Binance USD – BUSD

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Binance USD – BUSD

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Binance USD – BUSD is a dollar-backed stablecoin and was created by Paxos in partnership with the global exchange Binance. Is this stablecoin, approved by US regulatory authorities the most trusted stablecoin in crypto?

What is Binance USD – BUSD?

Binance USD – BUSD is a regulated stablecoin on the blockchain that is 1:1 fiat backed 

Simply put, Binance USD is a regulated stablecoin valued at the same worth as a U.S. dollar. The stablecoin’s value will thus follow the price of the dollar.

Fiat-backed means when someone buys BUSD, a single dollar is held in reserve.

Stablecoins are cryptocurrencies that have their price pegged to or backed by a stable asset, or group of assets. Stablecoin plays an important role in transactions, payments and settlement, and Decentralised Finance (DeFi).

This review of Binance USD – BUSD was created for informational purposes. This article is not intended for promotion.

General info about Binance USD – BUSD

Blockchain

Binance USD – BUSD runns on the blockchain where its transactions are recorded in an immutable cryptographic way. This eliminates the risk of hacking or cheating the system.

On what blockchains does Binance USD – BUSD exist? 

Binance USD – BUSD can be traded and transferred on three blockchains; Ethereum, Binance Smart Chain, and Binance Chain.

Stability

Binance USD is stable at 1 dollar, as it achieves this price stability via collateralization of buying and selling the BUSD. Sometimes fluctuations can occur, by doing this, but the price will ‘always’ return to its original value. 

What are the benefits of using Binance USD – BUSD?

  • Quick Transactions: Stablecoin transactions are instant in comparison to fiat currencies that can take one to four business days to show up in your bank account. 
  • Availability: Stablecoin exchanges can be done 24/7,  in comparison to the offline days of normal banks (weekends and holidays). 
  • Transaction Fees: Stablecoins will have a low transaction cost, depending on which blockchain the transaction is made. 
  • Stability: Prices of stablecoins will follow the price the fiat currencies they’re pegged to.
  • Transparency: Stablecoins issuers have to be audited. This is still a controversial topic among regulators and investors. But still more transparent than regular banking services.

Team

Binance USD – BUSD was Launched on 5 Sep 2019 by Paxos. 

Paxos, with offices in New York, London and Singapore, is the first regulated blockchain infrastructure platform. It wants to build a new system that enables fintechs and financial institutions to offer crypto capabilities to their users.

Paxos is a top-funded blockchain company with more than $500 million in total funding from leading investors such as OakHC/FT, Declaration Partners, Mithril Capital and PayPal Ventures. Their clients include global enterprises PayPal, Credit Suisse, Societe Generale, StoneX and Revolut. 

Their board of directors have quite the record in the financial world, some even worked as crisis actors for the U.S. government during the financial crisis of 2008.

Tokenomics

  • Circulating Supply: 17,747,431,589
  • Total Supply: 17,747,431,589
  • Max Supply: Undefined

Audits and attestation reports

Binance USD – BUSD is approved and regulated by the New York State Department of Financial Services (NYDFS). It is under audition by a top-ranking auditing firm named Withum.

Monthly audit reports and attestation reports can be viewed on the Paxos official website

What is the difference between audits and attestations? 

Audits are performed to discover data, risks, or compliance issues that may not have been known, and mostly done by internal parties.

An attestation, on the other hand, is to evaluate and review how true the data or information is when compared to a stated purpose (in this case the backing of 1:1 fiat currency). These are generally done by a third party that has nothing to do with the client.

Make sure to check out the video where the CEO of Binance, CZ, explains how Binance is related to Binance USD – BUSD.

Use case of Binance USD – BUSD

Crypto Trading Pairs

Trading pairs refer to assets that users can trade for one another through an exchange. These allow buyers to compare the costs of various digital assets. 

For instance, a BTC/BUSD crypto pair will let you know how many BUSD equals one BTC.

If you have Binance USD – BUSD and want to trade it, you can check for the pairing on the exchange. You may find different pairs on different exchanges. The most liquid trading pairs for BUSD will be located at Binance exchange. 

Lending in DeFi

Lending in Decentralized Finance – DeFi offers you an interest when lending your stablecoins to a borrower. Benefiting users that can get a loan at much lower rates than rates decentralized exchanges offer. Also benefit for long-term investors that can earn interest rates on the coins they lend.

What do we think about Binance USD – BUSD?

Binance is a reputable exchange and has a lot of reserves to compensate a de-pegging crisis or facilitate collateral in case of emergency. 

However BUSD is not issued by Binance, it is issued and controlled by Paxos. Binance helps to promote the stablecoin and lends its brand to it.

There are still many questions around many of the current centralized stablecoins, but this uncertainty is the result of the relative ‘early days’ of the industry. Be aware and diversify if necessary. 

Binance USD – BUSD conclusion

Binance US Dollar – BUSD is a stablecoin issued in partnership with Paxos. The 1:1 USD-backed stablecoin is approved by the New York State Department of Financial Services (NYDFS) and can be transferred globally in a fast and low-cost manner.

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