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Is Binance Coin (BNB) The Safest Crypto Investment in 2019?

· in Analysis
Carlos is an international relations' analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.

The cryptocurrency market recovered from the 2018’s bear trend that damaged all the virtual currencies in the space. Binance Coin (BNB), the cryptocurrency released by the Binance exchange has also been affected by this bear market. However, since December 2018, the virtual currency had an exceptional performance. 

Is Binance Coin A Safe Investment?

Before analyzing specific features of Binance Coin, it is worth mentioning that virtual currencies tend to follow bull and bear cycles. It is highly probable that if the whole crypto market is growing, Binance Coin would grow. The same applies if the market is in a bear trend as it happened in 2018. 

Binance Coin reached a high of almost $25 on January 12, 2018, when the whole crypto market was growing and expanding. In December 2018, BNB fell to $4.5 per coin. However, since that moment, it started to grow and it reached an all-time high of $39 per BNB. 

Binance Coin was released by Binance as a utility token for users to pay lower fees on their exchange. In addition to it, the company was able to gather funds to support its expansion in the market. Nowadays, after two years of being released to the market, BNB has many use cases, allowing users to purchase for goods and services, participate in investments and pay trading fees. 

Binance Coin

There are 200 million BNB coins that have been released to the market. However, 100 million of them are expected to be taken out of circulation through quarterly coin burnings. That means that the virtual currency is also expected to continue increasing in price for the future if demand grows. 

According to Binance’s whitepaper, 40% of the tokens went to the Founding Team, while 50% of all the tokens were released through the ICO. 10% were located among angel investors. 

The quarterly coin burnings are very bullish for a digital currency. The supply is systematically reduced according to the profits made by the firm. Binance uses 20% of its profits to purchase BNB and burn them every quarter. 

As reported by Changpeng Zhao, the founder of Binance, the team that received 40% of all the BNB supply decided to give up their coins and burn them. 

The official blog post announcing this reads as follows:

“The eventual total supply of BNB will still be 100,000,000 BNB. The current total supply of BNB is 189,000,000 BNB, which means that 89,000,000 BNB still need to be burned. The team will burn off the 80,000,000 BNB team allocation first, and the remaining 9,000,000 BNB will be burned by Binance.com exchange.”

This would make the ultimate burning of 100 million BNB tokens faster, which would have an effect in a shorter time on BNB. 

Binance Coin fell from $39 at the end of June to $25.4 on July 17 due to Bitcoin’s strengthening position in the market. The most popular digital asset has increased its presence in the crypto space in terms of dominance reaching almost 70% of the total value of the cryptocurrency market. 

Since reaching $25.4, Binance Coin recovered part of the value lost and it is currently being traded close to $30 per BNB. 

In terms of BTC, BNB reached its highest point in April 2019 when each BNB token could be purchased for 0.0047153 BTC. After three and a half months, BNB is being traded around 0.00235 BTC per coin. 

It is worth pointing out that Bitcoin has been growing over the past months compared to the altcoin market, which has been declining without finding a bottom. 

Binance Team

The decision not to use the funds they were awarded for creating the platform shows that the team is completely focused on building a profitable exchange that would onboard as many users as possible. In addition to it, the firm is working to offer new and better 

Changpeng Zhao himself is the founder of Bijie Tech, a firm that provides cloud-based exchange systems to exchange operators. The firm was able to power more than 30 different exchanges in the Asian continent and close several millions of dollars in revenue. 

Mr. Zhao has not only been two years working as the CEO of Binance, but he was also working as the CTO of OKCoin after co-founding it. 

Other team members include Ted Lin, the Chief Growth Officer, Yi He, co-founder and CMO, and Alejandro Isaza, Lead Blockchain Developer. 

Binance Products

Binance has been growing and offering new services to the cryptocurrency market. At the moment they are not only a simple spot cryptocurrency exchange, but they have also developed a decentralized exchange (DEX), an OTC trading desk for larger investors, a charity foundation and the Binance Launchpad. 

The decentralized exchange was created to offer users the possibility to have control over their digital assets. Centralized exchanges are usually a target for hackers and attackers. Indeed, Binance itself was hacked by 7,000 BTC a few months ago. In a decentralized exchange, users remain in control of their digital assets by holding their private keys. Centralized exchanges hold the digital currencies on behalf of the users. 

Through its OTC trading desk, larger investors can place their trades without having a large influence on the price of digital currencies. In this way, they can find a better execution price for their trade. 

The Binace Launchpad is an initiative launched by the exchange that allows startups to gather funds using the Binance platform. The funds can be purchased with BNB coins and users are required to follow a lottery scheme to be selected to participate in these IEOs (Initial Exchange Offerings). This makes of BNB a very useful coin for companies, investors and the whole crypto community. 

The digital currency exchange has also launched the Blockchain Charity Foundation that allows individuals to donate digital currencies to different initiatives. Most of these projects are located in Africa and try to offer kids and beneficiaries the possibility to have education, good services, healthcare attention and more. 

According to the official site of Binance Charity, 1224 donors donated 493.49 BTC, to help 74794 individuals in some of the poorest countries on earth. 

As we mentioned in this section, Binance Coin use cases are growing in the market as well. Several cryptocurrencies are being released on top of the Binance Chain using the BEP2 protocol. In the past, many projects were releasing their tokens on top of Ethereum (ETH). Now, ICOs, projects and companies can use the BEP2 protocol based on the Binance Chain to release their own cryptocurrencies.

Back on June 24, Stably announced the first stablecoin based on the Binance Chain. The goal was to offer a trading pair on the Binance DEX and Binance platform as well. The trading pair on the Binance DEX is BNB/USDSB. 

This was the first BEP2 stablecoin to launch on Binance DEX; making it possible for other blockchain projects to establish transparent, liquid and stable on-chain trading pairs. 

For Binance to offer EUR and GBP support for users, the company decided to launch a cryptocurrency exchange called Binande Jersey. Binance Jersey has 11 trading pairs in EUR and GBP. Users can also redeem the Binance GBP Stable Coin (BGBP) for GBP. Although the exchange has a lower trading volume that the traditional Binance exchange, this is a step in the right direction. 

Finally, Binance is also working to offer U.S. users the possibility to have access to different trading pairs in the market. After partnering with a local company in the United States, Binance announced that they will be launching Binance US, which is expected to focus on cryptocurrencies for the U.S. market. 

The United States, like many other countries, has a regulatory framework that is very restrictive towards specific digital assets. This is why regulatory agencies have been going behind those promoting these tokens or offering services related to them. 

Some of the digital currencies that could be available for trading on Binance U.S. include Cardano (ADA), Bitcoin (BTC), Basic Attention Token (BAT), Binance Coin (BNB), Ethereum (ETH), Litecoin (LTC), Decentraland (MANA), NEO (NEO), USD Coin (USDC), Stellar (XLM), and many others. 

Binance explained about this:

“Binance US has adopted a Digital Asset Risk Assessment Framework to help select bona fide blockchain projects with a real chance of making the world more efficient, to provide transparency in our listing standards, and to ensure Binance US’s compliance with applicable legal requirements.”

Some digital currencies among the top ten that may not be included are XRP, Bitcoin Satoshi Vision (BSV), and Monero (XMR). If Binance Coin is added to the U.S. exchange, it is expected for it to receive a new influx of investors. 

Conclusion

Finally, a report conducted by Multicoin Capital shows that they are very bullish about this digital currency and its future. Analyst at Multicoin Capital considers that the long-term non-speculative value of BNB tokens is a function of Binance’s net profits, the utility of BNB, number of BNB held by users and the volumes and parameters of the Binance Chain DEX. 

With growing projects that demand BNB tokens, with a larger demand for BNB tokens from market participants, with a team that has decided to burn all their coins received after the ICO, and with many other features, the digital currency seems to be one of those with the best future outlook. 

Since December 2018 until now, the virtual currency expanded 766%, allowing users to have better performances with this investment compared to other digital assets such as Bitcoin (BTC), Ethereum (ETH) or Litecoin (LTC). Indeed, the digital currency entered among the top 6 digital currencies and could continue growing in the future. 

It will be very important to the exchange to be able to sustain the current momentum that Binance Coin built over the last year. 

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