According to CoinMarketCap, Binance Coin (BNB) is the 6th most popular coin by arena capitalization. It is a relatively new coin in the coin arena but it has definitely got a lot of people interested. Whether you’re an investor, trader or just an enthusiast, it is important to know what the future of this particular coin holds. In this post, we’re going to cover everything you need to know about Binance Coin and then perform some analyses to predict what direction its price will take in 2019.
Brief history of Binance and its platforms
Before we can get into the details about Binance Coin and how we expect its price to change in future, it is crucial to take a few steps back and look at the entire picture. BNB is a part of the Binance ecosystem that includes the main platform as well as a decentralized platform and other subsidiaries. Therefore, it is impossible to talk about BNB without looking at the entire ecosystem.
Presently, this Bitcoin and coin platform is ranked 2nd among coin platforms by adjusted 24-hour trade volume. The other platforms in the top 3 are OKEx and HitBTC, which were launched in 2014 and 2013 respectively. Compared to these competitors, it’s surprising that Binance would be such a major competitor, but it is. One of the main reasons for their success has been the team behind the project. The two cofounders are Changpeng Zhao and Yi He both of whom have experience in the coin space. Zhao, in particular, once worked at OKCoin where Yi He also worked and together they came up with Binance. (These are the: 10 Most Important Resources to a Cryptocurrency Trader)
The company was launched following a successful ICO that raised $17 million in funding. Back in July 2017, this was a pretty good result and it was enough to launch the platform. Soon afterwards, Binance grew to become one of the top platforms in the world and has remained so since then.
At first, Binance was to be based in China, but a few weeks after its launch the Chinese authorities banned all coin trading. Following this move, the platform relocated to Japan where the company really took off. Unfortunately, the platform would not stay here for long either because by March 2018 they would also be warned by Japan’s Financial Services Agency (FSA) for operating without a license. Since Japan has legalized Bitcoin and other cryptocurrencies as financial assets, all platforms must get a license from the country’s financial regulator, which Binance had not done. (These are the: Cryptocurrency Regulations Around the World)
The warnings prompted them to relocate to Malta where the authorities were friendly to coin trading. Indeed, even the Prime Minister of Malta posted a Tweet welcoming them into the country. While here, Binance would sign a Memorandum of Understanding (MoU) with the Government of Bermuda in April 2018. Through the MoU, Binance would create Binance Labs that would provide investments in blockchain companies and education programmes in Bermuda. Furthermore, they also signed an MoU with the Malta Stock Platform to launch a digital platform for tokens that have been securitized. (Do you ever wonder: What Is The Future Of Cryptocurrency In Finance?)
There is a lot about Binance to appeal to traders and investors, but chief among those is their low fees. The cost of trading in coin can become a major problem especially if one is a frequent trader, but Binance is head and shoulders above the competition. That they have a lot of coins to trade doesn’t hurt either, including many ICOs being held on the platform. The rest of their suite of services is also impressive, and all of these have made the platform extremely popular.
Another advantage in dealing with this platform is their security. Any coin platform these days has to be constantly on the lookout for suspicious activities because of increased attacks. Since the company was launched, they had not experienced any hacks up until May 2019 when they did. 7,074 Bitcoins were lost in the hack, worth about $73 million at today’s arena price. Rather than have the clients lose their coins, Binance decided to refund those who lost Bitcoin from their own funds. Not many platforms have done this following their own hacks, and this goes to show how committed this platform is to their clients. (Ask yourself: Which Are The Most Influential Cryptocurrency Arenas By Country?)
One major downside to working with Binance had been their lack of deposits through fiat. To make a deposit here, one had to find another platform that did accept fiat and convert their money into coin before depositing into Binance. As you would imagine, this process was really cumbersome, which is why they partnered with Simplex to allow for deposits in fiat.
Other Binance platforms
While most coin platforms stick to that alone, Binance chose to diversify and create multiple platforms. One of the most popular ones was the decentralized platform, DEX. We have previously discussed more on the launch of DEX in a previous post, so we won’t go into more detail here. That being said, the final version of Binance DEX was launched in March 2019 as well as the Binance Chain. The latter is the blockchain upon which DEX operates, with the main goal being to make Binance as decentralized as possible, just as Satoshi Nakamoto intended. (Here is everything you need to know about the: Launch of The Binance Decentralized Platform Future (DEX))
As if that wasn’t enough, Binance also wanted a decentralized stock platform where any asset could be tokenized and traded in addition to coin. This plan was supported by the Malta Stock Platform and Neufund. Technically, any asset could be tokenized and listed on a decentralized platform, and the arena is expected to reach $1 trillion by 2020. For companies that need funding, this would be an alternative to IPOs. Furthermore, the entire process would be legal since the platform would be fully regulated in Malta. (Before investing: Learn How Cryptocurrency Scams Operate And Avoid Them)
Binance operates in many countries around the world, with the exception of Japan, China and the US. In these countries, coin regulations are strict and restrictive, but not so much in Europe. The friendly environment in Europe led to the creation of Binance Jersey in January 2019 to target the European arena. For the Australian arena, there was also the creation of Binance Lite Australia that allows residents to buy Bitcoin using Australian dollars. (This is: The Strategy Of Cryptocurrency Whales In 2019)
On Binance Jersey, clients are able to trade between fiat and coin, and the service is available in the same countries as the main branch of Binance. It is on Binance Jersey that the platform launched their own stable coin that is tied to the value of the British pound. The Binance GBP stable coin (BGBP) is tied to an equal amount of sterling pounds held by Binance in their bank account. Stable coins have become popular since Tether became so popular. Investors love stable coins because they can be held when the coin arenas are volatile. (Do you know: How Did Tether Survive The Coin Arena Selloff?)
There is yet another platform from Binance called Launchpad from which companies can launch their projects and receive funding from the public. It’s similar to an ICO except that Launchpad uses the BNB token rather than Ethereum or Bitcoin. Anyone with a verified account on Binance and holding BNB tokens can log into the Binance Launchpad platform and browse the many projects in need of funding.
In October 2018, Binance even launched Binance Uganda to allow Ugandan residents to make deposits in fiat in Ugandan shillings. This year in April 2019, another subsidiary Binance Singapore was launched that would allow residents to make instant deposits and withdrawals in Singapore dollars (SGD). By July 2019, Binance CEO Zhao Changpeng (CZ) reported that user base had been growing by 20% every week accompanied by a huge increase in trading volume. Apparently, Binance continued with their policy for low trading fees, and that attracted a lot of traders and investors. That the Singapore government had eliminated the goods and service tax (GST) for coin assets had to be a major contributor to the growth of the platform in Singapore. (Forex Trading in Singapore: Laws and popular FX brokers)
Binance Coin (BNB)
We could go on and on talking about Binance and their features, but that would take a long time. Instead, let’s focus on the main topic subject – those BNB. BNB was launched at the same time as the Binance platform itself. During the 2017 ICO, anyone who invested in Binance was rewarded with BNB tokens that were worth about $0.11 back then. Today the coin is worth just under $30 and with a arena cap of over $5 billion showing just how popular the coin has become. You can keep track of the price of BNB through some CFD trading brokers who offer a derivative of the coin.
Structure of BNB
At the time of the ICO in 2017, 100 million BNB tokens were offered to the investors, but the total intended supply was 200 million tokens. This may seem like a lot of tokens to be in supply compared to, say, Bitcoin with only 21 million tokens. However, Binance intends to ‘burn’ half of the tokens so that ultimately there will only be 100 million tokens in supply. Burning of the tokens means that they will be made completely obsolete and inaccessible with the transaction being recorded on the blockchain to show authenticity. The process is undertaken every quarter of the year depending on the trade volume at the Binance platform. So far, over 10 million tokens have already been destroyed leaving about 155 million tokens in circulation; the rest are still held by Binance.
Up until recently, BNB was an ERC-20 token that existed on the Ethereum platform. Being in such a structure, investors who had the coin could buy and store it in virtually any wallet, but he company did not intend on keeping things that way. In March 2019, Binance Chain was launched with BNB being the native token to be used on the blockchain. In the process, BNB switched from an ERC-20 token to a BEP-2 token, which is not compatible with as many wallets. Nevertheless, several major wallets have already been included in the Binance Chain including Trust Wallet, Ledger, Exodus, Enjin and several others. Despite the fear that BNB wouldn’t be as popular, Binance has proved that it can create an entire independent ecosystem without discouraging its users. (Learn about: The Future Of Ethereum In 2019 And What To Expect)
What is it used for?
The main use of BNB is on the Binance ecosystem. Holding BNB tokens entitles you to a discount on trading fees when trading on the Binance platform. Binance already has very low trading fees charged at a 0.1% commission per trade, but paying through BNB grants you a 50% discount. Apart from trading fees, holding BNB will also let you enjoy discounts when making withdrawals from Binance, especially if you intend to make large withdrawals. Besides discounts, BNB will also be used to participate in ICOs and projects being launched on Binance Launchpad.
BNB is not just meant for use on Binance chain, though, as a recent announcement from Binance shows. The company launched a #UseBNB initiative to increase the uses of the coin on various platforms. At the moment, Binance claims that there are 83 uses of BNB on companies such as BitTorrent, Magnum Wallet, Coinify, MachiX, etc. Binance hopes that more companies will start to accept BNB because it is run on the Binance Chain that performs really well. Being decentralized, BNB would be much faster and secure than other cryptocurrencies. (Will Institutional Investors and Sharks Invest Massively in Bitcoin in 2019?)
For speculators and investors, BNB can provide an investment opportunity simply from its changes in price. More about this will be discussed in the next section while advising you on the price predictions for the rest of the year. Some of the most popular CFD brokers like eToro going by eToro reviews have included BNB as a derivative for their traders.
Price analysis of Binance Coin
The image below is a graph of the price changes BNB has gone through since its launch in 2017. Despite a few downturns, the overall trend has been going upwards and registered a return on investment (ROI) of over 9,000%. At the time of the launch, BNB was worth about $0.11 and now it is worth almost $30. Clearly, Binance have achieved their goal to have a native token with high demand. To find out how the coin is going to perform in future, the best way is to analyse it based on fundamental and technical analysis.
From the chart above, it is clear that the transaction volume for BNB has not waivered over the past year. As already discussed, holding BNB and using it to pay for transaction fees provides a lot of discounts. With Binance being one of the most popular coin platforms by 24-hour trade volume, it’s no surprise that their clients use BNB to enjoy these benefits. Clearly therefore, there is a lot of demand for BNB. Beyond this, BNB also has other uses beyond the Binance platform, although that does not provide as much demand as yet, but perhaps in the future. (Gram (TON) Vs Bitcoin in 2019: Best Worldwide Coin Fight, Pros and Cons)
When Binance shifted BNB from the Ethereum platform over to the Binance Chain, a lot of investors were worried that demand would wane, but that wasn’t what happened. In fact, Ethereum lost trade volume after the move by Binance. One of the reasons was the lack of BNB on the Ethereum platform that was clearly producing a lot of trade volume. By moving away from Ethereum, a huge chunk of trade volume was immediately shifted away.
Another reason was the subsequent switch that some companies made over to the Binance Chain. The Binance Chain has a lot of benefits thanks to its use of a delegated prof of stake (DPoS) system rather than the Proof of Work (PoW) system used by Ethereum. Under DPoS, people who hold a lot of tokens are designated as ‘witnesses’ in the system and they get to validate transactions. In a Proof of Work (PoW) such as that used by Bitcoin, major miners get to validate transactions and set the rules. However, on DPoS, users can vote for the witnesses they prefer, and this keeps the designated witnesses on the right track. This system also means that transactions are much faster and energy efficient because they don’t require any algorithms to be solved by a processor. (These are: The Most Prominent Cryptocurrency Hacks and Scams You Should Know)
Due to these advantages of the Binance Chain, several companies already on the Ethereum platform have migrated. The only downside is that a BEP-2 structure is used on the Binance Chain rather than ERC-20. This is a new structure that is not yet compatible with the majority of coin wallets. That being said, Binance has a lot of clout in the coin-sphere, and they have been able to get the support of some of the major coin wallets already. With time, even more wallets will become compatible with BEP-2 and it may become a major competitor to Ethereum. (Should You Invest In CFDs Or Stocks To Make More Money?)
Binance is also popular among entrepreneurs who would like to receive funding through ICOs. Through their Launchpad platform, they have encouraged ICOs to be held through their platform. Further encouragement was provided by the incentives BNB provided to everyone who participated in these ICOs. Although the amounts of money being raised by ICOs have decreased since their peak in 2017, there is still a lot of money being raised in this manner, and Binance have positioned themselves to be one of the favourite platforms to do it from. In so doing, Binance is poised to remain relevant for the rest of the year, and that means that BNB will still be in demand and retain its value.
You would think that with all of the company’s success, Binance would be comfortable and focus on what they already have going. If you did, then you would be wrong since they keep creating subsidiaries in rapidly growing economies. For example, their foray into southeast Asia with Binance Singapore proved successful and immediately made the platform even more popular than those companies that had already set up shop there.
The image below is a price chart of Binance coin against Tether, which is a stable coin linked to the US dollar. Since we can’t get any chart of BNB against the US dollar, this is the next best thing. From the chart, it is clear that the value of BNB has been on the rise for most of the year so far. At the start of 2019, BNB was valued at $6 and it reached a peak value of almost $40 in June 2019, half a year later. This was a growth rate of over 500%, much higher than even that of Bitcoin. It is due to this spectacular growth that BNB has grown to become the 6th largest coin out of 2,365 cryptocurrencies in the world.
We can also try to predict the future price movements using the trend line and SMA as indicated above. First, the SMA is still heading upwards, a sign of bullish momentum. Add to that, the SMA has proven to be strong enough that prices didn’t go below it after the selloff in July. This observation is backed up by the RSI and trend line as showed on the chart above that both held up and kept prices going upwards. By extrapolating the trend line all the way to the end of the year, we can estimate that BNB will reach a value of $46.
How will Binance Coin perform for the rest of 2019?
The fundamental analysis tells us that Binance is very popular all over the world and that it is in very high demand. The technical analysis emphasizes this finding and proves that the value of BNB will continue to stay on an upwards trend. There is no reason to think that BNB will lose its popularity any time soon because it seems to have a strong position in the coin arena.
For more information about Binance Coin price predictions, here is a video with more insights: