Binance Coin, also known as BNB, is one of the top gainers so far in 2019 – and it is interesting to learn how this coin has become the center of attention in the cryptocurrency world. Let’s analyze how it got here and where will it go next
BNB (Binance Coin) in 2019
Binance CEO is a smart businessman. There’s no doubt about it. You can love him or hate him but let’s be honest..the guy knows his market. He knows how crypto traders think. And this is how he got big with Binance. He never stopped trying.
He always tries to innovate and find a way to expand BNB’s use cases so it will become more and more attractive in the eyes of cryptocurrency traders. So far in 2019 BNB has been one of the top gainers, especially among top 20 altcoins. There are multiple reasons why Changpeng Zhao (Binance CEO) is so successful in ‘shilling’ BNB. In order to try to predict where BNB is going, first we need to understand what has been happening this year with Binance and Binance Coin (BNB).
Basically, Binance Coin has four big use cases. As a ticket to Binance IEOs, as trading fees discount at Binance’s main website, as gas to Binance Chain, and to be burned every quarter (to reduce supply). Let’s talk about them one by one.
BNB As The Ticket To Binance IEOs (Initial Exchange Offerings)
In my opinion, the biggest reason for BNB’s success in 2019 is IEO. For you who are still new, IEO stands for Initial Exchange Offering. It’s like a spin-off to ICO (Initial Coin Offering) that took the crypto world to the moon back in 2017. The difference with ICO is that the new token in IEO is guaranteed to launch on the same exchange that offers the token to investors.
For example: If one new crypto startup offers its token the first time through Binance IEO platform (it’s called Binance Launchpad), the same token is guaranteed to launch on Binance exchange few days or a week after its first offering has ended. The idea is smart because most people know Binance is the biggest cryptocurrency exchange and thus a token which is launched on Binance Launchpad is guaranteed to have decent volume on its first trading day
The success of Binance’s IEOs (Initial Exchange Offerings) is the best use case of BNB so far. There are other use cases of BNB, such as trading discount fees or gas for Binance DEX, but the majority of traders are attracted to Binance launchpad. Back in February, Binance held its first IEO this year. At the time they were offering Bittorrent Token (BTT). And BTT price during the first day on exchange went through the roof, much higher than its initial offering price.
To get an idea of how profitable getting into Binance IEO, BTT is currently traded at 10.83x of its IEO price (at the time of this writing). The newer Binance IEOs all have positive stories as well. Celer, Matic, Fetch, Harmony all are being traded higher than their IEO prices.
And of course, Binance knows they can take advantage of their launchpad’s popularity. That’s why they force you to hold certain amount of BNBs in your account for certain period of time before you can get your lottery ticket allocation to participate in the IEO. With this, they know more people will hold and pump BNB. So far? It works great. BNB typically pump after the first week of their IEO announcements.
For me, this is BNB’s biggest use case. Let’s be honest. Most crypto traders are not here for the tech. They are here to make money. And when your coin can make big gains, that’s where they come in. Well, not everybody is here to claim IEO lottery tickets. Many people are just speculating BNB will rise before IEO lottery ticket claims, and thus it becomes a self-fulfilling prophecy (when enough traders believing it will rise, they will pump the coin, and thus the price goes up because of these same traders).
The promise to burn BNB’s supply every quarter
As stated directly on their white paper, Binance promises to burn BNB every 3 months based on their trading volume until BNB’s total supply reaches 100 million tokens. It’s still a long way to go, and that’s what makes the token interesting. When supply goes down, and demand goes up, BNB price should also go up.
BNB As Trading Fees Discount
Beside two things I mentioned above, another BNB’s big use case is to provide trading fees discount to crypto traders using binance.com to trade crypto-to-crypto. Without trading fees discount, generally, you have to pay 0.1% fee every time you make a trade – the full list here: https://www.binance.com/en/fee/schedule
However, you will be able to reduce your trading fees if you hold BNB in your binance account. Current trading fees discount is at 25% because we are in our second year after Binance’s first public launch. Last year it was 50%, and next year it will be 12.5%. Fourth year 6.75% and the 5th year will be no discount.
25% trading fees discount is still very attractive for now. It’s still a great use case. Binance is hoping that they will be able to expand other BNB’s use cases when they are closer to the fourth and fifth year. They expect people will still find BNB attractive to hold when their trading fees discount gets smaller.
BNB for Binance Chain gas fees
Previously a ERC20 token, now BNB has its own blockchain called Binance Chain. With Binance Chain, you can access its decentralized exchange (DEX) at binance.org. Obviously, Binance wants a piece of decentralized exchange market shares if DEX ever becomes mainstream. Many crypto supporters want decentralized exchanges to replace centralized exchanges for decentralization reasons and Binance is just trying to ‘spread’ its business empire to reach out to every demand in the industry.
Binance DEX itself is not free from criticism. Many crypto high profile figures have been saying Binance DEX is not really a DEX but Binance CEO responded Binance DEX will further ‘decentralize’ the network in the future.
I have tried Binance DEX personally. I must say I’m impressed although unfortunately, the volume is still really low there. Maybe one day once Binance DEX becomes more popular, we will have bigger use cases for BNB to pay Binance Chain’s gas fees.
The long-term vision of BNB
All these use cases (DEX gas fees, access to IEO, and Binance.com trading fee discounts) are attractive incentives for crypto traders to hold BNB. And as long as Binance remains crypto biggest exchange, obviously it’s always attractive to hold BNB long term. I don’t know what the future holds for Binance as the industry is still in very early stage, but one thing for sure..Binance is trying as best as its can to remain on the top of the business.
And imagine when there are more crypto traders in the future, most likely Binance’s traffic will always get bigger. And when there are more traders at Binance.com and Binance.org, theoretically BNB price should rise as well.
There are some potential obstacles with BNB. They will become more compliant with regulations in various countries. Recently Binance announced U.S. customers to be blocked from trading on Binance.com starting next September. Even though they will continue to serve U.S. customers with Binance U.S. (will be operated by BAM Trading Services), but most likely the trading volume and number of altcoins that can be traded with Binance U.S. will be significantly less compared to Binance.com (their main website).
Whether Binance can regain the trust from american crypto traders is still a big question. Binance competitors will try to take advantage of this situation to regain bigger market shares in the U.S.
If you ask my personal opinion, I believe BNB is still one of my top 3 attractive long term cryptocurrency investments. This year Binance Coin (BNB) price has been rising from $6 to ~$35 (at the time of this writing). General public sentiment of BNB is very bullish so I think they can keep pumping as long as cryptocurrencies remain popular and Binance remains the top crypto exchange.
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