Binancecoin: To Pay For Expenses On Crypto Exchanges

BinanceCoin is the crypto token from the Binance exchange. But an interesting question that comes up when a crypto exchange comes up with its own coin is why at all it should make a move like that. There are also native currencies traded in exchanges but there are no other windows where they can be exchanged. Undoubtedly, Binance is the topmost crypto exchange as of now and has issued a total of 197,192,382 BNB (the BinanceCoin token), although it has only 99,014,000 tokens in circulation. This currency is now useful to pay for expenses on the exchange. Users paying charges in BNB in preference to other coins also stand to get a rebate.


High value of the token

Using a BinanceCoin to pay for the expenses incurred on the exchange does sound convenient. But, that is by far the only specified purpose of the token and the current value of the token is hovering around the $9 mark. But, what is interesting is that BinanceCoin ranks 27th and its market cap is $8.5 billion and that lends some credence to the crypto. Also remember that the current price of $9 is on the downward spiral from the $24.34 that the coin achieved on 12th January, 2018. But then, the market leader BTC also kept company on that downhill journey dropping from a peak of $20,000 to about $6,000 as we write this. With the crypto markets coming under the scanner of government authorities in different parts of the globe with China and India leading the pack, the low tide may continue to impact the crypto markets, at least for some time to come. China is a big market for cryptos and any negative action from Chinese authorities can potentially trigger a tsunami or sorts for the coin prices.

BinanceCoin defined

BinanceCoin represents token based on Ethereum which allows users to get a discount for fees payable on the Binance platform which is presently a leading crypto currency exchange with plans to build a decentralized exchange for the blockchain assets. BNB, the BinanceCoin token also provides users with access to its special features and would be employed to power the decentralized exchange when it becomes operational. Almost similar to Bitcoin, BNB has a finite supply of about 200 million tokens as the upper limit. Presently there are about 197 million tokens in circulation. The token is created using Ethereum’s ERC 20 token standard as an optional means of paying trading fees on the Binance platform. Customers buying BNB also receive a discount of 50% on all transactions including withdrawals during the initial year of use. In the second year, customers receive a 12.5% discount and 6.75% in the subsequent years with no reduction in the 5th year. Typically, the transaction fee on the platform is fixed at 0.01% and that possibly is targeted at encouraging users to buy the BNB tokens and help the trade on the exchange active.

Trading in BNB has been brisk from the very day it opened with an opening price of $0.11 on 27th July, 2017 and climbed to $2.33 by end August and notched up further gains to reach $8.5 billion as at early February, 2018. The Binance exchange also supports some of the world’s leading cryptos like Bitcoin, Tether, and Ethereum.

Factors that will help BinanceCoin move on and scale new heights

Later in the current year, Binance will continue buying back BNB. While no significant details on this plan is available yet on public platforms, the expectation is that once the buy back is completed, only about 100 million coins would be left . The indication therefore is that the total supply would be reduced to half. The coins bought back would be destroyed and the team will not be holding them. While the plan itself is interesting, it also explains the high valuation that BNB is garnering now. Given that the Binance exchange is hugely popular, it would be only fair to assume that most users would opt to pay via BNB for their trading expenses. With the popularity of Binance surging further, it can be expected that more and more users will be attracted by this crypto. However, on the flip side, the crypto can be stored only on Binance which could potentially take some of the sheen away from the crypto.

The BNB coin will also be attractive to users looking to buy other coins rather than using the expensive Bitcoin for that purpose.

Trust factor

Binance enjoys significant trust from the crypto community and in fact occupies the top spot among other coins. The $30,000 limit set for withdrawals has apparently not experienced any significant security issues. That is also another factor that adds to the trust in the coin, particularly at a time when ‘trust’ is a waning commodity. Community trust and stability are significant factors that will work in favor of BinanceCoin in the days ahead. Binance is also linked to NEO coin and therefore, NEO’s fortunes will spill over to Binance.

Put together, BinanceCoin is apparently on firm ground and should successfully weather any storm.