve. The goal of BUSD is to provide a more stable cryptocurrency option for traders and investors wishing to escape the volatility of the digital asset market.
As mentioned earlier, Binance is the world's largest cryptocurrency exchange by trading volume. The addition of BUSD on the Binance platform is a smart step to enhance cryptocurrency adoption. Binance can appeal to a broader spectrum of customers who may have been hesitant to enter the digital asset market owing to volatility by offering a stablecoin option. BUSD is not Binance’s first cryptocurrency. The exchange launched its own coin in 2017, but this time wanted to create a more stable cryptocurrency.
It's also a means for the platform to promote their exchange, as this stablecoin is utilized in various Binance pairs, including BTC/BUSD, ETH/BUSD, and XRP/BUSD. Binance can attract more customers to its platform by providing new trading pairings. Native stablecoins are vital for crypto companies like Binance because they help to provide a more seamless user experience.
BUSD is an ERC20 coin that was created on the Ethereum blockchain. It does, however, support BEP-2. BEP-2 is a technical standard that governs how new digital assets on the Binance Chain, a blockchain platform that’s been created by Binance, can be generated and transferred. Many wallets and lending platforms accept BUSD as well. This lays the groundwork for Binance USD to become extensively used.
Binance announced the creation of a new stablecoin in September 2019. The cryptocurrency was created in collaboration with Paxos, a regulated financial organization that deals in digital assets. Changpeng Zhao, the creator of Binance, indicated that the new currency would be fully backed by US dollars.
Paxos was founded in 2012 as a fintech firm. The New York State Department of Financial Services regulates the corporation, which is situated in New York. Paxos developed one of the first digital assets regulated by a US state in 2018. The asset was known as PAX, and it was a stablecoin backed by the US dollar. Paxos created BUSD in collaboration with Binance a year later.
Binance USD's introduction was a watershed moment for the company. Until now, the bulk of stablecoins were constructed on the Ethereum network. Binance USD was among the first stablecoins created on the Binance Chain.
Binance made this strategic decision. They were able to provide an alternative to Ethereum's popular stablecoins by releasing a stablecoin on their own network. As a result, Binance USD swiftly gained popularity in the months following its inception. Binance's aggressive marketing strategy played a role in this. The token has also been added to a number of notable cryptocurrency exchanges, including OKEx and Huobi.
Binance USD has a one-of-a-kind tokenomics structure that allows it to keep its price constant at one US dollar, and its cooperation with Paxos is critical to this scenario. Through smart contracts, Binance is able to mint and burn BUSD tokens as needed. The newly minted BUSD tokens are then sent to the customer’s wallet. The blockchain infrastructure platform is funded with the same amount of US dollars as the total quantity of BUSD. At the time of writing, the total supply of BUSD is 5 billion, meaning Paxos holds 5 billion.
Paxos is a regulated financial institution that issues digital assets. They are also the company behind the popular PAX stablecoin. As a cryptocurrency custodian, Paxos is responsible for holding the USD reserves that are used to back the BUSD tokens. This digital financial infrastructure allows BUSD to be fully redeemable for US dollars.
The Binance USD cryptocurrency has a deflationary mechanism to maintain this ratio. When 50 BUSD is purchased, a $50 payment is sent to the Paxos treasury. When someone decides to sell 50 BUSD, the treasury receives $50 and the equal BUSD is burned.
Unlike Paxos, Binance is responsible for managing the BUSD token. This includes listing the token on their exchanges and providing customer support. In other words, Binance is the face of the BUSD stablecoin.
The Binance Convert tool enables users to exchange their digital assets between blockchains in real-time. Binance operates as a link between the two chains, making this possible.
Assume that a user wishes to exchange their BUSD from Ethereum to Binance Chain. All they'd have to do is transmit their BUSD to a specific Binance Chain address. Binance would then convert the BUSD to the same amount of BEP-2 BUSD and deposit it into the user's wallet. This method can also be used to convert BUSD from the Binance Chain to Ethereum.
Binance Convert is vital to the ecosystem: it makes Binance USD a versatile stablecoin. Because it is interoperable with both Ethereum and Binance Chain, the token can be utilized in a wide range of applications.
Binance stated that early adopters of BUSD trust it for their decentralized finance activities, and that it serves as a bridge between traditional and decentralized money. Stablecoins are primarily used as a safe haven from fluctuating cryptocurrency. For instance, when it comes to Bitcoin and a trader anticipates a price drop, they can convert to BUSD to protect their holdings. By holding investments in Bitcoin rather than trading it for fiat cash, it increases the liquidity in the crypto economy.
Unfortunately, US-based Paxos has announced that it will end its partnership with Binance and will halt the minting of BUSD. The Securities and Exchange Commission has told crypto firm Paxos to stop minting BUSD from February 21 onward because it has determined that the token fits its description of unregulated security. The company will continue to support the token through at least February 2024 in order to allow customers to redeem their funds in USD or convert to Paxos’ other stablecoin, Pax Dollar. However, Binance USD has already started expanding into real-world uses. Since its launch, stablecoin has announced numerous partnerships. One of the most notable is with BitPay, a Bitcoin payment provider. This has enabled BitPay’s merchants to start accepting BUSD coins.
Binance chief Changpeng Zhao has downplayed the link between his exchange and a token carrying its branding that's currently under fire from the Securities and Exchange Commission. ‘With BUSD gone, BUSD slowly winding down over time, we will continue to work with more stablecoin issuers or creators,’ Zhao said, citing existing support for other stablecoins such as USD coin (USDC) and tether (USDT). It must also be mentioned that he claimed that Binance USD is not issued or redeemed by Binance.
At the moment, BUSD remains one of the most successful stablecoins. The token is used by millions of people around the world and has become a staple in the cryptocurrency industry.
Binance USD price now is $ 1.0017.
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Don’t forget to do your own research before buying any crypto. The views and opinions expressed in this article are solely those of the author.
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