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Founder and CEO Changpeng Zhao officially started Binance in 2017. Zhao launched the crypto exchange with co-founder He Yi, who was then an anchor on television as well as co-founder of OKCoin, which at the time was the largest crypto exchange in China – according to CoinMarketCap. The two teamed up and found incredible success together, now running the largest crypto exchange in the world as chief executive officer and chief marketing officer, respectively.
While the start of Binance was originally just a trading platform, the vision was always to be more. Binance aims to become the infrastructure service provider for the entire blockchain ecosystem. This article will break down what the company intends to become and how the launch of the Binance Smart Chain in 2019 is attracting developers to push Web3 forward.
Is Binance Smart Chain Here to Stay, Or Just a Fad?
The Binance team launched the BNB token as a deflationary cryptocurrency, originally on the Ethereum chain as an ERC-20 token. BNB would soon migrate to its own chain, the Binance Chain. Just a few years later, the company released another chain that runs parallel to the Binance chain called the Binance Smart Chain.
The BNB token has a market cap of just over $50 billion, with a circulating supply of nearly 160 million. The BNB token, which once traded for just 9 cents, trades today for over $300. BNB holds a top 10 position in coins by market cap, along with its stablecoin, Binance USD (BUSD).
Many Binance Smart Chain features are inspired from Ethereum and are largely compatible with Ethereum as well. The obvious inspiration taken from Ethereum was smart contract capabilities. Also, the BEP-95 proposal lowered gas fees and made the BNB token much more deflationary. This proposal looks similar to the one executed by Ethereum, the EIP-1559.
Binance Smart Chain History
The Binance Smart Chain launched just three years ago and has accumulated over 160 million unique addresses, just under 1 million of which are daily active users, according to ycharts. The chain has attracted a number of users largely from the decentralized finance (DeFi) protocols that the Binance Smart Chain offers. The number of users is beginning to rival that of Ethereum’s and is currently third in users overall, only behind Bitcoin and Ethereum. Binance has also made an entrance to non-fungible tokens (NFTs), with the launch of Binance NFT. The marketplace uses the Binance Smart Chain and attempts to make it simple for users to release NFTs for relatively inexpensive prices.
Pros and Cons of Binance Smart Chain
A couple clear pros and cons emerge when analyzing the Binance Smart Chain.
- Smart chain compatible
- Interoperable properties for both Ethereum and Binance Chain
- Supported by the largest trading platform in the world
- More centralized than other smart-chain-compatible blockchains
- Largely a copy of Ethereum with few tweaks
- Binance Smart Chain programmers less common than Ethereum programmers,
- Hosts many memecoins but lacks innovation seen on Ethereum
Binance Smart Chain Competition
Binance is fighting many wars; as a trading platform, it competes against Coinbase Global Inc. (NASDAQ: COIN) as well as a number of other platforms. The Binance Smart Chain competes with Ethereum, NEAR protocol, Avalanche and Solana. Binance has stated that its chain has interoperability qualities that make the competition friendlier than would be typical, if the future turns out to be multi-chain, then this statement could hold true.
How to Make Money With Binance Smart Chain
If you are looking for exposure to Binance Smart Chain, the most direct way to invest would be to purchase BNB. The token can be bought and held as an investment and staked through Binance. Interest rates vary from site to site, depending on the staking pool size and risk.
How to Buy BNB
Binance now offers Binance US for customers who reside in the United States. The platform trades BNB as well as a number of other cryptocurrencies. Also trading BNB is a number of decentralized exchanges (DEX) – if you have a crypto wallet, a DEX would be a great way to trade, stake and interact with the Binance Smart Chain. Another great option for U.S investors is Coinbase.
So, Is Binance Smart Chain Here to Stay?
Binance holds some key aspects of decentralization – while taking advantage of a corporate structure and great leadership. Some form of centralization is often good and having a capable CEO and CMO greatly helps the vision of Binance and its smart chain.
If Binance Smart Chain can attract serious developers, then it could be here for the long haul. However, public opinion can shift quickly and often is quick to cast out over-centralized projects. Moreover, Binance Smart Chain has been unable to retain active users in the same way as Ethereum because many projects on the platform lack innovation.
The large number of users on the Binance trading platform helps attract users to Binance Smart Chain. Sheer volume may bring many users to interact with the token, regardless of intent to put it to use.