With the exception of Steem, gambling ICO’s have been the only tokens I have held outside of Bitcoin to date. However, this week after minimal research, I bought some Binance coins (I will explain later in this post why I bought them so quickly). After getting annoyed with Poloniex taking different tokens off and on their exchange without warning (most notable one being Steem) I decided to try a different exchange. That exchange was Binance, which interestingly enough has its own Binance coin.
So aside from Poloniex being a pain with token listings why did I try Binance?
Aside from all the noise on social media about how good the Binance exchange is, the trading fees are substantially lower. My plan was to try them out and buy some Steem using some Bitcoins I had sitting in a wallet. Now I am sure there are both positive and negative stories from people changing exchanges, but for me the move has been great. Moving Bitcoin to Binance, trading it to Steem and then the withdraw was a lot faster than my experience with Poloniex and at a cheaper rate.
So what is the Binance coin all about?
To be honest I did not even know about the Binance coin before I did my first trade. And when I did finally see the coin listed on their exchange and coincap the first thing that came to mind was the scam coin Bitconnect (apologies to the Binance team for the initial impression in my mind). This is probably why I ignored all the hype on twitter at first. However I then noticed that if you hold the Binance coin you can use the coins to get a 50% discount on the already cheap trading fees.
Currently the trading fee is 0.1% and with the Binance coin it drops to 0.05%. So naturally, like a lot of other people using the platform I bought some Binance coins to make the trading cheaper. In total so far I have bought about 0.2 Bitcoins worth which should cover all the fees for future coins I want to purchase. Now that I bought the tokens (so quickly) I decided to delve a little further.
On a quick side rant I have made a bit of noise about Poloniex already but an exchange like HitBTC (that I have had to use to purchase smaller tokens) it is even more brutal on the fees. Currently they are charging 0.0006 Bitcoin for just depositing Bitcoins on their platform, which is incredible considering that there is no real cost associated with this that I can tell?! So luckily Binance doesn’t charge this fee. On the downside, to date Binance does not list all the gambling ICO’s that I have been involved with. However, considering how new the exchange is, I am sure it will only expand.
Of course cheaper trading fees for Binance coin holders is not everything Binance is about and so I read the Binance white paper which was an interesting read. If you are thinking of buying some Binance coins definitely give it it a read it is not as long as some of the other ICO white papers out there! Some key details that I have found from the white paper and their site include:
Binance coin and exchange key details:
- Dollars are not accepted on the exchange. The exchange only supports cryptocurrency deposits and withdrawals. Obviously meaning you can’t transfer fiat currencies in and out of Binance. So if you want to use the exchange or buy the tokens, you’ll first have to buy BTC, LTC, or ETH first.
- The trading discount for Binance holders will not last forever and will be as per below:
|1st year||2nd year||3th year||4th year||5th year|
|Discount rate||50%||25%||12.5%||6.75%||No discount|
- There are withdrawing limits on the exchange. For new unverified users the limit is 2 Bitcoins per 24 hours but if you plan to go much bigger you can just verify your account and get that lifted to 100 Bitcoins per day. And if you plan to go bigger than that again you can contact them and they can set up bigger limits for you.
- Binance was originally launched as an ICO. BNB is the token name for Binance and it is an ERC20 token built on Ethereum (like nearly all ICO’s at the moment). The total supply of BNB tokens at the launch was 200 million and this number will only get smaller (due to burning of tokens from profits).
- Although 200 million tokens existed at launch, 20% of all quarterly profits are used to buy back and burn the BNB tokens. In fact in the last quarter the profits were over $200 Million and as such the max token supply is already well under 200 million. The buyback will continue until 100 million BNB tokens are burned.
- The tokens at launch were allocated 50% towards the ICO participants, 40% to the founding team and 10% to angel investors.
- To keep the team from running away and abandoning the platform (after they have made so much so fast) the founding team tokens vest very slowly over a 4 year period:
- 20% (16 million ) After the ICO
- 20% (16 million) After 1 year
- 20% (16 million) After 2 year
- 20% (16 million) After 3 year
- 20% (16 million) After 4 year
- The CEO is a bit of a big wig and forbes even put him on the list of Billionaires. Look up Changpeng Zhao on linkedin or google to get his solid looking resume.
- Binance has a sweet referral system that rewards you with 50% of your referral’s trading fees as commission for the first month of his or her trading.
- Trading liquidity on Binance is solid so far. This means you don’t have stupid big buy and sell gaps like those on other platforms. In fact I believe the daily volume has already surpassed that of Poloniex which means it is doing Billions of USD equivalent of trades per day!
- Finally a point that I liked from the whitepaper was: “In the future, Binance will build a decentralized exchange, where BNB will be used as one of the key base assets as well as gas to be spent.” I really like that idea as any centralized exchange is eventually doomed to failure in my opinion.
What is Binance worth? How much did I buy?
No idea what it is worth but given that it made over $200 Million in profit in the last quarter and it is not even a year into operations (as of writing this), it could have a very bright future. Assuming it grows a bit more and makes a Billion a year in profit, surely it is worth a large multiple of that. With a bit under 200 Million tokens around at the moment (due to some already being burned) if each token is at $25 that would give it an annual earnings ratio of 5x. Which to me seems pretty reasonable. Given that it is trading around $9 at the time I bought in I think it has some decent upside.
Many things could impact the business though, of course the crypto market size, the competition, hackers, decentralized exchanges making Binance obsolete. However with the amount of users and liquidity on the site already, it is looking rather solid so far. As such I will likely buy more Binance coins over the coming month and get my balance up to about 1 Bitcoin worth (as of writing this I have about 0.3 Bitcoin worth).