BUSD and BNB – What Is The Difference?

Although Binance founded both BNB and BUSD but the goals of these two tokens are completely different.

Busd And Bnb – What Is The Difference

BUSD and BNB – What Is The Difference?

Although Binance founded both BNB and BUSD. But the goals of these two tokens are completely different. Facilitate transactions (including converting BUSD to BNB). Offering preferential fees on the platform, BNB also serves as a utility token for Binance Exchange and Binance Smart Chain. In contrast, BUSD is classified as a stablecoin. Holds solid value to US dollars and designed for use in cryptocurrency markets.

Use Case of BNB and BUSD

Initially, Binance Coin (BNB) was only used to receive trading commission discounts. The fee reduction through BNB remains at a 25% discount until 2022. It then gradually reduces from 25% to 6.75% in the following years.

BNB’s utility expands with the arrival of Binance Smart Chain. Acts as the engine for the entire Binance ecosystem. Pancakeswap has become famous for its scalability, supporting the implementation of many other projects. BNB also serves as an authorization mechanism for transactions on Binance Smart Chain.

BUSD stable coin

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BUSD – a Stablecoin

On the other hand, BUSD functions as a stablecoin because its value is closely tied to the US dollar. 1 BUSD is equivalent to exactly 1 USD. BUSD holds a higher proportion of cash and cash equivalents. They account for 96% of reserves compared to USDT which has only 2.9% of reserves in cash.

Theoretically, buying back 1 BUSD would pay out 1 USD. Because the value of BUSD is directly backed by the US dollar. BUSD is strictly compliant and required by the New York State Department of Financial Services (NYDFS). BUSD is likely to attract interest as it is primarily used as a trading pair with other cryptocurrencies.

Related: What are Stablecoins? Learn All about Stablecoins.

BNB – Binance’s exchange coin

BNB, also known as Binance Coin, is the cryptocurrency of the Binance exchange, one of the largest and most popular exchanges in the cryptocurrency world. BNB was created on the Binance Chain Blockchain and was initially issued in Binance’s Initial Coin Offering (ICO) in July 2017.

BNB has many applications within the Binance ecosystem. Initially, it was used to pay trading fees on Binance with discounts. Additionally, BNB is also accepted as a means of payment for various projects and services in the cryptocurrency community.

Enterprise support for BNB and BUSD

Binance Exchange introduced BNB as a utility token in 2017. In contrast, Binance developed BUSD in partnership with Paxos. This is a financial company headquartered in New York. All US funds backing BUSD reserves are pledged as security. Two years later, Binance Exchange established BUSD

Stability of value

BUSD has almost no price fluctuations because it is a stable currency. Due to Binance’s buying and burning of BNB tokens, which effectively reduces supply and creates the potential for price fluctuations, the value of BNB is more volatile. Therefore, BNB is a more uncertain token to own. However, holding BNB for the long term can bring appreciation for individuals who have faith in the Binance ecosystem.

Trading pairs available on Binance Exchange

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Trading any cryptocurrency on Binance Exchange is possible using BNB or BUSD. Helps convert BTC to BNB or other cryptocurrencies. BNB and BUSD are widely accepted on the site for purchasing many cryptocurrencies as Binance developed both of them. The price of BNB trading pairs may be more volatile, which may affect the amount of Bitcoin a person purchases; In contrast, the prices of BUSD trading pairs tend to be more stable.

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