Two years down the line and Binance Coin (BNB) is still gaining popularity among crypto users. BNB recently broke into the top-10 as ranked by market cap tagging with it new investment considerations as well as better liquidity. The Coin is the native asset created by Binance exchange, the first of its kind in the buisness.
Notable, since mid-Dec, the coin has soared 7.5X, testing lows of $5 before rocketing to $39 at the time of writing. Launched in 2017, BNB was created to help the exchange in paying startup expenses like hiring new developers, marketing, and bolstering the security of the exchange servers. In the ICO stage, the token raised $15 million. Eventually, users began using the coin to pain for transactions fees on the platform.
However, recently, there have been a lot of controversies around the coin and its creators, Binance. Many in the crypto community have questioned the value proposition of BNB and whether investing in the coin is channeling funds into a security. Amongst other questions, critics are probing were the source of the asset’s liquidation value and what the asset’s true value is in.
Investor’s Point Of View
Nonetheless, people keep investing in BNB despite the various uncertainties around the coin. Some have urged that since the pricing from the supply and demand dynamics for the 99 million BNB coins already in the market show an excellent effect on the coin’s future.
Meanwhile, many are investing in the coin because of the low cost of transactions and how it is cost saving especially for day traders in Binance. Note that BNB can be used in buying other coins in place of Bitcoin because it is quite affordable. Using BNB for transactions could reduce trading fees up to 25 percent. Additionally, you can freely trade BNB against other coins in the Binance platform while concurrently qualifying for a ticket should they need to invest in any of their IEO.
There is also high confidence in the coin gained from Binance operations. Most importantly though, the coin has had minimal security issues and despite early May’s heist, there is confidence in the platform’s security measures. Lastly, the many incentives offered by the exchange keep pulling more people to the coin. With increased popularity, the currency has a fighting chance despite regulators arm twisting the exchange, forcing compliance.
Another critical thing to note is the quarterly coin “burns” by the exchange. According to parallel reports:
“Binance has an ongoing commitment to decrease the total supply of BNB in the market. Every quarter since it launched, Binance committed to using 20 percent of our profit to buy back Binance Coins and burn them permanently. At a time when market sentiments are low, our commitment to increasing BNB’s demand remains solid and backed up by our execution to date.”
It is not year clear whether the burned coins come from the exchanges own sizable treasury or from the market. Experts have indeed clarified that Binance’s burns are not open market buys.
During the initial offering, founders were allocated 40 million (20 percent) while investors were given 20 million (10 percent). The remaining coins were sold in the ICO. However, recent reported show that Binance’s BNB reserves exceed $95 million. The exchange will reportedly continue to burning tokens until the supply is 100 million. In the last two quarterly burns, Binance destroyed about 1.6 million tokens pieces.
There is still a lot to look for when it comes to BNB. Binance’s newly launched Bitcoin pegged token will greatly influence BNB prices. Additionally, the exchanges decision to restrict users from the US by Sep 17th will have a significant effect on BNB prices as most of their traffic is from this stringent jurisdiction.