Binance USD Stablecoin is an officially regulated cryptocurrency that is approved by the New York State Department of Financial Services. Stablecoin itself was created by major cryptocurrency companies Paxos and Binance. The main advantage of it is digital and financial transparency. The goal of BUSD is considered to be the formation of a stable, secure, and open payment stablecoin. That is why a lot of people are looking for a reliable BUSD wallet.
History of Binance USD (BUSD)
BUSD stablecoin is a joint project of Binance and Paxos Trust Company, LLC. Binance is the largest cryptocurrency exchange and a huge cryptocurrency service. Paxos Trust Company digitizes assets and provides cryptocurrency brokerage services. Also, the company manages its stable cryptocurrency – PAX.
In early September 2019, Binance and Paxos announced the launch of BUSD, denominated in U.S. dollars. The Binance platform was responsible for marketing and the launch itself, while Paxos took care of securing the stablecoin. Paxos is a licensed company that is regulated by the New York State Department of Financial Services. Therefore, Binance USD has also received approval from this Department, which is abbreviated as NYDFS.
On September 12, 2019, Binance USD became available on the Paxos platform and on September 20 on the Binance exchange. Paxos was introduced as the issuer of BUSD, which holds collateral funds for Stablecoin. Stablecoin was launched with an ERC-20 standard token, which is maintained by the Ethereum network. Soon, BUSD began supporting the BEP-20 standard (Binance network that supports BNB).
The purpose of Binance USD (BUSD)
Today, there is a trend in the world of the gradual digitization of the financial sector. Many companies are starting to move from centralized services to distributed networks. The reasons are in the security, openness, and cheapness of blockchain infrastructures.
Thanks to the cryptocurrency market development, there is a need for cryptocurrencies with a stable price. In addition, the lack of operational transparency in the financial sector pushed companies to develop stable cryptocurrencies. As a consequence, digital currencies with stable prices appeared. Their principle of work is based on the blockchain.
Stablecoin Binance USD is a digital currency, the value of which is secured by the U.S. dollar. Due to this, the BUSD token eliminates the price fluctuations that are inherent in conventional cryptocurrencies. Therefore, traders and investors use it to preserve capital when cryptocurrency prices fall. BUSD is also a means of lending, investing, and trading on the Binance platform.
Where to store Binance USD (BUSD)?
The digital currency BUSD is a stablecoin whose value is driven by its peg to the U.S. dollar. Independent audit firms confirm the consistency of the BUSD token offering and the underlying funds every month. For full transparency, Paxos Trust publishes information about the issuance and collateralization of the stablecoin. Therefore, BUSD is used by traders and investors to maintain liquidity in the exchange.
The question of how to create a BUSD wallet is the most popular among other questions about this cryptocurrency. No one recommends storing Binance USD on exchanges like Binance because of their unreliability. That is why most people store this and other cryptocurrencies in reliable non-custodial BUSD wallets like Sapien Wallet. The main advantages of Sapien BUSD wallet are:
- Non-custodial multi-currency crypto wallet
- User-friendly interface
- Built-in rating system
- Possibility of in-app correspondence
- Low cryptocurrency exchange fees
- Ability to buy and withdraw cryptocurrencies using Visa and Mastercard
- Fully decentralized cryptocurrency wallet
You can exchange, deposit, and buy cryptocurrencies in one app. You can replenish your account with 100+ cryptocurrencies including BUSD, USDT, BNB, and send them to almost any altcoin address. We have an internal exchange, you can easily convert your assets to any of the 100 cryptocurrencies right in the app. Sapien BUSD wallet provides great possibilities for users.
Blockchain Binance USD
The Binance USD stablecoin is built on a smart contract, which is responsible for security. The contract is regulated by the Paxos Trust Company, which has undergone a certification and account verification process. These accounts hold the funds that provide the issuance of BUSD while the smart contract performs the regulation of the price of the stablecoin. This contract is built on the ERC-20 protocol of the Ethereum blockchain.
ERC-20 defines a set of standard functions for transaction management and account balance tracking. This standard is the most popular in the cryptocurrency market, so it is supported by next-generation blockchain protocols. Binance Smart Chain is precisely the network that supports Ethereum standards.
A similar solution for launching tokens in Binance Smart Chain is the BEP-20 standard. This standard is compatible with ERC-20, which simplifies the use of Stablecoin. This means that BUSD-ERC20 tokens are converted to BUSD-BEP20 without any problems. At the same time, BUSD remains the same stablecoin without losing its properties. Sapien BUSD wallet supports both blockchains.
BUSD-ERC20 and BUSD-BEP20 transactions are performed by nodes in each network separately. Ethereum nodes are responsible for transactions in BUSD-ERC20 and Binance Smart Chain nodes are responsible for BUSD-BEP20 transactions. Each transaction is folded into blocks that stack the chain, which is recorded in a registry. A copy of such a registry is maintained by Ethereum and Binance Smart Chain nodes, respectively.
Binance USD (BUSD) Consensus
Consensus is an important prerequisite and is a process of matching between nodes. Binance USD is built on multiple standards that are served by different blockchain networks. Each of these networks uses different consensus algorithms. Both networks use algorithms based on the proof principle. Due to this, nodes that have reserved a certain number of tokens become validators.
Ethereum is moving to a consensus mechanism called proof-of-stake (PoS) from proof-of-work (PoW). Binance Smart Chain uses an advanced mechanism called PoSA. It also requires proof of stake, taking into account the authority of the node, where active and reliable nodes get a better chance to form blocks and conduct transactions.
Regulatory oversight of Binance USD (BUSD)
New York regulator NYDFS constantly monitors BUSD for compliance with U.S. banking laws. Paxos is required to have the tools to freeze accounts and reset them when needed. The blockchain code includes a “setLawEnforcementRole” feature that allows regulators to control the network. This feature can only be used to force a limit on the amount of BUSD in circulation. This goes against the principles of blockchain, but Paxos says the feature will only be used to restrict terrorist financing and money laundering. The company believes it will only be used when required by a court or law enforcement agency.