Cryptocurrencies are becoming increasingly popular. In addition to Bitcoin, BNB, and Ethereum, other crypto assets, like DeFi, NFTs, Stablecoins, etc., are making their way into the ring as well.
Stablecoins, like Tether (USDT), USD Coin (USDC), and Binance USD (BUSD), are among the most used types of crypto today.
They are cryptocurrencies with fixed values tied to fiat currencies, which makes them one of the most popular types of crypto today.
Let’s take a deep dive and learn how to buy Binance USD (BUSD) in a few easy steps with this quick guide to the Binance USD token.
What Is Binance USD (BUSD)
The Binance USD stablecoin is backed by a 1:1 USD, issued by Binance (in association with Paxos). It is authorized and regulated by the NYDFS (New York State Department of Financial Services).
The BUSD token is pegged 1:1 with US dollars. Every BUSD minted, results in addition of 1 US dollar to Paxos reserve accounts to back up the issues BUSD.
Source: Medium Binance USD Logo
Thus, a user who purchases 1,000 BUSD will receive 1,000 BUSD, and $1,000 will be added to the Paxos reserve. When the user sells the 1000 BUSD, the tokens will be burned.
BUSD aims to meld the stability of the dollar with blockchain technology. As a digital fiat currency, it is based on ERC-20, supporting BEP-2. You can send dollars instantly, with low fees, via the blockchain.
Why Do You Need BUSD
BUSD has multiple use cases for crypto investors and traders.
- Avoid Price Fluctuations
It is hard to ignore the need for stable assets when it becomes too volatile in the crypto market. BUSD offers the opportunity to convert holdings into fiat currency during a volatile period.
- Lock In Gains Without Needing to Convert to Fiat
BUSD provides a highly liquid means for someone to exit an investment and secure their profits from the investment. You don’t have to wait for an exchange to transfer your fiat funds into your bank account.
- Transferrable
The BUSD token is available on three blockchains: Binance Chains, Binance Smart Chains, and Ethereum. You can exchange your tokens between the chains at any time.
How Does BUSD Work
BUSD’s peg mechanism is simpler than other stablecoins. Each BUSD is pegged at 1 USD from the reserves. You can burn your BUSD tokens by sending them to Paxos, and in return, you’ll receive fiat currency. As a result, the ratio of supply and reserves will remain constant.
Arbitrager traders will purchase large quantities of BUSD whenever the Binance USD price begins to fall below $1 per 1 BUSD. After making large amounts of Binance USD purchase, arbitrageurs can convert them into fiat using Paxos. As BUSD demand increases, the Binance USD (BUSD) price rises back to $1, restoring the 1:1 peg.
How to Buy BUSD On a Cryptocurrency Exchange
Coinbase and Binance are the two most active BUSD trading exchanges. You need to open an account on a cryptocurrency exchange before trading. Here’s a step-by-step guide to help you get started:
Step #1: Choose an Exchange
There are several crypto exchanges where you can purchase BUSD. Comparing different exchanges will help you choose the exchange that offers the features you need. Look for features like low transaction fees, an easy-to-use platform, and 24/7 customer support.
Investing with some crypto brokers means you won’t have to pay commissions, which is a major advantage over others. You should also check whether the exchange supports different deposit methods via credit or debit card, another cryptocurrency, or a bank transfer.
Step #2: Create an Online Account
Once you’ve selected a reliable exchange, you need to open a trading account on the exchange to purchase Binance USD or sell BUSD.
For most transactions, we need information such as your name, contact information, email address, home address, social security number, and a copy of your driver’s license, passport, or government-issued ID.
The requirements may vary depending on the platform you choose. To begin trading, you must submit this information.
Step #3: Fund Your Account
To purchase BUSD coins and other cryptocurrencies, you must deposit funds after verifying your account. Depending on the platform, location, and preferences, BUSD coins can be purchased using a wide variety of payment methods, such as debit cards and credit cards.
Step #4: Make Your Purchase
To buy BUSD, you must first place an order with the broker. Similar to stock trading, you can place various types of orders. Here are two of the most common orders:
Market order: When you place a market order, you’re telling your broker you want to buy BUSD immediately. It isn’t easy to control the price you pay per coin when you use market orders, and you may wind up paying a rate different from what is displayed on the exchange.
Limit order: Limit orders specify a price range at or below which you wish to buy BUSD. Once you place an order, your broker will ask you how many coins you want to purchase and the price you are willing to pay for each.
You will only receive the coins if your broker fulfills your order at or below your requested price. A broker may cancel your order if the price increases over your limit at the end of the day.
Step #5: Setup a Wallet
Following your BUSD purchase, you will need to choose a crypto wallet to store your BUSD securely. You can store your coins in your brokerage exchange wallet, but in this case, they’ll be vulnerable to hacking.
For this reason, we recommend building your private wallet with your own set of keys. Depending on your investment preferences, you may prefer software or hardware wallets. However, hardware wallets are generally a more secure option.
Where to Store Binance USD
Now, let’s take a look at different types of wallets to store BUSD coins. It would be best to choose a wallet based on the amount of BUSD you have and how you intend to use it.
A Wallet can be classified as either a Software wallet (Hot wallet) or a Hardware wallet (Cold wallet).
Hardware Wallet
A hardware wallet or cold wallet, such as Trezor, Ledger or SecuX, is the most reliable option because they offer offline storage and backup capabilities. We recommend these for experienced BUSD coin holders with large amounts of tokens.
Founded in 2014, Ledger (Ledger Nano X or S) is a leading manufacturer of hardware wallets. To integrate a secure chip into their crypto hardware wallets, they use the BOLOS operating system. Security is managed through a pin code and a 24-word backup phrase. Moreover, it supports more than 1,000 coins and all ERC20 tokens.
Ledger offers an application for crypto staking and lending called Ledger Live that can be installed on your computer or mobile phone.
Software Wallet
A software wallet is also known as a hot wallet. Since the wallets are always connected to the internet and store your keys online, they are less secure. For beginners with a few tokens, software wallets are ideal since they are free and simple to use.
The Coinbase wallet is one of the most popular and widely used software wallets, accessible on Google Play and the App Store for free.
How to Sell Binance USD
To cash out your BUSD, follow these simple steps:
- Go to the cryptocurrency exchange and log in to your account.
- Click the trading button, and then tap “Sell.”
- Click on the drop-down menu to select how many BUSD you would like to sell.
- Choose how you would like to receive the fiat currency. Binance offers a variety of fiat channels, and users in different countries can choose from other fiat channels.
- To complete the transaction, click “Submit.”
- Complete the sale by confirming the price and associated costs.
BUSD Tokenomics
According to the data on CoinStats, the Binance USD token has a total supply of more than 17 billion tokens.
At the time of this writing, there are 17.95 billion Binance USD tokens in circulation, with a market capitalization of around $17 billion.
The BUSD price per token is $1, and around $3 billion worth of Binance USD tokens were traded in the past 24 hours.
Should You Purchase Binance USD
The Binance USD token is an ERC-20 compliant token based on the Ethereum blockchain. BUSD is always exchanged for USD at a 1:1 ratio.
The New York State Department of Financial Services (NYDFS) recognizes it as a medium of exchange, and is used on the crypto market across the globe as a payment method.
Research from InvestorsObserver suggests that the Binance USD token is a low-risk investment at the moment. Binance USD’s price has dropped by 0.03% over the last 24 hours, resulting in its current value of $1.00.
The decline in Binance USD price coincides with the token’s trading volume being below its average level and the rising market capitalization of the token. The BUSD currently has a market capitalization of $17.95 billion, with trades totaling $4 billion in the past 24 hours.
As a low-risk investment, Binance USD is a great addition to your cryptocurrency portfolio due to its low volatility.
You can use crypto portfolio trackers, like CoinStats, to manage all of your cryptocurrencies. The software allows you to track the performance of each coin, and it offers analytical tools to analyze it.
Conclusion
The BUSD is one of the very few highly regulated stablecoins. A stablecoin is a cryptocurrency whose value is tied to another asset. USD is a stable investment and an important tool for traders and investors because of its accessibility.
The stablecoin was created by Paxos and Binance, and complies with the strict regulations of the NYDFS. Since it is regulated and reputable financial institutions audit its reserves, the coin is extremely reliable.
BUSD is a solid choice of stablecoin for anyone who regularly uses Binance Smart Chain and Binance Chain.
