BUSD

Overview of BUSD

Binance USD, commonly referred to as BUSD, is a kind of cryptocurrency that was launched in 2019. Founded by Binance and Paxos, BUSD operates as a stablecoin, meaning it's designed to maintain a stable value relative to a specified asset or a pool of assets. It's commonly used in trading pairs on various cryptocurrency exchanges such as Uniswap, Biswap, MEXC and so on.

Pros and Cons

What makes BUSD Unique？

BUSD, as a stablecoin, represents a key advancement within cryptocurrency that offers a solution to the substantial price volatility that is frequently associated with digital currencies. Unlike many other cryptocurrencies that can see their values fluctuate drastically, the value of BUSD is pegged to the US dollar on a 1:1 basis and it is backed by reserves of the currency held by the issuers. This gives BUSD a steady value that mirrors the US dollar, as opposed to the drastic price changes often seen in other cryptocurrencies.

How Does BUSD Work？

BUSD operates differently from cryptocurrencies like Bitcoin that use a proof-of-work system. Unlike Bitcoin, which is mined using powerful hardware and specialized software, BUSD is not mined at all. Instead, BUSD operates on a different principle known as the mint-and-burn mechanism.

BUSD is an ERC-20 token that's issued on the Ethereum blockchain, though it also circulates on the Binance Chain as a BEP-2 token. Within this system, new BUSD tokens are minted or created when users deposit US dollars with Paxos, the co-issuer of the token. Conversely, BUSD tokens are “burned” or removed from circulation when users redeem them for US dollars. This mechanism helps to maintain the stable value of BUSD, pegged 1:1 to the US dollar, as the supply is adjusted in response to the demand.

Exchanges to Buy BUSD

Binance USD (BUSD) is supported by a variety of cryptocurrency exchanges.

• Binance: The native platform for BUSD, offering easy purchase and high liquidity. But it is not available in all jurisdictions and faces regulatory scrutiny. See this link for details on how to buy BUSD: https://www.binance.com/en/how-to-buy/binance-usd.

Step 1: Download a Trust Wallet Wallet

There are several crypto wallets to choose from within the BNB Chain network and Trust Wallet appears to be the most integrated.

Step 2: Set up your Trust Wallet

Register and set up the crypto wallet. And keep your seed phrase safe, and take note of your wallet address. You will be using it later on Steps 4 and 6.

Step 3: Buy BNB as Your Base Currency

Once your wallet is setup, you can login to your Binance account and proceed to the Binance Crypto webpage to buy the BNB.

Step 4: Send BNB From Binance to Your Crypto Wallet

Once you buy your BNB, go to your Binance wallet section and look for the BNB you purchased. Click on withdraw and fill up the required information. Set the network to BNB Chain, provide your wallet address and the amount you want to transfer. Click the withdraw button and wait for your BNB to appear in your Trust Wallet.

Step 5: Choose a Decentralized Exchange (DEX)

There are several DEXs to choose from; you just have to make sure the wallet you selected in Step 2 is supported by the exchange.

Step 6: Connect Your Wallet

Connect your Trust Wallet wallet to the DEX you want to use by using your wallet address from Step 2.

Step 7: Trade Your BNB With the Coin You Want to Get

Select your BNB as the payment and select the BUSD as the coin you want to acquire.

Step 8: Apply the Swap

Once you are done with the previous steps, you can click on the Swap button. And your crypto transaction is now complete!

• Coinbase: A well-established and user-friendly exchange with BUSD trading pairs. Generally higher fees than Binance. See this link for details on how to buy BUSD: https://www.coinbase.com/how-to-buy/binance-usd.

Step 1: Download Coinbase Wallet

A self-custody wallet like Coinbase Wallet is required to purchase Binance USD. Coinbase Wallet is available as a mobile app and browser extension.

Step 2: Choose a Coinbase Wallet username

As part of setting up your Coinbase Wallet, you will need to choose a username. This username lets other Coinbase Wallet users easily send you crypto. You can keep your username private, but you will need one to access the account.

Step 3: Securely store your recovery phrase

When you create a new self-custody wallet, you'll be given a recovery phrase that consists of 12 random words. The recovery phrase is the key to your crypto, meaning anyone with your recovery phrase has access to your crypto.

Step 4: Understand and plan for Ethereum network fees

Fees vary based on how busy the network is, how complicated the transaction is, and how fast youd like the transaction completed. Plan to set aside some money for fees.

Step 5: Buy and transfer ETH to Coinbase Wallet

If you don‘t have a Coinbase account, you’ll need to create one to buy Ethereum (ETH). The way you transfer ETH to your Coinbase Wallet varies depending on whether youre using the mobile app or the Chrome extension.

Step 6: Use your ETH to buy Binance USD in the trade tab

Once you've added ETH to Coinbase Wallet, you can you can swap your ETH for Binance USD right in the mobile app or browser extension. Tap or click the “Swap” icon in the Assets tab, then select “Choose asset” and pick Binance USD. Input the amount of ETH you'd like to exchange for Binance USD. Remember to leave enough for transaction fees. Confirm your purchase and follow the instructions on the screen to finalize.

• PancakeSwap: The leading DEX on Binance Smart Chain (BSC), where BUSD primarily resides. Offers direct swapping of cryptocurrencies for BUSD but requires a separate wallet and technical knowledge.
• Uniswap: Primarily an Ethereum-based DEX, but supports wrapped BUSD (wBUSD) trading pairs. Enables broader DeFi interaction but adds complexity with wrapped tokens.
• Biswap: Biswap offers comprehensive support for BUSD, making it a convenient and versatile platform for users who want to trade, farm, stake, or spend their BUSD tokens.

How to Store BUSD？

Binance USD (BUSD) can be stored in a variety of digital wallets that support ERC-20 tokens or BEP-2 tokens since BUSD operates on both Ethereum and Binance Chain.

- Trust Wallet: This is a favored mobile wallet for many users because it supports multiple cryptocurrencies, including BUSD. As the official wallet for Binance, it offers a high level of security and a user-friendly interface. It supports both Android and iOS devices. Users can hold, receive, and transfer BUSD with ease through this wallet.

- Ledger: Ledger is one of the most recognized cold storage hardware wallets on the market that supports a variety of cryptocurrencies, including BUSD. It provides offline storage for private keys, making it extremely secure against online threats. Ledger users can use applications like MyEtherWallet or Binance Chain Wallet with the device to manage their BUSD.

- Trezor: Similar to Ledger, Trezor is a secure hardware wallet that allows the offline storage of cryptocurrency assets. It supports a wide range of currencies, including BUSD. With the use of third-party interfaces like MyEtherWallet, users can manage BUSD with their Trezor devices.

- Metamask: Metamask is a software wallet that allows users to interact with the Ethereum blockchain. It is available as a browser extension, and as an app on iOS and Android. Metamask can be used to store, transfer, and manage BUSD tokens.

- Binance Chain Wallet: Specifically designed for the Binance Chain, this wallet supports BEP-2 tokens, including BUSD. It is available as an extension for Google Chrome and Brave browsers. Users can send, receive and store their BUSD coins quite easily here.

Is It Safe？

Determining the safety of BUSD is complex and involves understanding various factors and risks.

Centralized Issuance: Unlike many other stablecoins, BUSD is issued by Paxos Trust Company, a centralized entity, creating a single point of potential failure.

Audits and transparency: Paxos regularly undergoes audits by reputable firms and publishes reserve reports to verify BUSD's backing by US dollars.

Regulatory compliance: Paxos is licensed by the New York State Department of Financial Services, suggesting a commitment to regulatory compliance.

Wide adoption and liquidity: BUSD is one of the most widely used stablecoins, enjoying high liquidity and integration with various DeFi platforms.

How to Earn BUSD Cryptocurrency？

Hold and Earn: Deposit BUSD into interest-earning platforms like Binance Earn, YouHodler, or Celsius Celsius Network. These platforms offer varying APYs for holding BUSD, allowing you to generate passive income.

Yield Farming: Participate in yield farming on platforms like ApeSwap or Venus Protocol. This involves staking BUSD in token pools to earn rewards in platform-specific tokens, which can be converted to BUSD.

Margin Trading: Borrow BUSD and use it to trade other cryptocurrencies on margin. This allows for potentially amplified gains but also carries a high risk of losing your initial investment.