In this article, we will explore how to use the Binance exchange and what makes this exchange appealing and unique to cryptocurrency investors so you can best understand how to use Binance in your own investment strategies.
Binance is a cryptocoin abbreviated BNB that trades like any other digital currency. At present, the value of BNB is about $5 USD, and, like many other cryptocurrencies, BNB has a relatively volatile history. However, Binance is not just a digital currency. It is also the world's second-largest cryptocurrency exchange. In fact, about $6 billion in assets are traded on the Binance exchange every single week, which is likely one of the reasons BNB has a market cap over $654 million dollars.
What Is Binance?
The Binance exchange functions much like any other cryptocurrency exchange. The purpose of these exchanges is, essentially, threefold:
There are many cryptocurrency exchanges out there, but Binance functions uniquely to create a competitive edge for the exchange and the investors who use it.
The History of Binance
The Binance exchange was launched in July 2017, making it relatively young by cryptocurrency standards to have such a solid reputation in the industry. During the first year of Binance's operations, it achieved a number of milestones, including:
Two Chinese programmers named Changpeng Zhao and Yi He founded Binance after working together at OKCoin. When the two created the exchange platform, they also opted to create the Binance Coin (BNB) to help fund the exchange. The two raised $15 million in funding via an initial coin offering (ICO) of BNB to launch their exchange platform in July 2017 and, subsequently, opted to offer discounts to traders who use BNB to pay their trading fees.
The two programmers were forced to take their platform out of China entirely in September 2017 when the Chinese government outlawed the use of cryptocurrencies
in many cases and banned cryptocurrency trading completely. The company moved its offices to Japan and Taiwan, then recently opened a base of operations in Malta.
Involvement In Stable Coin Projects
In August 2018, Binance participated in a fundraiser for something called a "stable coin project." The project was intended to create stable cryptocurrencies that do not have the notorious volatility of many of the most popular cryptocurrencies, such as Bitcoin and Ethereum. The idea behind "stablecoins" is that they are tethered to currencies or traded commodities like precious metals that have real, definable value outside of the value established by the demand on exchanges or in a trading environment.
Binance itself announced plans to add fiat pairings to its offerings on the Binance platform, but it has not yet done so at the time of writing.
Commitment to User Protection
In late 2018, Binance was asked by the New York Attorney General's office to provide greater transparency into its operations and users. The company declined to do so, resulting in negative publicity for the exchange when the office released a lengthy “Virtual Markets Integrity Initiative Report” showing that, in that office's opinion, the Binance platform may receive fees for listing currencies and may not disclose unequal trading offers.
The request for information was couched in the attorney general's office's statement it is seeking greater transparency in cryptocurrency exchanges to prevent hacking and improve security and business practices. Despite somewhat cryptic implications in the report that Binance might be in “potential violation of New York's currency violations,” Binance users value the platforms loyalty to the concepts that make cryptocurrency attractive to investors, including anonymity and a degree of decentralization and deregulation of the currency.
Benefits of Using Binance
Binance was designed by two expert cryptocurrency exchange programmers and developers. One of the biggest advantages to traders using Binance is that these two men had very clear concepts of where cryptocurrency becomes difficult and ideas about how to resolve these issues. As a result, as you learn how to use Binance, you will soon see there are many benefits to using Binance.
As we mentioned earlier, Binance has many matching options on the platform. This is an advantage for cryptocurrency traders who use forex-related strategies to buy and sell various cryptocurrencies based on their likelihood to rise in value after the purchase. With Binance, a user is matched to another user who is willing to pay the desired price for the asset in question.
This means that if you are hoping to sell BNB or other supported cryptocurrencies on Binance at a certain price, the platform will match you with buyers willing to make that purchase. If you are seeking opportunities to buy a cryptocurrency at a certain price, the platform will match you with investors willing to make that sale. Binance offers many matching options, thereby creating many investment opportunities for users.
Historically, cryptocurrency exchanges have not operated quickly just because of the high volume of trading that takes place nearly all the time on these international platforms. Binance has resolved this issue of speed by creating a matching engine capable of about 1.4 million trades per second. This engine is the fastest on the market, which is one of the main reasons investors want to learn how to use Binance early in their cryptocurrency investing careers.
With cryptocurrencies' notoriously volatile characteristics, delays of seconds can dramatically change your opportunities for returns and for implementing strategies as you envisioned them. Binance routinely places in the top to cryptocurrency exchanges because of its reliable speed and has not fallen out of the top five since its inception.
Binance offers one more advantage to traders: high levels of activity in its order book. This means lots of traders are using the platform to make cryptocurrency exchanges and investments. Lots of activity is important because it makes it more likely that you will find the matching options you are looking for in terms of traders being willing to buy and sell in the cryptocurrencies you prefer and at the rates you have set as your goals.
According to CoinCentral, Binance has the best business order book in the world. In addition to liquidity, this creates some other positive advantages for Binance users, including:
How to Use Binance
If you are ready to learn how to use Binance, you must start by purchasing some cryptocurrency with which to invest. Many investors learning how to use Binance do not realize they cannot simply use their native, fiat currency to purchase cryptocurrency on the Binance platform. In fact, the designers of the platform gave it the name Binance to indicate “Binary Finance” is their interest. Essentially, they only wish to deal in digital assets.
Before you begin learning how to use Binance itself, you must purchase digital currency and place it in a digital wallet. You can use these platforms to achieve this:
Make sure you purchase cryptocurrencies that are trading on the Binance exchange. You may wish to invest at least part of your capital in BNB since Binance reduces user fees for investors paying in BNB and, furthermore, it tends to be relatively affordable compared to more common cryptocurrencies like Bitcoin.
Opening Your Binance Account
Binance also requires new users to complete an easy puzzle to prove they are a human investor and not a robot. Once you are done, you will receive an email confirming your account and asking you to verify that you actually set it up. Once you click that email, you are now the owner of a Binance account and ready to take the next step in learning how to use Binance.
Increase Your Security Immediately
One of the most important things you can do when learning how to use Binance is to establish a habit of maintaining solid security in your account early on. After you verify your account, the platform will offer you the option to set up a “2FA,” or two-factor authentication for your account. Essentially, it is an extra password on your account that sends a code to your mobile phone each time you log in.
While it will add extra time to your log-in process, cryptocurrency investors cannot be too careful. If your digital wallet or trading accounts are hacked, you will have very little recourse and even less if you have not taken all security measures possible on your side to keep your investment safe.
Funding Your Binance Account
Once you have a Binance account, you are ready to move on to the trading side of the process. Fund your account with the cryptocurrency you purchased prior to learning how to use Binance. In most cases, you can simply log into the platform where you purchased the currency and access the wallet associated with that account. You will have two main options:
Upon selecting “send cryptocurrency,” the platform will ask you to specify a recipient. The recipient is your Binance account, so open your Binance account and click on the taskbar to select first “funds” and then “deposits.” This will provide you with the information you need to send the specific cryptocurrency you are using to fund your account to your Binance account.
For example, if you are sending Ethereum to your Binance account, you will need a special Ethereum address for the deposit. Sending the deposit to the wrong address will likely result in the loss of your funds, so be sure to get the address right. Binance will offer you the option of using a “Copy Address” button to make sure you have copied it correctly.
Making Trades Using the Binance Platform
Now that you have funds to work with, it is time to start trading on Binance. After all, that is why you wanted to learn how to use Binance in the first place. Beginning traders can use “basic” trade settings, while more experienced traders can use the “advanced” options. Essentially, you will review the 143 different coins and tokens listed on the Binance platform and determine which of those coins and tokens may be traded for your coins or tokens.
If we stick with the Ethereum example from our funding example, you would look at the trading pairs for options to trade Ethereum with other traders. In that case, you would find that nearly all (140) coin options on Binance will trade for Ethereum, so you simply need to identify what strategy you will use in your trading.
For example, you might:
Market trades, which are transactions that occur in real time at current market prices, are simply entered as purchases for matching options and then the purchase is made.
Paying Your Trading Fees
Traders and investors learning how to use Binance love discovering how low the platform's trading fees are compared to other exchanges. Binance does not charge at all when users make deposits and only charges withdrawal fees. These withdrawal fees are highly competitive and considered very low. Traders pay trading fees of 0.1 percent on each purchase, but that charge can be reduced if you pay the fees in BNB. Other low-fee platforms charge as much as five times the fees Binance charges.
With Binance, Keep Safety First
As a new investor learning how to use Binance, you will be particularly attractive as a target for hackers and scammers.
There are three things you must do to keep your account and your capital safe:
Remember, Binance is one of the most popular cryptocurrency exchanges in the world, but it still is a cryptocurrency exchange. Unlike your local bank, Binance does not have a helpline or much recourse for you if someone steals your funds. This is one of the prices cryptocurrency investors pay to be on the cutting edge of forex trading and to preserve their anonymity online. With the proper precautions, however, your experience learning how to use Binance and trading on this platform can be a highly rewarding one.
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