The Prospects of Binance and BNB

March 11, 2019   Binance Coin

Given the fact that Binance Coin (BNB) is currently having an unprecedented bullish rally: the price of this cryptocurrency increased by as much as 47.5% over the last seven days, it seems that Binance is on everyone’s lips now. An enormous price surge is not the only thing that’s going on in the Binance ecosystem at the moment: the developers of this platform are launching their own blockchain, decentralized exchange (DEX); they have also introduced a new token launch platform (Binance Launchpad), a fiat to cryptocurrency exchange that is based in Liechtenstein, and they have opened a new office in Malta, the self-proclaimed blockchain island.

Zhao’s ambitious plans

All these events occurred in the course of last year alone, accompanied by the ceaseless promotional activities carried out by ChangPeng Zhao, a Chinese-Canadian digital entrepreneur and the founder of Binance, who has been preaching vehemently about his intention to scale up the entire ecosystem.

The actual cost-effectiveness of these novel solutions and the associated marketing campaigns is rather questionable, but they are certainly backed by sound judgment and logic. 

Binance runs a token with a solid market capitalization (as of now, BNB’s market cap is at $264.24 million) which is backed by nothing more than the desire of people involved in the Binance ecosystem to save money on exchange commissions.

Just a quick reminder, the holders of BNB, who trade cryptocurrencies on Binance exchange, get 25% discount of trading fees if they opt to pay with the native token. Before the Crypto Winter, which caused the trade volumes to spiral downward, BNB was something like a nice adjacent to the platform. But the current realities have turned Binance Coin into a valuable asset, the capitalization of which must be maintained, since it is, to a large extent, the only thing that still keeps traders on the Binance platform. That’s why the developers decided to invigorate their cryptocurrency in quite a smart way - by creating a decentralized Binance exchange which doesn’t store funds while allowing users to trade in such pairs as BNB/BTC, ETH and others directly from their digital wallets. In order to implement this idea into practice, Binance has to develop their own blockchain.

What is known about Binance’s decentralized exchange

According to the preliminary data, the expected block time would be only 1 second, which translates into literally instant confirmation and execution of transactions due to the fact that the transaction within such blockchain is deemed as confirmed as soon as it is included in the block. The similar technology allowed EOS to create a vast ecosystem of decentralized exchanges, such as Dexeos, Aeron, Newdex, in a relatively short period of time. After becoming a centerpiece of the renewed ecosystem, BNB would fall within the category of the ‘fast’ cryptocurrencies. However, the transactions that don’t involve Binance Coin would be carried out at a much slower speed. Basically, this difference in transaction processing rate should serve as an incentive for users to buy the excessive amounts of BNB which accumulated since the beginning of the Winter.

In a nutshell, the logic behind Binance’s strive to reinforce their standing on the crypto market appears to be the following:

  • Create a decentralized crypto exchange and add some liquidity to it from the centralized Binance exchange;  
  • Implement a great security feature by allowing users to trade directly from e-wallets;
  • Make BNB a ‘privileged’ coin that ensures the promptness of transaction thus increase the demand for this particular crypto.

So far, this scheme has proven its working efficiency since BNB has constantly been in the ‘green’ for the last few months. However, it may have happened in no small way due to Zhao’s promotional efforts, but once Binance obtains a fully operating model with the new DEX, they may elaborate further use cases for BNB and take this cryptocurrency to the Top 3 on Coinmarketcap, though it already occupies the 7th spot, which shows its immense progress.   


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