How To Invest In Binance Coin - Step-by-Step Guide
Binance Coin (BNB) is the native token from the Binance platform. Its structure is based on the Ethereum blockchain. Initially, this cryptocurrency used the ERC20 token and its principal objective was to facilitate trade and provide incentives to Binance users.
Even if it was not thought of as a big project at the beginning, Binance Coin keeps expanding globally. This is also due to the fact that Binance promoted its circulation through a rewarding system and more convenient commissions on its platform. Let's discuss how to invest in Binance Coin.
Table of Contents
Invest in Binance Coin in 3 Steps
Get a Binance Coin wallet
To begin investing in Binance Coin, you must first have access to a wallet of some kind. In this scenario, you can choose between a cold and a hot pocket. Wallets are available in various formats, including mobile applications, web apps and hardware wallets.
Of course, the most easily available and popular wallet for Binance Coin is provided by the Binance exchange. Like many other cryptocurrency exchange platforms, the platform also provides apps to allow users to store their favourite cryptocurrency directly on their phone. This option is an excellent solution for all those users who aim to have their funds under control and need quick access to their funds.
Join a Binance Coin exchange
To begin exchanging Binance Coin, you must first register with an exchange that allows you to swap this digital currency for fiat currency. As previously said, Binance is the ideal place to exchange Binance Coin.
This platform offers very special deals for their native cryptocurrency to increase its trading liquidity. A user can use BNB for a variety of operations, like paying for exchange commissions or fees.
Invest in Binance Coin
After you have verified your identity and entered your payment form, you will be able to purchase Binance Coin. This method may take a different amount of time depending on the platform you are using. This is the last move before you invest your money in cryptocurrencies.
Investing in Binance Coin Explained
When you first start trading cryptocurrencies, it is smart to educate yourself about the platforms and frameworks you will be using. Many tools may not be of straightforward understanding for beginners, so it is always a good idea to get to know everything you will be using before actually starting your investment journey.
Your cryptocurrency wallet is perhaps the most important thing you will use because it helps you store and protect your funds. "Cold" wallets and "hot" wallets are the two major types of wallets available. The first type of wallet is called cold due to the fact that it keeps your cryptocurrency away from the internet.
This is the kind of wallet you should consider if you want to make a long-term investment. On the contrary, hot wallets, like anything else linked to the internet, can be hacked. If you intend to spend a considerable sum of capital, you should seriously consider the cold wallet alternative. Hardware wallets are the most common type of cold wallets.
Hot wallets, on the other hand, are designed to store your cryptocurrencies in a convenient place. This may include desktop wallets.
Apart from these instruments, mobile applications are unquestionably the most convenient choice nowadays. Mobile applications satisfy the need to stay up to date with cryptocurrency trading news. The easiest way to control your finances and react rapidly as trades change is to have the market in the palm of your hand.
Most platforms use a number of methods to ensure a secure environment for their users. First of all, multifactor authentication is the most popular method of verification used by most financial institutions. This method requires the user to share different contact channels during the registration process. This is done by verifying a user’s identity first by sending a message, an email or a call to make sure you really are the person trying to access your account.
This is needed because if a bad intentioned person tries to steal your funds, you will still be able to block them by denying that you are trying to access your account.
Another security procedure used by most reputed platforms is the Know Your Customer (KYC) regulation. This security method is used to prevent criminal associations or individuals from accessing financial services for illegal purposes. This type of verification is part of the Anti-Money Laundering (AML) policies and applies to banks like any other financial service provider.
The standards with which this procedure is applied are the following:
- Customer acceptance policy
- Customer identification procedures
- Monitoring of transactions
- Risk management
We will talk more about different strategies and how to use them in the following sections.
Where Can You Invest in Binance Coin
To provide our readers with the best available alternative on the market, we have put together a shortlist of platforms where you can invest responsibly.
When you invest in Binance Coin, you have access to a wide range of payment options. The majority of the sites where you can purchase cryptocurrency support bank account and credit/debit card purchases.
Since the issuer has to check that you are the owner of your bank account or credit card, the procedure to define your payment methods typically happens during the registration process.
You would need to upload a small sum to your platform account to complete the authentication. Another popular way for verifying your payment is for your provider to debit a minor sum from your bank account. You would be required to enter the amount paid on the website. Depending on the provider you choose, the whole authentication process may take several days.
Binance Coin Investment Strategies
Now that we have learned how to buy Binance Coin, we will go through some of the most well-known methods for getting the most out of your Binance Coin investment.
Buy and 'Hodl'
What is it?
The name of this technique is based on a joke about the cryptocurrency price slump. The entire digital world went wild as a result of the crisis, and everyone began selling all of their cryptocurrency investments. "I AM HODLING", GameKyuubi, an investor, wrote at the time.
Its message was a powerful jolt to the whole world. Its content was strong, despite how funny it sounds. He clarified how he realised that the right choice was to stop selling because he found himself a poor trader. The explanation for this was that the market's major players would only take your money if you sell.
How to use this strategy
This plan is easy to implement: you can invest in Binance Coin and then keep your position even though the trend is declining. After the storm passes, your asset would be worth as much as it was before, if not more. Hodling requires a lot of patience on part of the investor.
When to use this strategy
The best time to buy under this approach is when the market is at its lowest point. The all-time low for Binance Coin was $0.3982. The all-time record high was $339.94. You should consider these two limits when evaluating the right moment to buy Binance Coin.
A user who wishes to use the Hodling strategy must learn to ignore minor price fluctuation and not be swayed by emotions while investing.
Buy Fractional Binance Coin
What is it?
Fractional investing is an investment strategy in which the aim is to purchase less than one unit of a cryptocurrency rather than a more considerable amount. This strategy is often used for cryptocurrencies that have hit a significantly high valuation and users find it difficult to purchase the token.
With Binance Coin, you can certainly consider implementing this technique. When rates are rising, and you only have $50 to spend in a given week, this strategy can be very useful. Given that many new inexperienced traders are joining this environment, this feature is user-friendly.
How to use this strategy
This strategy is advantageous and practical because it helps everybody to succeed in the market. A trader, for example, may raise a sizable investment by putting aside a small amount per month.
The point of investing small amounts of money per month is that the investment will build up in value with time because even though you invest $50 each month, over time, it can help you to accumulate a significant number of tokens.
When to use this strategy
This strategy is very useful when prices are going through a low period so that you can buy Binance Coin at a more convenient price and see its value grow during more profitable moments. Increase your earnings over time by starting with a small amount and steadily raising it.
Long Position on Binance Coin
What is it?
This investment strategy entails buying an asset, such as Binance Coin, with the expectation that its value will rise in the future. The long position, which is the polar opposite of the short position, is the most well-known technique.
“Going Long” with CFDs (Contract for differences) is another type of long position strategy. With contracts for differences, we mean a derivative financial product that takes its value from the underlying asset, in our case an investment in cryptocurrency. It is important to remember that with CFDs you never own rights on the asset, it is just a meter of measure to value your contract.
Going long is a strategy where you hope to earn a profit from a price increase of the asset thanks to your CFD. This position is equivalent to the one you have if you would actually buy the financial product, where the difference between the entry price and the exit price decides the profit or loss you make. From here, the name contract for differences.
Leverage trading, a method that entails using borrowed money, makes extensive use of this technique. Of course, you should keep in mind that trading without necessarily controlling the funds necessitates a certain level of expertise. After a wrong decision, you might lose a lot of money, so you should be able to afford some mishap before you start trading with leverage.
How to use this strategy
This strategy, which involves investing in a bull market, is simple to execute on every trading platform. The word "bull market" applies to a market where you can invest your cryptocurrency with the hopes of seeing its value grow in line with the current bullish cycle.
When to use this strategy
This strategy pays off when prices are rising. The rise may be due to good economic news, optimistic political trends, or simply a trend spread by more powerful traders. It is a good idea to keep up with what is going on in the cryptocurrency world since a lot can change in these competitive markets in a short period of time.
Benefits of Investing in Binance Coin
- Reliability- Binance Coin is one of the most trusted digital assets on the cryptocurrency exchange.
- Competitive transaction fees- As we mentioned earlier, Binance can offer very user-friendly commissions when you are trading Binance Coin.
- The same protocol as Ethereum- Binance Coin is based on similar principles and blockchain design as used by Ethereum.
- Many associated products- Binance coin has the great advantage of being part of the Binance family, which offers a wide variety of products such as Binance JEX, Binance P2P trading, Binance OTC, Binance Savings and Binance Crypto Loans.
Disadvantages of Investing in Binance Coin
- Discount keeps decreasing- Binance offered many advantages to tempt users to start using its cryptocurrency; unluckily, they keep reducing these advantages with time passing.
- Binance is challenging to use for beginners- Binance is not the best app for beginners, considering that it did not even allow deposits and payments with fiat currencies until not long ago.
Other Ways of Investing in Binance Coin
In the sections above, we looked at different ways to trade Binance Coin, but there are other ways to invest in this cryptocurrency.
If you know other people who are interested in investing in this cryptocurrency, face-to-face transactions are an option. If you are considering speaking with an unknown vendor, make sure the meeting is held in a safe environment and that you have some personal information about them before you meet. Peer-to-Peer platforms that provide escrow services are a better option. There are many such platforms available where you can find potential buyers/sellers and arrange to buy/sell Binance coin.
Trade Binance Coin on Leverage
When it comes to trading Binance Coin, leverage is a powerful weapon. As a consequence, it has to be properly evaluated. This approach is beneficial in the short term when we see a positive pattern and want to take advantage of it. When you trade with leverage, you are allowed more power on the market than you would have had otherwise, and this places you in a possibly dangerous position. Leverage is essentially borrowing funds from a platform and using them to invest in various coins. This allows a user to bet far more than his/her actual worth. The loss potential is far greater as a platform can liquidate your assets in case the trade does not go your way so leverage should only be practised by experienced users.
Invest in a Binance Coin ETF
Another way to trade Binance Coin is to use an exchange-traded fund (ETF). This approach might be helpful if you want to invest in Binance Coin or combined funds but are not confident you'll be able to keep up with the price tracking operation. An ETF pools funds from several users and invests in more than one asset/coin. An ETF is considered a safer and passive option. While it reduces the risk for the user, the returns are also on the lower side as compared to investing in a single asset.
This approach can appeal to investors because it helps them to remain passive while still earning a profit. This is a more comfortable and faster way to trade Binance Coin without engaging too much in the whole process. Investing in an ETF could be a good option for beginner investors who do not wish to spend a lot of time learning about the technicalities of cryptocurrency investment.
Frequently Asked Questions
Yes. It is considered a legitimate coin in most jurisdictions but check your local laws before investing. Furthermore, it is sponsored by one of the most recognised cryptocurrency platforms on the market.
As with any other cryptocurrency, the investment is a mirror of the efforts you put into it. A user can reduce the risk of fraud by using regulated platforms and selecting additional security features such as 2FA.
This cryptocurrency was created by the trading platform Binance.
No, but for long term storage, a hardware wallet is a good option. A user can also use other hot or cold wallets. Leaving assets on an exchange is risky.
You should always stick to institutional methods and platforms when trading this cryptocurrency.