Binance Exchange

Binance Exchange

What Is the Binance Exchange?

The Binance Exchange is a leading?cryptocurrency?exchange founded in 2017 in Hong Kong. It features a strong focus on?altcoin?trading. Binance offers crypto-to-crypto trading in more than 360 cryptocurrencies and virtual tokens, including bitcoin (BTC), ether (ETH), litecoin (LTC), dogecoin (DOGE), and its own?coin, BNB.

KEY TAKEAWAYS

• Binance is an online exchange where users can trade cryptocurrencies. It supports hundreds of the most commonly traded cryptocurrencies.
• Binance provides a crypto wallet for traders to store their electronic funds.
• The exchange has supporting services for users to earn interest or transact using cryptocurrencies. It also offers programs for miners and helps traders make investment decisions.
• Binance has its own blockchain-based token, BNB.
• Binance has a global presence but is limited in some countries like the U.S. and U.K. due to regulations.

History of Binance Exchange

Binance was created in 2017 by?Chengpeng Zhao, a well-known entrepreneur, investor, and software engineer. He started the exchange in July, and within six months, the exchange grew to become one of the largest crypto exchanges in the world.

Primarily known for crypto-to-crypto trading—trading between two cryptocurrency pairs—the Binance exchange has some of the lowest cryptocurrency transaction fees. It has high?liquidity?and offers discounts to users who pay in BNB—the exchange's native cryptocurrency token.

With high standards of safety and security and multi-tier and multi-clustered architecture, Binance delivers high processing throughput with the capacity to process around 1.4 million orders per second.

In 2019, the global Binance exchange was banned in the U.S. due to regulatory concerns. The exchange opened Binance.US, an exchange that meets U.S. regulations regarding securities and exchanges.

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Residents of Hawaii, New York, Texas, and Vermont are not allowed to use Binance.US as of February 2023.

Trading on Binance

Like other crypto exchanges, Binance offers services for trading, listing, fundraising, de-listing, and withdrawing cryptocurrencies. Cryptocurrency enthusiasts willing to launch their tokens can use Binance to raise funds through?initial coin offerings?(ICOs). Binance is used by millions of traders and participants for exchanging and investing in various cryptocurrencies.

To start trading, users must complete the necessary?know-your-customer (KYC)?requirements. Upon successfully creating a trading account, they can add funds to their public wallet address (provided by Binance) to start trading.

The Binance exchange supports four main types of trade orders: limit, market, stop-limit, and one-cancels-the-other (OCO) orders.?Limit orders?are executed only at the limit price set by the trader. Market orders are executed immediately at the best available market price. Stop-limit orders become valid orders only when the price reaches a specified level. An OCO order is a pair of orders where the executed order cancels the other.

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Binance Markets Limited, a U.K. subsidiary of Binance.com, was banned from offering regulated services to customers in Britain by the Financial Conduct Authority (FCA), the country's regulatory agency, in June 2021. The agency's notice prevents the subsidiary from offering trading services in crypto assets and derivatives to customers in Britain. However, the company's social media team clarified that the ban did not affect service offerings, such as trading, by Binance.com to users in the U.K.

Binance offers seven types of orders for crypto derivatives, specifically futures contracts. These trade orders include:

1. Limit Order
2. Market Order
3. Stop-Limit Order
4. Stop Market order
5. Trailing Stop Order
6. Post Only Order
7. Limit TP/SL Order (Strategy Order)

There is no fee charged for cryptocurrency or fund deposits. However, withdrawals come with a transaction fee that varies depending on the cryptocurrency and transaction amount.

As of February 2023, Binance does not allow U.S. dollar deposits by global users. Deposits using 27 other fiat currencies, including the euro, are permitted.

Other Binance Services

In addition to exchange-specific services, Binance also offers other tools, platforms, and services. Some of them are as follows:

Earning

Binance Earn is a platform for staking or earning interest by depositing stablecoins with the exchange. Depending on the coin and the tenure, the exchange offers investors multiple options and interest rates for these coins.

Lending

Binance Card is a Visa credit card that allows users to convert their cryptocurrency into fiat currency and spend it on products and services. While the conversion does not incur administrative fees, third-party fees, such as payment network fees, apply.

Binance Crypto Loans allow users to borrow for spot, future, and margin trading. Terms of seven, 14, 30, 90, and 180 days are available, with interest calculated based on the number of hours you've borrowed for.

Crypto Uses

Binance smart pool enables miners to switch between different cryptocurrencies for mining to optimize and multiply their income, while Binance Pay lets you use cryptocurrency to pay for purchases worldwide with zero fees. You can use it on Binance's Marketplace.

Development

Binance has a?blockchain?technology incubator called Binance Labs, which focuses on nurturing promising pre-ICO stage projects. It helps deserving cryptocurrency project teams by providing?necessary funding for development, advisory resources, and a launchpad for any necessary listing and fundraising exercises.

Binance also offers a?site called LaunchPad for hosting new and emerging blockchain projects and API interfaces. As of February 2023, 66 projects have been launched.

Binance Coin (BNB)

Binance Coin (BNB) is the platform's internal token. It is used to facilitate crypto trading on the Binance exchange. The coin was launched during an?initial coin offering?(ICO) in July 2017. Binance offered 20 million BNB tokens to?angel investors, 80 million tokens to the founding team, and the remaining 100 million tokens to the various participants through the ICO process.

Almost half the funds raised during the ICO process were intended for Binance branding and marketing, while about one-third were used to build the Binance platform and perform necessary upgrades to the Binance ecosystem.

Binance Coin initially ran on the??blockchain with the?ERC 20 standard. However, in 2019, Binance Coin became the native coin of the BNB Chain.

As of February 2023, BNB is worth around $311. It is the fourth most valuable blockchain-based token by market cap, at roughly $49 billion.

Can I Trust Binance?

Binance is used by millions that trust the exchange as a medium for cryptocurrency transactions. However, as with all third parties involved in blockchain and crypto, it is vulnerable to hacking, as seen when hackers stole $570 million?BNB in 2022.

Can U.S. Citizens Use Binance?

U.S. citizens can use Binance.US and be protected by U.S. laws. Accessing Binance (global) from the U.S.—or other restricted countries—using alternate connection methods like a virtual private network is against Binance's Terms of Use.

Is Binance Better Than Coinbase?

One is not necessarily better than the other. However, Coinbase is slightly more beginner-friendly, while Binance is a little less easy to use—in the end, it comes?down to preference.

The Bottom Line

Binance is a cryptocurrency exchange that lists more than 360 cryptocurrencies globally and over 290 in the U.S. In addition to cryptocurrency trading, it offers several services that enhance the experience for users and blockchain developers.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author does not own cryptocurrency.