Within 6 short months, Binance Exchange climbed into the Top 3 global cryptocurrency exchanges, processing between $4-10+ billion daily. Read on to find out how their innovative token-based business model is responsible for their exponential growth.
This post was originally published on my Medium blog and can be found here. I hope you enjoy and find this helpful!
Igniting a Wildfire of Innovative Exchange Features For Traders
If you have been a crypto-trader for anything longer than a few months, you have probably also experienced a lot of negative news from exchanges in the space. Perhaps the most critical exchange matter in recent years was the issue with Mt. Gox who, in 2011, announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time [Source 1, 2]. 850,000 BTC today…$16,150,000,000 at $19,000 each.
I don’t know about you, but that’s an issue I would rather not experience first-hand.
“While Poloniex did not highlight the changes that were made, Reddit user NLNico parsed the document and composed a long list. There are some surprising changes, including bizarre items such as a claim to own anything that a user writes about the exchange on its social media accounts.”
This change ultimately included their users waive the right to participate in a class action lawsuit against the exchange — see where this is going?
Last example I’ll bring into the mix is that of Bitfinex Exchange; an exchange that has most recently taken scrutiny from the community because of their potentially shady dealings with USD Tether, a token that is said to be backed by USD at a 1:1 ration. However, Medium user Bitfinex’ed makes quite the case that both
Bitfinex and USD Tether are run by the same, elusive CEO who has yet to display a public audit of the USD Tether bank accounts — 1:1 USD:USDT ratio. This quickly becomes an issue because of a November 2017 USD Tether ‘hack’ which resulted in $30 million of USD Tether lost. Bitfinex’ed really does have some good info on this Bitfinex exchange we are talking about.
The point I’m trying to make here is that exchanges have not acted in the best interest of the stakeholders involved in their operations. Instead, exchanges seem to think they can just ‘pick off’ the Bitcoin that rightfully belongs to the traders on their platforms by claiming a ‘hack’ has occurred. Kind of funny blockchain technology seeks to solve this problem directly — exterminating bad actor intermediaries from the planet.
While Bitfinex is one of the busiest exchanges in the cryptoverse — a new breed of token-based exchanges are popping up to enhance the trading experience, giving traders more attractive options to the regular Bittrex, Poloniex, Bitfinex-type exchanges traders were pigeon-holed into using.
Early Attempts At The Token-based Exchange
Some of the earlier attempts at putting a token at the center of the exchange model are Cryptopia and their DotCoin; NovaExchange and their NovaCoin; and POSWallet’s PoSWCoin. Today, I don’t hear about Cryptopia’s DotCoin or POSWallet’s PoSWCoin and NovaExchange is closing their exchange in Q1 of 2018. These were clearly all innovators that were just a bit too early to the party.
Today, we can see a revival of the token-based cryptocurrency exchange business model being led by Binance and Kucoin Exchange as they forge the path forward to a new era of trader-friendly exchanges. The projects following the path of Binance and Kucoin’s are Exmo and HitBTC as they are both integrating tokens into their pre-existing exchange model, currently undergoing their own Initial Coin Offering (ICO) in order to initiate their token integration.
Binance The Behemoth: Killer of Bittrex?
Binance Exchange launched their ICO in early July (2017) and has experienced exponential growth ever since, nailing down the token-based exchange model better than any before.
For a quick look into the Binance Exchange platform, below is what I believe is an explainer-video submitted by Hypercube Studios to a video competition put on by the exchange — VERY well done, concisely explaining the platform:
The large infographic above is a bit hard to read so I’m going to break-down each section in strips to make it easier to read. Notice how these are the updates for their 5-months of operating as an exchange — Nov. 15th-Dec. 14th.
Binance has reached Top 3 in this short time period, but I want to highlight that the exchange may have at one point been the #1 exchange in terms of 24h volume. As I was tracking Binance’s 24h volumea couple weeks ago, the highest I saw while refreshing their CoinMarketCap page was $4.5 billion and they are casually trading at $2,470,175,294 24h volume as we speak. So the $2.1b figure in the infographichas been more than doubled.
According to CoinMarketCap, Binance’s BNB token was trading at $3.00 as of Dec. 14th, 2017. Today, as I type this article, Binance’s BNB has a price of $6.95 — this means BNB’s market capitalization has more than doubled again since just 11-days ago, now sitting at $687,878,972.
Continuing with the infographic narrative, we can see that Binance has quite a diverse user-base with users coming from all over the world with a majority coming from the United States.
I really do feel that it is necessary to point out that Binance reached 1.5 million users within just 5-months. Similar to the previous highlights, Binance has already exceeded 2 million users in the 11–days since this infographic update. I say this because I’m now seeing exchanges like Exmo and CEX talking about their ‘1-million users reached’ after Binance has already been talking about their user-base statistics — those other exchanges have been around for years and Exmo is currently running their own ICO to integrate a token into their business model, effectively following behind Binance.
On top of all of this, they have also upgraded the desktop client to use the Binance Exchange through — not all exchanges have a desktop client for download.
What’s more, the ‘Binance Launchpad’ feature has been added, allowing Initial Coin Offerings (ICOs) to go straight to market — this can be most closely compared to the way an Initial Public Offering (IPO)works in the world of traditional finance. Seeing this feature installed further reinforces the fact that Binance is already an institutional-standard cryptocurrency exchange platform to trade cryptocurrency on.
I mean, everything went completely fine with the Gifto Official ICO — so well that it sold out in 2-minutes. This is also key because over 235 ICO’s were launched in 2017, raising over $3.7 billion in aggregate to date.
I don’t know what time period the 22 new coins/tokens were listed in, but they bring Binance’s total trading pair offering to 194. This is an important metric to look at because not all exchanges have an expansive offering — specially exchanges that have gotten up and operational, while growing this quickly.
Quite possibly one of the most exciting actions Binance has taken on its way to becoming the top cryptocurrency exchange was their various trader competitions! They gave away multiple cars including a brand-new Mercedes Benz c180L and Jaguar XF. Those are just past competitions — Binance is currently running trading competitions that will give away:
- Time New Bank (TNB) tokens — 1st place = Porsche Panamera. 2nd place = Mercedez-Benz Smart Fortwo.
- Monaco Card (MCO) — 1st place = Lamborghini Huracan RWD Coupe.
The two mentioned are live and the Tron trading competition just ended in which Binance gave away a 2018 Maserati 3.0T Levante Classic and Mercedes-Benz Smart Fortwo.
Oh, we can’t forget Binance’s competitive referral program! As of the Dec. 14th infographic, the top referrer had earned roughly $333,000. As of December 25th, 2017, the top Binance referrers have earned approximately:
- 63.69082344 BTC = $891,671
- 30.66260902 BTC = $429,276
- 28.548836 BTC = $399,683
Not only is Binance bringing a new, higher level of standards to the way exchanges treat traders, but they are quite literally bringing prosperity to the entire community by constructing this synergy-wrapped business model.
Token Burning: Things Are Heating Up
Binance’s business model includes a buy-back and burn feature to increase the scarcity of BNB in existence. On their ultimate journey to becoming a decentralized exchange, Binance offers traders a fee-discountfor using the BNB to pay exchange fees with. Binance will repurchase 50%of the total supply of BNB in existence to burn and will do so with 20% of quarterly profits. Per this update, Binance’s first quarterly token burn resulted in 986,000 BNB tokens burned.
Keep in mind, Binance had not even hit $1 billion in 24h volume as of their 1st token burn. The BNB was much cheaper during their last burn, I think under $2, so while we may not see as high a number, it’s safe to say the team has built an extremely powerful scarcity/demand mechanism for the BNB.
This leadership team gives us so many reasons to support this project and I believe their ultimate goal of becoming a decentralized exchange speaks volumes about the innovation this project brings to the blockchain community. I am nothing short of excited to see what the next announcement is from the Binance leadership team!
Until next time!
Below are some resources for beginning cryptocurrency enthusiasts or others interested in something new:
- History of Cryptocurrency Exchanges — insightful look into the token-based exchange model and how exchanges have evolved.
- Cryptoversity by Chris Coney — The Online School That Pays You To Learn About Bitcoin, Crypto-currencies and Blockchains
- HitBTC Exchange — major exchange, access ICOs and multi-currencies.
- CoinTracking — Your personal Profit / Loss Portfolio Monitor and Tax Tracker for all Digital Coins
- Changelly — as easy as purchasing cryptocurrency gets — watch the exchange rate.
- CoinMate.io — Bitcoin arbitrage made easy.
- CEX.io — Buy Bitcoin w/ credit card, ACH bank transfer, SEPA transfer, cash, or AstroPay. Credit purchases are instant.
- CoinPayments — Receive payment via 70+ different cryptocurrencies — the crypto-PayPal.
- CoinMama — purchase Bitcoin and Ethereum w/ credit/debit cards & using cash through WesternUnion on their platform. Best for Euro purchases.
- Bit-Z — Newer Top 20 cryptocurrency exchange adding new, ICO coins all the time.
- Exmo Exchange — just launched their own coin and adding robust features to the trading platform.
- Gate.io — Cryptocurrency exchange listing new coins — get 10% off trading fees if you register with this link.
- CryptoPay — Spend your crypto. Can order a Euro, US Dollar or Pound crypto-debit card. Get 25% off using this link.
- LinkCoin — Your ticket to using LinkCoin, Bibox, and Bibox365 exchange products and ICO’s — mainly Asian cryptocurrencies that are not available on other exchanges.
- Cryptocurrency Resource Telegram Channel — acts as an ICO/blockchain news/resource channel for crypto beginners.
- Ledger Nano S — multi-cryptocurrency cold hardware wallet supporting Bitcoin forks. Keep your coins safe and offline. Cold storage.
- Kucoin — new exchange with its own token used to split exchange fees with holders, daily. Only exchange with NEO trading pairs too.
- Binance — 150+ cryptocurrencies with its own token used to pay exchange fees on the platform and give perks to traders on their platform.