Last updated: 1 Oct 2018
If you are reading this, then chances are you know something about blockchain technology, cryptocurrencies, and exchanges in general. For a refresher, read my Blockchain ELI5 piece that gives some background on the new digital wave. In this guide I will summarize the pros and cons of the Binance Exchange as well as walk you through step-by-step instructions on how to acquire Binance Exchange’s digital currency, Binance Coin (BNB), a token that facilitates your trading and gives you a stake in Binance’s future.
Table of Contents
- What Is Binance
- Pros and Cons of Binance
- Get Bitcoins or Ether
- Fund Binance Account
- Buy Binance Coins (BNB)
- Useful Links
1. What Is Binance
Binance is one of the top cryptocurrency exchanges, headed by Changpeng Zhao and a team distributed around the world, most recently headquartered in the island nation of Malta. It has all of the main features you want to see in an exchange like support for trading pairs with all of the major coins (BTC, ETH, NEO), multiple languages, multiple device platforms, clean user interface, and importantly, extremely high throughput from its order matching engine of up to 1,400,000 orders per second.
Binance does not provide fiat (eg. US dollars) to cryptocurrency exchange, rather focuses purely on crypto-to-crypto. It emphasizes security, speed, and customer service above all else. As a proxy for fiat however, Binance does offer multiple stablecoin pairings including Tether USD (USDT) as well as True USD (TUSD).
2. Pros and Cons of Binance
If you’ve used other exchanges before, you can definitely feel the difference in execution speed. The engine underlying Binance in fact is already powering 30+ other exchanges in Asia.
Team & Partnerships
Binance’s CEO is Changpeng Zhao, who has a deep background in finance, trading, and blockchain technology. He is also the founder of BijieTech (company behind the underlying execution engine) as well as a co-founder of OKCoin (one of the largest Bitcoin exchanges in the world). The CMO is Yi He, one of the leading cryptocurrency experts in China and also a co-founder of OKCoin. They have a close partnership with the most promising blockchain protocol out of China, NEO smart economy (guide to buying NEO), headed by Da Hongfei (in fact, Binance offers fee-free withdrawal of NEO and GAS). Overall very strong team.
Binance Coin (BNB)
Owners of BNB will receive discounts on all trading fees (25% off as we are into the second year now). See the complete fee structure and the BNB discounts over time. In addition, all ICOs offered on Binance will have a discount for using BNB to invest, and the long term promise is owning a stake of Binance’s future fully decentralized exchange on their own blockchain protocol Binance Chain.
There will also be natural deflation as every quarter, Binance will use 20% of profits to buy back BNB and destroy them, thereby steadily driving up the price (up to 50% of all BNB in circulation).
Binance Coins are very compelling and is the primary reason we are here speculating on BNB.
As of Oct 2018, Binance has expanded immensely and now offers one of the most diversity of trade pairings of all exchanges. In fact, there is something called the “Binance Effect” where, when an altcoin gets listed on Binance, it gains “credibility” and sees significantly more trading interest (more liquidity is almost always a good thing!).
[Previously] Compared to other top exchanges, Binance offers a relatively limited selection of coins to trade - if you want to get anything outside of their supported list, then you will have to go elsewhere. This list will continue to expand (OAX, DNT, MCO, ICN) however and will not be a con for long. In Sep 2017, Binance added a Community Coin per Month program where the coin with the most number of community votes will be listed.
Binance is natively Chinese; this means that by default, documentation will start in Chinese and suffer from translation differences for other languages like English.
No fiat currency exchange
Like we mentioned above, you can only use crypto for trading on Binance, as fiat exchanges have much more regulatory scrutiny.
This con is rapidly being improved upon with Binance’s move into fiat-crypto operations: The first is LCX, a joint partnership between Binance and Liechtenstein Cryptoassets Exchange, which offers fiat-crypto exchanges (Swiss Francs (CFH) and Euros (EUR)). The second is Binance Uganda which is the first exchange in Uganda to offer crypto-fiat.
3. Get Bitcoins or Ether
Now that the fluff is out of the way, let’s get to getting ourselves some BNB! The first thing we have to do is get ourselves some transacting cryptocurrencies. In the digital currency world Bitcoin is king and Ether is queen, and either suffices to getting practically any cryptocurrency you would want, including BNB.
There are tons of ways to get either, but the easiest way is to use the most established crypto platform in the USA, Coinbase.
Help me help you! Sign up for Coinbase using my referral code (already linked) and we both get $10!
On Coinbase, you’ll be able to purchase BTC or ETH using conventional fiat methods including Bank Account, Credit/Debit Card, and Wire Transfer (depending on your locale); each has different buying times and limits, generally the longer the buying time the higher the limit. I’ll wait here while you buy some.
A few days later…
Okay great! Let’s get those BTC or ETH over to Binance now. Tab on over in your Coinbase account to “Accounts”, select “Send” from one of your coin balances, and pop in the deposit address from your Binance account with all of your new cryptocurrency.
With all of the traffic slamming Coinbase, if you’re looking for alternative places to buy BTC or ETH here are a couple more popular places:
- Changelly — Super easy interface and provides a wider variety of coins to buy like Ripple, Dash, Monero
- LocalBitcoins — Peer-to-peer buying marketplace, the advantage is that only you and the other person have knowledge of your transaction. They have an escrow service to facilitate transactions if needed.
4. Fund Binance Account
What Binance account, you ask? If you haven’t already, make an account on Binance (disclaimer: my referral link), and have your 2FA and so forth configured for extra security. One of the great conveniences of Binance is that, just by signing up, you are “Lv. 1” and can withdraw up to 2 BTC per day. You should see a screen like below once you are up and running:
Now hover over the menu nav dropdown “Funds” and select “Balances”. This page will show you the entire list of coins that are traded on Binance. We can think of these line items as all of our online wallets that hold our coins on the exchange.
For each coin, you can see the coin’s
- your total balance
- your available balance (this is different from total balance due to reasons like in-flight transactions)
- in order
- BTC value
At the very right of each line, you will see “Deposit” and “Withdrawal”. The former is what you want, and clicking it will take you to a new page where you can view your BTC or ETH address. This is the address where you should be sending your new coins that you got from Coinbase.
<div align="center">Closeup of the “Deposit” and “Withdrawal” buttons</div>
<div align="center">From Coinbase, you input your address that you get from Binance.</div>
Once you send your BTC or ETH into your respective Binance wallet, then you are ready to actually start trading on Binance and proceed to the next step!
5. Buy Binance Coins (BNB)
Here we go! This is the moment we’ve been waiting for.. getting us some sweet sweet BNB. At the top left of the nav bar, click on Exchange -> Advanced (because we are) and you will be transported to a crazy dark page with lots of numbers and a few colors. Don’t panic. We’ll briefly explain each part.
The first thing we’ll do is configure which crypto pair we want to trade. We can use either BTC or ETH to buy BNB, we just need to specify it. At the top right hover over the default “BNB/BTC” to see the possible pairs.
We’re going to use BNB/ETH” for our examples here. To get to this page directly, here’s the link: https://www.binance.com/tradeDetail.html?symbol=BNB_ETH.
On the left is a giant line chart (price over time). One of my favorite visuals is the “Depth” chart, or a visual representation of the “Order Book”. Click on “Depth” to see all of the buy orders and all of the sell orders that people have placed and are waiting to trade on. At the middle is where the buyers and sellers are closest together. These prices are what you will want to trade against.
On the right is a seemingly complicated table of numbers. The top row shows the high level stats - like Last Price, 24h Change, 24h High, 24h Low, and 24h Total.
The first table of numbers on the left (Price(ETH), VOL(BNB), Total(ETH)) is the exact numerical representation of the depth chart that we saw to the left. Red numbers are “sell orders” that go down in value from top down, where they meet in the middle with the Green numbers, which are “buy orders” that go up in value from bottom up. The bigger number in the middle (0.00682636 in the screenshot) is the price that is actively trading.
The second scrolling table of numbers on the right (Price(ETH), BNB, Time) is a running list of all trades that have happened in chronological order. You can get a general sense of buy or sell patterns and size of orders going through recently. In the screenshot above, you can see a huge order went through at 22:59:00 where someone bought 15,792 BNB for 0.00682563.
Finally, the bottom right is the actual execution prompt that lets us buy and sell BNB. We’ll only deal with the left side, as we want to buy BNB and not sell it right now.
- Balance is the number of ETH that we currently have to trade
- Price is the number of ETH that we are willing to pay for each unit of BNB
- Amount is the number of BNB that we want to buy for the above specified price. If we click on the input box, it will show us the maximum number of BNB we can buy based on our balance and price. We can also click 25%, 50%, 75%, 100% for fast configuration of our total balance
- Total ETH is calculated for us automatically based on the price and amount
Here I am placing an order to buy 10 BNB at 0.00658372 ETH per BNB for a total of 0.0658372 ETH total. After clicking “BUY”, then my order will either be executed or sit in the order book at that ETH price, waiting for someone else to trade against it.
Edit 11/21/17: There is a new option for “Market” buy (see screenshots below)
And finally, on the bottom left, you can see all of your “Open Orders”, as well as your “Trade History” and “Funds”. Here you can see I have an open order to buy 10 BNB for 0.00671723 ETH just like I specified above.
As of 11 Dec 2017, there is now a stop-limit order type available. Binance’s guide gives a good overview of what a stop-limit order is, but here’s a concrete example:
Here we are looking at the BNB/NEO page, specifically buying NEO with BNB coins. It currently costs 12.949 BNB to buy 1 NEO.
Stop: Setting a buy order stop at 12.949 means that when the 12.949 price is being traded (or higher), then the order will trigger and a limit order to buy will be active at the limit price;
Limit: When the stop is triggered, then a limit order with this price of 12.949 will be placed and active.
Generally for buying, setting a limit amount higher than the stop will have a better chance of getting your order filled. Vice versa for selling: setting a limit amount lower than the stop will have a better chance.
And that’s it! You’ve bought your first Binance Coins. You can now have greatly discounted fees, and own a piece of one of the best exchanges in the world. See you on the moon!
Like this tutorial? Any tips are greatly appreciated!