What Is Binance And How Does It Work?

Binance is one of the largest and most widely used crypto exchanges around the world. Read on to find out exactly how it works.

<div class="paragraphs"><p>Source:&nbsp;<br>Vadim Artyukhin on Unsplash&nbsp;</p></div>
Source:  Vadim Artyukhin on Unsplash 

In order to buy, sell or trade cryptocurrencies, investors and crypto users need to visit a website/platform called a crypto exchange that facilitates all these transactions. While you can also get cryptocurrencies from other avenues, crypto exchanges are the most secure places to buy and sell cryptocurrencies. Binance is an international crypto exchange that operates in a large number of countries around the world. Binance was originally founded in 2017 with a strong focus on providing its users with the option to purchase a wide variety of altcoins. At the time of writing, Binance offers more than 600 different crypto coins and tokens for sale on their exchange platform including Bitcoin, Ethereum, Dogecoin, BNB (Binance’s native crypto token) and more. Let’s take a closer look at how the Binance crypto exchange functions.

Key Features Of The Binance Crypto Exchange

Binance offers its users the following useful features, such as:

  • The ability to sell, purchase and trade more than 600 different crypto coins and tokens. 

  • Binance also provides all its users with an inbuilt crypto wallet where they can store all their purchased cryptocurrencies safely. 

  • Binance also provides crypto staking services on its platform. Staking in crypto refers to depositing your cryptocurrencies for a set period of time in return for interest. Users can stake many different types of cryptocurrencies on this platform to earn interest rewards. 

  • Binance also charges a small trading fee on every transaction that takes place on their platform. However, users can avoid discounts on this fee by using BNB (Binance’s native cryptocurrency).

Understanding The Binance Exchange

Binance is extremely popular among crypto traders, investors and enthusiasts for its crypto-to-crypto trading, as the crypto exchange allows users to trade cryptocurrencies in various pairs. What makes Binance attractive for the users is also the fact it has one of the lowest transaction fees compared to all other mainstream crypto exchanges. Moreover, the Binance crypto exchange offers high liquidity, meaning you can sell off your cryptocurrencies at any time and withdraw the funds to your own accounts immediately. The crypto exchange claims to have the capacity to process as many as 1.4 million crypto transactions or orders per second while maintaining completely foolproof and robust security. As of 2021, Binance had more than 28.6 million registered users.

Trading Cryptocurrencies on Binance

Similar to other crypto exchanges, Binance offers various cryptocurrency-related services, such as the purchase, sale, trading and staking of cryptocurrencies. Not only this, but Binance has its own crypto platform called the Binance Smart Chain where crypto developers can create their own cryptocurrencies and NFT projects. To date, thousands of crypto tokens have been built using the Binance Smart Chain. Binance also allows crypto developers to launch their own cryptocurrencies on Binance in the form of an Initial Coin Offering or ICO. However, these crypto tokens have to be vetted and approved by the Binance team before Initial Coin Offering can happen. 

If you wish to start trading and investing through Binance, you will have to start by signing up on Binance and creating an account. You will have to submit certain important documents for KYC (Know Your Customer) purposes before your account gets full access to all of Binance’s services. Once your account has been successfully created and the KYC approved, you can start purchasing cryptocurrencies through the exchange. You can also choose to send your own crypto coins to your Binance wallet and start trading from there. Binance supports 3 different types of trade orders: limit orders, market orders, and stop-limit orders. However, Binance is a fairly complex platform for beginners, so if you are just starting to trade, it would be wise to read up a few Bianance tutorials or videos before making high-value transactions.