Binance coin (BNB), the newest kid on the block is reliving Bitcoin’s glory days. Bitcoin, the most popular cryptocurrency based on market capitalization may be revamping to give us something outstanding, but BNB is keeping us happy till then.
BNB’s Price, Market Cap, and Trading Volume Increments
Developed by Binance, a Malta-based exchange, BNB’s price, market capitalization, and daily trading volume has been on the rise. The virtual asset is currently ranked 7th on Coinmarketcap’s platform, having outperformed several coins like the Stellar and Tether which were once ranked higher.
On January 1, BNB opened at a price around $6, but as at press time, it is trading over $15. The asset also began the year with a market capitalization of barely $700 million which is currently valued at about $2 billion. We could go on and on, but what has really brought about these significant improvements?
The Backing of the Most Popular Cryptocurrency Exchange
First off, being backed by the most popular cryptocurrency exchange gives BNB a head start in the race with other assets. Binance which was founded in 2017 and once based in Hong Kong had to relocate to Malta, a European nation that has crypto friendly regulations. BNB’s part in this aspect is to be used to pay for transaction fees as users trade on Binance.
Another major influence on BNB’s performance is the willingness of some companies to run their ICOs (Initial Coin Offerings) while accepting BNB. The latter has been the case of the just concluded BitTorrent and Fetch ICOs, and the yet to be conducted Celer ICO. Therefore, this creates a demand for the asset, which in, turn keeps it hot on the market.
The Launch of Binance Chain in the Upcoming Months
In the same vein, Binance intends to launch its own Blockchain, Binance chain in a few months time. The company’s aim is to allow platforms to take advantage of Binance chain to launch their tokens. Likewise, BNB will be used to pay gas fees which creates another use case for the cryptocurrency.
Asides these, Changpeng Zhao, the 42-year-old co-founder and CEO of the exchange revealed that the company has made a pact to use 20 percent of its yearly profit to buy back the asset and destroy it. As such, this reduces the amount in circulation and could positively impact on its price.
While commenting on the later, the CEO said:
“We are in the same boat…We don’t want the price to drop, to be negatively impacted. We are very much aligned with our investors.
Burning of Assets Could Raise Regulatory Concerns
Nonetheless, while this aspect is impressive, it has come under scrutiny by many who believe that the digital currency may be labeled as securities. If that’s the case, then it could pose some regulation problems in certain jurisdictions.
Zhao, on the other hand, clarified this when he said: “Personally, I don’t think it’s a security…I don’t think that there’s any regulation against destroying assets you have yourself. In the worst case, we can stop the burning process.”