Stablecoins are an important part of cryptocurrency because they provide stability. Unlike other cryptocurrencies that can easily fall and rise in price, stablecoins try to maintain a steady price. This is because stablecoins are backed by traditional currencies like the US Dollar or Euro.
In this post, I’ll focus on Binance USD (BUSD), one of the most popular stablecoins. I’ll be explaining everything you need to know about this cryptocurrency. Shall we?
What is BUSD?
BUSD, which stands for Binance US Dollar, is a popular stablecoin backed by the US dollar. Its price is predictable and that distinguishes it from other cryptocurrencies. This is because the BUSD is intended to be steady and consistent in value. One unit of Binance USD is backed by, or you can say, connected to one regular US dollar, which means that one unit of Binance US dollar equals one US dollar. In figures, 1BUSD = 1 USD.
BUSD is a big player on the pitch of stablecoins. The main purpose of stablecoins is to provide a secure and steady way to use cryptocurrencies without having your blood pressure go up worrying about price fluctuations.
It’s like having the reliability of regular money, but in electronic form, think “digital US dollar”. BUSD is one of the most significant stablecoins amongst others like Tether (USDT) and USD Coin (USDC) because it’s the brainchild of Binance, one of the biggest cryptocurrency exchanges in the world.
Who owns BUSD
BUSD is co-owned by Binance and Paxos. As I mentioned before, a unit of Binance USD is equal to one US dollar. To make sure things stay like that, Paxos keeps a reserve of US dollars that matches the total supply of BUSD tokens.
This ensures that the Binance USD price moves in sync with the value of the USD, as the USD goes up and down, so does the value of a token. This sync provides users with confidence in its stability and reliability.
How does BUSD work?
BUSD works by being connected to the value of the US Dollar at a 1:1 ratio. This means that for every 1 BUSD, there is 1 US Dollar. If you want to buy BUSD, you can get it from Binance or cryptocurrency wallets by paying for it with your regular money (fiat currency). You can also exchange other cryptocurrencies for it.
The US Dollars used to buy BUSD are held in reserve by Binance and Paxos to ensure that the stablecoin maintains its value. Despite its connection with Binance, Binance USD was first launched on the Ethereum network. But of course, it also works on the Binance Smart Chain and Binance Chain.
What is BUSD used for?
There are so many things you can use BUSD for, both within and outside the crypto world. For starters, it gives its holders a secure and stable store of value. This allows them to preserve their tokens from the volatility that most cryptocurrencies experience. Secondly, you can use BUSD as a form of payment or medium of exchange for goods and services where cryptocurrency is accepted. This allows you to make quick and secure purchases without having to worry about abrupt price swings or fees.
Furthermore, BUSD makes the flow of funds within the Binance exchange easier. As a result, the stablecoin can be used for trading and accessing other cryptocurrencies. Furthermore, BUSD is widely used in decentralised finance (DeFi) spaces like lending platforms and liquidity pools, giving consumers more options for putting their digital assets to use.
Why is BUSD popular?
BUSD has grown to be one of the most popular stablecoins in the crypto world because the growth of other volatile coins gives it visibility as a stable alternative. Also, the rise of innovative crypto technologies like DeFi and Non-Fungible Tokens (NFTs) also drives the demand for BUSD.
BUSD has an impressive user base, with over a million people currently holding and trusting the cryptocurrency. Many people actively pick Binance USD for DeFi-related activities. Can you guess why? Because it acts as a bridge between the regular money world and the dynamic DeFi world.
It provides users with a whole new level of financial freedom that traditional currencies or financial institutions cannot provide. That’s why it has become the go-to choice for people who want to eat their cake and have it when it comes to traditional finance and decentralized finance.
Benefits of BUSD
There are many benefits that come with holding the Binance USD stablecoin. As a BUSD holder, you get to enjoy benefits like liquidity, price stability, financial security, interoperability, and high-interest rates.
Let’s discuss these benefits one by one.
1. Liquidity
Binance is one of the largest cryptocurrency exchanges globally, and this makes it easy for holders to liquidify their Binance USD. Unlike some little-known cryptocurrencies, it is easy to buy, exchange, or sell BUSD.
2. Price stability
Binance USD maintains a stable price because it is tied to the US dollar. It gives its holders a safe way to store their cryptocurrency and protect their money from unpredictable market fluctuations.
3. Financial security
BUSD protects its users from financial threats like inflation and provides appealing Annual Percentage Yields (APYs). If you have Binance USD, you can engage in yield farming and liquidity pools with increased financial security.
This gives investors better protection against risks compared to fiat-related or cryptocurrency-heavy products.
4. Interoperability
What this means is that you can use Binance USD on various crypto wallets. Plus, you can easily convert it to other cryptocurrencies. BUSD is compatible with many crypto wallets because of its popularity. This gives you more flexibility and better options for using the stablecoin.
5. High-Interest Rates
Binance USD and other stablecoins let people bet, lend, and borrow. It allows users to spend their money to earn interest on the money they already have. You can invest your BUSD in Binance or other platforms such as Beefy Finance and Autofarm, which may provide better APYs.
Frequently Asked Questions about Binance USD
1. Binance USD safe?
Yes, Binance USD is safe. It is one of the safest stablecoins in the crypto market because it follows strict regulations and is regularly audited by a third party.
2. Where can I buy BUSD?
You can buy Binance USD on Binance or any other cryptocurrency wallet. Also, you can easily and quickly buy BUSD with other cryptocurrencies or regular currency on Coinosh.
3. What should I do with BUSD?
There is a lot you can do with your Binance USD, and what you should choose is totally up to you. You can use it as a stable store of value or you can choose to trade it. With it, you can also participate in yield farming and liquidity pools, access DeFi services, or make easy and convenient transactions.
4. Which wallet is best for BUSD?
The best choice for your BUSD wallet is a reputable and secure crypto wallet that supports it as an ERC-20 token. Coinosh is an amazing solution for storing your Binance USD safely and easily. You can trust that your assets are well-protected and will be easily accessible whenever you need them with Coinosh.
5. Where can I sell my BUSD in Nigeria?
Coinosh is your go-to walle to sell your BUSD for Naira instantly. You get to enjoy security, a user-friendly interface, great rates, quick transaction times, and many other benefits. Sweet right?
Conclusion
Binance USD is one of the most popular stablecoins in the crypto world, and it is backed by the US Dollar. With its price stability, financial security, and interoperability, BUSD has become a favored choice among over a million crypto traders and investors.
In short, Binance USD offers users a practical and reliable way to hold and transact with digital money while enjoying the stability of traditional currencies.