What is Binance USD?

Last edit: February 22, 2023
Author: Coinranking
Reading time: 12 minutes

Bitcoin was originally established as a currency that could be used for payment.

However, most crypto enthusiasts would agree that the best cryptocurrency to be used for payments are stablecoins.

Stablecoins are pegged to the value of an asset such as fiat currency or gold. Thus, this makes their value more stable. They are more resistant to the fluctuations of the crypto market.

Binance USD (BUSD) is a stablecoin that is pegged to the value of the US dollar. It is a digital asset that is designed to maintain a stable value relative to the US dollar.

BUSD is issued by Paxos Trust Company and is backed by actual US dollars held in reserve. It can be used to store value, make payments, and transfer money internationally, similar to other stablecoins such as Tether (USDT) and USD Coin (USDC).

BUSD can be bought and sold on various cryptocurrency exchanges, including Binance, the largest cryptocurrency exchange by trading volume.

Quick Facts

Here are some quick facts about Binance USD:

Binance USD is a stablecoin that is pegged to the US dollar.
It is issued by Paxos Trust Company and is backed by actual US dollars held in reserve.
It can be used as a store of value, for making payments, and for transferring money internationally.
BUSD is an ERC-20 token on the Ethereum blockchain.

Who is Paxos Trust Company?

Before we explore more about the BUSD token, let’s first understand the company that issued it.

Paxos Trust Company is a financial technology company that is licensed and regulated by the New York State Department of Financial Services (NYDFS).

It was founded in 2012 and is headquartered in New York City.

Paxos is a financial institution that is focused on creating innovative solutions for the financial markets.

This includes the development and issuance of stablecoins such as Binance USD (BUSD).

In addition to issuing stablecoins, Paxos also offers a range of other financial products and services.

This includes a digital asset exchange, a platform for institutional investors, and a settlement service for securities trading.

The company is known for its strong focus on compliance. They have received a number of regulatory approvals and licenses, including a BitLicense from the NYDFS.

How does BUSD work?

Binance USD (BUSD) is a stablecoin that is pegged to the US dollar.

It is also an ERC-20 token on the Ethereum blockchain, which means it is a digital asset that is built on the Ethereum network.

BUSD has to follow a set of standardized rules known as the ERC-20 protocol.

Paxos actually holds actual US dollars in reserve to back the issuance of BUSD.

This means that for every BUSD in circulation, there is a corresponding US dollar held in reserve by Paxos. This helps to maintain the stability of the value of BUSD, as it is tied to the value of the US dollar.

BUSD can be bought and sold on cryptocurrency exchanges, such as Binance, and is traded against other cryptocurrencies, such as Bitcoin and Ethereum.

It can be used as a store of value, for making payments, and for transferring money internationally. It can also be used to hedge against volatility in the cryptocurrency market, as its value is tied to a stable asset.

To use BUSD, you will need to have a cryptocurrency wallet that supports ERC-20 tokens. You can then buy or sell BUSD on a cryptocurrency exchange, transfer it to your wallet, and use it to make payments or transfer funds.

BUSD vs USDT

Binance USD (BUSD) and Tether (USDT) are both stablecoins that are pegged to the value of the US dollar.

However, there are some key differences between the two.

Regulation

BUSD is issued by Paxos Trust Company, while USDT is issued by Tether Limited. Both companies are regulated financial institutions.

However, Paxos is a financial technology company that is licensed and regulated by the New York State Department of Financial Services (NYDFS). On the other hand, Tether Limited is not a regulated financial institution.

Backing of stablecoin

BUSD is backed by actual US dollars held in reserve by Paxos, while the backing of USDT has been the subject of controversy and debate.

Tether Limited has claimed that USDT is fully backed by US dollars, but some have questioned the extent to which this is actually the case.

Blockchain

BUSD is an ERC-20 token on the Ethereum blockchain, while USDT is available on several different blockchains, including Bitcoin's Omni Layer, Ethereum, Tron, and EOS.

This means that BUSD can only be used on Ethereum-compatible wallets and platforms, while USDT has more versatility in terms of its use on different blockchain networks.

How to Stake BUSD?

Staking refers to the process of holding and validating transactions on a blockchain network in exchange for rewards.

It is a way for users to earn a passive income by participating in the maintenance and security of the network.

To stake Binance USD (BUSD), you will need to follow these steps:

Purchase BUSD and transfer it to a wallet that supports staking.

Some examples of wallets that support staking BUSD include the Binance Chain Wallet, Math Wallet, and TokenPocket.
Once you have your BUSD in a staking-compatible wallet, you will need to find a staking platform or pool that supports BUSD staking.
Once a staking platform is selected, you will need to follow their specific instructions for staking your BUSD. This may involve transferring your BUSD to a specific address, configuring your staking settings, and verifying your staking status.
After you have successfully staked your BUSD, you will begin to earn rewards for your participation in maintaining and securing the network. The amount of rewards you earn will depend on the specific staking platform. It could also depend on the pool you are using and the amount of BUSD you are staking.

It's important to note that staking is a relatively advanced activity and may involve some risks. It is important to carefully research and understand the specific staking platform or pool you are using.

Always understand the risks involved in staking before diving into it.

How to Transfer BUSD?

To transfer Binance USD (BUSD), you will need to follow these steps:

First, get a BUSD wallet. BUSD is an ERC-20 token on the Ethereum blockchain, so you will need a wallet that is compatible with Ethereum and supports ERC-20 tokens. Some examples of BUSD-compatible wallets include MyEtherWallet, MetaMask, and Ledger Nano.
Once you have your BUSD wallet set up, you will need to have some BUSD in it. You can purchase BUSD on a cryptocurrency exchange and transfer it to your wallet.
To transfer BUSD to another wallet or address, you will need to access your wallet and locate the "Send" or "Transfer" feature. This is usually found in the main menu or under the "Assets" or "Transactions" tab.
In the "Send" or "Transfer" feature, you will need to enter the recipient's BUSD wallet address and the amount of BUSD you want to send. You will also need to confirm the transaction by entering your wallet password or using an authentication method.
Once you have entered the required information and confirmed the transaction, your BUSD will be sent to the recipient's wallet. The transfer may take a few minutes to complete, depending on the network conditions.

It's important to note that BUSD transfers, like most cryptocurrency transactions, are irreversible. Be sure to double-check the recipient's wallet address and the amount of BUSD you are sending before confirming the transaction.

What Can You Use BUSD For?

Binance USD (BUSD) is a stablecoin that is pegged to the value of the US dollar. As a stablecoin, it is designed to maintain a stable value relative to the US dollar, making it a useful tool for storing value and making payments.

Here are a few examples of what you can use BUSD for:

Storing value

BUSD can be used as a store of value. Because its value is pegged to the US dollar, it can provide a stable store of value despite market fluctuations.

Making payments

BUSD can be used to make payments for goods and services, both online and in person. Many merchants and online platforms accept BUSD as a form of payment. It can also be used to make purchases in a similar way to using cash or credit cards.

Transferring money internationally

BUSD can be used to transfer money internationally, as it is not tied to any particular country or region. It can be used to send money to other countries quickly and inexpensively without a middleman.

Trading

BUSD is traded on cryptocurrency exchanges, such as Binance, and is often paired with other cryptocurrencies, such as Bitcoin and Ethereum. It can be used by traders to buy and sell these cryptocurrencies, or to hedge against market volatility.

Earning rewards

BUSD can be staked on certain blockchain networks, such as Binance Chain, in exchange for rewards. This allows users to earn a passive income by participating in the maintenance and security of the network.

How To Buy BUSD?

To buy Binance USD (BUSD), you will need to follow these steps:

First, you will need to set up a cryptocurrency wallet that is compatible with BUSD. BUSD is an ERC-20 token on the Ethereum blockchain, so you will need a wallet that is compatible with Ethereum and supports ERC-20 tokens.
Next, you will need to find a place to buy BUSD. BUSD can be bought and sold on cryptocurrency exchanges, such as Binance. You will need to create an account on the exchange and follow their specific instructions for buying BUSD.
Once you have set up your account on the exchange and have your BUSD wallet ready, you will need to deposit funds into your exchange account. This can typically be done by transferring funds from your bank account or using a credit or debit card.
After you have deposited funds into your exchange account, you can then use them to buy BUSD. To do this, you will need to navigate to the BUSD trading pair and place an order to buy BUSD using your available funds.
Once your order is filled and you have successfully purchased BUSD, it will be credited to your exchange account. You can then transfer it to your BUSD wallet for safekeeping.

It's important to note that the process for buying BUSD may vary slightly depending on the specific exchange you are using. Be sure to carefully read and follow the instructions provided by the exchange.

Is Binance USD (BUSD) a good investment?

Making investment decisions involves a number of factors that are specific to each individual, and it is important to carefully consider these factors before making any investment decisions.

That being said, Binance USD (BUSD) is a stablecoin that is pegged to the value of the US dollar, which means it is designed to maintain a stable value relative to the US dollar. This can make BUSD a useful tool for storing value and making payments, but it may not necessarily be a good investment in the traditional sense.

Stablecoins like BUSD do not typically fluctuate in value as much as other cryptocurrencies, which means they may not offer the same potential for price appreciation as other assets.

It is important to carefully research and understand the risks and potential rewards of any investment before making a decision. This may involve consulting with a financial advisor or conducting your own research and analysis.