Binance is the world’s leading cryptocurrency exchange, and it provides its users with a huge range of different coins to trade. However, Binance is not only focused on becoming one of the best cryptocurrency exchanges; it’s also a large and growing ecosystem of trading products and blockchain protocols which provides some of the most comprehensive tools for traders and crypto enthusiasts.
Find out everything you need to know about Binance below in this complete Binance review.
In its short history, Binance has become much more than simply a crypto exchange.
The organization has built a vast ecosystem of products and services to make it easier and more accessible for people everywhere to participate in the blockchain industry.
In the Binance ecosystem, there exists a complete pipeline that aims to allow as many people on the planet as possible to buy their first crypto asset, trade and invest in new ones, learn more, and even launch their own initial exchange offerings (IEO) and blockchain business.
Changpeng Zhao (CZ)
No discussion of Binance is complete without mentioning its founder, Changpeng Zhao (also known as CZ). CZ is the face of Binance and has made himself a very public figure in the crypto world by commonly appearing on different podcasts, events, magazines, and news sites to promote and discuss Binance.
CZ was born in China and educated in Canada. He gained experience building software in the finance industry before switching over to the blockchain industry where he worked with prominent industry companies such as blockchain.info and OKCoin. The experience he gained in these roles allowed him to start building Binance and launch Binance’s initial coin offering (ICO) in 2017.
CZ has claimed that Binance’s whitepaper was written in both English and Chinese in three days and the ICO, which introduced and created the Binance Coin (BNB), was launched only a week later. The timing of the ICO, which occurred in June of 2017 at the beginning of the bull market was combined with Binance starting in the world’s largest market, China.
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|1 ETH||2700 BNB||2500 BNB||2300 BNB|
As a result of this fortunate combination of timing and place, Binance was able to raise $15 million USD within ten days of launching its ICO, which at the time was the largest ICO in China. During the first week of Binance’s ICO, one Ether could buy you 2700 BNB tokens.
As of 12 April 2019, one Ether will only buy you about 10 BNB tokens, which is about a 27,000% return on investment if you participated in the first week of Binance’s ICO!
The focus of the Binance whitepaper is the exchange functionality, the BNB token, and “The Burn” mechanism. The Binance exchange was going to be different from existing exchanges at the time by offering the BNB token, adequate liquidity, and a secure platform, built by finance specialists that offer international and multi-lingual support.
From the whitepaper, we can also see how Binance’s business has changed and evolved over time. It planned to deal specifically in crypto trades and not focus on fiat in the beginning.
Binance Coin (BNB)
The Binance Coin (BNB) token is at the heart of Binance’s system, with a total market capitalization of about $2.7 billion as of April 2019. It was created as an ERC20 token on the Ethereum network, but the BNB token is planned to be the basis for Binance’s upcoming decentralized exchange, functioning as a way to pay for transactions and as a base asset.
Since its inception, the BNB token has mainly functioned as a way to pay fees on the Binance platform at discounted rates and has also been used as a speculative token.
The BNB token is backed by a unique system called “The Burn,” which is created as a way to increase the value of BNB tokens in the long term. Essentially, the supply of BNB tokens is tied to the profitability of the Binance exchange so BNB token holders are incentivized to help Binance earn more profits. How it works is that every quarter, Binance uses a portion of its profits from Binance fees to buy BNB tokens.
These tokens that have been bought are then burned or destroyed, effectively removing them from the total BNB supply until 50% of the 200 million total BNB tokens have been destroyed. Since the total BNB supply decreases, the value of each BNB token should increase in the long run.
In Binance’s latest quarterly burn, which was it’s sixth and occurred in January of 2019, a total of 1,623,818 BNB worth roughly $9.4 million USD was destroyed.
2017 Bull Run
In the fall of 2017, Binance was able to become the biggest exchange by trading volume by being accessible to a very large number of interested crypto asset investors and traders at a time when interest was approaching all-time highs. Because the number of ICOs, which had been launched increased dramatically, the hype and demand for a larger variety of crypto assets also increased dramatically.
Binance was one of the few large exchanges where people were able to register to the platform using only an email address and be able to access a wide variety of tokens. The lax registration requirements meant that Binance and the tokens that it offered was available to a large variety of users from nearly any country.
During this time, China made ICOs and exchanges illegal, so Binance had to move its operations out of China and into Japan.
In 2018, the total crypto market shrank dramatically, but Binance expanded its presence and began developing a more complete ecosystem. This included launching Binance Academy and its venture capital fund, acquiring Trust Wallet, and opening new services in Africa.
After leaving Japan due to regulatory concerns, Binance finally settled in Malta where it was able to have a close relationship and guarantees from Malta’s Prime Minister. During 2018, the price of BNB remained relatively stable compared to the rest of the crypto market.
For example, at the beginning of 2018 one Bitcoin was worth $14,000 and at the end of 2018 one Bitcoin was worth under $4000, which was about a 70% loss in value, while BNB only lost about 25% of its value during this time.
Since the beginning of 2019, the BNB token has been deviating from Bitcoin’s price trend. The divergent correlation is uncommon among most crypto assets, which have a history of closely tracking Bitcoin’s price.
Despite its ventures into education, venture capital, and mobile wallets, the flagship product from Binance is still its exchange. The crypto exchange is the reason that the platform exists and was developed. Binance has been the top exchange for much of the last two years since its launch, but recently new exchanges have begun overtaking Binance as the top exchange by adjusted trading volume.
In the past year Binance has made some big updates, including the addition of margin trading, staking, futures and a partnership with FTX.com.
Margin trading is the practice of borrowing funds from a broker, in this case Binance, to buy an underlying asset. It is similar too, though not the same as, leverage, which involves taking on debt to increase a trading position – which Binance also offer as we’ll discover later.
Binance introduced live margin trading in February 2020 after hinting for many months that the feature would arrive. Margin trading is currently available for BTC, XRP, BNB, TRX, and ETH.
Although Binance have recently removed FTX tokens from their exchange, as traders were holding the tokens rather than using them to trade, the two exchanges are still working closely. Binance invested an undisclosed sum into FTX.com in 2019, and have hinted that new joint-led products will come from the partnership in the coming months.
Likes every other crypto exchange, Binance has standardized platform fees for trading and withdrawing different assets. Deposits are free, but specific withdrawal and trading fees depend on the asset that you are transacting as well as your trading volume or BNB holdings.
Trading fees are tiered by ‘VIP’ level according to how many BNB tokens a trader holds, or their 30 day trading volume in BTC. If users hold no BNB or they have traded under 50 BTC in the last 30 days, the trading fee is set at 0.1%.
For example, if you hold zero BNB tokens in your account and your 30-day trading volume is less than 100 BTC, then your general trading fees are set at 0.1%. However, if you are at the highest tier and hold greater than 11000 BNB and have a 30-day trading volume greater than 150000 BTC, then your general trading fees are only 0.02% to 0.04% depending on whether you are a market maker or taker.
|TIME||The 1st Year||The 2nd Year||The 3rd Year||The 4th Year||The 5th Year|
|Discount Rate||50%||25%||12.5%||6.75%||No Discount|
Though more common now, Binance was one of the first crypto-asset exchanges to incentivize its users to use its base token in order to receive discounted rates. Binance’s discounts for using BNB token decreases over time and is currently at 25% for those who pay fees using BNB tokens.
One of the reasons that Binance was able to gain such widespread adoption when it launched was because it offered such a wide variety of tokens to trade. As of today, Binance offers hundreds of different tokens for trading. It now also has a listing process with only one way to apply to get a token listed, which is through its official application form.
Though there are no hard requirements published by Binance for its token listing process, guidance for listing a new token on Binance is outlined by CZ in a post, which includes tips such as:
- Tip 4: Update your project progress on Binance Info on a weekly basis. Constant and steady progress is highly valued. This is required even after listing.
- Tip 5: If you incorporated $BNB into your ecosystem, it would help.
- Tip 7: If you have been a promoter/supporter of Binance in your community, it will help.
- Tip 20: Focus on user adoption. If you have a large number of users, your product has value. That’s the easiest to measure.
Contributing to the Binance exchange and general ecosystem is very helpful for new tokens to get listed. There is a listing fee to get added to Binance, but it is not a fixed number, and all listing fees go to the Binance Charity Foundation.
Besides the wide variety of tokens on Binance, the other advantage that gave them a large user base in such a short amount of time was their accessibility in a wide variety of countries.
Binance is available in nearly every jurisdiction except for a small list where they don’t offer their services. Furthermore, its simple sign up process does not require the Know-Your-Customer (KYC) processes such as identity verification or proof of address verification that is common in other exchanges that deal with traditional fiat currencies.
Credit and Debit Card Buys
Despite Binance’s initial mission in their white paper to be focused specifically on crypto-to-crypto trades, they have evolved over time to now allow fiat purchases through credit and debit cards via Simplex.
The ability to purchase crypto assets on Binance using MasterCard and Visa launched at the beginning of 2019. Simplex is a payment processing service that focuses on preventing fraud, so it is perfect for crypto exchanges such as Binance that because of the pseudonymous nature of cryptocurrencies are highly susceptible to fraudulent activity.
CZ has publicly expressed his strategy to increase the mainstream adoption for crypto assets, which includes as a major component offering more ways for people to buy Bitcoin and crypto assets using fiat currency.
Specifically, he wants to launch up to 10 fiat gateways in 2019 with ideally 2 per continent. This highly ambitious plan would certainly increase the average person’s ability to buy their first crypto asset and start investing in other tokens and coins.
Binance Jersey launched in January of 2019 as its first foray into allowing direct Euro and British Pound transfers into crypto. We have written a review of Binance Jersey here if you want more information about Binance’s newly launched fiat gateway.
The island of Jersey is located off the coast of France and serves as a major offshore financial center with its lax financial and tax regulations. Binance Jersey serves a relatively simple function compared to the main Binance exchange; it is simply there for users to convert their Euros and British Pounds to Ethereum or Bitcoin.
Though this limited functionality may change in the future it is currently not needed because once users have one of these major coins, it is relatively easy to transfer them to the main Binance exchange platform and trade for the hundreds of tokens that Binance has available for trading.
Binance’s strategy of being available to as many people as possible has brought them to Africa. Though many in the crypto industry preach about blockchain being helpful to the unbanked and those living in developing countries, few make genuine efforts to really expand their product to those places.
Binance is the exception in this case putting its money where its mouth is and opening a fiat-to-crypto gateway in Africa. Binance Uganda launched in June 2018 as Binance’s first fiat-to-crypto gateway and specializes in having users buy crypto assets with mobile money accounts, which is a very popular method for sending money in the region.
With the success of Binance Uganda, which signed up over 40,000 users in its first week, Binance plans to continue expanding its presence on the continent as well as more fiat to crypto gateways in Singapore, Liechtenstein, and other countries.
As mentioned in Binance’s whitepaper, the plan has always been to eventually move BNB tokens off of the Ethereum blockchain and onto its own specially developed blockchain. The Binance Chain is supposed to function mainly as a digital asset creation and exchange platform.
This specialized blockchain will allow users to send and receive BNB tokens, issue new tokens, make trades, and even stake their BNB tokens for involvement in governance decisions. Binance’s blockchain is aiming to be non-custodial of user’s funds, able to process a large volume of transactions at high speeds and low costs, as well as offer high liquidity.
Binance Chain launched in XXXX and now has over XX assets issued on its blockchain protocol. These tokens primarily trade on Binance.org, otherwise known as Binance DEX, which we’ll explore below.
The Binance Decentralized Exchange, or ‘DEX’, is part of ‘Binance.org’, which focuses on building decentralized exchange infrastructure where Binance Chain based tokens can be issued and traded.
This ties in closely with the Binance Launchpad, where new projects can be created and traded as we’ll discover later, but it’s also a decentralized exchange where users can trade peer to peer without a centralized exchange processing the orders.
Similar to IDEX for Ethereum-based tokens, Binance DEX allows users to create their own Binance Chain wallet to store and trade Binance-based tokens, and trade against BNB pairings on over 100 digital assets.
The Binance DEX has succeeded in bringing many new projects to the exchange, who have either issued a portion of their tokens as Binance Chain assets, or ran token sales through the DEX.
In 2019, CZ announced the launch of Binance Futures at the Asia Blockchain Summit in Taipei. Futures are a type of derivative trading instrument that allows parties to buy an asset at a predetermined future data and price.
Like other derivatives platforms, Binance Futures allows users to open long and short positions on a variety of cryptocurrency assets, with up to 125x leverage.
Leverage involves the use of borrowed capital to open larger trading positions than you normally would using your own funds. For example, a leverage of 100x would allow a user with just $100 of original capital to trade with $10,000 – generating larger profits, but also risking larger losses.
Originally only catering to Bitcoin traders, Binance Futures now offers 24 contract options on cryptos such as Ethereum, Chainlink, Tron, BAT, and many more.
With a similar interface to their ‘advanced exchange’ feature, the Binance Futures exchange suits intermediate to experienced traders who have a certain appetite for risk. It’s a great option for those looking to take advantage of the daily fluctuations in the cryptocurrency markets.
The Binance Charity Foundation was created as a way to donate to social impact projects that focus on the “bottom billion” or those living in the least developed countries. The non-profit organization records all of its transactions on the blockchain so that donations and reception of donations are completely transparent and traceable.
Though Binance has benefitted greatly from existing crypto interest, onboarding new users is necessary in order to continue growing its platform at a rapid rate. In addition to opening up in new markets and starting fiat to crypto gateways such as Binance Uganda and Binance Jersey, Binance has also begun creating basic educational resources for those who are new to blockchain technology.
Through Binance Academy, users are able to watch videos and read articles on a large variety of different blockchain and financial concepts.
Education is a fundamental way of expanding the entire crypto ecosystem which will benefit Binance as a major player in that ecosystem.
After users are familiar with the basics of how blockchain technology and crypto assets work, Binance has created and curated informational resources regarding different tokens and projects through Binance Info. The resources take the form of in-depth research reports, which should allow readers to make wiser investment and trading decisions.
Beyond token specific research reports, Binance Info also offers a rating list that curates project ratings from different sources as well as broader themed reports such as investigating crypto-asset cycles and a JPM Coin Report.
JPM Coin Report
When JPMorgan, the company whose CEO Jamie Dimon famously said that Bitcoin “is a fraud,”, officially announced that they were creating its own crypto asset called JPM Coin, the blockchain industry took notice. In fact, Binance’s comprehensive JPM Coin Report was even covered by several of the major crypto news media organizations.
This report broke down how a large institutional bank like JPM was going to enter the market with its own crypto offering and concluded that it offered a minimal threat to a blockchain organization such as Ripple.
Binance’s report raised the level of knowledge for the entire blockchain space as a whole with a detailed analysis of the threat that the major financial institution could pose.
With Binance Labs, Binance is looking to expand the entire ecosystem of new projects that are launching in the blockchain space. Labs is Binance’s startup incubator and venture capital fund where it invests in new startup companies that focus on blockchain technology.
To date, Binance Labs has invested in at least 12 different startup companies.
Within Binance Labs is the Ecosystem Fund, which aims to bring together one billion US dollars from twenty different funds in order to build and grow blockchain infrastructure.
One of the major reasons for Binance’s early success was its offering of ICO tokens or recently launched tokens that other more established exchanges were not willing to offer. Binance is now taking this one step further by becoming a platform for new projects to launch their token sales in a way that is standardized and immediately exposed to a large market.
The Binance Launchpad allows new tokens to easily and directly be introduced to the Binance exchange platform, which creates a direct pipeline for new tokens and coin offerings.
In 2018 Binance acquired Trust Wallet and brought it under the Binance umbrella. The Trust Wallet brings an extra layer of usability and functionality to Binance users and completes its very well rounded suite of products.
The Trust Wallet is able to handle any ERC20 or ERC223 tokens on the Ethereum network as well as function as a browser to explore Ethereum dapps (decentralized applications).
Eventually, users will be able to stake tokens such as Tezos in order to earn staking rewards and interact directly with Binance’s upcoming decentralized exchange.
Like everything else in crypto, only time will tell whether Binance’s comprehensive strategy will pay off. However, it does bode well that it has launched many of these new services and products during a time when many other blockchain organizations are laying off staff or downsizing their operations, which may signify that Binance has been more financially responsible than some of its peers.
When the crypto market turns positive again, it should be in a very favorable position to capture the wave of growth and interest that rises.
However, Binance is not the only company that has been hard at work building and expanding during the last year. There are many other exchanges and resources available, and the competition is getting tougher as is evident by the number of exchanges that have recently overtaken Binance in terms of the trading volume.
Would Binance have been better off spending its time and energy in a more focused approach? Only time will tell…
- Lisa Deikun’s Explanation of Cryptocurrency
- Binance Fees
- Binance FAQ
- Binance Chain FAQ
- Binance Charity FAQ: Empowering the Bottom Billion with Blockchain Technology
- Trust Wallet Help Center
- Investopedia’s Definition of ICO
- Changpeng Zhao’s Twitter Account
- Changpeng Zhao’s Bio
- Binance Whitepaper
- BNB Token Details