A Top Industry Exchange
Currently, there are hundreds of cryptocurrency exchanges vying for market share in a burgeoning industry. Every day new exchanges flood the market in hopes of being the intermediary to process transactions and collect fees. In fact, there are over 200 exchanges to buy and sell cryptocurrency! However, very few exchanges have reached stability in this unpredictable market. This is why the story of Binance, a staple of stability in this market, is an amazing story.
Binance markets itself as a global cryptocurrency exchange, servicing users from around the globe. The exchange has experienced massive growth. During the height of its growth, Binance experienced 240,000 new users registering in a single hour, a testament to how quickly the exchange has risen to prominence.
A Founder Entrenched in Finance
Binance CEO Changpeng Zhao has been in the financial world for quite some time. After his family moved from China to Vancouver, Canada, Zhao attended McGill University majoring in computer science. Zhao’s first foray into the financial world was by developing software at the Tokyo Stock Exchange. Soon thereafter he would go to work at Bloomberg. Several years later Zhao founded Fusion Systems which designed financial trading systems for high-frequency traders and brokers.
Zhao would then go on to work for several blockchain companies and exchanges, including Blockchain.info, and OKCoin as its Chief Technology Officer. Zhao wouldn’t last long at OKCoin, as shortly after he came on board to the company he left to begin working on his own exchange, Binance.
Exponential Growth Trajectory
Very few, if any, tech companies have reached exponential growth as quickly as Binance. The company raised $15 million in its initial coin offering (ICO) to get off the ground. However, it wouldn’t take long for Binance to become one of the most well-respected exchanges on the market. The company officially launched in July of 2017, and was met with great success. In fact, success came so quick that Binance became the largest cryptocurrency exchange in less than one year of operating.
On the Move
Zhao started his company in China where he originates. However, due to restrictions against cryptocurrencies in the country, Binance quickly was moved out of China into Japan in 2017. It wouldn’t be long before the company moved again to Taiwan. This has left many wondering where Binance is located today.
The exchange is actually on the move once again. Zhao has now taken Binance to Malta, a country which has been extremely friendly to blockchain-based businesses through. The government in Malta has made known its wishes to become a hub for blockchain businesses. Parliament in the country passed a set of laws around blockchains, cryptocurrencies, and digital assets. This move also came with it an agreement with the Malta Stock Exchange for creating a security token trading exchange.
The willingness to relocate based on market conditions makes Binance extremely flexible. This is especially important as no one is certain what lies ahead for the industry, and because of this, those willing to adapt quickly are more likely to not only survive, but thrive in the end.
On Top of the Crypto-World
Because Zhao had significant experience in both the financial and exchange world, it didn’t take long for Binance to take-off. With its combination of low trading fees and wide array of cryptocurrencies to trade from, users were left continuing to come back.
Binance would become the largest exchange on the market by the beginning of 2018. Today, the Binance coin (BNB) has a market cap of over $1.2 billion, making it one of the top 10 cryptocurrencies in the entire industry. The exchange itself processes over $500 million in cryptocurrency transactions per day.
Formula for a Successful Exchange
Binance didn’t become the largest cryptocurrency exchange by accident. It has provided its users some of the best services in the industry while at the same time creating a global brand. The Binance website makes it easy for users, both new and advanced, to trade cryptocurrencies.
Tools for Beginners
The best cryptocurrency exchanges can attract new, uninitiated customers to their platform. That is exactly what Binance does with its Binance Academy. The Binance Academy has a wide variety of videos and tools to help users understand not only cryptocurrencies, but their integration with underlying blockchain technology.
The Binance basic exchange view displays everything a trader needs to get started with placing an order. Users can favorite cryptocurrencies to check back in on later, and can begin trying trading strategies using charts and order book information.
Advanced Trading Tools
As beginners can spend hours learning the basics of cryptocurrencies and trading strategies, advanced traders are satisfied on the same trading platform. Binance has an advanced trading exchange on which they provide a host of advanced trading tools. Resources for advanced traders include:
- charting features
- open buy and sell orders
- charting features (MACD, trend lines, RSI indicators, etc.)
- detailed order book
A major gripe with many cryptocurrency exchanges is their lack of coin variety. While Coinbase and Gemini might be two of the bigger names in the industry, they only offer trading of a very limited number of coins, leaving many users having to interact with multiple exchanges to make trades.
Binance, on the other hand, offers hundreds of cryptocurrency trading pairs to select from. These include all of the major cryptocurrencies such as Bitcoin and Ethereum, as well as many lesser-known cryptocurrencies as well. This allows users to have access to trading volume and liquidity for coins which are not yet known by the masses, providing them a key advantage in their trading pursuits.
One of the biggest criticisms of crypto exchanges is the difficulty in getting started. Exchanges which are bound to local regulations can require photo identification, address verification, and more, just to open a new account.
Binance has no roadblocks to registration. Anyone, anywhere in the world with an email address can register for an account. This makes it easy for Binance to attract new customers to its exchange. As the entire industry begins to attract less tech savvy users, this easy onboarding process is likely to benefit the exchange.
Transparency and Security
Binance has maintained security in an industry riddled with fraud and theft. This is no small feat. Binance offers a host of resources to assist users in detecting fraud and scammers. What might be even more impressive is the company’s transparency when there is an attack or interruption of its service.
After a hack to the exchange in March, Binance was direct in its effort to bring justice to those responsible. In a statement the company offered a $250,000 reward for anyone with information leading to the arrest of those responsible. The company went on to say:
“To ensure a safe crypto community, we can’t simply play defense. We need to actively prevent any instances of hacking before they occur, as well as follow through after-the-fact. Even though the hacking attempt against Binance on March 7th was not successful, it was clear it was a large-scale, organized effort. This needs to be addressed.”
Eyes on Continued Growth
Zhao and his team have reached the pinnacle of an already growing industry. Yet, competitors are lurking all around ready to take down the exchange. This makes it extremely important for the Binance team to be looking toward the future for new initiatives and methods of growing its business. There are already talks of some major upgrades to the Binance ecosystem coming soon.
Not satisfied with its current centralized business model, Binance is working on developing a decentralized exchange (DEX). DEX exchanges are becoming more and more popular in the industry as an antidote to user loss of funds as a result of centralized exchanges holding cryptocurrency.
Zhao recently updated the public on the project’s progress in a Tweet:
Just had a productive meeting for #Binance #DEX (decentralized exchange), where $BNB will be native gas, and the exchange don’t control user funds. Aiming for a public beta end of the year/early next year. Yes, we work on Saturdays, non stop!
— CZ Binance (@cz_binance) September 29, 2018
The Binance DEX is expected to utilize the native BNB token as gas to facilitate transactions on the exchange. The major difference is that Binance will never hold any cryptocurrency, and users will directly exchange with one another. Users in control of their own funds will likely make for a more secure trading environment.
One function which Binance lacks is fiat trading. For new cryptocurrency users this is a major setback in adopting the exchange, as they must first purchase cryptocurrency using fiat from another exchange.
However, this may shortly change. In fact, Binance has already integrated fiat trading in Singapore.
— CZ Binance (@cz_binance) September 15, 2018
A successful launch in this test market may mean fiat integration in more countries around the world.
Incubating New Ideas
The Binance team recognizes the need for innovative thinking to come outside of its corporate structure. This is why it has developed Binance Labs, a social impact fund which aids in the development of blockchain-based ideas. This initiative is set to build the Binance brand as an innovator and supporter of the entire blockchain industry, even for businesses outside its traditional exchange focus.
Binance Labs not only offers funding to entrepreneurs, but also assists them in talent recruiting, technical reviews, and go-to-market strategies, among other things. The incubator has already supported projects such as:
- Basis – a new stable cryptocurrency with an algorithmic central bank
- Oasis Labs – cloud-computing integrated with privacy on the blockchain
- Cred – cryptocurrency-backed lending
- Republic – small-scale angel investing for retail investors
Staving Off Growing Competitors
Binance has not just survived in a cutthroat market, it has thrived. Changpeng Zhao is seen as a visionary in the industry, and as such has his company poised for even more greatness. This has competitors chomping at the bit to take a piece off of the Binance business.
US-based exchanges Gemini and Coinbase are continuing to add more cryptocurrency trading pairs, making them more attractive to investors. Meanwhile, across the Atlantic, many European-based exchanges are attempting to become regulated financial institutions to provide stability and regulatory-compliance to a business which generally has very little.
As an exchange at the top, Binance has its work cut out for it. Zhao and the rest of the Binance team have already shown their propensity of innovation and flexibility, and will have to continue moving the needle to stay ahead of new competitors. Failure to do so will result in a significant loss of market share. As for now, Binance is enjoying its place at the top of the cryptocurrency world.