Binance USD (BUSD)

Fredrick Awino
20.08.2022
222 Views

Since the coming to be of the first cryptocurrency , Bitoin, new ones keep emerging with a wide scale of variation. In the rush to create and trade in new cryptos, cryptocurrency exchanges of which Binance is part are key. Binance has been on a strategic move to meet the dynamic needs of those who depend on its platform for buying, swapping or trading in cryptocurrencies. One of the proof that Binance is rising to the occasion in its product offerings is Binance USD.

WARNING: Investing in crypto, or other markets, can be of a high risk for your savings. Do not invest money you cannot afford to lose, because there is a risk for losing all of your money when investing in crypto, stocks, CFDs or other investments options. For example 77% of retail CFD accounts lose money.

Binance USD is a USD-dominated stable coin that is backed by the New York State Department of Financial Services (NYDFS). The stable coin runs on the Ethereum blockchain. The platform was developed through a collaboration between Binance and Paxos.

BUSD is worth $1. Additionally, since it was launched in 2019, the price has not highly deviated. The highest BUSD has reached is $1.11 while the lowest is $0.88. Traders mostly use stable coins such as BUSD in keeping their holdings at a steady value.

BUSD has different uses. One of the uses is in trading crypto. The other use is in selling and purchasing U.S dollars on the Paxos platform. Also, it may be used in holding. Hedge against crypto assets volatility by holding in BUSD as stable as the dollar. Lastly, BUSD has been used in the place where ERC20 tokens are accepted for payments, loans, and commerce.

The Problems that BUSD wants to Solve that are in the Current Crypto Exchange

The first problem that it tries to solve is poor language support and internalization. The firm has a multilingual team with experience. They work in ensuring that they support the global market. Besides, it tries to solve the issue of poor customer service. This is solved by the company sharing responsibilities across the company and the whole staff. In case a trader faces an issue, someone in the system answers them.

Furthermore, it works towards solving the problem of poor technical architecture. Most of the exchanges are equipped with technical architects with no experience and little understanding. Therefore, the process influences the first development as well as the long-term success.

The other problem it is trying to solve is an insecure platform. This is done by prioritizing security in the BUSD platform. Also, it has worked towards developing financial systems to a high-security standard. In addition, it solves the issue of poor market liquidity. The reason is that ordinary, as well as professional traders, are worried about poor market liquidity which is a bit expensive for traders.

The Way Binance USD Works

A Binance USD can be generated by making a deposit of U.S dollars on the Paxos platform. It ensures that 1:1 U.S $ backing of the stablecoin. Additionally, BUSD utilizes Ethereum blockchain which is issued with an ERC-20 token. Binance further provides the Binance-Peg version of BUSD in the Binance Chain and Binance Smart Chain blockchains for BEP-20 token standards, supporting the BEP-2, and transactions.

The aim of developing Binance USD is to develop a crypto-backed with the U.S dollar. In maintaining the value, Paxos reserves USD which are equal to the total BUSD supply. Therefore, this means that in case the U.S dollar fluctuates, then this stablecoin will also fluctuate. The good thing about this crypto is that it offers its investors monthly audited reports.

The Main Features of Binance USD

  • Behind every 1 unit of BUSD, there is a USD in the capital reserve.
  • BUSD is a digital fiat currency issued as an ERC20 token and it supports BEP-2.
  • Binance cooperates with multinational financial corporations. The cooperation enables the players to invest in cryptocurrencies and credit cards through the platform. The reason is that BUSD is purchased by credit card.
  • BUSD plays an important role in Decentralized Finance (DeFi), settlement, payments, and transactions.
  • BUSD is based on the blockchain of Ethereum
  • BUSD is part and parcel of the Binance Venus Project.

The Process of Buying BUSD on the Binance Exchange

The first step when purchasing BUSD is creating a free account on the Binance application or website. Your Binance account work as a gateway for purchasing crypto. You can make registration through the Binance application and the website using your mobile number or email.

The second step is choosing the way you want to purchase the BUSD asset. You should then click the option of Buy Crypto. Depending on your country, you will get varied options. The different options for purchasing BUSD include credit or debit cards, bank deposits, third-party payments, and P2P trading.

The next step is confirming your order using the current price. You should do so within 1 minute because after that, your order will be recalculated based on the current market price. To see the new order amount, you may refresh it.

After the confirmation, you may use or even store your BUSD on Binance. Also, you may stake it or trade in the Binance Earn so that you can earn passive income.

The Uses of BUSD

  • BUSD is used as collateral in Futures
  • The investors may transfer their BUSD anywhere in minutes in the blockchain and with low fees
  • This stable coin gives users the chance of depositing BUSD in earning interest rates.
  • It may also be used as collateral and for loan assets
  • Lastly, BUSD may be used in paying for goods and services

Why You Should Invest in Binance USD

Apart from BUSD being backed by the U.S dollar, it may utilize it as collateral. Additionally, the burning and minting of BUSD are highly based on smart contracts. In a way, this strategy enhances transparency for the people trading the Binance coin.

As compared to the other cryptocurrencies, BUSD is not prone to extreme market risks, liquidity crunches, and swan events. Besides, BUSD is the only crypto across the globe that accepts financial regulators to supervise. Therefore, it is verified by financial institutions as well as audited by international accounting organizations.

BUSD is good crypto as it complies with anti-money laundering (AML). Apart from that, it complies with counter-terrorist financing laws. Also, BUSD redemption and issuance are immune to pricing and liquidity restrictions.

The Limitations of Investing in Binance Coin

The first limitation is that BUSD is just available on a few cryptocurrency platforms. For instance, it is only available in Binance US, Binance, and Paxos. The other disadvantage is that it is not suitable for trading. The reason behind this is that it is a stable coin.

 

Author Fredrick Awino