The profitability of investments depends on the compliance of the asset with the chosen strategy and competent diversification of risks. It is quite logical that coins from the TOP-10 largest cryptocurrencies attract the most attention of beginners.
What is Binance Coin (BNB)?
Binance Coin launched in 2017 as the base coin of the Binance ecosystem. It was originally created on the Ethereum blockchain and functioned as an ERC-20 token. After the launch of the Binance blockchain, the coin was moved to its own network.
BNB entered the market at $0.5 per coin. At the beginning of May 2021, the price of the coin briefly exceeded $670. Moving in line with the general trend, by mid-summer, BNB fell sharply in price, and another growth cycle began in the fall. At the time of writing, the coin is trading just above $270, which is comparable to the local low of last summer.
How the coin is used
Primarily Binance Coin is used to exchange liquidity, pay fees and charges on the Binance network. Like any other cryptocurrency, it can be used for crypto trading and investing. The exchange of BNB to USDT and some other coins is available not only in the Binance system.
In addition, coin holders can use the system discounts, qualify for participation in the Binance VIP program, take part in IEO (Initial Exchange Offering) to purchase assets. BNB holders have access to crypto lending and the possibility of earning on staking.
The coin is already accepted for paying for goods and services online and offline.
Other features of BNB
The growth of Binance Coin is closely linked to the development of the Binance ecosystem. In addition, the asset was initially created as a deflationary one. Once a quarter, Binance destroys an amount of coins equivalent to 20% of the total profit for the period.
However, the close connection of BNB with its native ecosystem has a downside. The price of the coin will display both achievements and problems of the exchange, and this is important to consider.
As in the case of other cryptocurrencies, it is impossible to give any guarantees of stability. Especially when it comes to a young ecosystem and a young cryptocurrency. The paucity of historical data makes forecasting very difficult. In addition, as the project develops further, previously unobvious technical shortcomings may appear.
In the long term, investing in Binance Coin can bring significant returns, but for short-term investors and people with low risk tolerance, BNB is not the best choice.
The first ever fiat stablecoin Tether (USDT)
In contrast to the super volatile classical cryptocurrencies, USDT is very stable. In theory, 1 USDT should always be worth 1 USD. In practice, small deviations of less than 0.1% are observed.
USDT is part of a special group of coins called stablecoins. Unlike the vast majority of cryptocurrencies, the value of a stablecoin is pegged to the value of a third-party asset in a strictly established ratio. This asset can be sovereign fiat currencies, precious metals or other commodities, as well as other cryptocurrencies
Binding is performed by two fundamentally different methods. As conceived by the creators, USDT is backed by real money, which is stored in a special account of the issuing company.
USDT application
A fixed-value cryptocurrency instrument simplifies cryptocurrency trading and improves the efficiency of cryptocurrency exchanges. Stablecoins are much more convenient than fiat currencies.
The high volatility of cryptocurrencies brings significant profits to traders and investors, but it makes it very difficult to use digital coins for current calculations. Stablecoins successfully solve this problem.
Asset-shelter
During periods of large-scale social and economic upheaval, investors move their funds into stable assets, the so-called safe havens. In traditional markets, this niche is occupied by gold and the US dollar.
Similarly, USDT is used to lock in profits and preserve capital during periods of extreme market volatility. Moreover, you can quickly change USDT to ETH or another coin on almost any crypto exchange.
BNB vs USDT
All cryptocurrencies at this historical stage are high-risk assets. Experienced investors do not recommend investing more than 10% of your total portfolio in digital assets.
Additionally, it will not be superfluous to diversify investments approximately as follows:
- Safe, in the role of which the most stable and reliable assets are used.
- The medium-risk group can include coins of projects with clear prospects.
- Meme coins, new and undervalued cryptocurrencies are included in the group of high-risk assets.
The ratio between groups is determined independently, taking into account your own risk tolerance, goals, investment dates, as well as the amount that you can invest and that you are not afraid to lose.
It is not necessary to oppose BNB vs USDT and choose one of the instruments. A well-thought-out strategy of using both coins now looks more advantageous than