Binance Coin – An Evolving Use Case

By Hugues Bugilimfura - 

Summary
● Price: $21.62 (at time of writing)
● ATH: $39.33 (06/22/19)
● MarketCap: $3.36 Billion
● Max Supply: 200,000,000
● Use Case: Trading token on the Binance exchange giving discounts and access to special promotions on Binance
● Origin: ICO July 2017
● Performance: Last 30 days -24%
● Main Competitors: Huobi Token, Kucoin Shares
● Community: Twitter 1 million, Reddit 25k


What sets them apart?
Binance Coin was the first native trading token for a cryptocurrency exchange. Before then, a lot of coins were built on a whitepaper and a promise to deliver a working product in a couple of months. The Binance Coin ICO was very unique in that it had a cash generating working product and built-in utility. Most top 100 coins are bought specifically for speculation and not the use case on their whitepaper. BNB is not only actively being used to trade by thousands of people everyday, but it is also very profitable. This means that it has an intrinsic value that is much easier to quantify than 99% of altcoins.
What really sets them apart from any other project is their commitment to the world-wide adoption of cryptocurrencies. You can see that in the fact that thy recently announced that they would use their team allocation for the majority of the coin burns. That means that they are giving up more than $2 billion dollars worth of their own BNB in order to increase the value for all the other coin holders!
What are they trying to accomplish?
Binance Coin was created to give lower trading fees, staking rewards and preferential access to special promotions on the Binance exchange. Even without BNB, Binance already had the cheapest trading fees and the highest exchange volume, so using BNB would help traders become more profitable due to the reduced cost of each trade.
Does it solve a real problem?
If you regularly trade on Binance, BNB is great for keeping your costs low and efficiently trading between altcoins. BNB has more than 100 trading pairs so you don’t have to convert to ETH or BTC before a trade. Not only does this save you time by making your trades easier to keep track of but it will also save you money in the long run since governments around the world are starting to view each trade as a taxable event. So the fewer trades you have, the fewer taxable events you will have to pay for when the taxman comes knocking down your door.
SWOT Analysis
Strengths


Most popular exchange
BNB is custom built for the Binance exchange and as Binance grows, so does BNB’s value. Binance is opening up a new US exchange which will make it easier to for users in the US to buy and trade altcoin pairs that were previously reserved for foreign exchanges that required the use of a VPN.
Very profitable
BNB increases in value every time someone pays for a trade on Binance and most of the income that Binance produces is in BNB, which also makes the token very liquid.
SAFU
Binance’s Secure Asset Fund for Users (SAFU) was setup as an emergency fund to refund users in the case of a hack or security breach which resulted in a loss of funds. This makes BNB safer than most other tokens that leave the holders backup or security.
Reliable Token Burn
Binance has committed to spending 20% of their profits to buy back burn BNB until 50% of the total supply is left remaining and they have consistently done this every quarter since they started. Every time they do a coin burn, the value of BNB goes up due to the decrease in supply and since Binance is growing every month, the decrease in available BNB to trade with will only make BNB more valuable.
Binance DEX
Binance recently created a decentralised exchange running on the Binance Chain. BNB will be used to facilitate all of the transactions on the Binance Chain. That means that BNB will be used as gas on the Binance Chain which will be a great source of value as the Binance DEX grows in the future.


Weaknesses


Overdependence on Binance the company
BNB’s greatest strength could also become its greatest weakness. BNB’s future is tied to the success of the Binance exchange and all the other projects that they are working on. If they fall foul of any regulatory authority or release a product that the market doesn’t like, BNB will be negatively affected.


Opportunities


New BTC hedge
During the last bull and bear market, Litecoin was a great hedge against Bitcoin’s movements but this time around BNB has proven to be the greatest hedge against overall market movements. It’s the only top 10 coin that reached a new all time high this year! Litecoin hasn’t had the huge jump in price that people expected after the halving and is still fighting to find long term support levels.


Threats
Cryptocurrency exchanges have always been under the watchful eyes of financial regulators and Binance is no exception. Being the largest and most popular also makes you the biggest target. So far, Binance has been able to avoid a lot of regulatory issues by setting up shop in Malta. They are working on opening a US exchange which will mean stricter regulations along with more scrutiny.


Conclusion
Binance is an exchange like no other in the cryptocurrency space, their CEO CZ, is one of the nicest people you will meet, and has always shown his commitment to improving the Binance exchange for their customers. They have been the drivers of a lot of innovation in the industry and will continue to do so for many years to come. All of this make BNB a great coin to have in your portfolio. It has outperformed BTC this year and you can bet that it will go on a tear once the next bull run properly gets going. Its fundamentals are strong, it has an A+ team, large scale adoption and a profitable use case. You can’t say that about 99.9% of the current altcoin market.


Disclaimer: Investing or trading in crypto currencies involves significant risk. It is important to research and carefully assess any such investments. All the information presented in this article does not constitute financial advice or recommendations of any kind.