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You don’t have to be a financial expert to know that diversification is one of the most effective strategies when it comes to growing and protecting your money. It’s actually common sense that if you want to ensure long-term growth and shield yourself against the risk of losses, you don’t put all your eggs in one basket. Spreading your funds across a variety of financial assets is the surest way to guarantee the stability of your portfolio.
However, being aware of the importance of diversifying your investments and knowing how to approach it are two completely different things. Deciding what assets to include in a portfolio and what percentage each of them should occupy can be quite a challenging task, especially in the case of crypto investments.
Unsurprisingly, Bitcoin and Ethereum take up more space in investors’ portfolios than any other crypto, given their long-standing market dominance and their proven return potential. So, what other crypto assets should one add next to them? As the fifth-largest crypto by market cap, with a trading price of $674 at press time, BNB emerges as a viable option, drawing the attention of numerous traders and investors. Yet it’s not enough to look at the BNB price to determine its potential as a diversification tool. For that, we need to take a closer look at this popular crypto and analyze the aspects indicating that the asset might be a choice worth considering.
The history
Let’s start from the very beginning and see how BNB came to be. BNB, formerly known as Binance Coin, was launched in 2017 through an Initial Coin Offering (ICO). Built as an ERC-20 token on the Ethereum blockchain, the coins’ primary purpose was to facilitate transactions on the Binance exchange and thus support the platform’s growth.
With the creation of Binance’s proprietary blockchain in 2019, originally named Binance Chain, and later changed into BNB Beacon Chain, BNB completed the transition to the new ledger and continues to serve as its native token.
In 2020, Binance introduced the Binance Smart Chain, currently referred to as the BNB Smart Chain. This new blockchain was designed to support the deployment of smart contracts and the development of decentralized apps (dApps), DeFi protocols, NFTs, and other similar projects, and BNB plays a key role in enabling all these functions.
Therefore, BNB has been through numerous changes since its inception and survived multiple market cycles, proving its resilience and strength time and time again. The coin’s long track record in the market and the appreciation it has experienced over the years establish it as one of the most trustworthy and coveted digital currencies in terms of investment. At times, BNB has fared better than crypto giants Bitcoin and Ethereum, becoming one of the top-performing altcoins in crypto history.
Binance association
One of the reasons BNB is so highly regarded and seen as a dependable investment is its association to Binance. Being the native token of the world’s leading exchange by trading volume comes with a lot of perks. Binance has built trust and recognition in the crypto space and, as expected, its native token benefits from the platform’s strong reputation.
By the latest count, Binance records an estimated 57 million monthly users, all of which utilize BNB to conduct operations on the platform. With BNB being part of such a large and thriving ecosystem, there’s ongoing demand for the token, which translates into more price stability and greater credibility than lesser-known coins. This creates a solid foundation for BNB to continue its development and get to new highs.
Multiple use cases
BNB is not just a random crypto that rehashes the narrative of so many other projects. It’s a unique token with multiple use cases on the Binance platform. One of its main functions is covering transaction fees on the Binance exchange and providing users with discounts for regular trades.
Apart from that, given BNB’s integration with Binance Smart Chain, holders can use the token to pay gas fees and gain access to the numerous services offered by the innovative blockchain.
Other use cases include participating in token sales on Binance Launchpad, conducting payments via Binance Pay, staking, and engaging in DeFi activities. All these features and practical applications enhance BNB’s utility and appeal as an investment instrument.
Continuous development
BNB is also a crypto that focuses strongly on continuous improvement through the constant rollout of upgrades and updates. As outlined in the BNB Chain Tech Roadmap 2025, the team behind BNB has big plans for the project. The enhancements scheduled for this year aim to improve network scalability and efficiency through AI integration, smart wallet innovation, and the introduction of other solutions and features designed to boost overall performance.
Moreover, BNB maintains its commitment to supporting the development of the meme coin ecosystem by providing simplified launch platforms and liquidity tools. This evolution and forward-thinking approach are expected to keep BNB in the spotlight in the long run.
Tokenomics
BNB employs an auto-burn mechanism, where Binance regularly destroys a certain amount of BNB units to reduce total supply. The number of burned tokens is determined by the BNB’s price performance and the number of blocks generated on BSC during a quarter. The objective is to ultimately remove 50% of the total supply, which stands at 100 million BNB. This deflationary system helps maintain scarcity, which can lead to long-term price appreciation.
It’s also important to mention that BNB can offer a different type of crypto exposure than Bitcoin and Ethereum since it’s correlated with the exchange ecosystem and offers an alternative to Ethereum’s smart contract platform.
Finally, BNB emerges as a notable investment option, due to its positive price performance, expanding use cases, innovative capabilities, active development, community support, and, last but not least, its relationship with the Binance company.