What is Binance (BNB) in a Nutshell [DEL]

Boxmining avatar Boxmining
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Description

Binance is a chinese digital asset exchange that is getting a lot of attention recently. In this episode talk about the exchange itself, its business strategy and uses for the Binance Coin (BNB). 0:30...

AI Analysis

Binance is a rapidly growing cryptocurrency exchange, primarily targeting the Chinese market but with international ambitions. It stands out by exclusively dealing in digital asset pairs, completely sidestepping fiat currencies, which helps it navigate the complex regulatory landscape in China. The platform's strategic focus on high performance, rare coin listings, and strong support for new ICOs, combined with a unique utility for its native Binance Coin (BNB), aims to attract and retain a significant user base.

Here’s a closer look at what makes Binance tick:

* Binance Exchange Overview:
* Binance combines "binary" and "finance" because it only supports digital asset-to-digital asset trading pairs, completely avoiding fiat currencies like USD or RMB. This strategy is key to sidestepping regulatory issues in China.
* The exchange offers support in multiple languages, including English and Chinese, with plans for Korean in the future, aiming for an international user base despite its Chinese focus.
* It currently lists around 10 different tokens and coins, including popular ones like Ethereum and NEO, as well as its own token and others like Quantum and OpenAnx.
* Despite being a relatively new launch, Binance has quickly achieved a daily trade volume of around $4 million USD, which is considered very high for its age.
* A notable example of its rapid growth is its performance with NEO; within just two weeks of listing NEO, Binance captured 23% of its global trade volume, placing it right after Bittrex.
* A major selling point is its impressive technical capacity, capable of handling 1.4 million orders per second, making it a high-performance trading platform.
* Initially, Binance attracted users with zero trading fees, a promotion that ran until around August 24th. This aggressive strategy aimed to pull in a large user base quickly.
* After the promotional period, a 0.1% trading fee was implemented, which is still quite competitive and significantly lower than Bittrex's 0.25% commission.
* Despite its rapid rise, the exchange is still new and needs to prove its long-term reliability and security, as these are crucial factors for user trust.

* Business Strategy and Market Position:
* Binance employs a unique strategy of listing "rarer" coins that are particularly popular in China, rather than just focusing on the traditional top 10 cryptocurrencies like Monero or Dash. This approach, similar to exchanges like Cryptopia or Ether Delta, attracts users looking for access to more niche or newly launched tokens.
* The exchange features an "ICO session," allowing new ICO projects to list directly on its platform, much like HitBTC. This is a significant draw, especially given the huge interest in ICOs in China.
* Listing ICOs not only generates revenue for Binance through listing fees but also creates exclusivity, positioning it as a primary exchange for these new projects and attracting their communities.
* Binance is intentionally not targeting the classic top 10 cryptocurrencies, as other established exchanges already dominate those markets with higher volumes. Instead, it focuses on newer and particularly Chinese-origin coins.
* A key question for its future success is whether it can maintain its high trade volume and insane growth rate once trading fees are fully implemented.
* Binance faces stiff competition from both established international exchanges and other Chinese platforms like BTCC DAX.
* The presenter highlights the potential impact of China's "Great Firewall" on international trading, noting that disconnections can be devastating for trades. This might be a reason why Chinese traders prefer a local exchange like Binance for better connectivity and reliability within China.

* Binance Coin (BNB) Utility:
* The Binance Coin (BNB) is a central part of the exchange's ecosystem, currently trading at around $2.37 (at the time of the video).
* Fee Discounts: The primary use case for BNB is to provide a discount on trading fees on the Binance platform. Users can choose to pay their fees using BNB to get a 50% discount. When BNB is used for fees, it is "burnt," meaning it's removed from circulation.
* Diminishing Returns on Discounts: The discount rate for using BNB will decrease over time. After five years, there will be no discount for using BNB for fees, which encourages users to utilize and burn BNB sooner.
* Coin Buyback Program: Binance has committed to a regular coin buyback schedule, using 20% of its quarterly profits to buy back BNB tokens from the market. This program will continue until 50% of the total BNB supply (leaving 100 million tokens) has been bought back and then "burnt" or destroyed. This reduces the supply, potentially increasing the value of the remaining BNB.
* Future Decentralized Exchange Utility: Beyond the current centralized exchange, Binance plans to build a decentralized exchange. BNB tokens are slated to be used as "gas" (transaction fees) and for reducing costs on this future decentralized platform.
* These planned uses demonstrate a clear business plan and utility for BNB, suggesting its long-term value is tied to the growth and development of the Binance ecosystem.

In summary, Binance is a highly ambitious and fast-growing cryptocurrency exchange that has carved out a niche by focusing on digital-asset-only trading, targeting the Chinese market, and listing new and rarer coins. Its impressive technical capabilities, competitive fees, and a well-defined utility for its native BNB coin position it as a significant player in the crypto exchange space, though its long-term sustainability after the initial growth phase and fee implementation remains an exciting point to watch.

Transcript

What's up everyone and welcome back to Box Mining. Today I'm going to take a look at Binance in a nutshell. I'm going to take you through the current working exchange, talk about its strategy and what it's going to do in the future. Then I'm going to talk about the Binance coin as well. It's currently trading at $2.37, getting a lot of traction recently. I'm going to talk about use cases for the coin and how it's going to be valuable in the future. This has been a highly requested topic, but I ...