Bithumb Trading Booms after Sale, Outpacing Even Binance!

Trading in South Korean cryptocurrency exchange Bithumb shot up by some 25% over the weekend after the Singapore-based BK Global Consortium bought a controlling share in the platform late last week.

The BK Global Consortium is a blockchain investment company based in Singapore. It is fronted by a South Korean, Kim Byung-gun of BK Medical, one of South Korea’s leading plastic surgery clinics. BK last week bought a 38% share in Bithumb for in the region of USD 350 million – making Kim the company’s largest single shareholder. Per Newsway, the deal involved a purchase of 50% plus 1 share of Bithumb Holdings’ shares in the platform.
Bithumb also announced that it would reward its top 300 traders with some USD 88,500 worth of tokens as part of a forthcoming airdrop event.

South Korean media reports were quick to point out a spike in Bithumb trading following the news, with the company jumping in the exchange rankings by trading volume.

In comparison, in the beginning of October, the exchange was 9th with a trading volume of around USD 350 million.

Per media outlet Newsis, a Bithumb spokesperson stated, “It looks like the strategic alliance with BK, which has its own global blockchain network, has brought about a good response from the market.”

In an interview published by South Korea’s Maeil Kyungjae newspaper, Kim explained his reasoning behind the purchase, stating that Bithumb was “the Samsung of the blockchain industry.” He also hinted that Bithumb might look to invest in blockchain startups in the future, saying, “In the past, many blockchain projects have struggled to survive when it comes to funding. Bithumb could serve as an incubator to support these kinds of companies.”

Asked what sort of role he envisaged himself playing at Bithumb, Kim stated, “I will not be assuming the role of owner – rather I will be acting as the chairman of the Bithumb board.”
Many South Korean crypto enthusiasts have been angered by the move, however with some concerned that the company’s power base could now move away from the country. Commenters on news stories and Telegram groups criticized the government for perceived anti-blockchain development policies. The government talked up a possible blanket ban on trading earlier this year, and has implemented a nationwide initial coin offering (ICO) ban. Seoul also recently removed exchanges’ tax breaks, and has made direct investment in exchanges through South Korean venture capital companies all but impossible.

Bithumb will likely make use of BK’s Singaporean network, as the country has recently served as a destination for scores of South Korean companies wishing to launch ICOs. Bithumb was also rumored to have been on the verge of launching an initial coin offering (ICO) in Singapore though a subsidiary in April this year.

Cryptocurrency has found an unlikely ally in South Korea’s affluent beauty and plastic surgery industries, with scores of beauticians and cosmetic clinics across the country now accepting pay in digital tokens.


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Author: Tim Alper
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Binance Hires IPO Heavyweight as CFO, Fueling Rumors the Exchange is Going Public

Cryptocurrency exchange Binance has recruited an executive with wide experience in initial public offerings (IPOs) as its chief financial officer.

Wei Zhou, who is currently the vice chairman of gay dating platform Grindr, boasts of executive experience running into more than one-and-a-half decades. He began his career at the Hong Kong subsidiary of Goldman Sachs, where he focused on investment banking.

A graduate of Harvard University,where he received a bachelor’s degree in economics and East Asian studies, Zhou has particular expertise in growing and scaling business operations in the United States and China. Additionally, Zhou has served as the chief financial officer of both Charm Communications, a Chinese TV advertising firm, and Zhaopin.com, China’s second-biggest online recruitment services platform, managing to lead these firms into successful listings on NASDAQ and the New York Stock Exchange (NYSE), respectively.

Initial Public Offering

This has led to speculation that, with the hire, Binance is preparing for an IPO. However, the cryptocurrency exchange’s CEO, Changpeng Zhao, has denied this while not dismissing the fact that the relatively young cryptocurrency sector could benefit from the fundraising model.

The hiring of an ex-Goldman Sachs employee is not the first time in the recent past that a cryptocurrency firm has recruited an executive with experience from the traditional finance sector. As CCN reported earlier this month, for instance, Japanese crypto startup FXcoin announced that they had recruited a former foreign exchange dealer at Deutsche Bank, Yasuo Matsuda, as the firm’s senior strategist. Interestingly, the founder of the Japanese crypto startup, Tomoo Oshi, also has a background in traditional finance, having worked as the head of currency sales at the same German banking giant from which he poached his latest hire.

Regulatory Compliance

Towards the end of last month, U.S. cryptocurrency firm Coinbase announced that it had hired Jeff Horowitz, an alumnus of Bank of New York Mellon, to lead the company’s global compliance efforts. Prior to the new position, Horowitz held the position of global head of compliance and managing director of Pershing, a subsidiary of the firm. Horowitz had also worked at other traditional banking giants such as Salomon Brothers, Goldman Sachs, Lehman Brothers, and Citigroup.

In making the appointment, Coinbase argued that with the growth of the cryptocurrency and blockchain sector more attention needed to be paid to the compliance efforts that were increasingly becoming complex across the globe.

“Hiring Jeff is recognition on our part that navigating compliance complexities on a global scale requires a concerted, cross-functional effort, guided by leaders with experience that spans policy, financial services, and corporate governance,” wrote the president and COO of Coinbase Asiff Hirji, as CCN reported at the time.


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Binance Backs $32 Million Funding for Unicorn Founder’s Crypto Stablecoin

Yet another stablecoin is attracting big investors.

Announced Tuesday, the founder behind a $1.4 billion startup unicorn called TMON is revealing he has raised a $32 million seed round to build a stablecoin called Terra. But while a number of startups have deployed stablecoins – cryptocurrencies engineered to track the price of another asset, usually fiat currency – Terra comes with a notable addition: an existing user base.

LIONBIT

Created by Korean entrepreneurs Danial Shin, who founded and chairs TMON, one of the top e-commerce websites in South Korea, the Terra project is launching with a significant number of partners that already reach 40 million customers. Those partners, who will together form the Terra Alliance, a group of e-commerce sites that are interested in incorporating the stablecoin into their business, include Woowa Brothers, Qoo10, Carousell, Pomelo and TIKI.

According to a spokesperson for the project, those companies, combined, take in $25 billion in sales.

“We’ve banded together all the e-commerce platforms in Asia that are not called Alibaba or Amazon to push Terra into the hands of many many people,” Shin told CoinDesk.

It’s no wonder that the round includes quite a few notable crypto investors, including Polychain Capital, FBG Capital, Hashed, 1kx, Kenetic Capital, Arrington XRP, Binance and others who were not disclosed.

“We are pleased to support Terra, which sets itself apart from most other blockchain projects with its established and immediate go-to-market strategy,” said Polychain’s Karthik Raju in a statement.

Echoing that, Ella Zhang, head of Binance Labs, said in a statement:

“While we see many stablecoins coming out, Terra’s journey is especially meaningful as they are designing one of the few price-stable protocols with existing, working and strong go-to-market strategy and usage.”

That use, according to Shin, is in acting as an economical digital payment system, compared to credit cards.

He told CoinDesk, that a significant portion of TMON’s annual losses take the form of credit card fees. And he’s sure other retailers experience the same.

That said, if companies like his can lower transaction fees dramatically, he believes they stand a better chance against the industry giants.

For the new alliance of companies, “the commitment really is that they will work together on a more efficient form of payment, obviously using blockchain technology,” he continued.

TIP

A two-token system

To do that, the Terra protocol uses two tokens: terra and luna.

Investors in the seed round bought tokens from a pool of 400 million luna tokens (a fixed supply of one billion luna tokens will be created) set aside for them.

These luna tokens function as collateral on the network. Their sale will supply an initial reserve that will help stabilize the price versus fiat, much as Tether does now. The other token, terra, will act as the day-to-day payment method that consumers will use when the protocol goes live. It will be emitted as needed based on demand.

Then every time a transaction happens on the network, a tiny transaction fee will be paid to holders of Luna.

Shin told CoinDesk:

“Luna is essentially a decentralized equity akin to Visa and Mastercard.”

He continued: “What we’ve learned watching Visa and Mastercard stock prices every year, it’s very smooth.”

Much like other stablecoin projects, oracles on the network will monitor supply and demand. As terra’s use grows, it will algorithmically issue new tokens.

The advantage to e-commerce consumers and merchants will be that these new issuances will be used to provide discounts to people who use the crypto token. So, for example, if the protocol has issued a new lot of terra, merchants might be able to give consumers a 10 percent discount on purchases made with the token – that is until the new supply runs out.

“As we integrate with more e-commerce partners, we are able to distribute that money back to e-commerce companies and their consumers in the form of kickbacks and discounts,” Shin said.

In this way, the project seems focused on one of bitcoin’s early touted use cases, as a cheaper digital payments rail as compared to the incumbents.

What Terra still needs, though, is a host blockchain – a big question for many projects today. The protocol will run on top of one of the existing projects; Shin said either ethereum, EOS, Orbs, messaging giant Kakao’s Ground X or the forthcoming project from Upbit, one of Korea’s exchanges.

But Shin doesn’t seem phased by that, telling CoinDesk that even though the focus will first be on the Asian market, that’s just the start of the project’s aspirations.

“We thought deploying the design in the U.S. where crypto adoption is very low, makes very little sense,” Shin said, adding: “I think the ambition is global.”


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Peoples Token

Why Bitcoin Would Probably Not Get Listed on Binance Today

If launched today, Bitcoin would likely not be listed on Binance, the world’s biggest cryptocurrency exchange by volume — according to its listing guidelines. 

LIONBIT

Getting Your Foot in Binance’s Door

Getting listed on the world’s biggest exchange is the holy grail for any coin that wants to be taken seriously.

At the same time, Binance has been at the receiving end of criticism for charging exorbitant listing fees for new tokens. [It was]reported how Expanse founder Christopher Franko claimed Binance asked for 400 BTC ($2,600,000) to list his altcoin token.

Meanwhile, Binance CEO Changpeng Zhao clarified that his exchange does not list ‘shitcoins.’

In fact, getting listed on Binance is an arduous and expensive process, though the fee is “really not the key factor,” according to Zhao. “There is a 98% chance you won’t hear from us after you submit your application. This is the norm.” He stressed that “we like coins with a proven team, useful product, and large user base.”

In addition, Binance’s guidelines, updated August 12, reiterate that submitting the form is the only way to get your token listed. “We typically require the project founder or CEO to fill out the form,” writes Zhao. “Why? If there ever is a bug with your wallet, a fork or double-spend in your blockchain, we need to talk to a key person.”

Indeed, hacks, cyber attacks, bugs and general errors continue to plague novel low market cap coins. Verge, for example, has experienced several technical issues this year. Such emergencies put users’ funds at risk and thus, close communication between a supporting exchange and the coin’s development team is crucial.

Ultimately, Binance says that at the heart of their listing process is the aim of protecting users and investors.

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If Bitcoin Were to Launch Today

Granted, any type of anomaly goes out the window if some authority must fill out the listing form “completely and comprehensively.”

Hence, it is ironic that the most successful cryptocurrency, Bitcoin $6458.89 -0.21%, would likely not get listed for the very reason that made it the most successful: a creator who disappeared.

Also, good luck getting Zhao to read your whitepaper. “Don’t send me your white paper. I don’t do initial reviews” he writes.

Therefore, if Satoshi were to launch Bitcoin today just like it was a decade ago — its chances of landing on Binance would be slim for one simple reason: who would fill out the application? And who would Binance communicate with in case of any issues? Satoshi? One of the Core developers?

“If you have a decentralized cryptocurrency with a founder that disappeared you can never get listed on exchanges,” wrote Twitter personality WhalePanda. “This isn’t just for Binance, this is pretty much for any exchange now.”

At the same time, there are other factors that would probably put it into one of the better categories: Very good, good, average, and bad.

If Bitcoin indeed has the same “strong team” of talented developers, a working product, a large user-base, and no ICO launch but organic growth via mining and proof-of-work, it would likely incur a smaller fee than your “average” token.

Bitcoin’s Immaculate Launch Unreplicable

On the flipside, new cryptocurrencies aspiring to become the ‘next Bitcoin’ will not be able to replicate Bitcoin’s immaculate launch. Creators of new tokens will find it irresistible to get listed. Investors will demand it. Meanwhile, creator(s) will be forced to reveal their identity particularly as calls for regulatory scrutiny grow louder.

In other words, while getting listed on Binance is hard, replicating Bitcoin’s organic launch — at a time when crypto exchanges didn’t even exist — is next to impossible.

“Bitcoin changed the game,” Bitcoin & Markets podcast host Ansel Lindner commented on Twitter.

Trying to compete with bitcoin is like trying to compete with the dollar playing by their rules. Very difficult.

In the meantime, ICOs can expect to pay a nice chunk of their coins as an insurance listing fee — a measure to dissuade scams — though the exact amount is decided by the project itself. 

“For Binance, we hold more of a black box, subjective model. Our listing process is by no means perfect, or anywhere close to it. We are still constantly improving and evolving it,” Zhao adds.



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Binance, LCX Collaborate to Launch Fiat-to-Cryptocurrency Exchange in Liechtenstein

Binance, the world’s leading cryptocurrency exchange by volume, has partnered with Liechtenstein Cryptoassets Exchange (LCX) to create and launch a cryptocurrency trading platform that allows users to trade directly against fiat currencies such as the euro.

LIONBIT

The Malta company announced Binance LCX as the forefront of their trading operations in the Central European economy. This newly established joint venture will allow cryptocurrency users to trade their crypto-assets for Swiss francs (CHF) and euros (EUR). Binance will be overseeing operations and management of the technology platform, while its unification with LCX will be responsible for managing customer support and regulatory compliance.

Just over a year ago, Binance did not exist. It wasn’t until the end of July 2017 when the Binance ICO gave the firm its first presence in a competitive trading market. The company’s ability to handle larger volumes and its choice of being bankless had put it on the top ten crypto exchanges list at an early stage. Binance now leads the list and has recorded 85 percent ICO returns for its token sale participants already.

“I believe Binance LCX will create a sustainable and reliable fiat-crypto gateway for professional and regular investors alike,” said a confident Changpeng Zao, CEO and founder of Binance. “I hope Binance LCX will drive new standards for usability and compliance for the blockchain industry, and we are very excited to bring the relevant experience and best practices to grow our team at Liechtenstein.”

LCX, as an individual organization, is “an exchange made for professional investors offering crypto custody, an advanced trading platform for security tokens and other crypto assets.” The company hasn’t released its whitepaper, but it appears “well-backed,” should the sheer presence of some high-profile names, including Wikipedia’s Founder Jimmy Wales, in its advisory list be considered.

TIP

LCX is reportedly looking to obtain a MiFID II license in line with the Liechtenstein Banking Act. The exchange will also be applying for permits under the Liechtenstein Blockchain Act, a holistic initiative by the Government of Liechtenstein to build legal security for cryptocurrency and blockchain businesses.

The Binance LCX partnership has attracted support from Adrian Haslet, the Prime Minister of Liechtenstein, indicating strong political and regulatory backing for this initiative. Haslet said:

“We welcome Binance LCX to Liechtenstein. Blockchain technologies are laying the basis for an entirely new industry. We are confident that Liechtenstein’s existing and future legal framework and practice provide a robust foundation for the Binance LCX and other Blockchain companies to provide exceptional services here in Liechtenstein.”

The Binance token value (BNB/USD), as of the time of writing, had risen approximately four percent on the news.


IZX

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Binance Argues it Does Not Charge 400 Bitcoin For Listing, CEO Clarifies

Changpeng Zhao, the CEO of Binance, has officially stated that the company does not charge 400 bitcoin ($2.5 million) to list cryptocurrencies on its platform.

LIONBIT

Legitimacy of the Claim

Last week, cryptocurrency researcher Christopher Franko claimed that Binance, the world’s largest digital asset exchange, has been charging cryptocurrencies a listing fee of 400 BTC to integrate them on its exchange.

Franko cited a screenshot of an email with the address oyyq@binance.com, an address which allegedly said that it costs 400 BTC to list Expanse, his blockchain project, on the exchange.

However, on August 12, CZ released an official statement refuting the claims of Franko, saying that the exchange does not list cryptocurrencies for 400 BTC or even 4,000 BTC without conducting due diligence and putting them through a rigorous verification process.

The statement of CZ read:

“We don’t list shitcoins even if they pay 400 or 4,000 BTC. ETH/NEO/XRP/EOS/XMR/LTC/more listed with no fee. Question is not ‘how much does Binance charge to list?’ but ‘is my coin good enough?’ It’s not the fee, it’s your project! Focus on your own project!”

“Also, the email Franko showed is a spoofed/scam email, not from Binance. Binance never quote fees in email, and not in BTC. Project owners should be able to spot email spoofing, those who can’t should not issue a coin. The communication process/method tells a lot about a coin,” he added.

As a commercial company and an exchange, similar to the way major stock markets require listing fees and maintenance costs prior to listing new assets, it is appropriate for Binance and any other cryptocurrency exchange to accept a listing fee to integrate a cryptocurrency into its platform.

TIP

The amount of the fee involved in the listing process is irrelevant, whether that is 4 BTC, 40 BTC, 400 BTC, or 4,000 BTC, as blockchain projects that see merit in the listing, even with a high fee, will take the offer, and that is how the free market works. If there is enough demand and low supply, the price of a product inevitably goes up.

But CZ stated that Binance does not blindly accept listing fees to integrate cryptocurrencies, which is important for the users of Binance, as it demonstrates that even for a large amount of capital, the exchange does not list cryptocurrencies that are not legitimate.

Is CZ Speaking the Truth?

Binance, which launched just 13 months ago, is the world’s largest cryptocurrency exchange. | Source: CoinMarketCap

Earlier this week, in an interview with local publications, blockchain project operators in South Korea spoke up about the black market of cryptocurrency listings, in which brokers charge $2 million to $5 million for guaranteed listings.

These offers are illegal, and cryptocurrencies that pay for these services are also a part of an illicit group of operations. Several blockchain operators reached out to the top three exchanges in the world, including Binance, OKEx, and Huobi, all of which claimed that they do not accept listing fees and that cryptocurrencies will have to use proper channels to be listed, meaning that these brokers, who are charging multi-million dollar listing fees, are operating independently without the authorization of exchanges.

Conclusively, it is appropriate for cryptocurrency exchanges to charge high listing fees, given the high demand from the market. But, as CZ emphasized, and other blockchain operators in leading markets have said, major cryptocurrency exchanges like Binance are following proper protocols to list digital assets.


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The Rise of Regulated Exchanges Is Boosting Crypto

  • Crypto is gradually assuming a more acceptable and legitimate face.
  • There could be even more positive effects in the future, particularly if full regulation helps to reel in big institutional investors.

LIONBIT

The recent rally of bitcoin and its rivals were linked to several explanations: the reemergence of the bulls, a possible Bitcoin ETF, and also a new (Tether-driven) pump and dump. However, there was one other possible factor that was largely ignored: regulation.
In recent weeks, news has steadily emerged of a number of new crypto-exchanges becoming fully regulated. Not only is this highly encouraging for the exchanges concerned, but it underlines how crypto is gradually assuming a more acceptable and legitimate face, something which can only instil would-be investors with more confidence.

On July 26, Blocktrade announced the beta launch of its crypto-exchange, which is due to witness its full release in September. Based in Liechtenstein, Blocktrade is in the process of obtaining an MTF (multilateral trading facility) license under the MiFID II framework, a piece of EU legislation that rules on the trade in financial instruments.

Once obtained, an MTF license would be a considerable boost to Blocktrade, which is already trading in bitcoin, bitcoin cash, ethereum, litecoin, and ripple. “This is an ideal way for regulators across Europe to recognize cryptocurrencies as a new asset class and put in a regulatory framework,” said Blocktrade CEO Luka Gubo, according to a report in Forbes.
Currently, not a single exchange is regulated under the MiFID 11 framework, something which Gubo believes deters traditional, mainstream investors away from crypto.
“If an institutional investor wants to invest in cryptocurrencies, they currently have a problem,” he says. “Where do you send the order to buy? There’s a lot of speculative valuing in cryptocurrencies — proper regulation is the only way to lower that risk.”
Yet Blocktrade won’t be the only exchange likely to reduce the ‘risk factor’ of crypto trading. In Switzerland, SIX – the owner-operator of the Swiss stock market – announced at the beginning of July that it’s building a fully integrated and regulated exchange for digital assets (i.e. cryptocurrencies).

Scheduled for launch in the first half of 2019, the SIX Digital Exchange will be regulated as a Financial Market Infrastructure (FMI) by the Swiss financial regulator, FINMA, and the Swiss National Bank. As with Blocktrade, its regulation will offer a secure environment for trading such digital assets as bitcoin and ethereum, while it will also enable the existing securities and non-bankable assets to be tokenized for the first time.
“As the stock exchange infrastructure for Switzerland, we know what it takes to build and run mission-critical and scalable, systemically important services,” says Thomas Zeeb, Head Securities & Exchanges, SIX. Not only does such comments underline the likely reliability of the upcoming exchange, but it underlines the huge vote of confidence crypto has received, if a player such as SIX is willing to put its weight behind it.

Such announcements mirror developments elsewhere in the world, contributing to the overall sense that crypto is building a more reputable foundation. In South Korea, the government officially recognised the nation’s crypto-exchanges as regulated financial institutions at the beginning of July, a move that will permit larger scale trading and entitle exchanges to support from local authorities.

South Korea is currently the fourth biggest crypto-market in the world (third is the EU), while the second and first biggest markets – USA and Japan – have also been moving towards greater regulation as of late. In the US, Coinbase is allowed to list tokens classed as securities, and can operate as an alternative trading system and a broker-dealer. And in Japan, 16 government-licensed crypto-exchanges joined together to form a self-regulatory association in March, providing much needed assurance at a time when trust in the

If you accept that, say, talks about a Bitcoin ETF had a positive effect on crypto markets, then it’s just as likely that these moves towards greater regulation have all combined to have a similarly positive effect, even if they haven’t been the most decisive factor in July’s surge.

And given that the full regulation of one group of exchanges will have a snowball effect on others, there could be even more positive effects in the future, particularly if full regulation helps to reel in big institutional investors. Of course, the likes of bitcoin were meant to be employed as money, so an increase in regulated exchanges may only solidify the use of cryptocurrencies as alternative financial assets.



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What is Binance Coin (BNB)? The Utility Token that Helped Binance Become Leading Crypto Exchange

Binance Coin (BNB) is a utility token that can be used on the Binance Exchange. Its main use case is to reduce the trading fees on Binance. In order to find out more about the coin itself, we have to understand how Binance became one of the biggest crypto exchanges in the world in just one year.

Binance – from 0 to over 10 million users in one year

Binance was launched in mid-July 2017 after raising USD 15 million in several minutes during its initial coin offering (ICO). Its founder, Changpeng Zhao, better known as CZ, created Binance with the ambition to provide trading services to every single person on the planet. That goal is supported by superior technology, providing 1.4 million transactions per second, and multi-language support.

The name Binance is a combination between binary and finance and reveals the company’s main focus – to trade digital assets versus digital assets and not deal with fiat. The exchange achieved an incredible growth during its first year of existence and as of July 2018 there are over 10 million registered users on the platform, 143 supported coins and 370 listed trading pairs.

5 key reasons for Binance’s growth

1. The close relationship with NEO

Binance was founded in China but moved its headquarters to Hong Kong after the Chinese government banned cryptocurrency trading in September 2017. However, its Chinese origin has a huge role for the impressive growth of the trading platform.

During the early days of Binance, China’s first cryptocurrency Antshares, also popular as the ‘Chinese Ethereum’, was rebranded to NEO. Back then, Bittrex was the only big exchange that was providing NEO trading pairs, but it wasn’t supporting the distribution of GAS, the token that keeps the operations on the NEO network running.

Basically, when you buy 1 NEO, you are also buying 1 GAS, which is distributed to your wallet over time. However, those who were keeping their NEO on Bittrex weren’t receiving GAS.

On the other hand, Binance started distributing GAS to its users since day one. So, the fast-growing NEO community quickly realized that they won’t miss receiving this ‘free money’ if they just switch to the newly created Chinese exchange. In addition, the technology of Binance seemed reliable and the fees were lower, so one by one, namely the NEO investors were those who started the ball rolling and spread the word about this innovative exchange.

2. Binance Coin use case

The newcomers to Binance were introduced to BNB and its main benefit – to cut trading fees by half. The BNB token had a unique and easy to understand selling point, which attracted a lot of users. BNB is one of the few coins that have real world use case and a clear way to determine where its value comes from.

To put things in perspective, the fee on Bittrex is 0.25%, On Poloniex the taker fee is 0.2%, on Coinbase it is 0.25%, on Bitfinex it is 0.2%, on Huobi it is also 0.2%, while on Binance it is 0.1% and if you pay it with BNB coins, it drops to just 0.05%.

This may sound insignificant but for anyone who is trading regularly it is a huge deal.

However, during the second year, the discount when using BNB for fee payments will be reduced to 25%. It will be lowered further to 12.5% during the third year and to 6.75% a year later. After that, there won’t be any discounts.

3. Relatively higher withdrawal limits for unverified users

The third major reason why people started using Binance was because it has higher withdrawal limits for unverified users. For example, the daily limit for such users on Poloniex is USD 2000, while on Binance is 2 BTC per day. On Coinbase, you have very strict verification process, and you can’t even trade without sharing your identity. On Huobi, unverified users can withdraw just 0.1 BTC per day.

The appealing trading environment on Binance attracted many foreign users on the platform and helped for the global expansion of the exchange.

4. Binance matching engine

Binance is facing the same problems every cryptocurrency exchange has today – high performance of the exchange is not guaranteed and liquidity is uncertain.

Binance hasn’t resolved completely all of these problems yet but it definitely does one thing better than anybody else. The core matching engine of Binance is extremely fast with the capability of handling 1.4 million transactions per second. The response from placing an order to executing it is very quick and that’s why Binance is the highest liquidity provider in the world right now.

5. Binance business model

There are several aspects of the Binance business model that set it apart from the other exchanges out there. The first one is Binance Labs – a blockchain technology incubator.

The projects that Binance support through this initiative first and foremost are those with strong tech team, active GitHub Repo and working prototype. To the selected teams Binance offers full ICO advisory, including a technical architecture review, funding through BNB coins and a token economy structure.

The natural evolution for a project from Binance Labs is to be listed on Binance Launchpad, which is a token sale platform. The goal of the Launchpad is to give exposure to promising blockchain projects.

Binance supports projects aiming to raise maximum $20 million. Once the token sale is finished, they release those funds in batches. If the project achieves a predetermined milestone, it will receive part of the money. This way, if the team run away or don’t deliver its promises, the project won’t get all the money from the token sale.

Another part of the Binance business model that helps BNB to hold and increase its value is that Binance buys back and burns BNB tokens every three months. In accordance with their white paper, the latest burn was in mid-July when 2.5 million BNB tokens were destroyed.

This basically makes Binance Coin a depreciating asset and over time its initial supply of 200 million BNB is meant to become 100 million.

Last but not least, Binance’s referral program helped a lot for the exponential growth of the exchange. If you invite a new user to Binance through a referral link, you will receive 20% of their trading fees forever. If you hold 500 BNB in your account, your commission will be even higher – 40% of the fees.

Binance vs KuCoin and Huobi

The utility tokens of those exchanges
Binance is practically competing with all cryptocurrency exchanges but I will compare it to two of them that have similar utility tokens – KuCoin and Huobi.

KuCoin’s token is called KuCoin Shares (KCS) and just like BNB it can be used as a discount for trading fees, but the model is different. For every 1,000 KCS you hold, you will receive a 1% trading fee discount with the maximum amount capped at 30%.

However, unlike BNB, KCS gives you a share from KuCoin’s trading fees. The Chinese exchange shares 50% of its profits with the KCS holders, so depending how many KCS you have, you will receive different amount of dividends.

Huobi launched its utility token – Huobi Token (HT) – in February 2018. It can be used as a discount for trading fees, too. However, its model is similar to a monthly subscription. You have to become a VIP member and buy a certain amount of tokens in order to receive a discount of between 10% and 50%.

For 10% discount you have to buy 120 HT per month and for 50% — 12,000 HT per month.

New coin listing process
Another use case of HT is to give you voting rights for listing new coins on the Huobi Autonomous Digital Asset Exchange (HADAX). The more HT you have, the more meaningful your vote is.

The listing criteria for new coins on HADAX, which is part of the Huobi Global family, is similar to KuCoin’s but quite different from Binance’s.

KuCoin also has a voting system where the community decides which coins to be listed, but KCS holders doesn’t have any advantage over the other users.

On the other hand, the only way for listing a new coin on Binance is the founders to apply through a web form. And they have only one chance to do it because Binance won’t ask them for additional information.

The company doesn’t share the identities of its review team. The people in it are not allowed to have contact with project leaders, so once you submit your form you are either approved or declined.

Binance has crafted this procedure with the goal of preventing corrupted practices. CZ has stated that he had been offered multiple times millions of dollars to list a coin and he always replied, “No, submit a form”.

Once the review team analyses the submission, they put a score on the project and if the score is positive, the Binance business development team contacts with the project’s leaders for more details.

BNB – 220 times price increase for 6 months

Binance completed its ICO on July 2, 2017 after selling out 100 million BNB within several minutes. The average ICO price of a BNB token was USD 0.11.

As of July 19, 2018, the price of 1 BNB is some USD 13, the circulating supply is 95.5 million BNB and the total supply is 192.4 million BNB, according to CoinMarketCap data.

The all-time high of BNB was reached on January 12, 2018 when 1 BNB traded at USD 24.90, which is around 220 times higher than its ICO price.

Despite the strong decline since then, BNB lost significantly less value in the first half of 2018, compared to the other projects in the top 20 list by market capitalization.

The future belongs to decentralized exchanges

Changpeng Zhao’s vision for the future is that decentralized exchanges will overtake their centralized counterparts. However, he doesn’t know how long this will take. It won’t happen before a blockchain project can provide a reliable network supporting at least hundreds of thousands transactions per second.

Binance already has a team dedicated to the development of a decentralized exchange.

Anyone who believes that cryptocurrencies have bright future ahead and they will become more and more adopted by people should be aware of something — once you own a cryptocurrency, you will need a liquid exchange at some point.

In a world where cryptocurrencies are mass adopted, exchanges of some sort will undeniably be among the most used platforms. So, investing in the one that has definitely a head start over the others but at the same time is in its early stage of development could be a great long-term opportunity.

Binance is one-year old and expects to accumulate a net profit of USD 500 million to USD 1 billion for the whole 2018. However, quite a few people in the mainstream world have heard about this company. In addition, cryptocurrency trading volumes are ridiculously low compared to stocks. Imagine what would happen if cryptocurrencies became mass adopted.

I personally think that Binance is here to stay and BNB and other exchanges’ utility tokens will be among the best performing coins in the next couple of years.

The views and opinions expressed by the contributor in this text should not be considered financial or investment advice, neither treated as an expression of Cryptovest’s view. Neither the author nor the publication takes any responsibility or liability for any investments, profits or losses you may incur as a result of this information.

 


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Author: Lyubo Zhechev

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