The token that we’re going over in this article really doesn’t need an introduction. We’re of course talking about Binance Coin or BNB. As the token for the Binance exchange, BNB has been an industry leader and an example for other exchanges on how to launch their own exchange token. In fact, it may be more apt to say that other exchanges have sought to copy Binance and their success with BNB. Here we’ll be taking a look at the basic details of Binance Coin, the advantages a user of Binance receives with the token, and Binance’s plans for the future.
We’re gonna start this off with a short look at Binance. Binance is the entity that brings you Binance Coin and the next paragraphs are my thoughts on Binance and some hard facts for those of you who are truly new to the crypto space or for anyone who wants a little refresher about Binance.
Simply put Binance is a monster in the cryptocurrency community. It’s my favorite exchange for trading altcoins against Bitcoin or Ethereum, they have excellent volume, list great coins, and have fantastic phone and desktop applications for trading. Personally, I do most of my trading on their desktop client and would recommend it to anyone.
Most importantly the exchange has a great UI and user experience and I have only had issues with the exchange one time in the past year and that was them doing a security update. At the height of crypto FOMO during the previous New Year people were illegally buying and selling Binance accounts to gain access to the exchange after they had closed registration, so yeah they are pretty good.
Now for those who need some hard numbers to get them going. Binance was formed in July of 2017 and has 408 active markets. Per coinmarketcap’s 30D volume Binance has the highest volume of any exchange at $20.8 million. Binance provides two types of trading platforms — simple and advanced as well as three order types with limit, market, and stop-limit. Trading fees are 0.1% per trade with reduced rates for those that use Binance Coin to pay.
Binance is not without its drawbacks. Two of the most often cited of these cons are the customer support and the lack of fiat trading. At this time, Binance does not support a live chat or phone service line for those with issues. As for fiat trading, that issue is more of an annoyance since many would prefer to do all of their trading on one platform. Let’s move on from the exchange though and look at their token, which is indeed a pro of the exchange and not a con.
First off we’re gonna jump into the absolute basics of Binance Coin and that’s actually something we already touched on in this article — reduced trading fees. Paying your trading fees with Binance Coin entitles the trader to a reduced trading fees. 0.1% may not look like much but for those of you with a large volume of traders or trading large amounts at once that 0.1% can start to look pretty big.
The fee reduction is a flat rate that changes each year. Below is a graphic showing the fee reductions per year.
Currently, we are in the second year of the discounts, so users receive a 25% discount to their trading fees. Through this model Binance effectively incentivizes the purchase and holding of their token by millions of people. This is the first component to the Binance Coin value proposition.
The second component is all about reduction of the token supply. Binance Coin started with a token supply of 200 million and the goal is to reduce that supply in half to 100 million over time. Each quarter Binance takes 20% of the company’s profit and buys back Binance Coin and “burns” the tokens removing them from the supply. These token buy backs are announced in advance. Over time as the supply decreases as well as the discount a true value of BNB should be discovered.
A different use for BNB is its use in helping to “launch” crypto projects through the Binance Launchpad. With that project users are able to support ICOs and use BNB to purchase tokens. Two projects that are highlighted on the Binance page are Bread and Gifto which both concluded their join BNB and ETH sales back in December of 2017.
Lastly, holding at least 500 BNB will increase the referral bonus earned by the user and holding large amounts can also further reduce based on that held amount and the trading volume of the user.
Aside from holding the token and using it on the exchange BNB may also be used on several platforms for a variety of uses.
Due to the popularity of Binance, the token’s stability on the Ethereum network, and demand for the token there are several platforms and other crypto projects that eagerly integrate BNB into their own. For example, on the crypto social media platform InvestFeed users are able to buy BNB directly. That development is a part of the platform’s ongoing growth strategy to integrate trading directly into the platform.
The most interesting use cases on the chart are in the first row in my opinion. The ability to pay for travel, some type of utility, or entertainment is what many people envision as the end stage of crypto. With BNB that ideal is realized.
Binance and by extension BNB have two large developments in the future. The first of those is the Binance Decentralized Exchanged. Binance is aiming to launch a decentralized exchange to go with its current exchange model. In that model it’s likely that BNB will be used as the “gas” that funds the transactions that occur on the exchange. With that development, Binance will be adding another use case to the token. If the success of the traditional Binance exchange is anything to go off of then their decentralized exchange should be widely used and add a healthy chunk of volume and transactions to the BNB ledger.
The second development is the development of Binance Coin itself. The natural cycle of Ethereum tokens seems to lead to the breaking away of the token from the Ethereum chain and the token launching its own native chain. Binance Coin is no different in that regard.
Binance plans on creating a standalone blockchain for Binance Coin where it will be the native coin. With that switch Binance will have complete control on how it can develop the chain and coin to best serve the use cases that it envisions. One of those being the DEX mentioned in the previous paragraph.
Binance Coin is currently trading at a price of $6.20 or 0.00157102 BTC. At this time the total supply of BNB is at 190 million tokens with a circulating supply of 130 million. Daily trade volume is sitting at $30 million and the overall market cap of the project is $811 million.
Naturally, Binance is the exchange with the highest trade volume for BNB. The most liquid pairings are USDT, BTC, and ETH in that order. USDT rakes in about 42% of that daily volume with BTC at 29% and ETH at 6%. Other liquid options for trading BNB off of Binance exist on LBank with a USDT pair, P2PB2B with BTC, ETH, and USD pairings, and lastly Exrates with USD and BTC pairings.
Binance — https://www.binance.com
To learn more about Binance Coin please see the following links:
Binance — https://www.binance.com
Twitter — https://twitter.com/binance
Reddit — https://www.reddit.com/r/binance/
EToro report — https://www.etoro.com/wp-content/uploads/2018/11/BNB.pdf
Binance Coin is the gold standard for how exchange tokens should function. Binance has led the market in several categories and is looking to expand that leadership into other realms including decentralized exchanges. With that expansion it’s likely that Binance Coin will see an expanded scope of use to go along with its shiny new blockchain.
Thank you for reading today’s article! As always follow me on here or on Twitter @thant1194 or on InvestFeed @thant11 in order to stay up to date on all my articles as I release them. I am not associated with the Binance team and am a holder of their token. Thank you again for reading. I have to return some video tapes.