All about Binance Token- BNB
Comprehensive Analysis Report about BNB, What is BNB?
I have never owned BNB at the time of writing. But I purchased BNB to participate in the IEO run by Binance Launch pad.
This is not financial advice, as always, please do your own research before deciding to invest. All research material is solely my own and not affiliated to Binance.
If we were to look back I think we would all agree that the year of 2018 was a tough one for all crypto investors.
After such a prolonged bear market, I can imagine a significant pre-investment hesitation of crypto and blockchain projects.
Whilst this bear market has been on-going, many projects have been conducting their ICO funding and continued to issue coins and tokens.
Among them, there is a very sensational token which has grabbed investors and holders’ eyeballs, BNB, aka. Binance Token.
These kinds of exchange tokens are commonly used as a way to get discount transaction fees whilst trading, and also a way to increase trading volume. Many exchanges, such as from Huobi to Okex have issued their own tokens, but comparing to them, BNB was something different and naturally, the attention to this token was enormous.
BNB is showing a new hope to Hodlers by drawing a dramatic graph, the masterpiece of Binance, what is BNB? and What is the story behind this trailblazing company?
Who is the creator of BNB? What is Binance?
1. It is a well-known centralized crypto exchange that boasts the largest trading volume in the world.
Transaction speed is very fast. According to a recent Binance announcement, they have a proud record of 1.4M TPS(Transactions Per Second).
Also, Binance is very well known for its aggressive stance on maximum security for its users. As a user of Binance, I have never experienced any kind of security breach, nor had any transaction stuck for no valid reason, something that can’t be said for every exchange.
At present, there are more than 500 top-level experts that have been joined and are now working alongside CZ (CEO of Binance), I personally see its sustainability as very high.
2. Binance’s annual revenue reached the level of global top companies which are nearly 20 it’s senior.
It boasts more than $ 100 million in transactions per day and is used by 9 million users worldwide. In a dramatic example, the world-renowned Deutsche Bank has been surpassed its first-quarter revenues by Binance.
3. The power of Binance’s community is enormous.
The amount of community of Binance is renowned, being dubbed the ‘Binance Angels’. As a give-back, Binance has invested about $ 100 million in funds just for its community.
4. Binance will build its own blockchain, forked from Cosmochain, with its own capital and technology. Binance DEX is also being developed on the basis of its blockchain. Test Net already has been running without any noticeable errors.
Binance Token, BNB was issued earlier than any other exchange Token and as a pioneer of exchange, this token was much sensational.
It was created in July 2017 in order to find ways to reduce transaction costs and drag up the trading volume of Binance.
Let’s look at the overview of BNB;
Latest Price: 10.18 USD (standard: February 25)
IEO Pegging Price: 10.01 USD (standard: February 25)
Market Cap: 1,296,264,671 USD
Volume (24hrs): 75,160,201 USD|
Circulating Supply: 141,175,490 BNB
Total Supply: 189,175,490 BNB
BNB has been distinguished as a utility token based on Ethereum Blockchain, but until now, Binance has been continuously developing Binance Chain. It is now only a matter of time when BNB will map over to their native chain- the Binance chain.
The Prelude of Binance Chain- One of the most influenced public chains in the world.
On February 7, 2019, during the course of China’s nationalization, CZ, the head of the organization, actively engaged in an AMA with the community through Twitter, where he is seen frequently interacting with the community, and as he mentioned there, on February 20th, the Test Net come online. https://testnet.binance.org/
In March 2018, when the bear market was just starting to find traction, Binance had a very well timed and clean presentation of its Binance Chain development. Up until the date for the test-net was officially announced, the noise marketing and the facts strictly refrained. On February 19, 2019, Binance released an article via its social media why there is a need for its own chain, and its longer-term plans, including its upcoming DEX.
Through our internal testing we have not seemed to find any serious bugs or errors, whilst creating multiple wallets, no errors or lagging problems have occurred.
User-friendly UI, professional wallet creation speed, clean homepage, etc. So far, many users seem to have no problem using it.
In-Depth analysis of Binance Chain
Whenever we talk about the BNB, We cannot separate Binance Chain apart.
Then, What is Binance Chain?
Binance Chain is categorized by one of the Public chains and will be a blockchain for the trading of blockchain assets (coins, tokens, and other crypto assets), and increasing the liquidity of constantly-generated blockchain assets.
There are three factors which need to be focused when Binance team develop its chain; performance, a real case, and asset liquidity.
Currently, distinguished as one of ERC20 tokens, BNB will soon be moved to the Binance Chain as soon as the main net comes out, and it will be the first Native coin.
Binance’s ultimate goal is :
We will dissolve the revenue of Binance
from “Company” to “Binancians(Community)”.
The first step toward to achieve the goal is Binance DEX, which everyone has been expected.
Binance chose its DEX as the first practical use case on Binance Chain. They have announced that they will move current assets and operating system from Binance, which is currently composed of a centralized system and also has been criticized by people, to their DEX.
Binance Chain as Keywords
1. Node and TPS and COSMOS, TENDERMINT
Since Binance has already run its test-net, the community has asked a lot of technical questions about the current test net.
Nodes always play an important role in the blockchain. Through the Twitter AMA, CZ officially stated that there are 11 nodes currently in use on the test net (video 1:30) and that it is working fine. Comparing to the other projects such as NEO and Ripple, the level of operating Nodes is quite similar. He also mentioned that those nodes will be user-friendly and will require tremendous technical support during operation.
- It seems like they have not thought of running a large number of nodes until now whilst other projects boast a magnificent number of TPS(about8,000 to 20,000). Their Leader starts another crucial business with a proper amount of technical support and nodes rather than doing unnecessary marketing. A year ago, the professional crypto-media in China, 8BTC, published an article that Hangzhou local government built a blockchain with nearly 20,000 TPS, but after the announcement was published soon many experts have confirmed that this is technically impossible, and was, therefore, put down as noise marketing.
Second, Utilizing Cosmos and Tendermint.
The reasons for picking Cosmos and Tendermint project was very simple. According to CEO CZ, those projects are now an almost identical platform to the Binance Chain project that they are currently building.
Cosmos and Tendermint are special for not uploading the SDK, meaning Binance will not adopt the Cosmos and Tendermint itself but will use the modified fork version of them for Binance Chain. Also, Unlike other projects, CZ announced that Binance would not use smart contracts. (Video 4:15)
-What is Cosmos then? It is simply an Inter-Chain platform that allows you to connect different types of blockchains.
For an easy example, Bitcoin and Ethereum have different structures, but if we can connect these different blockchains together then the synergy will be tremendous, not only simply increasing scalability, but also could become a bigger reality.
Furthermore, while Ethereum or EOS now boast their vertical scalability, Cosmos pursues a more horizontal, decentralized approach.
This factor directly relates to what Binance and its team are now pursuing: Decentralized.
Right now, you can only find ERC-20 tokens that have been listed on Binance DEX, but as Tendermint and Cosmos are very closely related to NEO, NEP-5 tokens will be listed in the very near future at the front primary line.
Currently, NEO and Tendermint’s DEV team are working on the overall system along with Binance team.
In the future, NEO projects & NEO holders can look forward to being integrated.
2. DEX, and Decentralization.
Binance Chain’s first use case is Binance DEX, a decentralized exchange.
Now that the test net has come out, all users can now signup and creat their own wallet.
As one of the users of Binance, I have also tried it, and surprisingly the UI was very neat and easy use, My worries were gone with the wind watching screen create my wallet and transact at incredible speeds.
Although DEX is a “decentralized” exchange, it is not a system that is operated by itself.
How will Binance DEX work in the future?
Like other exchanges, Binance DEX will receive listing fees. According to the AMA with CZ, The listing fee will cost on average, 100K USD, and the reason why they have a high listing fee is to filter spam projects and scammy projects and teams more effectively. CZ also additionally mentioned that Binance Dex will have some validators who will be in charge of listing projects.
-What are “validators” doing?
They have some sort of power who have voting rights in the consensus of Tendermint. It is also normally called a “Miner”.
The validators are delegated token holder ho will stake their tokens and have a voting right in the process of creating blocks.
How can our users know that Binance Chain is really 100% decentralized in real life?
According to CZ’s answer, it is very simple.
He took a cold wallet as a good example to explain this.
“If you directly connect that to the chain and check if your private keys still remain in the hard wallet device or not. If not, then the chain should be decentralized.”
- This means that those hard wallets will never display your private key publically. This will always be stored on the device, avoiding the chance of being hacked.
What evidence is there other than above?
The influence of Validators.
Unfortunately, according to CZ, even after the main net is online and BNB is actually on the chain, Binance DEX will still have the same operation way as the centralized exchange.
This is an inevitable part of the operation to run the DEX more smoothly and successfully.
Eventually, they will gradually remove the influence of the operation team by increasing the participation of validators and communities. (Video 9:05)
-It is up to Binance to decide how to operate the nodes more effectively comparing to other existing projects, the meaning is the activeness of participation of the communities and validators, the one who actually runs the DEX in the future, and the right time when they need to increase the percentage of participation of them.
Right before they have their own DEX, the whole ecosystem of Binance is used to a more “centralized” way of operation, it is time to change dramatically. That is why the role of the management team of Binance is very important at this moment. The management team needs to know how and when they will encourage the communities and validators to participate in the DEX.
The team that was domesticated in centralization need to put their power to others. DEX would have to go that way, and even if there is a dramatic error or bug in the process.
I reckon the only actors who can deal with this properly and effectively is Binance and its team.
BNB as keyword
1. BNB and “Burning”
Since $BNBis listed, CZ, the head of the Binance, has made it very clear about the reasoning behind the burning token events;
“to share the revenue with the community.”
What is Burning token event?|
According to the team, Binance will buy back their coins (BNB) at market price by using 20% of each quarter’s profit and will “burn” them, meaning these will no longer be in existence.
Since the summer of 2017, when the $BNB was issued, the token burning has been ongoing on a regular basis, quarter after quarter.
At TGE, a total of 200 million tokens have been issued, and Binance regularly will perform burning token events until a total of 100 million BNB have been burnt.
So far (February 25, 2019) there were six Burning token events.
- The ‘Burning’ event, which permanently deletes the coin, will reduce the total token volume and the value of the remaining tokens will automatically increase as the burning event keep going on.
There are very few ICO projects that issue hundreds of millions and still boast a real use case.
Originally, these issued coins are somewhat used in “real cases”, and one can argue that the circulating supply is literally used to cash out, however, as there are liquidity and interest, it is not a big issue. The issue begins when no one is using it,and people begin to ‘forget’ about it, the community begins to sell their holdings and the volume on the exchange reaches almost zero, later becoming delisted and the project disappears altogether. There are many that have followed this exact path.
BNB’s burning event not only gave people “Buy Pressure”, but also a kind of performance event. In conclusion, prices have risen steadily.
I do not know exacts because I do not have a revenue report on how much I will buy at the time of Buy Back during the event, but I am still using the exchange listing cost of the centralized exchange and not the revenue from the BNB to date, It is predicted to execute a buyback and incinerate.
2. BNB, Binance Launch Pad, and IEO
On February 25th at about 22:00 in China, the token sale of the fetch.ai started on Binance Launch Pad in terms of IEO(initial Exchange offering) and it only needed 22 seconds to be sold out. The result was a great success.
(The author did not succeed … because of buffering.)
After all this talk of how successful $BNB is, one could ask:
“Where on earth can you use BNB?”
I would say that many people will still primarily use to trade BNB-paired tokens, utilizing the discounted transaction fees that come with $BNB.
As the concept of IEO has been created on all brains of communities, the use case of BNB is expected to be enormous.
Previously, through its blog, Binance has published the contents called “Ten Ways to Use BNB”.
I could not take most of the content seriously because of the PR of BNB, but I wanted to go over a few things from here.
- BNB as a utility
The role of BNB as a utility token is similar to Ethereum.
- It is mainly for cutting off transaction fee on the exchange, ie a GAS required when an asset is moved or withdrawn. According to the announcement of Binance, when using BNB, the Fee will be reduced by 50%.
It is also possible to trade directly with coins or tokens paring with BNB listed in Binance now.
This means that even if those assets are moved to DEX, the way of a transaction will be similar or almost exactly the same, also moving forward, the discount rate will still be 50%.
- BNB, token for IEO of Binance Launch Pad project
By February 25, 2019, four different blockchain projects already have been completed their IEO on the Binance LaunchPad.
Those projects were successfully sold out, from the very first project Gifto, Bread, the most sensational token BitTorrent from Tron, to Fetch.ai, where all the tokens were sold out within an extremely short time.
- Most of the projects have not been able to use their actual tokens and coins to the real cases in real life so far, meaning, they serve very little purpose of being created, however, looking from the perspective of Binance, they managed to invent the Binance Launch Pad and find a very effective way to use their token, $BNB.
After the success IEO event of BitTorrent and Fetch.ai, the demand of BNB has remarkably increased and its prices have been pumped, with its volume at an all-time high.
Binance has successfully started to turn back investors and communities’ minds that have a deeply negative impression of ICO with a name of IEO on its platform with its reputation at the forefront.
It was a very clever strategy. Someone would criticize that the way of their business is too distractive, they are expanding their business model too aggressively, but for me, it seems they are catching a good time to get all the opportunities that come in a very smart way.
3. BNB and STO
Binance is waiting to play their cards when it comes to STO’s as there are still many unanswered questions surrounding this upcoming trend. (Video 41:17)
I think we can kind of find our answer in CZ’s twitter.
Communities kept asking about STO, which has been a heavily publicized topic since late 2018. Communities and investors are very curious about Binance’s stance on STO’s and if they are willing to create their own, or list others.
- As others have mentioned, CZ, as a representative figure of Binance has expressed a “positive” sentiment about STO and also mentioned that now the team is waiting for the results of their research and review from the lawyer. Unlike other utility tokens, it needs to be dealt with in a more cautious manner as these tokens are mostly backed to equity which would entitle holders to dividends, similar to traditional stocks.
In my own opinion, it seems likely that BNB will issue or trade STOs.
In order to make token securitize, you have to pass a “Howey Test” ;
- It is an investment of money
- There is an expectation of profits from the investment
- The investment of money is in a common enterprise
- Any profit comes from the efforts of a promoter or third party
If BNB or BST (Binance Security Token) will become a security in the future, the token needs to pass the above criteria.
- I would like to say Binance’s token or BNB can easily satisfy those conditions as one of the funds for investment, investments for Launchpad IEO’s, exchanges and other businesses, and because they are created by three-party’s efforts so BNB or its future STO token should “pass” those conditions.
At present, lawyers or any other professionals are very hesitant to deem tokens as securities as many regulations have not yet been firmly established in the blockchain and crypto industries.
The picture above is a process that should be proceeded if the token expects to become STO token, the Red box, and the arrow signs are the hypothetical theory that I made myself under the condition that Binance is right now considering STO token issuance. The red arrow insists that the current stage that Binance is at, and the box means that if Binance issues their security then they will use their own platform or establish another platform for the STOs.
And, as you can see in section 3a on the graph, they would currently need a separate platform to list their security tokens, and I do not think it is a big issue because it is a problem that can be solved somehow by the connections and funding of Binance.
If you look at some of the current CZ comments and answers that often appear on Twitter, I think the team is constantly contemplating STOs with Lawyer lawyers.
4. BNB, Buy? or Sell?
All readers will probably be considering it now.
So should we buy or Sell it? or HODL?
I have been trying to read the trend while drawing a new level on trading view, drawing the current level, peak, and low from the Monthly chart to the Weekly and Daily.
As BNB is a new token, it has a short history, has been publicly traded for a very short time. So as an entry level of trader, it’s really hard to read the trends in the chart and estimate the range of price.
At the same time, Binance’s IEO event was going on, there were several ‘pump and dumps’ within the normal trades.
As I was learning and identifying highs and lows, namely Swing lows, highs, I could see that the BNB regularly tested and rejected these highs and lows.
Nevertheless, the reason why I was clicking the “buy” button was because I could see the potential of Launchpad’s influence and its IEO process for a specific time period.
Before the exact trend comes out, we can not say that the chart will be exactly hit or overhead the specific price or also cannot say it will come down, but if you look at the Macro part, this token has a value to buy and trade in the near future.
So in short, I have bought and will continue to buy BNB.
I am not only curious about the price of BNB but also am wondering about Binance’s ecosystem, which Binance and CZ, will formulate in the future.
The rapid growth of Binance and its aggressive market penetration, and movements to create their own ecosystem will spread their words broadly.
Which other projects have attracted our attention?
What’s NEXT? Stay tuned!