The world's third-largest cryptocurrency by market value, "Binance Coin", has risen 13.7 times this year

Binance, the world's largest cryptocurrency exchange by trading volume, has recently attracted attention because its CEO Changpeng Zhao has become the new richest man in China. It is also worth noting that its platform currency "Binance Coin" (BNB) has also increased significantly this year, with a year-to-date increase of 1371%. At the beginning of the year, one piece was only worth HK$292.6, and now one is worth HK$4,272.6. What is "Binance Coin"? What function and potential does it have?

The platform currency represents the exchange, investing in BNB is like investing in Binance

Binance is currently the number one exchange in the world in terms of cryptocurrency trading volume. Binance was founded by Changpeng Zhao, a Chinese-Canadian engineer. In 2017, Changpeng Zhao conducted an ICO (issue of cryptocurrency) to raise the first fund. This token is called "Binance Coin" (BNB). Binance Coin is minted by smart contracts and cannot be Obtained through mining, it originally existed on the Ethereum network in the form of ERC-20. Later, after the main network of Binance Chain and the launch of Binance Smart Chain, it can run on the BEP-2 and BEP-20 blockchains at the same time. .

There are many kinds of cryptocurrencies, among which the tokens issued by the trading platform itself are called platform coins, and BNB belongs to the platform coins. The platform currency has various functions on the trading platform, such as reducing the handling fee (using BNB when trading cryptocurrencies on Binance can get an additional 5% of the handling fee). Additionally, using Binance Coin allows you to purchase goods and services, settle transaction fees on Binance Smart Chain, participate in exclusive token sales, and more.

In terms of investment value, the platform currency is like a stock representing the exchange. Investing in BNB is investing in Binance. Therefore, the larger the scale of Binance's development, the more valuable BNB will be. In addition, the prevalence of IEO (Initial Exchange Offering) has also increased the value of BNB. The so-called IEO is the use of cryptocurrency exchanges to raise funds for new projects. Binance introduced the Launchpad rule in 2020. As long as you hold BNB, you can subscribe for the corresponding new currency according to the number of BNB, and all the BNB used to subscribe will be destroyed. Because of the huge increase after the listing of IEO, this rule promoted in disguise The trend of BNB price.

What is the price action of Binance Coin related to?

The trend of BNB is also closely related to the trend of the currency market, just like the relationship between the stock price of listed securities firms and the trading volume. For example, in mid-May this year, as the currency market fell, the value of BNB also dropped significantly. At the time, China said it would ban banks and payment companies from offering services related to cryptocurrency trading, and on May 18 warned investors against speculative cryptocurrency trading.

At that time, Bitcoin fell from the level of $458,000 on May 8 to $269,000 on May 23. It only took 15 days to evaporate 40% of the market value. Binance Coin also fell significantly over the same period, from HK$5,023 on May 8 to HK$2,038 on May 23, a drop of 59.4%. Regulatory risk has always been the main risk in the currency market. Investors need to pay close attention to regulatory policies and pay attention to related risks.

However, despite the slump in May, the cryptocurrency has since recovered and even hit all-time highs. Bitcoin started to recover from the decline at the end of July, and brushed a new high of $526,390 on November 8. In the same period, Binance Coin also hit a level of HK$5,096.