BINANCE: EVERYTHING YOU NEED TO KNOW.
The google of cryptocurrency…
Binance has become more than just a cryptocurrency exchange or marketplace, it’s now a household name in the cryptocurrency and blockchain industry. With a wide range of products and services in cryptocurrency, binance has positioned itself not just as the largest cryptocurrency exchanges in the world but as an undisputable heavyweight of these Decentralized Digital financial system. Something I called the Mecca of crypto & blockchain technology.
Disclaimer⚠️: This post is not sponsored by binance and everything is my own original work based on my opinion and research.
BRIEF HISTORY.
Registered in Cayman Island, Binance was founded in 2017 by a Chinese-Canadian developer and business executive named changpeng Zhao popularly known by its acronym CZ. He had previously founded Fusion Systems in 2005 in Shanghai, China; the company that built high-frequency trading systems for stockbrokers. In 2013, he joined Blockchain.info as the third member of the cryptocurrency wallet’s team. He also worked at OKCoin as CTO for less than a year, a platform for spot trading between fiat and digital assets.
LOCATION & AREA SERVED.
Binance was initially based in China, but later moved its headquarters out of China following the Chinese government’s increasing regulation of cryptocurrency. It quickly enters the spotlight and became the largest cryptocurrency exchange in the world by daily trading volume and number of active users.
Just like the phrase, “practice what you preach” Binance operations are decentralized as they operate from different part of the world across Europe, Africa & Asia with headquarters in Cayman Islands & Mahé; Seychelles.
Binance provides crypto exchange services in almost every countries with few exceptions such as the United States.
In 2019, Binance was banned in the United States on regulatory grounds. In response, Binance and other investors opened Binance.US, a separate exchange registered with the United States Financial Crimes Enforcement Network and designed to comply with all applicable US laws.
PRODUCTS & SERVICES.
Binance offers a wide range of services across the blockchain network and cryptocurrency in general such as trading, analytics, investments, custody, education and research.
Binance Exchange (Trading)
As mentioned Earlier, Binance is the largest exchange in the world. With a beautiful UX design of black & yellow interface, it’s easy to navigate and let’s you trade from over one thousand cryptocurrency listed on the exchange and several trading pairs in spot trade.
binance offers perpetual contracts knows as (futures trading) with up to 125X and 100X leverage on bitcoin & Ethereum respectively.
Binance also offers margin trades (both cross & isolated) that let users borrow funds to trade by depositing a certain amount into the margin account as collateral. Users can then repay the funds along with interests. Also, expert traders can enter battle trades and compete with fellow users on the platform by speculating on a crypto price via perpetual contract.
Binance options is also another types of perpetual contract which uses a US-styled options rather than the European-styled alternatives.
In options trade, users can speculate on price of any listed assets (crypto) by paying a premium and selecting the desired expiry period, ranging from 5min to 1day. If trades is in favor of the user Profits can be settled manually by user or automatically when the options expires and users can only lose only the premium in worst case scenario.
P2P Trading.
This is a type of trade directly between users, Binance serves as a platform where users can interact and trade with one another with Binance providing escrow services & facilitate transparency & security.
Usually, fiat payment are made to a seller outside Binance and the trades would be completed on Binance.
BINANCE COIN (BNB)
BNB is the native cryptocurrency of the Binance exchange platform, it is used for paying transactions fee across the network, exchanges and platforms, it is also used in staking, yield farming and many more.
There is an initial maximum supply of 200,000,000 BNB coins, of which 168,137,036 are currently in circulation as of September 2021.
Binance conducts quarterly burning of the Binance Coin supply, with the goal of reducing the total supply by half — or 100,000,000 BNB. On July 18, 2021, it conducted its 16th quarterly burning, which was worth $390 million in Binance Coin price at the time of burning. However, that was not the most expensive burn — on April 16, 2021, the exchange burned nearly $600 million worth, in Binance Coin price at the time of burning.
According to the Binance whitepaper, exactly half of the maximum supply of BNB tokens was allocated towards the initial coin offering (ICO) and public sale of the token. The ICO was held in July 2017 shortly after the exchange launched, and saw Binance raise $15 million in funding, with Binance Coin price at $0.10 during the ICO.
STABLE COIN (BUSD)
Launched on 5 Sep 2019, Binance USD (BUSD) is a 1:1 USD-backed stable coin issued by Binance (in partnership with Paxos), Approved & regulated by the New York State Department of Financial Services (NYDFS), which can be used like a digital dollar. The BUSD Monthly Audit Report can be viewed from the official website.
BUSD is the third largest stable coin by market cap with over $17bn, only behind Tether’s USDT and circle’s USDC.
Based on the price stability, Stablecoin plays an important role in transactions, payments and settlement, and Decentralised Finance (DeFi).
BINANCE VISA CARD.
Binance offers a crypto Visa card that can be used like a traditional bank debit cards. With the Binance Card, you can spend your favorite cryptocurrencies at more than 60 million merchants worldwide. Just transfer crypto from your spot wallet to your funding wallet, and you’re ready to go. Spend your crypto anytime, anywhere. Getting a Binance Visa card is completely free and users can get up to 8% cash back of purchases.
To provide these services is the reason why in July 2020, Binance acquired a majority stake in SWIPE.
DECENTRALIZED FINANCE.
Binance offers centralized Defi products/services on it’s exchange, something they referred to as cedefi. This allows users to earn passive income from services such as Lending & borrowing protocol, staking (locked & flexible), savings, liquidity farming, swap farming that let users swap one crypto to another instantly and earn back up to 50% of trading fees.
BLOCKCHAIN: SMART CONTRACT PLATFORM
Binance Smart Chain is a smart contracts platform that allows Dapps to run on its blockchain. It is also an individual blockchain, but it isn’t the replacement for Binance Chain, despite it being newer. Binance Smart Chain is actually designed to run alongside the original Binance Chain. This blockchain was developed because the Binance Chain had some frustrating programmability limitations. So, the new blockchain comes equipped with EVM-compatible programmability.
Binance smart chain uses a Proof of Staked Authority (PoSA) consensus mechanism. A PoSA is a modified version of the original Proof of Stake mechanism, in which network users stake their identity and reputation (instead of tokens). It is also a combination of Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). If any user proposes a valid block (or transactional data file), they can become a validator.
With Dozens of Dapps on its network, BSC is the third largest Smart contracts platform according to defillama with a TVL of over $13bn only recently displaced from second position by Terra.
BSC’s largest Defi protocol is pancake swap, an AMM Dex & yield farming platform with a TVL of approximately $5bn as the time of writing.
BSC security concerns.
BSC had some security concerns as a handful of Defi projects on BSC was hacked & exploited with hundreds of millions of dollars worth of crypto stolen. such exploited Defi projects includes pancake bunny, Burgerswap, cream finance, Quibit finance, dego finance e.t.c.
Although these exploits are not directly as a result of the inefficiency of the blockchain. However, platforms and smart contracts deployed on BSC fall prey to what Binance describes as external threats.
An external threat could include any type of exploit of technical or operational vulnerabilities of platforms and projects built or deployed on BSC. Meanwhile, internal threats would include rug pulls, exit scams and insider theft or hacks.
However, With only 21 active validator nodes, it’s safe to say that the BSC is less decentralized and hence, less secured.
DATA, METRICS & ANALYTICS.
In the bid to expand its products and services in crypto industry, in April 2020, Binance announced it has acquired CoinMarketCap (CMC) which is one of the leading crypto data & analytics platform for an undisclosed fee but rumors has it that its about $400 million.
CoinMarketCap has a lot to offers for every crypto trader even beyond the walls of data & metrics, follow this link to see a comprehensive guide on using CoinMarketCap.
CUSTODIAL WALLET.
In July 2018, Binance announced that it has completed the acquisition of Trust Wallet, a secure and intuitive mobile wallet. Through this acquisition, Binance aims to provide a better service and to enhance the safety for all of their users.
Trust wallet is a secure, open source, decentralized and anonymous Ethereum wallet application that supports a wide range of ethereum tokens majorly ERC-20 and BEP-20 tokens.
In a bid to bootstrap its adoptions, In December Binance distributed about $20 worth of trust wallet tokens (TWT) as airdrops to several Binance users.
RESEARCH.
Binance has a research department known as Binance Research which provides institutional-grade analysis, in-depth insights, and unbiased information to all participants in the digital asset industry.
Such analysis includes Crypto projects reports, institutional crypto reports, global crypto users index and some latest insights & analysis.
BINANCE CUSTODY.
As more businesses, corporations and wealthy individual investors recognize the value of digital assets such as cryptocurrencies and are seeking to own them, the need for custodial services that ensure the safety of their assets is needed.
Using advanced cutting edge technology, Binance Custody offers a secure and robust institutional-grade virtual asset custody platform that is both regulated, compliant and insured by standard insurance policy.
EDUCATION.
Binance has an educational/tutorial platforms known as Binance academy.
On it’s home page the first sentence you’ll see is this “Your one-stop guide to all things crypto. Whether you’re a rookie trying to understand mining or a veteran looking to develop a trading strategy, we’ve got you covered.”
Binance academy allows anyone to learn about blockchain, cryptocurrency, security, technology and many other related topics.
VENTURE CAPITAL.
Binance Labs is a crypto VC firm that identifies, invests, and empowers viable blockchain entrepreneurs, startups, and communities, providing financing to industry projects that help grow the larger blockchain ecosystem.
Binance labs has an incubation programs which showcases the most promising blockchain projects, founders, and developers worldwide. They just recently announced its season 4.
Binance labs portfolio includes some exciting crypto projects that are now heavy weight and also making headlines in the crypto space, such cryptocurrency projects include Polygon, Terra, The Sandbox, Audius, 1inch, injective protocol, Harmony, Certik and many more, just to mention few.
Final thoughts.
There are probably other important things about Binance that I might have missed out but this is more than enough to realize that Binance has not only positioned itself as a heavy weight in the blockchain & cryptocurrency market but also indispensable.
But there’s so much regulatory concerns on Binance as regulatory crackdowns on blockchain, cryptocurrencies & digital asset trading companies is ever increasing.
Also Binance is pretty much centralized in almost every ramifications and like the saying goes absolute powers corrupts.
There’s no doubt Binance is the biggest cryptocurrency company in the world but it’s still far from monopolizing the market.
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