Buy Binance Coin (BNB)
The Binance token is breaking price records and coming out on top in terms of capitalisation. In addition, the exchange and its ecosystem are actively attracting new users, outperforming US regulators' favourite, Coinbase, in terms of statistics.
Since the beginning of the year, the exchange's token, Binance Coin, has grown by 1,384% and ranked third in capitalisation, ahead of XRP, Cardano and Tether. Moreover, the growth rate of BNB price was several times higher than that of the largest cryptocurrencies - Ethereum and bitcoin.
Let's take a look at Binance's position on Crypto-Olympus to understand why you should buy BNB and what the fundamentals tell us.
Binance Coin is a cryptocurrency issued by the Binance exchange and traded with the ticker BNB. The Binance coin runs on the Ethereum blockchain with ERC 20 and has a strict limit of 200 million BNB tokens. The cryptocurrency is currently (May 6 2021) the third most capitalised, behind Bitcoin and Ether, with a capitalisation of $98bn.
The Binance ecosystem
From an investor's perspective, the value of Binance Coin can be determined by the evolution of its ecosystem and the growing popularity of its products. Binance has long ceased to be the usual centralised spot trading exchange. It now has its mining pool, decentralised exchange, tokenisation platform, cryptocurrency wallet, brokerage service, venture capital fund, blockchain start-up incubator, research and education projects and more.
It is worth noting that not all of Binance's projects are as successful as the exchange's core business. For example, Binance DEX is only in the middle of CoinMarketCap's decentralised exchanges ranking in terms of the trading volume.
The BNB token and its "stable" counterpart, the BUSD stable coin, can be used within the ecosystem services. Binance Coin acts as a "gas" in Ethereum: it can make transactions on the network. The token also allows users to pay for Binance services at more favourable terms.
Users also earn by storing BNB in savings accounts, a counterpart to bank deposits in the cryptocurrency market. The average annual interest for holding BNB is 0.67%, and BUSD is 5.05-6.66%. The tokens can also be used as collateral for loans in the Defi market.
The expansion of the range of products and services on offer, and the increased demand for cryptocurrencies, has led Binance to see the most robust growth in the number of users on its platform. This, in turn, may have triggered an increase in the value of the Binance Coin token.
Binance Coin Competes with Ethereum in the Defi market
Amid an expanding audience, among the possible reasons for Binance Coin's rapid growth is the popularity of the Binance Smart Chain (BSC) network in the growing decentralised finance market. The network allows users to earn from stacking and cryptocurrency loans, develop decentralised applications, and launch Defi tokens.
The Binance Smart Chain network has $43 billion in blockchain funds as of April 29. The exact figure for Defi projects on the Ethereum platform is $65bn.
Binance Smart Chain is in intense competition with Ethereum, which is experiencing problems with bandwidth and fees. As a result, users are looking for alternatives, among them BSC. In addition, the median commission in BSC is hundreds or thousands of times smaller than in Ethereum. According to various studies, this attracts investors: the number of active addresses in the BSC network has already exceeded that of the Ethereum network at the end of the first quarter.
The token's price directly impacts the dollar volume of blocked funds in Defi on the Binance Smart Chain platform - as it increases, so does the importance of funds. However, the volume of blocked funds has increased 42 times in the last 90 days, while the BNB exchange rate has risen only 14 times. This means that most of the growth is still due to the development of the BSC network as a Defi platform.
Despite the world-famous Binance Smart Chain, many users have questions about its decentralisation. For example, one of the leading analysts at research firm Messari pointed out that the network only verifies 21 validators, six closely tied to Binance. By comparison, the Ethereum 2.0 network has almost 135,000 active validators.
If you aim to obtain revenue, you can invest in Binance Coin. But don't forget to consider risks.
A $600m token burn
Another possible reason for BNB's rise is the most significant token burn in Binance's history. It leads to a reduction in BNB issuance and supply, which in theory should cause the price to rise.
But, firstly, the burn is conducted every quarter and according to a predefined plan, so it is unlikely to affect the token price dramatically. Secondly, the "biggest" was only due to the increased value of BNB. By comparison, three times as many tokens were destroyed in the previous quarterly, but they were worth much less.
Moreover, the primary growth of Binance Coin occurred before this event: from the beginning of the year until April 16, the exchange rate increased 14 times, but from 16 to April 30, after the burning, only by 12%.
For those looking to buy Binance Coin, coin-burning is a significant plus.
Interest in Binance Coin could also be driven by the hype surrounding the altcoin market. Bitcoin's dominance has been declining since the beginning of the year, and at the end of April, the share of other tokens in cryptocurrency capitalisation had reached 50%, according to the portal.
This may be due to a desire to "beat" the market. Like stock exchanges, investors seek above-market returns and are willing to buy riskier assets than the leading cryptocurrency. Some altcoins are rising faster than BTC for just that reason. Hence the interest in BNB.
Finally, one of the most popular versions of why the BNB token rose remains the Coinbase listing. In April, the second-largest crypto exchange by trading volume was listed on Nasdaq. The offering went well: ahead of the listing, analysts at the exchange had valued the paper at $250, but the actual opening price was $381, and the rate reached $430 at the moment. On the day of listing, capitalisation was rising to $112bn. Forbes noted that this result puts the stock exchange in the top 100 most expensive public companies in the US. By May 17, it was around $50 billion, according to Nasdaq.
The announcement of plans for Coinbase's future listing could draw attention to tokens from other cryptocurrency exchanges. Since most exchanges do not have shares, investors tend to see tokens as an alternative to investing in the company. More often than not, exchange tokens are the only way to benefit financially from the growth of a cryptocurrency exchange.
Since the beginning of the year, digital assets on the Binance, OKEx, Huobi, FTX and Bitfinex exchanges have grown by tens or hundreds of per cent. Binance Coin was the fastest-growing asset among these exchanges.
A notable jump in the value of cryptocurrency exchange tokens occurred on February 19. On that day, the last stake in Coinbase was sold at $373 per paper on the closed Nasdaq Private Market. The procedure was conducted to determine the price of a direct listing in the future. That's how investors learned that Coinbase's capitalisation could exceed $100 billion. And they didn't miss the mark.
So what does that leave us?
Binance is not only equated with a cryptocurrency exchange but also with many other services. Some of them are industry leaders. Some are just developing. Binance Coin is an integral part of the ecosystem. As the exchange itself writes on its blog, it is unclear why users prefer to invest in BNB - most likely, they do so for many reasons.
The rise in the value of the Binance Coin token could be based on both a belief in the Binance ecosystem, as reflected in an increase in users and the desire of speculators to join the bull market.
The Coinbase listing may indeed have pushed up the price of BNB, but differences in the way crypto exchanges do business do not allow the two to be equated.
How to invest in Binance Coin In Nigeria?
If you want to invest in Binance Coin In Nigeria, choose a reliable broker. Then you should register on the website. During registration, you will have to enter some personal details. This process is necessary to identify you later on.
A demo trading account is an account filled with virtual credit (play money). It simulates trading with real money. This way, traders can trade real market situations without risk. The account is especially suitable for beginners who want to start trading. In addition, first impressions can be gathered in a demo account.
Feel the desire and strength to try real trading? Want to buy Binance Coin in Nigeria? Then make a minimum deposit of $10 or more. Then, all the functionality of the site is at your disposal, and you can start investing and earning.
Fortune goes with the brave!