Altcoins

Total Dominance: The Story of Binance

When people think crypto exchange, Binance is usually the first thing that comes to mind.

The exchange has seen meteoric growth, reaching the highest volume of any exchange just six months after launch and valued at almost $2 billion within the same time frame, making it the fastest ever platform to reach ‘tech unicorn’ status.

Beautiful.

Binance recently celebrated the year anniversary of the platform’s conception by the team, making it a fitting time for an overview of the exchange, how far they’ve come, and obstacles met along the way.

The Early Days

Binance was founded in China 2017 by Changpeng Zhao and Yi He, both of whom worked previously at OKCoin – Zhao was the CTO for a short while. The project raised $17 million in the good old days of 2017 when ICOs were a little more… modest than the behemoths of today’s crypto space and pioneered the use of native exchange tokens with the launch of BNB token which offers traders a 50% discount on trading fees, a model that has since been adopted by other exchanges.

The project has since relocated multiple times due to harsh regulations in their local region, expanding to Japan and Malta to pursue more lenient regulations.

Since then they’ve had their share of legal battles and expansionary initiatives. Let’s start with the good stuff.

International Initiatives

Binance established their new global compliance center in Bermuda, a small island territory with a population of 65,000. Through the Binance Charity Foundation the company put up $10 million towards local educational programs related to blockchain technology and an additional $5 million investment in local blockchain startups, creating 30 jobs for locals and 10 for external staff.

$15 million goes a long way in such a small place, hopefully allowing Binance to make a significant impact both long and short-term in the local economy, and hey – it doesn’t hurt to buy a little goodwill in the place where your compliance center is set up, right? This interesting and no doubt prosperous partnership had the added bonus of featuring Zhao looking perfectly at home in the traditional business attire of the island, Bermudan shorts.

Looking sharp, Zhao.

Binance turned their gaze to East Africa, partnering with local organizations in an effort to bolster the Ugandan economy and benefit from opportunities in the nation.

Binance met with the Ugandan president and held an open meeting with the Blockchain Association of Uganda, who quoted Zhao as saying:

“Binance is tailor-making partnerships according to the environment. We want to understand the landscape and grow our understanding of the market.”

Binance later announced that they would be continuing their work in other African nations in future.

Legal Battles

The saga continues with Sequoia Capital VC firm taking Binance to court in Hong Kong over an alleged breach of contract that resulted in Sequoia missing out on a profitable investment in the blossoming exchange.

In the unlikely event that you’re not a venture capital funding enthusiast, Sequoia Capital provided seed funding that helped catapult companies like Google, Apple, Paypal, and Yahoo! to success, making them officially a big deal.

Sequoia were negotiating a round of funding for Binance in exchange for an 11%  share of the company valued at $80 million. The VC firm proposed two rounds of funding valuing the crypto-exchange at $400 million and $1 billion respectively, but the sudden growth in the December market led Binance shareholders to rethink the proposition.

Binance looked for a second opinion and ended up going with IDG Captial who partnered with Binance valuing the company at $1 billion from the outset. Sequoia didn’t take kindly to being sidelined and convinced a high court judge in Hong King to issue an injunction preventing Binance from collaborating with other firms, claiming that the exchange broke an agreement between them by seeking outside funding.

The injunction was big news, although the VC firm received criticism for stalling the funding process while they continued to negotiate with Binance to prevent them from landing a deal in the meantime. The injunction was overturned in a matter of days, and Binance fired back by stating that they may need to ask crypto-projects seeking a listing to disclose any involvement with Sequoia before proceeding with the listing.

This was essentially some good old fashioned revenge tactics, putting upcoming projects in the tight spot of choosing between a leading crypto exchange and a leading VC firm, a choice that would probably work in Binance’s favor (there are a lot more venture capital firms than top-dog crypto exchanges with Binance’s influence on the market). The statement alone likely discouraged many projects from giving SC their business, and probably discouraged anyone from ever crossing Binance to boot.

DEX and Investment Fund

In May Binance announced the development of a native blockchain and a decentralized Binance exchange, a move seen as the forward-thinking project hedging their bets and protecting themselves from increasingly harsh international regulation by creating a DEX with no leadership and no legal accountability, cementing their position as a leading exchange regardless of the regulatory climate.

“Binance was growing too quickly, and too busy to start anything else. So, all we could do is to just start one more Binance. “

Earlier this month Binance announced a $1 billion investment fund, something that could see the exchange graduate from A+ crypto startup company to an entity that could end up rivaling the big players in traditional venture capitalism as well (shouldn’t have messed with Binance, Sequoia).

The Community Influence Inc. fund is aimed at helping emerging startup companies and other funds as well, with the funds being comprised of Binance’s own BNB tokens.

Criticism

Now that you think Binance is the best thing to hit crypto since Doge memes, it’s time to take a look at the other side of the coin.

Binance, along with other major like OKex and HitBTC, has been accused of falsifying trading volume by as much as 92% to mislead investors as to the profitability and profile of the exchange.

A study in March 2018 found that trading volumes were significantly inflated. Crypto-trader Sylvian Ribes said:

“I found ridiculously massive discrepancies between exchanges. Not the kind that can be easily hand-waved away (“oh well, their users must behave differently”), but the kind that can only be explained by some figures being overstated as much as 95%.”

That said, Ribes was mostly taking aim at the other exchanges mentioned, particularly OKex, saying:

“It could however serve well to keep a close eye on Binance claimed volume in the future, although inspecting their volume history does not show any obvious suspicious activity.”

So we can probably put away the pitchforks for now, and keep that as a reminder to always stay frosty in the hectic world of cryptocurrencies.

All told, Binance’s story is a highly impressive one – I wonder what they’ll do next?

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Binance Exchange Review – From Rags to Riches

Binance – Exchange The World

Well not literally rags, but you get the idea: They started small and became a behemoth. Binance WAS an up and coming cryptocurrency exchange eight months ago, until it stunned the crypto world by becoming the number one exchange in December 2017 with $2.8bln (BILLION) in trading volume. How did this exchange, which held an ICO in July 2017, become the hottest and most popular crypto exchange in less than nine months?

Through a mix of savvy marketing, useful interface, native coin (Binance Coin BNB, more on that later) and an abundance of listings Binance rose quickly and continues to innovate to this day (Binance chain anyone?). Binance was oringally based in China but since the #cryptocrackdown in September 2017 they settled temporarily in Japan and now find themselves based in Taiwan as of March 2018.

Technically Binance is a Chinese digital cryptocurrency exchange, but it offers a multitude of languages from Japanese, English, Russian, Spanish and a host more. More language support = more users, it’s simple but many exchanges do not bother to invest in this concept. That being said the bulk of Binance users are overseas so this is very much an international crypto exchange.

Would you believe me if I told you Binance had a great team? It’s such a common refrain in the developer and crypto space it’s become a wonderful meme. It’s worth mentioning the core team that brought us Binance has serious creds coming into the venture. CEO Chanpeng Zhao previously founded a high frequency trading system called Fusion Systems and was one of the original musketeers in Blockchain.info, the massive online bitcoin wallet. Not to be outdone Yi He, a co-founder, worked at OKCoin the head of branding and marketing for the virtual currency exchange. What am I getting at? The Binance team has a stong core, early adopters and believers of Blockchain and cryptocurrency. That says a lot about the exchange itself.

Binance Exchange Overview

Binance Exchange Frontpage

Binance has made their name and grown their volume through a friendly user interface for beginners, various language support, a complete trading platform for advanced users and a copius amount of coins to buy and sell. So we have a lot to cover. If you use other exchanges you may find the above image oddly familiar. Yes Kucoin kinda sort of borrowed the basic Binance template. When you arrive to the Binance home page you are welcomed to the exchange with the active contests that are being held to spur more trading and new users.

I am not a huge fan of the dark colour scheme the site uses. I prefer a softer and lighter tone, but aside from that we begin with the registration process. If it ain’t eay users will be turned off easily. Start off with the basic email and password request. Binance has had incredible success bringing in news users and the referral ID you see during registration lets you reward someone who told you about the exchange. If you use twitter it’s almost impossible to miss these referral links.

Binance Registration

Once you’ve completed this form and proven you are not a robot you simply have to verify your email address and you are in business. It takes less than five minutes, it’s easy. Let’s start splashing cash on digital money! Once you have successfully logged into your Binance account you will be able to adjust settings, track your assets, set up your 2FA (JUST DO IT!!), etc.

Markets and Trading view

Binance Basic market

Binance offers two options for cryptocurrency trading – basic and advanced. We will primarily focus on the basic UI. Unfortunately the “basic” feature is not all that basic, or user friendly. For any new user to trading the image avove (Basic) can be off-putting. A basic interface should have less moving parts and be more direct, making it quick and easy to buy.

From the basic view a user can view the order book on the left showing open sell (red)/buy (green) orders and the number in the  middle showing the last price. In the upper right hand corner you will notice the trading pairs you can select from (BTC, ETH, BNB, USDT) and all the cryptocurrencies that can be traded listed below. You can create a favourite list clicking the star and search here.

To place an order use the central box beneath the graphs and you will note a Buy and sell box. You have the option of manually entering a price that you want to buy at or clicking a price on the Order book that will auro populate the price. You can then enter an amount you wish to purchase or use the 25%, 50%, 75%, or 100% buttons to fill in the amount based on how much currency you have (In our image it’s BTC).

The main difference with the Advanced view are the colour scheme and the ability to do advanced Technical analysis like adding indicators (RSI, Bollinger Bands, etc) and trend lines.

Binance Coin – BNB

The Binance coin was issued during their Initial Coin Offering (ICO) in July 2017 and is based on the Ethereum standard ERC20. BNB can be used as a trading pair and also as a means of lowering fees paid. Even as an investment BNB has shown spectagular growth reaching an all time high of $24. As the years progress, however, the savings are drawn down leading to an eventual savings of 6.75% in 2021.

Binance also plans to use their profits to buy back BNB coins every quarter and destroying them thus reducing the supply and making them more valuable for holders (#HODL). Another reason traders and investors have flocked to Binance.

Binane Fees

The fee for each trade is 0.1% which can be reduced another 50% to 0.05% if you have BNB coins in your balance. That’s an incredible offer for traders, active and unactive alike. This is one of the many reason Binance has been able to draw in so many new users to quickly. There are no deposit fees, which is a norm for most exchanges. Below is a quick comparison with Kucoin, for which you can read our review here.

 KucoinBinanceBittrexNote
FreeFreeFee
Trading Fees0.1% (of asset bought)0.1% (of asset bought)0.25% on all tradesIf you have BNB, you can choose BNB to deduct 50% trading fee?temporary?
BTC withdrawals0.001 BTC0.001 BTC0.0005 BTC
ETH withdrawals0.010 ETH0.010 ETH0.0060 ETH
LTC withdrawals0.001 LTC0.010 LTC0.0100 LTC

Summary

The rate at which Binance has grown in the past year is astounding. With it’s recent move to Malta and the possibility of FIAT pairs in the near future, the sky is the limit for this young cryptocurrency exchange. Binance also has good ties and communication with the crypto ocmmunity in the forms of regular updates and announcements.

Regarding security Binance in general has been a model exchange with it’s use of 2FA, security notices and active communications. Recently Binance suffered a hacking attempt which saw hackers gather logins using phishing websites and then installing API access to the account. Amazingly the automated systems detected the behavior and did not allow the withdrawal of BTC. This was made possible by people giving the account and 2FA details to a fake website. Never do that. Ever.

The whole situation was caught, communicated and peoples affected were reimburesed. Over all it improved Binance standing, but also gives the investor a wakeup call on storing your coins on an exchange.

While not having the most user friendly interface, Binance has still managed to grow beyond anybody’s expectations through savvy marketing, a large offering of tradeable assets, good customer support, a clever Binance Coin that reduces trading fees and great security.

We recommend using Binance even if the basic trading interface is not so basic. Check out our other review of Kucoin exchange, another new kid on the block.

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