What is Binance Coin? All you need to know

What is Binance Coin?  All you need to know

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  • Binance coin, which debuted in 2017, has become one of the most controversial cryptocurrencies.
  • Binance is able to handle three times more transactions than Etherium for half the cost.
  • Despite investigations into its parent company, many believe the coin will continue to grow.

While the binance coin may not be the biggest cryptocurrency, it is perhaps the most controversial.

Based in the Cayman Islands, the cryptocurrency has become a magnet for a list of allegations of tax evasion, money laundering and even terrorist financing by US, Japanese and Dutch authorities.

Despite the controversies, interest in binance coin has exploded. Its market capitalization is over $55 billion, a 1,300% increase from last year, and it has outperformed bitcoin and ether. And when the cryptocurrency market doesn’t crash, it’s either the third or fourth largest cryptocurrency.

How Binance Coin Began

Launched in 2017 by former high-frequency trading software developer Changpeng Zhao, the binance coin was originally a fork running on the Ethereum blockchain before moving to a blockchain owned by Binance, the popular platform of cryptocurrency trading. The exchange said at the time that it believes “significant improvements can be made to provide Binance users with a level of trading experience they are already accustomed to.”

By doing so, Binance was able to raise funds and acquire users much more easily than publishing a coin on an independent platform.

“BNB coin was released as a way for Binance to effectively do growth hacking,” said Patrick McCorry, blockchain developer and former assistant professor at University College London.

The growth hack model was so successful that it started a trend among altcoins, with smaller coins like leo following suit.

In November, the value of the binance coin peaked at $649.20 per coin, but the price has since fallen – although some crypto investors are optimistic about the coin’s prospects for this year.

“This is a short-term correction, which is still needed to test support and build long-term strength,” said Lisa N Edwards, crypto trader, influencer and advisor. “For the public, lower price movement is a bad thing. For a professional trader, that’s where the money is made.”

The popularity of the coin is also inextricably linked to Binance’s cryptocurrency trading platform. Traders receive up to 25% off on Binance’s trading platform when trading binance coins. Like Ethereum, it is used to pay fees on Binance’s blockchain, which can be used to build decentralized applications on the platform.

Its popularity also means that the coin has come under intense scrutiny from regulators around the world.

Last year, US authorities began investigating whether Binance was involved in money laundering. In September, the Commodity Futures Trading Commission added insider trading to the growing list of allegations against the Binance exchange. Earlier in the year, Japanese regulators warned the company against operating an exchange in the country without a license.

In August, Dutch regulators said Binance was not in compliance with the country’s anti-terrorism and anti-money laundering laws. Two months later, the company was forced to freeze associated accounts with a man in Mumbai, India, accused by the government of being a notorious drug lord.

How is Binance Currency different from Ethereum?

Binance coin is similar to Ethereum but can handle more than three times the number of transactions of the latter.

Ethereum’s main flaw is that it limits the total computation that can be done at any time to maintain decentralization. This limits Ethereum to 30 million transactions every 14 seconds, with users accruing “gas” fees when trading on the platform. For traders, being continuously stung with a charge every time they make a transaction can add up. By sacrificing decentralization, Binance’s blockchain can handle up to 80 million transactions every two seconds at a fraction of the cost.

“It’s one more magnitude,” McCorry said. “The downside is the loss of decentralization, because you need big, beefy computers to participate and protect the network.” Others have accused the project of to be directed like that of a “stoned teenager”, arguing that developers randomly change blockchain settings with little regard for the consequences.

At its peak in November, 16.2 million transactions took place in a day on the Binance Smart Chain. It is now fluctuating between 6 and 7 million per day, according to analytics firm BscScan. But Binance’s Zhao has big plans for the Binance Smart Chain: in October, he launched a $1 billion accelerator fund designed to promote adoption of the Binance Smart Chain and binance coin.

Can Binance Coin shed its controversial image and become a cryptocurrency leader?

Binance Coin has to weather many storms to continue playing its role as one of the leading cryptocurrencies. Apart from the current crash, in which the coin fell by 11%, the investigation into its parent company is ongoing. Any negative results could lead to lower prices.

Still, many believe the coin continues to grow.

“I currently think binance coin is undervalued for its usefulness,” Edwards said. “If we compare it to Ethereum, it essentially does everything ETH does, but with extremely low transaction costs and a strong development team that continues to develop and implement revolutionary new technology, which makes it makes it easier to use for the everyday man.”

Privacy remains an issue, especially since binance currency is not as decentralized as Ethereum. But decentralization can be a complicated concept.

“You could say it’s cheaper to use and it’s more affordable for a large population,” McCorry said. “And privacy is the same issue across all channels.”

Not everyone agrees.

“It’s not going to change the crypto world,” said Layah Heilpern, author of “Undressing Bitcoin.” “It’s another competitor to Ethereum because it’s faster and cheaper. But there are plenty of competitors. The whole DeFi space is focused on improving Ethereum.”

But Heilpern said binance coin will have a strong future.

“It’s not going anywhere because it’s Binance,” she said. “The chain will continue to grow and more projects will migrate from ethereum to binance – hence the price increase.”