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Emerald Crypto | Feb 20
Bitcoin is the world’s leading cryptocurrency, Ethereum is the most widely used blockchain technology, and Binance is the world’s largest crypto exchange. An exchange is a market that allows users to trade cryptocurrencies or to buy and sell digital assets with traditional fiat currencies.
Binance Coin (BNB), the house coin of the Binance platform (like Ether is to Ethereum), has made a huge splash this week by surpassing Tether as the world’s third largest cryptocurrerncy by market capitalization. As of this writing BNB has a market cap of over $43.7B.
The price of Binance Coin was $37.98 on January 1st and according to Coinbase the current price is $281.39 – a 640.89% increase for those keeping score at home.
Binance used the Ethereum blockchain until 2019 when it switched to its own technology called the Binance Smart Chain. According to Ivan on Tech,
“Binance Smart Chain is a blockchain built with the flexibility for smart contracts, decentralized applications, and cryptocurrencies.”
The technology makes it “super easy for developers to move their projects onto the blockchain.”
Binance is known for its large centralized exchange but the venture has more to offer than a blockchain, a coin and a marketplace. They also have a funding scheme, an Academy, a Trust Wallet, a charity and a decentralized exchange.
Which leads to what very well may be the cause of Binance Coin’s current surge.
The DeFi movement in a nutshell is a move towards decentralization. When something is centralized there is an entity and usually a person who can be identified as in charge or running things. 99Bitcoins summarizes the goal of decentralization nicely: to replace centralized financial services with autonomous organizations that allow everyone to participate.
This means the decentralization of everything – currency, financial services, infrastructure, and exchanges.
Uniswap (UNI) has been the leading decentralized exchange on the market for some time now. The protocol runs on Ethereum but recently has had trouble catering to increased demand caused by the DeFi fad. According to Bhushan Akolkar of CoinGape, the result of this rising demand has been an increasing transaction fee (gas fee), which has shot to over $20 per transaction on average.
On Thursday Binance’s decentralized exchange PancakeSwap (CAKE) overtook Uniswap in terms of daily trading volume. CAKE runs on the Binance Smart Chain.
This news is likely at least one of the causes of Binance Coin’s sharpt increase this week. Additonally, Binance has a buy back program where they buy up BNB every quarter and then 'burn it'. Thus the coin is essentially deflationary which bodes well for the future value of the asset.
Is Binance the new Ethereum? That’s probably a little premature but this is definitely a trend to keep one’s eye on.