Binance USD

Binance USD


The popularity of Bitcoin has led to ambiguous opinions among investors and blockchain enthusiasts regarding the safety of investing in cryptocurrencies. While some have experienced significant gains during market upsurges, others have faced substantial losses when market conditions did not favor them. In the world of technology, resolutions often involve upgrades, updates, or even a complete overhaul. For cryptocurrencies, the resolution came in the form of stablecoins, which aim to provide stability by pegging their value to an underlying asset like the US dollar. Today, there are over 200 stablecoins across the globe with many more to come, and here we’ll be discussing one of the more reputed ones – the Binance USD, as well as making a BUSD vs USDT comparison.

Binance USD Exchange Rate

BUSD by TradingView

What is Binance USD?

BUSD or Binance USD is a fiat-backed stablecoin that is pegged to the US dollar. It was created by the cryptocurrency exchange, Binance, and blockchain financial institution, Paxos.

BUSD allows users to own a digital asset that is not affected by the high volatility faced by other cryptocurrencies. The stablecoin creates a way for users to have real-world value in a digital space. It is pegged to the US Dollar at a ratio of 1:1. This means that for every BUSD issued there is one US Dollar to back it up. This dollar is kept in a reserve that is managed by Paxos. This means that the total circulating supply of BUSD is backed by an equal amount of US Dollars. Because of this, BUSD holders can swap the stablecoin for dollars at any time. The main goal of BUSD is to make transactions within the decentralized finance (DeFi) ecosystem more efficient.

How does BUSD work?

BUSD works similarly to how other stablecoins work. Each BUSD token in circulation is backed by a single US dollar which means that BUSD can exchange their BUSD for dollars whenever they want. When you exchange your BUSD, you receive an equal amount of dollars in its place. The BUSD you exchange is burnt to maintain the 1:1 ratio of the BUSD in circulation and the dollars in the reserve.

If the price of BUSD ever falls below $1 per BUSD, arbitrage traders will buy large amounts of BUSD to make a profit. Then arbitrage traders can send their BUSD to Paxos in exchange for fiat currency. After this, the token price will return to $1 as a result of increased demand for BUSD.

How is BUSD regulated?

BUSD is a regulated stablecoin. It was actually the first stablecoin to be regulated by the New York State Department of Financial Services (NYSDFS). Because of the regulatory approval on the stablecoin, it has to comply with certain rules as stipulated by the NYSDFS. The rule is that the BUSD must be fully collateralized. This means that there must always be an equal amount of US dollars to back the circulating supply of BUSD.

Another rule that must be complied with is that Paxos must carefully manage the creation of the BUSD token. The rule also requires Paxos to cautiously oversee the burning of the token as well.

The regulatory approval from the NYSDFS also permits Paxos to freeze any account that is suspected of illegal activities. Paxos can also seize ‌funds in the account.

The regulations stipulated by the NYSDFS are adhered to using a new function that was built into the smart contracts of BUSD. It is important to note that these regulations only apply to the Paxos-issued BUSD that runs on the Ethereum blockchain. The Binance-issued BUSD that runs on the BNB Chain is not regulated by the NYDFS.

Why use Binance USD

Binance USD offers several use cases that attract both investors and traders. For starters, it helps to avoid the price fluctuations that constantly affect the crypto markets. The high volatility of the crypto market has discouraged many investors and traders over the years. Binance USD offers a way for you to hold relatively stable assets within the crypto space. Another benefit that attracts users to Binance USD is the opportunity to make money through arbitrage trading. And finally, Binance USD allows investors and traders to secure their profits without converting their crypto assets to fiat currency.

How is BUSD different from other stablecoins?

BUSD is a fiat-backed stablecoin. However, there are other stablecoins that are backed by crypto assets. BUSD stands out when compared to other fiat-backed stablecoins because Paxos publishes regular audits to show that the amount of US dollars in the reserve is equal to the circulating supply of BUSD.

This makes BUSD more trustworthy because there are some fiat-backed stablecoins whose reserves have never been audited. This leads users to wonder if stablecoins have any money in their reserves at all. BUSD allows users to own real-world digital assets without worrying about reserves. The regular audits give them peace of mind because they know that their BUSD is securely backed.

How to buy Binance USD(BUSD)

Binance USD can be bought, sold, or swapped on a crypto exchange. Several crypto exchanges list the BUSD token including Swapzone. You can store your BUSD in hardware wallets or exchange wallets. And you can seamlessly convert your BUSD to fiat currency whenever you want. On Swapzone, ETH to BUSD swap would go like this:

  • Visit
  • Select the ETH to BUSD exchange pair.
  • Enter the amount of ETH to be exchanged.
  • Compare the exchange rates and select the best.
  • Click the Exchange button to proceed.
  • Enter wallet address to receive USD.
  • Send ETH to the generated ETH address.
  • Processing will take some moments and then the exchange will be completed.
  • Kindly rate and leave a review for Swapzone after your transaction has been completed.

BUSD Ecosystem

Paxos-issued BUSD runs on the Ethereum blockchain. Binance also issues a BUSD token that runs on the BNB Chain. Binance issues BUSD (BEP-20) by storing BUSD tokens in an Ethereum address. Then it mints pegged BUSD tokens which represent the original tokens stored in the Ethereum address. BUSD holders on the Ethereum and Binance blockchains can seamlessly swap their tokens between the two blockchains.

Frequently asked questions

What's the difference between BUSD and USDT?


Both stablecoins are backed by fiat currencies and maintain a 1:1 value ratio with the US dollar, rendering them more stable in comparison to other cryptocurrencies. BUSD undergoes thorough audits and adheres to regulatory standards, with its tokens and reserves securely held in a bank account. In contrast, USDT has encountered controversies related to reserve management and decentralization. The differing approaches in security measures and regulatory compliance contribute to the distinct characteristics and perceptions of stability associated with BUSD and USDT.

Is BUSD pegged to USD?


BUSD (Binance USD) is pegged to the US dollar. It is a stablecoin introduced through a collaboration between Binance and Paxos. The primary characteristic of BUSD is its value, which is consistently maintained at a 1:1 ratio with the US dollar. This pegging mechanism ensures that for every BUSD in circulation, there is an equivalent amount of US dollars held in reserve, providing users with a stable and reliable digital asset with a value mirroring that of the US dollar.

Is Binance USD legit?


Binance USD (BUSD) is a stablecoin backed 1:1 by the US dollar and authorized by the New York State Department of Financial Services (NYDFS) in collaboration with Paxos. This USD-backed stablecoin, seamlessly issued by Paxos in association with Binance, holds the NYDFS approval. Notably, BUSD permits issuance and redemption without incurring any additional fees, providing users with a straightforward and cost-effective means of transacting in a digital asset with a value directly pegged to the US dollar.

How trustworthy is BUSD?


BUSD is a reliable investment that can also be used as a trading tool by investors and traders. The coin's regulatory status and audited reserves in trusted financial institutions give it a high level of reliability. Crypto users will find BUSD a solid stablecoin that can be used alongside other projects.

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