ryptocurrencies are booming more than ever.
By booming, I mean not only in price, but in the number of coins being introduced to the system.
When I started writing this article, I looked at CoinMarketCap to see how many cryptocurrencies are currently listed there.
And I was astounded to see these numbers…
The reason I was so surprised by this number was because I clearly remember this number was around 800 two months back.
Then I thought to dig a little bit deeper and check where these cryptocurrencies were getting their liquidity.
I then found this list of top performing exchanges.
This list gave me even more concrete proof that this space is ever-expanding and will keep expanding as long as we have such exchanges to provide this liquidity.
For those of you who don’t know what “liquidity” means, here is a simple definition:
Liquidity means how quickly you can get your hands on your wanted currency by exchanging it for other currencies.
While analyzing that list, I came across an exchange called Binance – now sitting comfortably at the #8 spot.
I was again surprised because 3 months back, there was no such exchange.
So after doing a lot of research, I’d like to present you what I found out about this new and incredibly unique entrant to the crypto world.
So let’s begin…!
What Is Binance?
Binance is both a cryptocurrency and an exchange (which concluded its ICO in July 2017).
Binance means “Binary Finance”, and as an exchange, it aims to power the future of crypto finance.
It is a centralized exchange like Bittrex and Poloniex, and they’re based out of China. It claims to be a better alternative to many other centralized exchanges because they have identified the most major pain points of centralized exchanges and are working rapidly to provide solutions.
Problems That Binance Is Aiming To Solve
These are the following problems that Binance is claiming to solve:
Poor technical architecture
Insecure platform
Poor market liquidity
Poor customer service
Poor internationalization and language support
Binance’s Answers To These Problems
Binance has introduced, and is in the process of introducing, several features to counter these problems.
Some of the features that Binance has in place are:
Matching Engine – Binance’s matching engine, as claimed in their whitepaper, is capable of handling 1,400,000 orders/second, making Binance one of the fastest exchanges in the market today. So there is no risk of being “stuck” due to matching issues on Binance.
Device Coverage – They are providing cross-platform trading clients for:
● Web-based trading
● Android
● iOS and Mobile iOS app
● Mobile HTML5
● PC (Windows)
Multilingual Support – In their white paper, they promised that they will launch Binance on all of their user interfaces in English, Chinese, Japanese, and Korean. They have already added support for their website in Japanese, Spanish, and Korean (along with English and Chinese). I would say this is a good start in just two months, and I am sure there will be more languages to come as adding full language support is explicitly mentioned in their whitepaper.
Binance Team
Binance’s team members have been in both the finance and crypto industry for many years. The team has worked on and operated a number of exchanges, and they have accumulated a large network of partners in this space.
Changpeng Zhao – CEO
Roger Wang – CTO
James Hofbauer – Chief Architect
Paul Jankunas – VP of Engineering
Allan Yan – Product Director
Sunny Li – Operations Director
They are clearly not newbies trying to run a scam exchange; they understand the risks and challenges very well.
BNB Total Supply & Business Model
The first question that came to my mind while reading Binance’s whitepaper was:
What’s the need of an ICO for an exchange?
The answer to this is based on their unique business model, which is self-sustaining and easy to understand without any complex mathematical formulas that you generally find in a whitepaper.
But before discussing their business model, it’s important to understand their token economics.
Binance Coin (i.e. BNB) is an ERC20 token with a fixed supply of 200 million. Out of this total supply, 100 million BNB tokens were distributed during the ICO.
Here is what the final allocation breakup looks like:
In my opinion, one of the reasons of having an ICO for Binance was to accelerate the development process while catalyzing its mass adoption through fee incentivization for its users. This puts everyone in a win-win situation.
This fee incentivization is made possible by BNB tokens which are an integral part of this exchange. You can use BNB to pay for any fees on the platform, including but not limited to:
Exchange fees
Withdrawal fees
Listing fees
Any other fee
Apart from this, when you use BNB to pay for fees, you will receive a significant discount according to the below-shown schedule. You can see their fee structure in detail here.
And last but not least, to ensure that everyone participating with Binance ends up in a win-win situation, every quarter they will use 20% of their profits to buy back BNB and destroy them until they eventually buy 50% of all the BNB (100M) back.
They announce all buy-back transactions on the blockchain and will eventually destroy 100M BNB, leaving 100M BNB in circulation.
This is meant to drive up the price of BNB tokens.
Want To Buy Some BNB?
Below is a list of established cryptocurrency exchanges listing BNB:
Binance (obviously) -Supported pairs are BNB/BTC, BNB/ETH
EtherDelta -Supported pairs are BNB/ETH
My Closing Thoughts
In my opinion, the Binance exchange and BNB tokens are here to stay.
Here’s why:
From a subjective economics point of view, Binance’s business model makes sense, and it is based on the simple law of supply and demand. So it wouldn’t be wrong to say that the price of BNB will continue to go up because people want to get a fee discount while trading on the Binance exchange.
Another observation is that Binance is expanding very fast and is already in the top 10 cryptocurrency exchanges by volume – a feat worth mentioning for a 3-month old exchange.
It’s clear from their business model that the price of BNB will be strictly driven by their business profits that will eventually be used to destroy 50% of all BNB tokens. To achieve this, they are doing a lot of innovative and creative stuff like the Binance Angel Program, the Community Coin Per Month, the Binance API Coding Competition, and various giveaways.
Binance is the only exchange that gives NeoGAS to its NEO HODLers which is a good adoption sign for NEO and Binance investors.
They are launching themselves in various international languages across all platforms which is a good strategy for mass adoption.
And last but not least, the way Binance is expanding and its volume is growing day by day, I wouldn’t be surprised if they are among the top 5 exchanges in terms of volume in the next six months. In just 2 months, they have built a list of 50 cryptocurrencies that are being traded with a nominal 0.1% trading fee – far cheaper than most of its competition.
Because of all this, I believe Binance, as well as BNB, has a good future.
Their recent clarification on China’s exchange ban has also given a sigh of relief to its investors and traders. To read their stance on China’s ban, read here and here.
Now it’s time to hear from you: What do think about Binance and BNB? Are you invested? Do think there will be a better exchange which solves these problems in the near future? Do let me know your thoughts in the comments section below!
Great article, if anyone wants to sign up to Binance please use my link. https://www.binance.com/?ref=10812558
tnx man. i will follow u
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