Fast Growth In a Fast-Paced Space
Things move at a very fast pace in the cryptocurrency space. So did the Binance Cryptocurrency Exchange on its way to becoming one of the top exchanges. The exchange was officially launched on 14th July, 2017 but is already the number 1 exchange by daily volume traded. This feat was achieved in less than a year.
The name “Binance” comes from the combinations of the words “Binary” and “Finance”. This smart and meaningful name is, however, not the reason for the impressive performance of the exchange over a short period. The quick rise to the top can be attributed to a number of factors.
Attempting to Explain The Quick Rise of Binance
Due to the ban of cryptocurrency exchanges in China, all trading on exchanges in mainland China came to a close by the end of November, 2017. It is known that Chinese customers who wanted to trade, in spite of the ban, looked elsewhere for exchanges. It is highly likely that Binance was the destination of such clients.
Binance was also quick to list more cryptocurrencies within the short period of its existence. The exchange currently has 297 listed cryptocurrencies. There has also been support for bitcoin forks such as Super Bitcoin and Bitcoin Diamond. This gives people reason to leave their coins on the exchange despite the risks. Having more listed cryptocurrencies also attracts the members of the communities behind the various projects to the exchange.
Speaking of community, Binance has a number of competitions or similar activities it runs quite frequently. These competitions help to increase its followership and create a sense of community. Examples are the coding competition, community coin vote, and the giveaways associated with newly listed tokens.
The Binance Coin
The capital for establishing the exchange was raised through an ICO in July 2017. The ERC20 token of the said ICO is known as Binance coin (BNB). BNB is only listed on its own exchange. It is unclear whether the team is not interested in getting BNB listed on other exchanges or the other exchanges are reluctant to do so. It would not be surprising if the latter is the case. We cannot expect exchanges to be keen on listing tokens of their competitors.
Being on a single exchange is not doing the BNB token any harm. It has over fifty trading pairs. The price stood at about $0.11 in July 2017, but has increased over the months to its current price of $ 10.6. Additionally, the market cap of $1 bllion makes it a top 20 cryptocurrency on CoinMarketCap.com at the time of writing.
The Ecosystem And Its Features
The community coin of the month was mentioned earlier. With this competition, the crypto community is allowed to decide the next coin to be listed on the exchange by voting for their favorites. The fast-growing number of cryptocurrencies has made it more difficult and expensive for new cryptocurrency projects to get their coins listed on major exchanges. This new idea kills two birds with a stone. The coins that have a larger following and are of use to the majority get listed. On the other hand, Binance gets to attract all the users of the various cryptocurrencies.
The Binance info platform, which is currently in its beta stage, was launched in February 2018. As its name suggests, the platform would furnish users with up to date information on crypto assets. Users would be able to upload information of their own at a fee paid in BNB token. The statement announcing the platform also stated that that information could be uploaded by users for free throughout the beta stage, in order to grow the database.
Also part of the Binance ecosystem is Binance labs. It’s an incubator which is focused on blockchain technology. The incubator provides advisory services and funding for Blockchain and cryptocurrency related start-ups.
In the News This Year
Binance has been featured in the news quite often this year. It hasn’t always been good news, but we can say the company has handled it all quite well.
Earlier in February 2018, CEO Zhao Changpeng had to calm fears that the exchange had been hacked. Users panicked because they were unable to make withdrawals or any trades during the time the exchange was not running smoothly. The CEO cleared the air via twitter and explained that the problem was caused by “server issues”. There were also frequent updates till the problem was finally resolved and the exchange began functioning properly again.
The exchange did get attacked in a phishing and stealing attempt. Some accounts were compromised and used to buy Viacoin. The idea of the hackers was to sell Viacoin for the Bitcoin in the accounts they had hijacked. In the end, the hackers did not benefit from the attack since withdrawals were paused before they could bolt with the stolen coins. Binance also went further to place a bounty on them. $250,000 was on offer for any individual or persons who would provide information leading to the arrest of the perpetrators.
Zhao Changpeng had to respond to what can be considered as FUD from the Nikkei media in Japan. Nikkei reported that Binance was asked by the Financial Services Agency of Japan to stop serving its Japanese customers. In response, Zhao Changpeng called out Nikkei for “irresponsible journalism.” He explained that Binance was in talks with the Financial Services Agency of Japan. Both parties were working together on the issue to ensure Binance could continue its Japan operations.
There was good news too. The CEO recently made known to the public, plans of introducing operations in Malta. Malta is preparing to woo cryptocurrency businesses with friendly regulations. Binance is set to take advantage of this by making some partnerships and having operations there as well.
Next Is The DEX And The Binance Chain
On 13th March 2018, Binance announced its plans to launch a decentralized exchange (DEX). As mentioned earlier, Binance has had its fair share of attacks. It is, therefore, not surprising that Binance would want to set up a decentralized exchange in the near future. Moreover, this is the general direction the cryptocurrency space is moving.
With a DEX, Binance would not be responsible for keeping users’ funds. This is because trading would take the form of direct swaps between the parties involved. The Binance DEX is also going to have a larger number of coins that can be traded.
According to the announcement, the centralized exchange would remain operational after the DEX has launched. Albeit being a good idea, decentralized exchanges are yet to catch on and still have problems such as low liquidity.
Related to the decentralized exchange is the plan to launch the Binance chain. As spelled out by the Binance team, the upcoming blockchain would “mainly focus on the transfer and trading of blockchain assets, as well as provide new possibilities for the future flow of blockchain assets.” This also means the BNB token would no longer be based on Ethereum but will be supported on the Binance chain.
Dealing With Regulatory Bodies
It is also expected that Binance’s future plans would include how to handle the many requirements that regulatory bodies from different jurisdictions would demand. Binance is not in mainland China, and thus was not hit by the cryptocurrency exchange ban in China. There has, however, been pressure from regulators from different jurisdictions.
For instance, Hong Kong regulators called on exchanges to desist from trading crypto assets that can be considered as securities. This one could get very tricky if the Binance (BNB) token is adjudged to have characteristics of a security. Japan’s Financial Services Agency also recently served Binance with a letter requesting that Binance apply for a license. There is also the “know your customer” requirements that financial institutions in most countries have to satisfy.
In order to continue to serve its customers from all over the world, Binance would be expected to not only find ways of complying with regulations but also anticipate them.
Binance seems to be doing a lot of things at the same time and doing them well. Their way of handling difficulties that come up has also gotten them a lot of goodwill in the cryptosphere. At this rate, we can expect Binance to continue to be a force to reckon with in the space.