Whenever cryptocurrency exchanges issue their own coins, some people will be wary. After all, such currencies can only be traded on the main exchange, which makes them seem prone to market manipulation. In the case of Binance Coin, things appear to be looking pretty good. It is an interesting cryptocurrency in its own right, especially because it has surged in value by so much.
Why Does Binance Need its own Coin?
That is always the main question to ask when exchanges decide to make moves like this. Native exchange-traded currencies which can’t be exchanged anywhere else also make for an interesting discussion. Binance, one of the world’s biggest cryptocurrency exchanges to date, decided to issue 197,192,382 BNB in total, even though only 99,014,000 are in circulation at present. This currency is used to pay expenses on the trading platform. Additionally, Binance offers users a rebate when charges are paid in BNB rather than Bitcoin.
Is there any Reason to Value Binance Coin so High?
While it sounds convenient to use Binance Coin as a way to pay expenses on the trading platform, the currency is currently valued at over US$16. That seems like quite a steep value for an ERC20 token with only one specific purpose. It’s good to have a currency to pay for most expenses rather than be forced to deduct them from your trading balance. Users who do not use their BNB for this purpose can always sell it to other users of the exchange. Whether or not that is enough to warrant a US$16 valuation per coin is still a bit unclear.
Furthermore, it seems Binance will continue to buy back BNB later this year. Although not too many details have been made public, it is expected there will only be 100 million coins left in total. This seems to indicate the total supply will be cut in half very soon. The purchased coins will be burned, rather than held by the team. It is an interesting plan, but it would also explain the high valuation associated with BNB right now.
Given the current popularity of the Binance exchange, it seems fair to assume that plenty of users rely on BNB to pay for most trading expenses. As its popularity continues to rise, even more people will learn about BNB and its value, and it is unclear if that will spark more interest in this particular currency. So far, it seems the interest in BNB is warranted, although its use cases are still very limited in nature.
Is There a Future for Binance Coin?
Assuming the aforementioned buyback occurs, it is evident there is good reason to be interested in this particular ERC20 token. Since Binance offers a fair amount of cryptocurrencies to trade, settling fees in a completely different currency is an option well worth checking out. Storing the currency can only be done on the exchange itself, which may make it less appealing to some users. It will be very interesting to see what the future holds for Binance and its native currency.
You may be interested
Bets Against Bitcoin’s Price Are Nearing Record HighsBrian Evans - Aug 21, 2018
BTC/USD shorts on Bitfinex are nearing record highs, leaving many to wonder if a short squeeze will occur like it did when the prior mark was set.
Major Players Use Blockchain to Streamline Agribusiness’ Creaking Supply ChainBrian Evans - Aug 21, 2018
Let’s see why China and Australia are really into blockchain in the agriculture
Apple Co-Founder Steve Wozniak Flip-Flops on Blockchain, Joins Crypto StartupBrian Evans - Aug 21, 2018
Apple co-founder Steve Wozniak discussed his involvement in a new crypto startup company and his interest in blockchain in general in a NullTx interview earlier this week.…