Introduction
Hearing the word ‘Binance’, most people picture the world’s second largest cryptocurrency exchange worth billions of dollars being traded every single week. The platform has grown rapidly since its launch in 2017 and is now one of the top choices of the people in the cryptocurrency market to trade coins.
But looking beyond its highly successful platform - Binance is also the name of a crypto coin, represented by BNB and is issued by the Binance exchange. Although not very successful, the Binance coin has also grown and have risen on the list of top cryptocurrencies with the exchange.
Binance coin runs on the Ethereum blockchain and follows the ERC-20 standards, which states the strict limit of 200 million BNB tokens at max.
Binance, which stands for Binary Finance claims to have the abilities to power the future of crypto finance. This company is based in China and follows a centralized exchange system. Their main target is to solve the problems of centralized exchanges and they are working to improve on those points like insecure platform, poor architecture, bad market liquidity and not good language support for the international market.
The team behind Binance Coin (BNB)
Changpeng Zhao or CZ, the founder of Binance is one prominent personality in the Binance ecosystem. He was born in China but soon after, his family was temporarily exiled out of China to Canada. He was a normal person from any general family and worked in McDonald’s and gas stations as a teenager to help with the family costs.
He has a degree in Computer Science from McGill University and after graduating, he went to Japan for his first job. There he built different software for companies like Tokyo Stock Exchange and Bloomberg’s Tradebook.
In 2005, he started his own company in Shanghai. In 2013, he came across the blockchain market and started poking in several projects like OKCoin. Yi He is one of the co-founders of OKCoin and is known for her ability to efficiently and easily grow new technologies and understand the user experience for new products.
How BNB started?
After founding Fusion Systems in 2005, he had joined blockchain.info in 2013 and has also made himself space in OKCoin as its CTO. CZ has always been an entrepreneurial figure and has always worked with the mindset of building his own things. In 2017, Binance was launched in China with Yi He but soon, shifted to Japan, when the Chinese government imposed a ban to the cryptocurrency trading.
By 2018, they signed MoU with the Government of Bermuda and also a similar memorandum with the Malta Stock Exchange to develop tokens that will be used to secure trading.
They also had the plans of introducing the system of fiat to cryptocurrency exchange which was successfully implemented by Binance Uganda in late 2018. Their plan for 2019 is to launch their own blockchain and improve the speed of transactions to 1-second verifications.
How BNB works?
Binance coin works in several layers of the Binance exchange itself. It provides support to the ecosystem of the exchange by allowing customers to trade, exchange or list any kind of fees in terms of Binance coin. One important issue that Binance coin is trying to answer is the technical problems of exchanges. Binance’s exchange is standing on the top in terms of the volume of coins that it holds and one of the biggest advantages that it could work on as a platform is to improve its technical faults.
To understand the way Binance coin helps in boosting the exchange’s performance, it is important to understand how exactly an exchange works. A general exchange works as a place that helps people to buy and sell orders.
Many people have this wrong notion that one buys from or sells to the exchange. Instead, an exchange helps a person in finding some other person who is interested in buying the seller’s assets at a set price of the seller. The only way the exchange earns is by charging both the parties a part of the transaction.
This system has major problems in case of big exchanges where Bitcoin and other popular coins are ordered for exchanges at a rate of million orders per minute. It is often difficult for the machines to handle this big an amount and can lead to delays in completing the orders. One of Binance’s prominent features is the handling capability of its machines.
Another big feature that makes Binance an important and chosen exchange place among investors is its busy order book. This feature is termed as liquidity which determines the speed at which the assets travel in the exchange and find a match fast to complete an order. Binance not only tops liquidity charts for Bitcoin but many other coins.
Binance is also one of the few exchanges that are global and provide coins used in specific areas to reach all destinations. A big list of assets that can be traded on Binance makes it stand out.
Now here, Binance coin was launched with the platform itself so as to help people pay BNB for exchanges. If one chooses to pay in Binance coin, the platform provides a rebate. For the first year of the membership, a discount of 50% is provided when one pays with BNB. In every coming year, this discount decreases by half. This means in the second year, one gets 25%, the third year gives 12.5% and in the fourth year 6.2%. In the fifth year, this discount feature is removed.
This also leads to the decrease in value of Binance coin and to overcome this problem, the coins are destroyed thus decreasing the number in circulation from 200 million to just a 100 million.
Binance coin was created for the purpose of assisting the fees on the Binance platform but it is not limited to this only. One can also invest in ICOs using Binance coin. This investment is limited to only the ICOs that are participating in Binance Launchpad Program. As soon as the ICO is over, the list on Binance is updated with new tokens. This creates a very smooth and efficient platform both as an exchange and ICO.
Advantages of BNB
First and the most important advantage of BNB is its use on the Binance platform. The coin was made targeting the users on this platform and is one of the many reasons why most people choose Binance as an exchange option. There are discounts for the first four years of one’s membership and using it properly can help you gain a lot with ease as it is a sufficient amount of time. Also, Binance coin has a lower fee as compared to other coins on different exchanges.
There are not many advantages of Binance Coin other than using it to get a discount on the Binance platform. Anyways, the company has announced its movement from the Ethereum blockchain to its own blockchain and that can boost the Binance platform user base. This can further bring opportunities in the future but for a starter, holding Binance coins can be the most efficient way of making a profit.
There is also a chance that several countries including major markets like the United States, Japan, and South Korea will ban users from their countries from using the platform. Many people have referred trading on Binance as gambling and it can easily be justified by the government that Binance is not a regulated platform and is a threat to security.
Disadvantages of BNB
The most prominent problem with Binance is that although several exchanges list it, the coin still remains very much limited to its own platform.
Another problem is that the buyback policy listed by Binance developers can lead to a crash in its price. Because Binance is born out of China, it can face harsh problems in terms of how much it can succeed. Other than that, Binance coin is doing well in terms of what it was made for.
How to buy BNB?
Many other exchanges other than Binance list BNB but it is not really any use other than its own platform. On other platforms the liquidity of Binance Coin is low and most users buy BNB to reduce trading costs on the Binance exchange because it can be used as an alternate fee at lower costs.
Also Read: How to trade on Binance?
Other than on its own exchange, Binance Coin can be traded at exchanges like gate.io, Trade Santoshi and IDEX.
As Binance Coin follows the ERC 20 standards, it can be stored in any wallet that supports Ethereum. In mid-2018, Binance acquired the crypto wallet called Trust wallet which is now being termed as the Binance wallet. Many other wallets like Mist and Trezor can be used. Though, it is not really a preferred coin for people to invest in.
How is Binance Coin different from other cryptocurrencies?
Not like most other cryptocurrencies, Binance Coin is produced not only to make payments between parties but to use as a product that can help collect revenue for the exchange platform. Also, this is most probably the only coin that gives users a discount on the fee for trading. This is not a feature for any other cryptocurrency and people choose Binance as an exchange just to gain from exclusive features like these.
Another of the similar features is the Binance Labs that the exchange has integrated which helps the users to invest in any blockchain project. This according to Binance is a way of empowering and encouraging the blockchain technology. There is hardly any other exchange that has a system which lets its users directly invest in the blockchain.
The future of Binance Coin
Binance has grown into its form very fast. There are many exchanges that fail to reach a fraction of its value in a far longer running time. Not only the platform, but its coin has also done it’s magic to reach in the top 20 cryptocurrencies in the world.
By the end of 2018, it has burned more than a million coins and less than half of the number of coins initially released are circulating in the market. As compared to 2017, the volatility of the coin has been more striking in 2018. It rose to its highest value of $24 in early 2018 and then suddenly crashed. Initially, it has seen steady growth and there is a good chance it will make its position back again.
The main reason why this coin was built is what fuels its presence in the market. The real target was to attract users to the Binance exchange and with the increasing number of blockchain participants, there is no doubt that more people will gather to buy Binance coin.
Should you invest in Binance Coin?
The whole of Binance ecosystem has kept the cryptocurrency arena in a state of shock. They have risen to a very valuable position in a very short period of time. The platform and the coin have both gained a lot of participation and investment. Overall, the strategy that the teams at Binance laid down has worked.
The people that work behind Binance’s strong architecture are people with good experience as well as the relevant skills. The company is led into a proper direction which is proved by its increase in value by thousands of percentage as that of its starting value.
When an attempt was made to maliciously affect the system, Binance successfully repelled it in 2018. The way the company is performing its tasks, there is no denial of its upcoming successes in all its fields. Keeping in mind their exchange, they have several initiatives which themselves have proven to be successful.
The burning down of coins is one of the very impressive ways how the value of the coin is retained. If someone is looking to invest in cryptocurrency, this might not be the best fit but surely not a bad choice. Although it does not have application in every area, the value is only supposed to increase.
What’s next for Binance?
Binance is fast, reliable, secure and a worldwide available system. The reason behind their success is the perfect structuring and performance of their strategy. Binance has a good future but there are several regulations that can take almost no time binding it.
Whatever be the case, looking at Binance at present, it is one of the strongest and most successful cryptocurrency in terms of what it has achieved as compared to its age.