BUSD

Overview of BUSD

Binance USD, commonly referred to as BUSD, is a kind of cryptocurrency that was launched in 2019. Founded by Binance and Paxos, BUSD operates as a stablecoin, meaning it's designed to maintain a stable value relative to a specified asset or a pool of assets. It's commonly used in trading pairs on various cryptocurrency exchanges such as Uniswap, Biswap, MEXC and so on.

Pros and Cons

- Stable Value: As a stablecoin, BUSD is designed to maintain a stable value. It's tied to the US dollar, aiming to keep its value consistent rather than subject to the volatility often experienced by other cryptocurrencies.

- Supported by Many Exchanges: BUSD is widely accepted on numerous cryptocurrency exchanges including Uniswap, Biswap, and MEXC. This widespread acceptance provides users with greater flexibility and ease of use when trading with BUSD.

- Multiple Wallet Support: The BUSD token can be stored in various types of digital wallets, including Trust Wallet, MetaMask and Ledger. This gives users a variety of options to ensure that their assets are securely stored in a way that best suits their needs.

- Regulated and Audited: BUSD is jointly issued by Binance and Paxos, and it's regulated under the New York State Department of Financial Services. Moreover, the reserve assets are regularly audited. This regulation and auditing provide a level of security and confidence that not all cryptocurrencies can offer.

- Dependent on Reserve Assets: BUSD's value is dependent on the reserve assets held by the institution that issues it. If these reserve assets were to lose value or become inaccessible, the stablecoin's value could be affected.

- Not Accepted in Non-Cryptocurrency Markets: Despite its acceptance in the cryptocurrency market, BUSD is not widely recognized or accepted in traditional financial markets or for general transactions. This limits its use to primarily within the realm of digital assets.

- Low Reward Potential: Because the value of BUSD is stable, its investment potential is not as high as some other, more volatile cryptocurrencies. While this stability makes it a safe choice, it also means that it lacks the potential for high returns that can occur with other cryptocurrency investments.

What makes BUSD Unique？

BUSD, as a stablecoin, represents a key advancement within cryptocurrency that offers a solution to the substantial price volatility that is frequently associated with digital currencies. Unlike many other cryptocurrencies that can see their values fluctuate drastically, the value of BUSD is pegged to the US dollar on a 1:1 basis and it is backed by reserves of the currency held by the issuers. This gives BUSD a steady value that mirrors the US dollar, as opposed to the drastic price changes often seen in other cryptocurrencies.

Unlike cryptocurrencies produced through mining, BUSD is minted and burned according to supply and demand. That means new coins can come into existence or existing coins removed from circulation to help maintain its peg to the US dollar.

Market & Price

Current Price: As of February 5, 2024, BUSD is trading around $0.999 - $1.00 USD, depending on the exchange.

Recent Fluctuations:

• 24 Hours: BUSD has seen minimal change, slightly up by 0.02% in the last 24 hours.

• 30 Days: Over the past month, BUSD has dipped slightly by 0.09%.

• 60 & 90 Days: Looking further back, the price shows greater stability, fluctuating within a 0.05-0.07% range.

Overall: BUSD exhibits low volatility compared to other cryptocurrencies. Its price primarily deviates from $1 due to:

• Market inefficiencies: Temporary supply and demand imbalances can cause slight price differences across exchanges.

• Trading fees: When buying or selling BUSD, small fees can lead to a price slightly above or below $1.

Important Notes:

• Despite its stability, BUSD can still experience unexpected fluctuations during periods of high market volatility.

• While generally considered safe, remember that no cryptocurrency is entirely risk-free.

How Does BUSD Work？

BUSD operates differently from cryptocurrencies like Bitcoin that use a proof-of-work system. Unlike Bitcoin, which is mined using powerful hardware and specialized software, BUSD is not mined at all. Instead, BUSD operates on a different principle known as the mint-and-burn mechanism.

BUSD is an ERC-20 token that's issued on the Ethereum blockchain, though it also circulates on the Binance Chain as a BEP-2 token. Within this system, new BUSD tokens are minted or created when users deposit US dollars with Paxos, the co-issuer of the token. Conversely, BUSD tokens are “burned” or removed from circulation when users redeem them for US dollars. This mechanism helps to maintain the stable value of BUSD, pegged 1:1 to the US dollar, as the supply is adjusted in response to the demand.

Regarding processing time, transactions involving BUSD generally happen faster than Bitcoin transactions. This is due to the architectural differences in the blockchains they operate on. Ethereum's average block time (the time it takes to validate a new group of transactions) is significantly lower than Bitcoin's, hence making transactions faster.

Exchanges to Buy BUSD

Binance USD (BUSD) is supported by a variety of cryptocurrency exchanges.

• Binance: The native platform for BUSD, offering easy purchase and high liquidity. But it is not available in all jurisdictions and faces regulatory scrutiny. See this link for details on how to buy BUSD: https://www.binance.com/en/how-to-buy/binance-usd.

Step 1: Download a Trust Wallet Wallet

There are several crypto wallets to choose from within the BNB Chain network and Trust Wallet appears to be the most integrated.

Step 2: Set up your Trust Wallet

Register and set up the crypto wallet. And keep your seed phrase safe, and take note of your wallet address. You will be using it later on Steps 4 and 6.

Step 3: Buy BNB as Your Base Currency

Once your wallet is setup, you can login to your Binance account and proceed to the Binance Crypto webpage to buy the BNB.

Step 4: Send BNB From Binance to Your Crypto Wallet

Once you buy your BNB, go to your Binance wallet section and look for the BNB you purchased. Click on withdraw and fill up the required information. Set the network to BNB Chain, provide your wallet address and the amount you want to transfer. Click the withdraw button and wait for your BNB to appear in your Trust Wallet.

Step 5: Choose a Decentralized Exchange (DEX)

There are several DEXs to choose from; you just have to make sure the wallet you selected in Step 2 is supported by the exchange.

Step 6: Connect Your Wallet

Connect your Trust Wallet wallet to the DEX you want to use by using your wallet address from Step 2.

Step 7: Trade Your BNB With the Coin You Want to Get

Select your BNB as the payment and select the BUSD as the coin you want to acquire.

Step 8: Apply the Swap

Once you are done with the previous steps, you can click on the Swap button. And your crypto transaction is now complete!

• Coinbase: A well-established and user-friendly exchange with BUSD trading pairs. Generally higher fees than Binance. See this link for details on how to buy BUSD: https://www.coinbase.com/how-to-buy/binance-usd.

Step 1: Download Coinbase Wallet

A self-custody wallet like Coinbase Wallet is required to purchase Binance USD. Coinbase Wallet is available as a mobile app and browser extension.

Step 2: Choose a Coinbase Wallet username

As part of setting up your Coinbase Wallet, you will need to choose a username. This username lets other Coinbase Wallet users easily send you crypto. You can keep your username private, but you will need one to access the account.

Step 3: Securely store your recovery phrase

When you create a new self-custody wallet, you'll be given a recovery phrase that consists of 12 random words. The recovery phrase is the key to your crypto, meaning anyone with your recovery phrase has access to your crypto.

Step 4: Understand and plan for Ethereum network fees

Fees vary based on how busy the network is, how complicated the transaction is, and how fast youd like the transaction completed. Plan to set aside some money for fees.

Step 5: Buy and transfer ETH to Coinbase Wallet

If you don‘t have a Coinbase account, you’ll need to create one to buy Ethereum (ETH). The way you transfer ETH to your Coinbase Wallet varies depending on whether youre using the mobile app or the Chrome extension.

Step 6: Use your ETH to buy Binance USD in the trade tab

Once you've added ETH to Coinbase Wallet, you can you can swap your ETH for Binance USD right in the mobile app or browser extension. Tap or click the “Swap” icon in the Assets tab, then select “Choose asset” and pick Binance USD. Input the amount of ETH you'd like to exchange for Binance USD. Remember to leave enough for transaction fees. Confirm your purchase and follow the instructions on the screen to finalize.

• PancakeSwap: The leading DEX on Binance Smart Chain (BSC), where BUSD primarily resides. Offers direct swapping of cryptocurrencies for BUSD but requires a separate wallet and technical knowledge.

• Uniswap: Primarily an Ethereum-based DEX, but supports wrapped BUSD (wBUSD) trading pairs. Enables broader DeFi interaction but adds complexity with wrapped tokens.

• Biswap: Biswap offers comprehensive support for BUSD, making it a convenient and versatile platform for users who want to trade, farm, stake, or spend their BUSD tokens.

• MEXC: MEXC is a well-established exchange with extensive features and competitive fees, making it a viable option for various trading needs.

• BakerySwap: BakerySwap is a BSC-based DEX specializing in smooth stablecoin trading and diverse DeFi opportunities.

• FTX: FTX Gains popularity for its user-friendly interface, diverse trading options, and innovative derivatives products.

• ApeSwap: ApeSwap is a decentralized finance (DeFi) platform that operates on the Binance Smart Chain.

• THENA: It's a decentralized exchange (DEX) with a focus on AI-powered trading tools and on-chain analytics.

These exchanges provide various services, so users can explore and use the exchange that best suits their trading requirements.

How to Store BUSD？

Binance USD (BUSD) can be stored in a variety of digital wallets that support ERC-20 tokens or BEP-2 tokens since BUSD operates on both Ethereum and Binance Chain.

- Trust Wallet: This is a favored mobile wallet for many users because it supports multiple cryptocurrencies, including BUSD. As the official wallet for Binance, it offers a high level of security and a user-friendly interface. It supports both Android and iOS devices. Users can hold, receive, and transfer BUSD with ease through this wallet.

- Ledger: Ledger is one of the most recognized cold storage hardware wallets on the market that supports a variety of cryptocurrencies, including BUSD. It provides offline storage for private keys, making it extremely secure against online threats. Ledger users can use applications like MyEtherWallet or Binance Chain Wallet with the device to manage their BUSD.

- Trezor: Similar to Ledger, Trezor is a secure hardware wallet that allows the offline storage of cryptocurrency assets. It supports a wide range of currencies, including BUSD. With the use of third-party interfaces like MyEtherWallet, users can manage BUSD with their Trezor devices.

- Metamask: Metamask is a software wallet that allows users to interact with the Ethereum blockchain. It is available as a browser extension, and as an app on iOS and Android. Metamask can be used to store, transfer, and manage BUSD tokens.

- Binance Chain Wallet: Specifically designed for the Binance Chain, this wallet supports BEP-2 tokens, including BUSD. It is available as an extension for Google Chrome and Brave browsers. Users can send, receive and store their BUSD coins quite easily here.

Is It Safe？

Determining the safety of BUSD is complex and involves understanding various factors and risks.

Centralized Issuance: Unlike many other stablecoins, BUSD is issued by Paxos Trust Company, a centralized entity, creating a single point of potential failure.

Audits and transparency: Paxos regularly undergoes audits by reputable firms and publishes reserve reports to verify BUSD's backing by US dollars.

Regulatory compliance: Paxos is licensed by the New York State Department of Financial Services, suggesting a commitment to regulatory compliance.

Wide adoption and liquidity: BUSD is one of the most widely used stablecoins, enjoying high liquidity and integration with various DeFi platforms.

How to Earn BUSD Cryptocurrency？

Hold and Earn: Deposit BUSD into interest-earning platforms like Binance Earn, YouHodler, or Celsius Celsius Network. These platforms offer varying APYs for holding BUSD, allowing you to generate passive income.

Yield Farming: Participate in yield farming on platforms like ApeSwap or Venus Protocol. This involves staking BUSD in token pools to earn rewards in platform-specific tokens, which can be converted to BUSD.

Margin Trading: Borrow BUSD and use it to trade other cryptocurrencies on margin. This allows for potentially amplified gains but also carries a high risk of losing your initial investment.

Conclusion

Binance USD (BUSD) is a regulated stablecoin, co-created by entities Binance and Paxos. As a stablecoin, BUSD offers a way for crypto enthusiasts and investors to avoid the usual volatility of the cryptocurrency markets.

In terms of development prospects, BUSD is grounded in the ecosystem of Binance, the world's largest cryptocurrency exchange by trading volume, which offers a certain level of stability and constant utility. However, due to its stable nature, the potential for appreciation in the value of BUSD over time is relatively low compared to more volatile cryptocurrencies. Hence, if your goal is to make a significant profit via appreciation, investing in BUSD may not be the most suitable route.

FAQs

Q: What is the essence of BUSD？

A: BUSD is a regulated stablecoin, backed by US dollars on a 1:1 ratio, co-issued by Binance and Paxos.

Q: Which digital wallets can safely store BUSD？

A: BUSD can be stored in a variety of digital wallets including Trust Wallet, Ledger, Trezor, and others.

Q: Can BUSD be used for everyday transactions outside the crypto exchanges？

A: No, BUSD's acceptance is primarily within the realm of digital assets and exchanges, and it is not widely accepted for daily transactions in the broader, traditional economy.