Binance is one of the modern buzzwords in the crypto space. Leaping from a humble startup in years 2000, it now ranks as the world’s largest cryptocurrency exchange by trading volume and encompasses over 100 crypto assets. In 2017, Binance unveiled its native currency Binance Coin (BNB) as a ERC20 token on the Ethereum blockchain. As of July 2019, BNB posts the 7th global position by market capitalisation with over $4.6B (according to CoinMarketCap).
What are the drivers for BNB growth?
Wrestling in the bearish market. It’s worth noting that Binance managed to strengthen its market foothold under a decline in 2018. Current trading volumes lingering around $1.5B with 1.4M transactions per second speak for themselves. As bullish times come, more and more individual traders will be incited to jump on the Binance bandwagon.
Favourable reputation. Binance’s resounding success and recognition give the boost to its native coin. The Binance rally goes hand in hand with the rapidly increasing customer base, ensuring sustainable long-term growth. Binance had just short of 8M users in 2018, as of mid-2019 the estimate is over 10M+ registered customers. Despite the uncovered vulnerabilities, Binance remains a stable exchange making Binance Coin somewhat of a security that only accumulates more value over time. Binance also announced plans of issuing its stable coins in Q3 2019.
Active development and innovation. Binance has always focused on product improvement and building the powerful ecosystem. This includes tweaks in the exchange functionality, coin burning algorithms, BNB-based investment opportunities through the Launchpad programme and more. Every move of Binance impacts the crypto world and beefs up BNB’s market stance.
Binance vs. traditional financial institutions
In Q3 2018, 8 months after the launch, the 200-employee startup Binance reaped $200M in profits against $209M of Nasdaq, the world’s second largest exchange by market cap. In the same year, it outperformed Deutsche Bank with its 100K personnel and 150 years in business.
Binance is a magnet for crypto traders, in the same vein as NYSE is the fundamental venue for classic assets. The comparison may even go beyond status and significance: given the current pace of tokenisation and Binance’s organic growth it may one day overtake Wall Street by volumes. Provided that NYSE trades 50B+ and Binance trades 1.5B daily, you can multiple BNB’s current price of $30+ by the quotient 33.33 (50/1.5), and bingo. In theory, the BNB growth potential could be ballparked at over $1K.
How Binance expands
Binance’s CEO Changpeng Zhao, aka CZ, once mentioned: ‘Any country that can attract Binance to open a branch in their location will receive a handsome tax income revenue.’ The recent relocation of Binance from Taiwan to Malta further emphasised the motivation behind the Maltese flexible financial policy. As the country embraces blockchain and the crypto industry, more innovative businesses choose Malta as their resident country and boost the local economy. Binance also engaged with offshore territories like Bermuda and Jersey. Binance Jersey Exchange trades a slew of fiat-to-crypto pairs based on EUR and GBP.
In early 2019, Binance teamed up with Israel-based payment processor Simplex to effectuate crypto purchases from bank cards, including Visa and Mastercard. At this point, the purchases work seamlessly for Bitcoin, Ethereum, Litecoin and Ripple’s XRP, yet they are subject to Simplex’s local bank policies.
The cloud and the silver lining
A seemingly catastrophic security breach at Binance in May 2019 was, after all, one of the drivers for the crypto rally and BTC’s spiralling rates. $40M worth of Bitcoins were hijacked and a shedload of assets were frozen in response, thus sparking hectic crypto demand. Despite the breach, trading went on, and Binance guaranteed reimbursements to affected customers from the secure asset fund. At the end of the day, the crypto boom is making up to the losses suffered by Binance and its positions remain unshattered.
Wrap-up
Reaching multi-billion dollar valuations and leaving behind major EU banks, Binance promises a healthy long-lasting trend that is here to stay. The Binance team is now working on a decentralised exchange with BNB as the key element. Once this huge project sees the light of day, a plethora of new opportunities will emerge for BNB holders. At any rate, Binance has the expertise and motivation to fix the flaws of decentralised venues, such as impaired performance and low liquidity, and reinforce security to prevent further hacker attacks.
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