A review of Binance Dollar features shows its potential for multiple use cases. Traders, investors and the public interested in digital currencies can take help from these features in optimizing their transactions. Binance stablecoin has significant advantages over many other stablecoins. BUSD has solidified its position as one of the most popular stablecoins after reaching the 6th place among the best cryptocurrencies in less than 3 years. But is this digital currency really useful? Will BUSD Succeed to No. 1 Among Stablecoins or Will It Be a Failure for Binance? In this article, we describe the Binance stablecoin and examine its mechanism and applications.
What is Binance Stablecoin?
BUSD digital currency is a stablecoin with Fiat support is that with cooperation Paxos It’s been published. Each BUSD token is backed by a one-to-one US dollar reserve, meaning that for every BUSD in circulation, $1 is held in a bank account as a reserve, and its value fluctuates with the US dollar. The stability of the Binance dollar chart is one of the important signs to gain the trust of users and traders of digital currencies. Binance and Pexos have partnered with some of the world’s largest banks to create the necessary storage to back up all tokens in circulation. Paxos has USD reserves equal to the entire supply of BUSD insured in various US banks FDIC maintains In this way, Binance’s stablecoin reserves can be backed by the US Treasury. This stablecoin is approved and regulated by the New York State Department of Financial Services (NYDFS). These regulations help to ensure that each token of this currency has sufficient backing.
Compliance of this currency with these regulatory standards ensures the safety and security of the user’s assets. This digital financial infrastructure allows BUSD to be fully redeemable in USD. The pricing of this stablecoin will fall or rise in line with similar trends in the case of the US dollar. Strong regulations along with monthly certification reports of the company’s reserves make this digital currency a very attractive stablecoin for traders.
The story of the Binance dollar
In September 2019, Chang Peng Zhao, the founder of Binance, formerly Binance Coin with the symbol BNB had also created, announced that the company is launching a new stablecoin. This token with participation Paxos, developed. He stated that the new token will be fully backed by the US dollar. This was good news! Paxos started in 2012 as a financial technology company. This company is actually a financial institution issuing digital assets. It is based in New York and is regulated by the New York State Department of Financial Services. This company uses blockchain to provide products Stablecoin-as-a-Service It is also used by foreign companies. Paxos has been successful in creating gold-backed stablecoins such as PAX Gold or PAXG. In 2018, Paxos launched one of the first digital currencies. This asset was a stablecoin called PAX, which was backed by the US dollar. Paxos launched Binance Dollar in partnership with the company just a year later.
The launch of this cryptocurrency was a strategic move by Binance. By launching a stablecoin on their blockchain, they were able to provide an alternative to the popular ERC-20 stablecoins. After the successful launch of BNB in the article What is Binance Coin? You can learn more about it, with Binance’s marketing campaign, BUSD was able to gain popularity quickly after its launch; So much so that it was immediately added to several popular exchanges. The demand for buying this token grew more during 2020; So that its market value increased by 1360%.
The market value of BUSD, which was around $1 billion at the beginning of 2021, reached more than $14.6 billion by the end of 2021 in just one year. This was an important milestone for Binance and Paxos, as it demonstrated the demand for stablecoins outside the Ethereum chain.
How does BUSD digital currency work?
As a digital currency custodian, Paxos is responsible for maintaining the dollar reserves to support the tokens of this stablecoin. Aside from guaranteeing collateral, Paxos follows regulations governing the process of creating and burning Binance Dollar tokens. Pexos also reserves the right to freeze accounts and remove funds in case of any illegal activity.
On the other hand, Binance is responsible for managing this token, including listing it on exchanges and providing customer support. Regulatory aspects of this currency and all smart contracts of this stablecoin from the function SetLawEnforcementRole They are used to facilitate stablecoin regulations.
Through smart contracts, Binance can multiply and generate new BUSD tokens as needed. minting It is called the process of creating new tokens. This is done when Paxos deposits USD into reserves. The newly minted tokens are then sent to the client’s wallet. The opposite of minting, the process to burn Or it is token elimination, during which tokens are taken out of circulation and maintain price stability.
In fact, the Binance dollar is a token ERC20 It is built on the Ethereum blockchain. However, with the standard BEP-2 Binance is also compatible. This means that the token can be used on both Ethereum and Binance Smart China. Paxos creates the BUSD token on the Ethereum blockchain, while Binance offers the Binance-Peg BUSD token on the BNB chain. Binance via Standard BEP-20 By putting BUSD into a specific Ethereum address, it develops its own stablecoin and multiplies Binance-Peg BUSD tokens. Each Binance-Peg BUSD token corresponds to tokens in the Binance reserve, and owners can exchange tokens between different chains according to their needs. In fact, Binance acts as a bridge between two chains. The way it works is that when the user wants to use his BUSD, he must transfer his token from one blockchain to another blockchain using the Binance conversion function.
More than one million people already own BUSD. The popularity of the Binance stablecoin has been largely due to its ability to bridge the gap between DeFi and traditional finance. Rapid adoption of new and innovative products in the crypto space, such as DeFi and NFTs, provides the foundation for the adoption of Binance Stablecoin. Many early adopters of the Binance Dollar chose it as a stablecoin for use in various DeFi activities. Stablecoins can protect users from losses caused by price volatility and inflation, along with attractive APYs offered for DeFi services.
What are the uses of Binance dollars?
Binance exchange is the largest digital currency exchange in terms of transaction volume. The launch of BUSD on the Binance platform is a strategic move to further increase the adoption of digital currencies and a way to promote their exchange. Binance Dollar aims to provide a stable digital currency for traders and investors looking to avoid the volatility of the digital asset market. The reality is that many investors may be hesitant to enter this market due to the volatility of digital currencies. But Binance can attract a wider range of users by offering its stablecoin option. Another reason to use the BUSD stablecoin is to provide liquidity for a specific investment, without the need to transfer fiat currency from exchanges and retain profits. Also, this stablecoin is available in various currency pairs on the Binance platform, including BTC/BUSD, ETH/BUSD And XRP/BUSD is used By creating more trading pairs, Binance can attract more users to its platform. The reason why native stablecoins are important for a company like Binance is to create a seamless experience for the users of this ecosystem.
As we said earlier, BUSD supports BEP-2. BEP-2 is a technical standard developed by Binance that defines how new digital assets are created and transferred on the Binance chain. At the same time, it brings lower fees during transactions and withdrawals. This protocol enables interaction between the main chain of Binance and smart contract platforms. In fact, with its help, Binance can offer its users a wide range of digital asset applications and also provides the infrastructure needed for the widespread use of Binance Dollars.
Binance dollars have various uses. For example, a user can trade BUSD for BTC on the Binance exchange and then use it to trade on Binance DEX use. Even if users want to participate in Ethereum smart contracts, they can easily convert their BUSD to ETH. A BUSD holder can also participate in liquidity pools and farming, collateral for loans, payments for goods or services, and anything else. Do not forget that many wallets and lending platforms accept this cryptocurrency.
Which wallets are suitable for storing BUSD cryptocurrency?
The Binance dollar wallet is actually a software that stores the data necessary for users to access their stored currency funds. This data includes a private key, like a password, and a wallet address, also known as a public key, which acts like an account number.
The best wallets for this currency can include the following:
- Ledger hardware wallet
- Web wallets like the web version of Myetherwallet
- Desktop wallets like Guarda and Lumi
- Mobile wallets such as trust wallet and Infinity
- Paper wallets
How to buy and sell Binance dollars
Binance Stablecoin enables quick money transfers around the world with minimal fees. The advantage of this coin is its ease of trading through Binance or Paxos. You can get this stablecoin by using Binance exchange services. On the other hand, you can buy your desired cryptocurrency by sending US dollars to Paxos. Additionally, you can participate your tokens in multiple contracts for more trading opportunities at a given point in time. The feature of multi-assets mode in Binance stablecoin also provides the possibility of trading with other stablecoins. One of the advantages of this cryptocurrency is the ease of buying and selling Binance Coin through this currency.
Binance dollar future
Today, Binance Dollar is widely used as one of the most successful stablecoins. This token has been used by millions of people around the world and has become one of the main components of the digital currency industry and there is no limit to its supply. BUSD digital currency at the time of writing this article has a circulation of 17,547,224,379 and a market value of 17,571,828,411 dollars. Sixth rank on the CoinMarketCap website. This trend continues and Binance remains a dominant force in the crypto space. As more people become familiar with the industry, more users are drawn to BUSD as the stablecoin of choice.
What do you think about this stablecoin? Which USD-backed token do you prefer for your transactions? Share your thoughts with us.
What is Binance Dollar or BUSD digital currency? Applications of Binance Stablecoin for the first time on Wallex Blog. appeared.
