Stablecoins are incredibly useful and have become an integral part of the crypto sphere over the past years. These cryptocurrencies pegged to the dollar (or other fiat currencies) avoid the volatility of crypto assets like Bitcoin. Sometimes, converting LTC to BTC can be too risky, so stablecoins are very useful as an intermediary to avoid price drops. At the same time, they conserve some of crypto’s advantages such as fast transactions and low fees.
However, since there are so many different stablecoins out there, one might wonder which one is the best one to store your crypto in times of high volatility. Binance USD is one of the most popular stablecoins and is getting more traction by the day.
But what is BUSD? How does it work and what are its main use cases? We will try to answer all of these questions in this article and see whether you should choose BUSD over other stablecoins.
Binance USD: Basic Info
As we mentioned in our introduction, Binance USD, or BUSD, is a stablecoin pegged to the US dollar. This means that at any time, users can redeem 1 BUSD for 1 USD, regardless of market conditions.
As its name suggests, this stablecoin is issued by the Binance exchange, in partnership with the Paxos protocol. Paxos ensures that assets are audited at all times and backed 1 to 1 by fiat or fiat equivalents. Consequently, one can rest assured that BUSD remains pegged to the dollar at all times, even in case of a bank run.
To ensure user protection, Paxos and BUSD are regulated entities by the NY State Department of Financial Services. BUSD can be found on a wide range of blockchains, including the BNB chain, Ethereum, Polygon, Avalanche, and Solana, among others. This makes it quite versatile, as users can easily bridge it onto different blockchains and participate in separate DeFi protocols.
Why Does Binance Need BUSD?
Binance uses the BUSD stablecoin as a direct on-and-off ramp for streamlined use of its crypto exchange. Traders can easily trade the thousands of cryptos listed on Binance with BUSD, as it’s their main stablecoin. Even freshly listed coins on the exchange can get a BUSD pair immediately. This makes it easier for investors to acquire assets in case they don’t own any BNB or BTC yet.
Moreover, it’s an easy way for users to deposit fiat USD onto the platform, as it directly gets converted into BUSD. To increase the adoption of BUSD over other stablecoins, Binance has slowly phased out USDT and USDC pairs on the exchange.
While this was regarded as a controversial move from the #1 exchange in the world, the result was beneficial to the business, as demand for BUSD increased significantly.
Finally, BUSD is a major player in the DeFi ecosystem of the BNB chain. It’s the main coin used for liquidity providing, yield farming, and lending, making it crucial in both Binance’s CeFi and DeFi.
Busd Use Cases Outside The Network
Since BUSD is a stablecoin, it has quite a few use cases outside of the BNB chain ecosystem and Binance exchange. Users can pay for goods and services online, transfer value to one another across the globe and store wealth in BUSD.
Many online platforms as well as eCommerce stores are adopting BUSD, which makes it easier to plug it into real-world economics. For example, you can book a vacation with BUSD on Travala, and at the same time, benefit from full reimbursement in case of an issue.
How Is BUSD Better Than Other Stablecoins?
BUSD remains highly popular, especially with fervent Binance users. If you are using Binance, it’s certainly the best way to trade cryptocurrencies against the USD, as it’s paired with every listed coin and token on the exchange. You can easily trade BUSD to MATIC among thousands of other cryptos.
Moreover, the fact that it’s entirely regulated makes BUSD much safer than some of its counterparts. And finally, BUSD has remained stable during the market turmoil, which makes it one of the best choices when trying to choose a stablecoin for your portfolio.