Binance exchange is one of the largest and most popular cryptocurrency exchanges in the world, and BNB plays a crucial role in its work. At some point, everyone started abruptly exchange USDT to BNB securely. Binance users can use BNB to pay trading fees on the platform at a reduced rate, which can lead to significant savings over time.
About Binance Coin (BNB)
Binance Coin is a service token that offers its holders a number of advantages and use cases in the Binance ecosystem. As the Binance exchange and its ecosystem continue to grow and expand, the value and usefulness of BNB will also increase.
An important aspect of Binance Coin is the management function, which allows holders to vote for certain proposals and changes in the Binance ecosystem. Binance has implemented a decentralized autonomous organization (DAO) model that gives Binance Coin holders the opportunity to vote on important decisions, such as listing new coins, changing trading fees, and allocating funds for development and marketing. This gives Binance Coin holders a direct say in the direction and future of the Binance ecosystem, which makes the token very popular among crypto enthusiasts.
BNB has also been used in initial coin offerings (ICOs) on Binance Launchpad, a platform that allows startups to launch their own tokens and raise funds for their projects. This feature has made Binance Launchpad one of the most popular platforms for ICOs, and has also helped increase the demand for Binance Coin.
In terms of price efficiency, Binance Coin has been one of the most efficient cryptocurrencies since its launch. It is in the top 10 cryptocurrencies by market capitalization, and over time its price has grown significantly.
About Tether (USDT)
“United States Dollar Tether” or USDT is the very first and most popular stablecoin issued by Tether. A cryptocurrency whose exchange rate is stabilized by providing the equivalent of another currency. In the case of Tether, the value of one coin is determined by the US dollar exchange rate in a ratio of 1:1: this means that 1 USDT is worth 1 US dollar. The project was officially launched in 2014 by Tether Limited, and in the same year, it announced a partnership with the well-known cryptocurrency exchange Bitfinex.
Stablecoins are the cryptocurrency that is least susceptible to market fluctuations. Algorithms, users themselves can be responsible for stability, smoothing out jumps in supply and demand, as well as the actual provision of real assets, as in the case of Tether. If you want to learn more about what stablecoins are and how they work, read our detailed material on this topic.
Tether on the cryptocurrency market
Today, Tether (USDT) is one of the leaders in the digital asset market. On January 13, 2023, according to the CoinMarketCap portal, it confidently occupied the third place in the rating of cryptocurrencies with a capitalization (total amount of invested funds) of $66.2 billion. The total number of coins issued is 66.2 billion.
Pros and cons of USDT
Like any other cryptocurrency, USDT has its pros and cons. The pros include:
- low volatility compared to other cryptocurrencies, such as Bitcoin or Ethereum;
- transparency of the issue. The company claims that it constantly monitors the compliance of funds in the vaults and the number of USDT issued;
- high level of sustainability because the collateral is in US dollars;
- distribution of USDT across different blockchains;
- high transaction speed in fast blockchains (BSC, Polygon);
- high prevalence among exchanges, exchangers and wallets.
But USDT has its disadvantages, such as:
- it is not money or a means of payment, i.e. Tether Limited has no obligation to exchange tokens for dollars;
- centralized management allows the possibility of blocking individual addresses or transactions;
- the cost of USTD takes over the inflationary risks of the US dollar.
At first glance, it may seem that there are not very many disadvantages, but their number is “compensated” by their “quality”. It should be clearly understood that the liquidity of stablecoins rests only on the name and reputation of the company that issued them.
Conclusion
The best protection for a trader is diversification. Since each instrument has pros and cons, it is worth diversifying the portfolio using both centralized and decentralized stablecoins.
The main feature of stablecoins is the relative stability of their price, which tends to the exchange rate of the fiat currency. This property allows you to use tokens to fix profits when trading cryptocurrencies or for convenient transfers in which the transfer amount is always fixed and does not change with the change in the value of the cryptocurrency.
For owners of stablecoins, options for passive earnings are available when staking tokens in smart contracts of decentralized finance platforms.
Binance Coin (BNB) is a universal and valuable utility token that offers its holders a wide range of benefits and use cases in the Binance ecosystem. As the Binance exchange and its ecosystem continue to grow and evolve, the value and usefulness of Binance Coin is likely to increase as well, making it an attractive investment opportunity for cryptocurrency enthusiasts.
