The Rise & Rise of Binance
The native token of Binance exchange, Binance Coin (BNB), has been rising up the cryptocurrency market cap ranks over the past week surpassing Tron in terms of total market cap. The exchange itself managed to surpass decades old Deutsche Bank in terms of profit last year. In this latest blog post, we take a delve into what is separating the Binance business from other exchanges and why its token is continuing to outperform.
The History of Binance
It is easy to forget that Binance is a relatively new exchange given its dominant position in the exchange business. The exchange launched only in 2017 and was funded via an ICO for its native token BNB.
Up until the launch of Binance, the dominant exchanges specialised in facilitating fiat to cryptocurrency trading. The top exchanges in this category were Coinbase, Kraken, and Bitstamp. All of these had been around at least 2012 providing them with a significant first-mover advantage over Binance.
Binance took a gamble on their vision that crypto-to-crypto trading would capture an ever-larger share of the exchange business. Prior to the launch of Binance, crypto-to-crypto trading represented a small portion of the exchange business. The majority of crypto-to-crypto trading at the time was facilitated through Bittrex.
The second thing which Binance did differently was putting more emphasis on security, scalability, and speed right from the start. Instead of quickly launching as many crypto-to-crypto exchanges had done previously, Binance invested in building the correct infrastructure which allowed the exchange to easily scale once the demand increased. Binance’s matching engine was built to facilitate 1.4 million orders per second and the team emphasized security throughout the initial ICO whitepaper. Furthermore, the exchange was built with the capacity to support 20 million users and was available in multiple languages right from the start giving it global appeal. Binance completed their ICO in July 2017 and raised $15 million. Binance launched its exchange service within the same month.
The Rise of Binance
The investment in infrastructure paid off hugely for Binance. As demand continued to increase nearing the end of 2017, other major exchanges struggled to keep up. Crypto-to-crypto exchange Bittrex stopped accepting new account requests. Major fiat-to-crypto exchange Kraken suffered severe service outages. Binance continued seamlessly despite the enormous demand.
In January of 2018, Binance became the world’s largest exchange by total trading volume. It went on to report larger profits for Q1 of 2018 than Deutsche Bank. From this point, Binance continued to further solidify its dominant position by venturing into several different business fields and expanding its offerings.
One of the major areas Binance have ventured into is the fiat to cryptocurrency exchange business. They launched Binance Uganda in October of 2018 which facilitates trading between the Ugandan Dollar with bitcoin and ether. They furthermore launched Binance Jersey as a separate entity in January of 2019 which supports both euro and GBP trading with bitcoin and ether.
They have several programmes associated with their exchange business. Binance Launchpad is a token launch platform where BNB token holders can vote on projects they want to be listed to the exchange. Binance Academy has educational resources which guide users on not only how to use Binance but also on general topics related to cryptocurrencies and blockchain.
Binance has also made some partnerships and acquisitions to improve its value proposition. They acquired Trust Wallet so that users can secure their funds off the exchange. Binance has recently launched their own decentralized exchange (DEX) based on their own developed blockchain that integrates with Trust wallet. They have also recently partnered with Israel payment processor Simplex to facilitate the purchasing of some of the top cryptocurrencies with fiat currency through Simplex.
Binance has furthermore ventured into areas not explicitly related to its for-profit business but contributes to its overall brand image. The Binance Charity Foundation (BCF) uses blockchain technology to make charitable donations more efficient and transparent.
The Binance Token
Closely linked with the continued growth and dominance of Binance is their native token BNB. BNB has been linked to the success of Binance right from the beginning with the funds raised from the ICO used to fund the initial development. The token has recently entered the top ten cryptocurrencies by market cap with a market cap of over $1.6 billion at the time of writing.
The token has not only been linked to the initial fundraising but it has also been closely tied with how Binance has operated. The initially proposed use case for BNB was that holders could avail of significant discounts in trading fees. However, further use cases have since been added. The token can be used to vote on proposed listings on the Binance Launchpad. It can be used to make donations to the BCF. It is also accepted by some merchants and is being used increasingly as a means of payment.
The token is used in reward schemes and competitions run by Binance. The most recent example of this is Binance running a trading competition to increase the adoption of the recently launched DEX. Competition rewards will be paid in BNB.
From a technical analysis perspective, BNB has also been performing well. BNB continued to increase over the past month while there were mixed performances recorded from other top cryptocurrencies. The price has also managed to overcome a prior resistance level over the past week of trading.
The Continued Rise of Binance
Binance does not look as if it is taking its foot off the pedal. It has already launched Binance Jersey, partnered with Simplex, and launched its DEX so far this year. BNB continues to increase and move up the ranks in terms of market cap. As the Binance ecosystem continues to increase, it is very well possible that we may see BNB become one of the top five cryptocurrencies by market cap in 2019.
