Is Binance coin a true contender to overall market dominance? Binance coin is not only a utility token to the world’s biggest crypto exchange, but it also has smart contract capabilities worthy of rivalling the top dogs.
Before exploring what gives Binance coin (BNB) its value and how it has performed, we must first understand what it is.
What is Binance?
Binance is a cryptocurrency trading exchange founded by Changpeng Zhao in 2017. A cryptocurrency trading exchange is similar to that of the JSE or the NYSE but for crypto-related products.
Binance has seen a huge increase in popularity from its launch and has quickly become the worlds leading crypto exchange. This is in part due to the wide variety of investment products offered on the exchange, easy access and relatively low fees when compared to its competitors.
Binance is not just a cryptocurrency exchange. Binance has its own blockchain, the Binance Smart Chain (BSC). The BSC offers similar features to Ethereum, Cardano and Solana in that it seeks to develop an ecosystem of blockchain-based applications, called Decentralised Apps (DApps), that operate on top of its network. These include areas in decentralised finance (DeFi), Non-Fungible Tokens (NFTs) and many more.
DeFi is a subsector of the cryptocurrency industry challenging traditional financial institutions, including banks, insurance companies and stockbrokers, where entrepreneurs build semi-automated trading and lending systems atop blockchain networks.
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property. The digital tokens can be thought of as certificates of ownership for virtual assets (such as in-app items and digital art) or physical assets (such as real-life paintings and even houses).
Like Solana, BSC offers faster transaction times, lower fees and a programming capability that makes it easy for developers to create complex smart contracts.
What is Binance Coin (BNB)?
BNB is the native cryptocurrency of the Binance network. Binance coin was originally created as an ERC-20 token on the Ethereum network but has since moved away from this and developed its own network, The Binance Smart Chain (BSC).
BNB was created as a utility token for the Binance exchange allowing users to pay for transactions and have discounted trade fees. Still, its uses have expanded far beyond the original use case.
A utility token is a token that cannot be considered as money but rather gives users access to products and services on that specific platform. In Binance’s case, utility can be found in the form of reduced trading fees, early access to new BSC projects, beneficial loans terms and much more.
These are just the tip of the iceberg when it comes to BNB’s use cases, and its utility is only part of the reason this coin has such high demand.
How has Binance coin performed against its competitors?
Now that we know what BNB is, let’s see how BNB has fared against its competitors.
The above graphic shows the returns of the top BNB competitors in the following sectors: Smart Contracts, Centralised Exchanges and Decentralised Exchanges.
From a performance standpoint, BNB has done remarkably well:
- BNB is the third-highest returning cryptocurrency when compared against all competitors, posting a return of 1,312%
- BNB is the top-performing centralised exchange coin, beating FTX and Huobi, respectively.
- BNB has outperformed the equivalent top-performing decentralised exchange coins, beating PancakeSwap and Uniswap, respectively.
It is clear BNB has lagged behind its Smart contract counterparts, Solana and Cardano. This lag could be due to the fact that Solana and Cardano both had increased hype around them as “Ethereum killers”. While BNB does have smart contract capabilities, it is still not yet seen as a big smart contract player. This might be a big mistake when considering the rising popularity of the Binance Smart Chain for decentralised app development and NFT’s.
What gives the Binance coin (BNB) value?
- Utility Value
When you look at the trading volume on the Binance exchange, it’s easy to see that having reduced trading fees is an important use case for the coin. In 2021 alone, Binance has daily trading volumes of between $60 to $90 billion per day, meaning Binance can forecast a trading volume north of $20 trillion this year. The more the trading volumes grow on Binance, the more demand there is for BNB to reduce trading fees. This reduced trading fee is the utility you get from holding BNB. Simply put, BNB is saving you this cost and therefore has a value of the fees not paid.
- BNB is becoming more scarce by the day.
Believe it or not, Binance actually makes the BNB token supply smaller and smaller every quarter. They are doing this through what is called a ‘token burn’, and these burns will continue until 50% of the BNB supply is gone.
A token burn has a similar effect to that of a share buyback, and if you don’t know what that is, then not to worry. Basically, Binance is “buying back” their BNB tokens and destroying them to reduce the number of tokens available to everyone. Without getting too complicated – the amount of BNB available (supply) is decreasing every quarter, while the demand for BNB is increasing every quarter. Economics 101 tells us that a decreasing supply coupled with an increasing demand for an item implies a higher value.
- Binance Smart Chain value
For a smart contract competitor that no one seems to register over Solana and Cardano, the Binance Smart Chain (BSC) actually has over 13% of all smart contracts total value locked (TVL). This makes the BSC the second biggest smart contract player behind Ethereum.
The total value locked (TVL) is calculated as the value of assets currently being held in smart contract platforms. TVL, therefore, shows exactly which smart contract platforms are attracting the most money and hence the most adoption.
The dollar value locked in these smart contracts adds to the value of the BSC and, in turn, adds value to the BNB coin itself. It is clear to see that the Binance smart chain has its eyes firmly set on dethroning the current top dog, Ethereum.
Where do I buy Binance coin?
Cape Town-based crypto investment platform Revix (www.revix.com), which is backed by JSE listed Sabvest, will be one of the first platforms in South Africa to offer Binance coin as a standalone cryptocurrency investment option. Revix will be offering BNB Binance Coin from the 24th of September with an enticing fee-free promotion.
- Revix will offer zero buying fees on Binance coin purchases when using ZAR and GBP for one week. (September 24 – September 30, 2021)
- Revix is also offering a refer friends promotion: whereby if you refer one or multiple persons using your referral code, you will receive double the Revix rewards to the value of R600 per referral. (Promotion valid: September 17 – September 30, 2021)
Revix also offers multiple standalone cryptocurrencies, such as Bitcoin, Ethereum, Solana, Uniswap, Polkadot and many others.
Through Revix, you can also gain access to their ready-made “Crypto Bundles”. Their Bundles enable you to effortlessly own an equally-weighted basket of the world’s largest and, by default, most successful cryptocurrencies without having to build and manage a crypto portfolio yourself. They’re like the JSE Top 40 or S&P 500 but for crypto.
Revix brings simplicity, trust and great customer service when investing in cryptocurrencies. Its easy-to-use online platform enables anyone to securely own the world’s top cryptocurrencies in just a few clicks. Revix guides new clients through the sign-up process to their first deposit and first investment. Once set up, most customers manage their own portfolio but can access support from the Revix team at any time.
Remember, cryptocurrencies are high-risk investments. You should not invest more than you can afford to lose, and before investing, please take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
This article is intended for informational purposes only. The views expressed are opinions, not facts, and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any cryptocurrency.
To learn more, visit www.revix.com.