Prior to July 2017, no one had ever heard of Binance. Now, barely just one and a half years after its launch, the cryptocurrency exchange has surged to unimaginable heights of success – by humble estimates, consistently the top 2 crypto-exchange by trading volume.
The BNB token, which is the native token of the Binance exchange, was valued at about US$0.10 at the time of its ICO. However, due to its massive success, it has traded as high as US$20 at its peak. Its investors are obviously ecstatic, and Binance is known to have cult-like following within the crypto-sphere; due to its honest, down to earth approach in sharing the success with its token holders. For one, Binance pioneered “token burn” which is similar to stock buy-back. Every quarter, Binance commits part of its profits to buying back certain number of tokens in the market, and burning them. This inadvertently drives the price of BNB upwards and rewarding loyal token holders in the process.
Perhaps one of the reasons why many in the crypto-sphere can relate to CZ, is because he had a humble beginning. In fact, he was forced to sell off his house to fund Binance. The rest of course, is history. While Binance is no stranger to cult-like following, it has also faced accusations of outright market manipulation, and controversies. Either way, this article aims to take an objective look at what has happened, and what the future holds for Binance.
After less than 45 days of its launch, Binance was ranked among top 10 contenders of the industry and after 165 days, it was consistently one of the top cryptocurrency exchanges in the world. Never had anyone (in modern history) manage to hit such a runaway success in such a short time span, like Binance. It grew so fast, that its competitors had difficulty catching up.
Having a huge token listing of 150 tokens, in more than 350 exchangeable pairs on the platform clearly sets it apart. If that wasn’t enough, Binance doesn’t have a corporate bank account, and didn’t even trade in fiat currencies, until recently. Naysayers clearly had a HUGE shock when Binance declared that after 9 months of operations it had hit a US$1 billion in profits; and despite being in a down market in 2018, still clearly making more than some of the biggest and oldest financial institutions combined. It clearly is on track to the moon!
While mostly regarded as the most successful exchange in the world, it also had attracted tonnes of controversies. Some parties claimed that Binance demanded huge payments to be listed on their exchange, even when Binance and even CZ had outright denied the allegations. Of course, such claims are quite difficult to be substantiated because of the way the industry works. There’s little doubt that exchanges do operate on mostly grey areas, and they DO CHARGE hefty fees to be listed. However, these fees and the communications for payments are often done in secret (and in Bitcoins), and in a cryptic manner.
While being “nice” to its typical customers, Binance is also known to be ruthless to its competitors. Just recently, it announced that all its listing fees were to be donated to charity. This further signals to its competitors that it was about to give them a run for their money. As a result, barely a month after its announcement, some of the most popular exchanges had already entered into deals to be acquired. While we do not know if that was the “reason”, we do expect further consolidation in the industry as Binance flexes it muscle.
One can clearly see Binance flexing its muscles when it decided to muscle into the stablecoin industry, by backing Paxos. Bitfinex, one of the biggest (and baddest) exchanges around saw a huge run on its stablecoin, dubbed Tether recently when news of not only Bitfinex’s insolvency hit the news, but when Tether’s bank was rumored to be in trouble. We still wonder who orchestrated the “hit”. It was definitely very well timed!
While Binance is clearly the kingmaker now, it must be careful not to be too laid back. Its massive success has clearly attracted unwanted attention, as seen when it had to move offices from China to Singapore, and finally to Malta to find a government willing to back its ambitions. There’s no doubt, most governments are still anti-cryptocurrency and there’s no telling how far they would go to put Binance’s ambitions down. Perhaps this is why Binance and CZ is pushing massively into decentralizing their exchange. There’s no doubt that Binance DID NOT become an overnight success without hard work first being put into it. IF there’s one thing they deserve to have, it should be respect for their cunning.
The right preparations were made, and the accelerator pedal was pushed to the maximum at the right time – culminating in what we know today as Binance, possibly the next Alibaba in the making.
Cover photo by: Crypto Investor Asia