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All about BUSD : The comprehensive Guide to Binance’s stablecoin
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All about BUSD : The comprehensive Guide to Binance’s stablecoin

BUSD is a stablecoin, released by the Binance exchange. Like other cryptos in its category, it is a virtual currency whose price corresponds to that of the dollar. In this article, we offer you a definition of BUSD, an explanation of its project, and some ways to buy it. We will also compare this recent variant to its predecessors: USDT and USDC. Those hesitating between one of the three will find some food for thought to guide them.

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Mis à jour le 11/26/2023 à 20:58

busd

What is BUSD?

You will no doubt have understood it : the B of BUSD refers to the company Binance, which launched this crypto. The said launch took place in 2019, and marked a new stage in the diversification of stablecoins.

As a reminder, a stablecoin – unlike a classic crypto (Bitcoin, Ethereum) shows negligible volatility, because its value follows that of the US dollar.

But let’s take a closer look at BUSD as such.

Ranked #3 among stablecoins (USDT being the first; USDC the second), it climbs to 6th place in terms of capitalization among all cryptocurrencies.

This rapid and obvious success is undoubtedly linked to the excellent reputation of Binance, which appears to be a benchmark in its field.

The platform of this company, dedicated to the exchange of very many digital currencies, is the most popular in the world.

In addition, the regulatory system to which the BUSD is subject is particularly developed, thanks to the support of certain American banks and institutions; we will develop this aspect later.

BUSD Binance : how does it work?

The BUSD crypto has a particularity: it is not backed by virtual currencies such as Bitcoin or Ethereum. All reserves exist in the form of real money, the funds of which are held by Paxos (in some cases, it can also be bonds).

Thus, each unit of BUSD finds its direct and exact cash equivalent.

We are therefore faced with a crypto that offers a good compromise between the classic digital variants (Bitcoin, Ethereum, etc.) and sovereign currencies (in other words, money issued by a state). Users can take advantage of the advantages of decentralized currency while protecting themselves from the risks assumed by a volatile cryptocurrency.

Let us add that this correspondence between the existence of a dollar and that of a stablecoin from Binance is completed by a particularly elaborate guarantee and control system.

How is the BUSD regulated ?

The BUSD is indeed strictly regulated. The operations guaranteeing its integrity and regularity are centralized in New York.

Specifically, the creation, circulation, and value of Binance BUSD is verified under the New York State Department of Financial Services (NYSDFS). Created in 2011, this organization has an important role to play in the field of cybersecurity. It acts as a mediator and regulator.

But that’s not all. Binance, through Paxos Trust Company, has commissioned an independent firm named Withum to issue monthly attestations as to the effective liquidity reserves.

All reports are scrupulously published on the official Paxos website, including a concern for transparency and continuous communication.

We can go so far as to speak of geographical consistency: all the banks containing the reserves essential to maintaining the USD/BUSD equivalence are American. As for the headquarters of Paxos, it is located in New York.

All this contributes to making BUSD Binance one of the safest cryptos, whether thanks to the very regular audits or by virtue of this, so to speak, centralized organization. What may seem paradoxical in the context of a virtual currency in general is in this case part of its DNA.

How to buy BUSD ?

To buy BUSD, of course, you can go through the Binance platform. Moreover, some use it for trading via the native platform, since it allows you to operate free of charge (or at very low cost) on the financial markets.

It is also possible to carry out transactions reliably on certain partner sites. This is particularly the case with BitTorrent (or even the airline Air Baltic!).

In any case, do not forget that it is possible to carry out exchanges and conversions – for example to obtain a fiat (regular currency).

Outside of Binance, you have the option of acquiring BUSD on Hotbit, or even CoinTiger.

BUSD vs USDT vs USDC

Now we have to compare the BUSD to the other two most famous stablecoins to understand the differences.

BUSD or USDT ?

USDT remains stable overall, but audits are less regular and Tether, the founding company, has found itself at the heart of some controversies – it has notably been criticized for a lack of transparency regarding the effectiveness of its reserves.

The BUSD, since it was designed to function as an extremely controlled and secure stablecoin, should never lead to unpleasant surprises for investors.

However, USDT stands out in terms of trading volume and capitalization. It’s more popular and works as a payment method on more sites and services.

BUSD or USDC ?

The stablecoins BUSD and USDC are both based on the pursuit of greater transparency – knowing that BUSD Binance assumes an even more zealous system with its strict dollar equivalence.

Again, USDC circulates more than BUSD – it is actually used more significantly in trade.

All in all, the two cryptos are equal; your choice will be one rather than the other depending on your expectations and your habits. If you already have an active account on Binance, for example, maybe its local stablecoin will satisfy you.

The BUSD : a particularly supervised stablecoin

If we had to retain a typical characteristic of the BUSD, it is therefore its very elaborate audit and monitoring system, and its institutional and geographical attachment to the USA.

Overall, it is a very reliable crypto, which lends itself to secure transactions even if the platforms accepting it as a means of payment are not yet very numerous. If you are looking for a virtual currency with very low volatility, which is the result of a serious project and in particular allows you to trade free of charge on Binance, so do not hesitate to look into this alternative.

⚠️ This article is published for informational purposes and should not be considered as investment advice. Crypto-currency trading involves risk and it is important not to invest more than you can afford to lose.

InvestX is not responsible for the quality of the products or services presented on this page and shall not be held liable, directly or indirectly, for any damage or loss caused as a result of using any goods or services highlighted in this article. Investments related to crypto-assets are risky by nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.

Thomas

Thomas

Web editor for many years and SEO specialist, Thomas became an editor for InvestX when the site was launched. Passionate about the field of crypto and Web3, Thomas has made it his mission to deliver maximum value and introduce readers to the world of blockchains, considered for him as the world of tomorrow.

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Before deciding to trade in financial instruments or crypto-currencies, you should be fully informed of the risks and fees associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and tolerance for risk, and seek professional advice if necessary.