What is BUSD? (Binance USD)

The Beginner’s Guide

Binance USD, or BUSD, is a revolutionary collateralized stablecoin that is tied to the US dollar in a 1:1 ratio. Similar to other stablecoins, BUSD was created to facilitate transactional decentralized finance (DeFi) ecosystems. The coin was the first and one of three stablecoins to receive regulatory approval from the New York State Department of Financial Services (NYDFS). Easy to buy and trade on various platforms in the USA

BUSD is an ERC-20 token that supports BEP-2. It is stored in several Paxos reserves globally. Since ERC-20 is interoperable with several blockchains, the token was designed as an ERC-20 token to reach more platforms. And more reach is gained with profitable partnerships.

Binance USD Launch

BUSD is the brainchild of Binance and Paxos. It came about as a result of their partnership, which they announced on September 5, 2019. The token received regulatory approval from NYDFS prior to its launch. Paxos became available for purchase with USD (XRP), Bitcoin (BTC) and Binance Coin (BNB) on September 20, 2019, before launching on the Binance platform for trading with Ripple.

BUSD received positive feedback from the community and soon expanded its trading to 48 different USD pairs. Since its launch, the token has performed quite well, maintaining its intended 1:1 ratio with the US dollar.

The Technology Behind Binance USD

Binance has access to US dollars held by Paxos and created and managed by US banks. He wanted to create the first stablecoin that is truly collateralized by the US dollar. They made this possible with BUSD.

The first feature of Binance USD is a deflationary mechanism that keeps each Binance USD token at a ratio of 1: 1 to the US dollar. For example, every time 100 BUSD is purchased, 100 BUSD is generated for the purchase and a $100 payment is added to Paxos reserve accounts. When someone sells (uses) 100 BUSD in the market, the $100 payout is taken from their Paxos reserve account. The received 100 BUSD is then burned from the system.

The BUSD token also works with several ERC-20 smart contracts. These smart contracts provide unreliable security for BUSD. Also, BUSD uses this feature to facilitate interoperability between any wallet or exchange that supports Ethereum.

Users should be aware that Binance USD is fully compatible with the following. NYDFS regulatory framework. Using a revolutionary new function called “SetLawEnforcementRole” allows Paxos to restrict and control funds moving between operating accounts against the NYDFS regulatory framework. While this may seem against the decentralization principles of crypto, this feature will only affect criminal or fraudulent accounts while protecting user accounts from attacks.

BUSD Use Cases

As a stablecoin, Binance USD has numerous use cases that play a vital role in digital transactions and DeFi systems.

First, you can trade Binance USD with over 48 currency pairs available worldwide, each with a dollar value. Users will find in it an alternative to fiat currencies, as they can exchange dollars for 1:1. With virtually zero fees, the coin makes a great alternative to any currency, anywhere in the world, at any time.

Second, the versatility of Binance USD is not limited to real-world assets. You can instantly exchange it with other popular stablecoins on a 1:1 basis at no cost. And as an ERC-20 token, BUSD has interoperability with various platforms and can be easily integrated with various DApps and smart contracts.

In addition, with BUSD, users can earn money both passively and actively. Users can store and hold BUSD in wallets, hedge their bets against the volatility of accumulated digital assets, or trade on the Binance market.

Binance continues to add new features to the Binance USD coin. It adds versatility with features like Binance Margin Trading, which allows BUSD to be used as collateral against loans. The addition of several loan products allows users to deposit BUSD and earn up to 15% annual interest.

Advantages of BUSD Over Other Stablecoins

BUSD remains one of the few regulated crypto tokens on the market. And its partnership with Paxos, a trusted name in the crypto space, means a dedication to creating a truly secure and regulated token for the crypto space.

The regulation is already a long-awaited but very controversial development in the crypto world. With strict regulatory frameworks in most countries, crypto platforms and services often struggle to obtain regulation. Meanwhile, Binance USD is proving itself with approval from NYDFS, one of the world’s most notorious strict regulators.

Stay tuned to SinceCoin to learn more about Bitcoin and cryptocurrencies.

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