How does Binance work?
Through this guide we will introduce you to the largest cryptocurrency exchange in the world: Binance. But how does Binance actually work? We explain how to create an account on Binance. We give you insight into how to buy crypto and how to trade it. We also show how you can store your crypto on Binance. You’ll find it all in this guide.
What is Binance?
Before we can answer the question: How does Binance work, it is useful to first explain what Binance is. Binance is an online trading platform where you can buy, sell, trade and store cryptocurrencies. Binance was founded in 2017 in China and has been the largest cryptocurrency trading platform in the world since 2018. Binance is led by Changpeng Zhao (CZ), who has years of experience in trading systems. In 2018, Binance also opened an office in Malta due to changing regulations in China and Japan. Since then, Binance has been continuously developing. For example, in 2019 the platform introduced its own blockchain network, called Binance chain, on which Binance coins (BNB) are run.
The options for users have also improved rapidly in recent years. For example, since 2019 it has been possible to buy crypto via VISA or Mastercard, the platform offers a wide range of available cryptocurrencies and future contracts and leverage trading have been added to the product portfolio. Furthermore, the platform also offers investors the opportunity to participate in IEO projects. Binance is certainly not only interesting for the experienced crypto investor. Novice investors can also find their way on this platform.
Is Binance reliable?
To determine where you buy, store and trade your crypto, it is very important that you look at the reliability of the party where you want to do this. It is important that you pay attention to a number of things. Tips for buying crypto safely can be found here.
At Binance, security is of paramount importance. The platform helps you in various ways to use your account in the safest possible way. Binance offers various options to maximize access to your account. This includes 2FA security options, watermarks for email correspondence and withdrawal and trading limits. We discuss this further in our Binance review.
Customer support is well organized at Binance. Although you sometimes have to wait a long time for a response in times of revival of the crypto market, the employees are generally easily accessible and helpful in solving customer questions. Employees can be reached via an online chat, and an extensive support environment has also been set up where you can find answers to numerous customer questions.
Create a Binance account
But, how does Binance work? The first step to buy or trade crypto on Binance is to create an account. Go directly to Binance to create an account and we will guide you step-by-step through the registration process.
Via the yellow buttons “Register Now” and “Register” you will go directly to Binance’s registration form.
In the first step of the registration process you will be asked to provide your email address and a password. Furthermore, the refferal code is already filled in by default because you arrived at Binance via descrypted.com.
Once you have created your account via “Create account” you will arrive at the screen where your email address is validated. You have just received an activation code at the email address you provided with which you can confirm the creation of your account.
After you have entered the verification code, you will be taken to the Binance welcome menu. From here you will immediately be presented with the various options to buy your first crypto: via fiat (Ideal or a SEPA bank transfer) or via your credit card. If you already have cryptocurrency on another platform or in another wallet, you can also transfer it directly to Binance (via Deposit crypto).
How do you buy crypto on Binance?
An important theme within this How does Binance work? guide, are the instructions for buying crypto on Binance. As we explained above, you have different ways to buy crypto on Binance: via Ideal, a bank transfer or by using your credit card. But whichever option you choose, in order to buy crypto you will first have to verify your identity.
If you want to buy crypto via a bank transfer or via Ideal, click on “Deposit fiat”. You will then arrive at the following screen:
From this step, first verify your identity via “Verify Now”
If you choose the option to buy crypto with your credit card, you will be taken to the next screen in which you can select: “verify your identity” via the middle block at the bottom of your screen.
How does identity verification work on Binance?
Before you can buy crypto, you must first verify your identity. That may sound a bit laborious, but it is a process that only takes a few minutes. Binance does this precisely to offer the users of the platform optimal security. Due to the mandatory identity verification, Binance knows exactly who is active on the platform.
You can also easily complete this step via your smartphone. To go to this step, click on “Verify Now”
Then click on “verify” in the next step
Now you can start verifying your identity. Select your nationality and click “Start”
In this step you will enter your general personal data.
After you have done this, continue to the next step via “next”
You have now completed the basic verification. You can now continue with the extended verification. This gives you more options when it comes to depositing and withdrawing amounts.
To proceed to the advanced verification, click on “Go to advanced verification”
In this step you need to upload a photo of your ID. This is quite easy by taking a photo yourself with your smartphone or webcam, or by uploading an existing photo. You can choose from a photo of your passport, your ID card or your driver’s license. Make sure you take a photo of the front and back.
After you have added a photo of your passport, ID card or driver’s license, click on “continue”. You will now enter the next step in which you will be asked to take a new photo for verification. Take this photo and click on “submit and continue”
In the next step you will have to complete facial verification. Click on “Begin verification” to start this process. You can also perform this step by scanning the QR code if you have already installed the Binance app.
After completing this step, your identity verification is complete. Once your verification has been approved, you will receive a confirmation to your email address. In most cases, your verification is approved within an hour.
After verifying your account, you will return to the welcome screen where you can choose how you want to buy your crypto. If you can no longer find the welcome screen, you can always find the various purchase options via “buy crypto” in the top navigation.
How do you buy crypto via iDEAL on Binance?
You start again from the welcome screen from where we started the identity verification. Before you can actually buy crypto, you will first have to deposit an amount in euros (fiat) into your Binance account.
In this step, the currency is already set to “Euro” by default. You then choose whether you want to pay via bank transfer or via iDeal. You can also pay via a Visa or MC bank card, but this is not recommended due to the high fee. However, Advcash and Etana are recommended if you already use them. The additional transaction costs are clearly stated for each payment option.
In this case we choose the payment option via iDEAL. Then enter the amount you want to deposit and select your bank. The amount you want to deposit can be equal to the amount for which you want to buy crypto, but it can also be a different amount. For example, you can choose to first store part of your deposit in euros and use the remaining part to buy crypto on Binance. You will then be taken directly to your bank’s payment environment to complete your deposit.
Depositing amounts using your VISA or Maestro payment card works the same as iDeal. You select Bank card as a payment option and enter the amount you want to transfer to your Binance account. Via “next” you will go to the payment environment where you must enter your bank details.
How to buy crypto via bank transfer (SEPA) on Binance?
You can deposit an amount via bank transfer (SEPA) from the same welcome screen. You select SEPA and enter the amount you want to transfer to your Binance account. Then click on “Continue”
You will then arrive at the screen showing the payment details that you must provide with your transfer.
How do you buy crypto from your Binance account?
Now that you have deposited euros into your Binance account, you can buy crypto. To do this, go to “Buy Crypto” in the top navigation and choose “Cash balance”. Then enter the amount for which you want to buy crypto, choose the cryptocurrency you want to buy and complete your purchase via “Buy”.
Your purchased cryptocurrency is now directly in your Binance account. You can find this via “Wallet” in the top navigation.
How do you send crypto to Binance?
Another important part of this How does Binance work guide? is sending crypto to your account. If you already have crypto on a platform other than Binance, or in another wallet, it would be nice if you could transfer this crypto directly to your Binance account. Fortunately, this can be done quite easily. There are two ways:
1: Send your crypto to from the welcome screen.
In this case, choose the “Deposit crypto” option
2: Send your crypto to Binance from your Spot wallet
You can find your spot wallet via the top navigation under wallet -> Spot.
In your spot wallet you will see an overview of all cryptocurrencies that Binance offers. Then choose the coin that you already own on another platform or in another wallet and choose “Deposit”. In this case we have taken Cardano as an example.
In the next step you will see the receiving address, which you must provide during the transaction from the external platform or from the wallet in which your Cardona is stored. It is also possible to scan the QR code, so that your device immediately recognizes your Binance Cardano account address.
After completing your transaction, you will often receive a message by email which you must confirm. How quickly your crypto is transferred to Binance depends on the network of the coin involved in the transaction.
How does 2FA security work on Binance?
One of the most important things to take care of when buying or storing crypto on Binance is securing your account. Fortunately, Binance is doing everything it can to help you with this. One of those ways is to enable two-factor authentication, also known as 2FA. Binance even requires this method of account security to guarantee optimal use of the platform.
2FA security means that in addition to entering your email address and password, you apply a second access security. At Binance you can choose from a number of options to enable 2FA security.
A security key
In this case, the use of Yubikey is recommended. Read more about using Yubikey here.
Google authentication
Install the Google authentication app on your smartphone and receive an access code in the app with every login, transfer or withdrawal. This additional access security is very easy to set up. You can read more about this here.
SMS authentication
Receive an access code by SMS with every login, transfer or withdrawal. This method of account security is easy to set up, but less secure than using a security key or Google authentication.
You can set up 2FA security on Binance in the security menu. You can find this here. Then choose one of the 2FA options. The rest of the steps change automatically.
How do you trade crypto on Binance?
Now that you have purchased or deposited your first crypto into your Binance account, you can get started trading crypto. The trading menu on Binance can be found via the top navigation. Go to “Trading” and choose “Classic”. You will then end up in the following overview.
There are now a number of functionalities that are important to understand before you start trading on Binance.
Selecting your trading pair
Which coin do you want to buy with another coin? Binance offers 3 options for this: buy a coin with Bitcoin. In this case, choose the pair “BTC” to buy a coin with BNB (Binance coin). In this case, choose the pair “BNB” Or buy a coin with FIAT. These could, for example, be euros or dollars that are on your Binance account. You will simply purchase most coins with your already purchased Bitcoins. If you don’t have one yet, a FIAT pair is the most obvious choice.
You can forget the heading margin for the beginning. These are trading pairs that entail additional risk. It is not recommended to start with this as a novice trader.
Under the heading zones you will find various categories to which coins are related. But you can also forget about this for now. Think of it as an extra search filter.
In this example we choose to buy a coin with Bitcoins that are already in the account.
Selecting the coin you want to buy
The next step is to select the coin you want to buy. You can easily use the search function for this. In this example we are going to buy ADA with Bitcoins.
Order books time frames and price chart on Binance
Before you actually buy the selected coin, it is important to highlight a number of important elements. A large amount of figures and information is presented and it is important that you read this carefully before continuing with your transaction.
On the left you will see all sales orders in red. For example, on the bottom line of the sales order book you will see that a total of 3,534 ADA coins are offered for sale at a sales price of 0.00002361 BTC each.
You will also see all purchase orders in green on the left. You can see that on the top line of the purchase order book there is an outstanding purchase order for 10,000 ADA coins at a price of 0.00002360 BTC. Ultimately, this means that you currently offer the highest bidder a price of 0.00002360 BTC for 1 ADA coin, and the seller with the lowest asking price currently asks 0.00002361 BTC for 1 ADA coin.
In the middle of your screen you will see the ADA price chart. Here you can see how the price of ADA has developed over time. When you have eventually developed into an advanced trader, you will be able to buy and sell based on patterns in this chart.
In the middle above the graph you can adjust the time frame of the graph. In this example it is set to 4 o’clock. This means that you see the price development based on 4-hour time periods. For example, if you increase this to a day or a week, you will see that the graph goes further back in time, but also covers a larger time frame. Often patterns you see on higher time frames are more reliable than patterns you see on lower time frames.
Setting up your buy or sell order on Binance
Now that you have a slightly better understanding of the information you see on your screen, it’s time to set up your first buy or sell order. First decide whether you want to buy or sell a coin. In this case we assume that we are going to buy ADA coins.
You can leave the top option fields untouched. These are set to Spot and limit by default. We can leave that as is for now. Cross and Isolated trading involve additional financial risks that you do not want to deal with as a novice trader.
A market order and a Stop limit order are explained in more detail later.
In the “amount” row you enter the amount of ADA coins you want to buy. You can also choose to determine this amount based on a percentage of your Bitcoin portfolio that you want to spend on this transaction. Use the slider under “Amount” to do this.
In the “Price” row, enter the price you want to pay per ADA coin. From the sales order book we can deduce that the cheapest provider wants 0.00002361 BTC for 1 ADA coin. This means that you should never enter a price above this rate. In this case, we enter exactly the price charged by the cheapest provider. This means that our order is executed immediately and we immediately have the coins in our account.
When you sell a coin, the opposite applies. In this case, make sure that you always enter at least the price that the highest bidder offers.
It often happens that there is a gap between the price that the cheapest provider asks and the buyer with the highest bid. In that case, you can also choose to use a price that falls somewhere in the middle of this range. In that case, your order will not be executed immediately, but only once a seller or buyer has arrived at your entered price.
After you have entered the price and quantity of coins you want to buy or sell, the total amount of the transaction will appear on the screen. Then click on Buy or Sell. You have now bought or sold your first coins.
Have you now received your answers to the question: How does Binance work? Create an account with Binance immediately to buy your first crypto!