BNB Reaches New Highs After Binance Launches Own DEX And Blockchain Network
Binance, one of the largest and most popular cryptocurrency exchanges in the market, had a very good first quarter in 2019. At the same time, April has been the best month the company had in a long period of time.
The crypto platform has launched its decentralized exchange (DEX) and it has also unveiled its blockchain network. Finally, Binance Coin (BNB), the digital asset used on the platform, has reached a new all-time high after bottoming back in December 2018.
Binance announced in February that they launched a testnet of the Binance Chain. Basically, this blockchain network was developed by Binance and users will be able to create, issue and trade digital assets through a decentralized exchange (DEX). After a two-month testing period, its new custom blockchain was finally released.
BNB users are now able to move their tokens from the Ethereum (ETH) network to the new Binance Chain. The old Ethereum-based tokens are going to be destroyed as new BNB coins are created on the new chain. The company has already launched the Binance Chan Explorer and a Web Wallet that is now open to the public.
It is worth mentioning that the Binance Coin on the Binance Chain will have the same functionality as on the Ethereum network. Changpeng Zhao, the CEO of Binance, explained that users will be able to pay for network transactions as gas.
In addition to it, Binance Chain already supports different virtual currency wallets. The list includes Trust Wallet, Coinomi, Leger, Enjin, Exodus and many others. Now, the exchange is asking developers and interested individuals to start developing on top of the new Binance Chain.
On top of this platform is going to be operating the Binance DEX, which has been in a developing stage for a long period of time. Other projects will also be able to work on top of this blockchain and release their own products.
According to Mr. Zhao, the testnet had 11 nodes controlling the network. He mentioned during a conversation through Periscope a few months ago that they want to keep the number of validators in their network small in order to offer better performance for users.
He indeed, said that the network will be more similar to NEO or Ripple rather than to Bitcoin (BTC), that has thousands of nodes operating all over the world and that increase its security.
Binance Decentralized Exchange
Binance has also decided to launch a Decentralized Exchange (DEX) as well. Both the DEX and Binance Chain have been promised by Binance when it held its Initial Coin Offering (ICO) back in 2017. At that time, there were many ICOs and nobody really knew what was going to happen with all the new projects that aimed at revolutionizing different industries.
At that time, decentralized exchanges were just starting to appear. There were some projects that wanted to create DEXs for users to trade their digital assets, but they never received a lot of attention from the market. Most of these exchanges had a very bad user interface and didn’t have enough liquidity.
Binance proposed a different initiative. The main goal was to release a DEX but starting its operations as a centralized platform as most of the other exchanges in the market.
The first months operating in 2017 were difficult for the platform, but as soon as 2018 started, Binance usage and positive feedback skyrocketed. The exchange became one of the largest in the market with a large number of trading pairs.
About the Binance Chain, Changpeng Zhao said:
“So, in the Binance Chain, there’s no smart contract. We just have an interface for you to issue tokens, and then you can trade it. Binance Chain is a very simple chain in terms of application, but it can handle very large loads. It is our opinion and that the load is more important than the features.”
Binance Coin Performance and Expansion
Binance Coin, the digital currency that is used in the Binance platform, has also been expanding in the market. After bottoming in December 2018, the virtual currency has now reached new all-time highs that surpassed their record at the beginning of 2018.
Almost five months ago, the virtual currency was traded close to $4.5, according to data provided by CoinMarketCap. Since that moment, BNB skyrocketed and reached $25 a few days ago.
Back in February, Multicoin Capital, a crypto hedge fund launched in 2017, released a report in which they explain that the digital currency has the potential to keep growing all around the world.
During the first months of this year, the price of this digital asset increased due to different reasons, including the Binance Launchpad, the DEX and the Binance Chain. With the Binance Launchpad, users that want to purchase tokens on the Binance platform can do it with BNB coins according to the funds they held for a period of 20 days prior to the Initial Exchange Offering (IEO).
Additionally, the cryptocurrency exchange performs quarterly purchases of BNB to burn them and reduce the total supply of Binance Coin. In order to purchase these coins, the exchange uses 20% of its quarterly profits. In this way, the exchange is expected to reduce the supply of BNB 50%.
Although there are several experts that believe that Binance could have devastating effects on Ethereum, Changpeng Zhao considers that Binance Coin is less powerful than Ethereum and that the communities should work side by side rather than attacking each other.
These are the reasons why the digital asset has been the best performing digital currency among the top 10 during the last five months.
At the time of writing this article, Binance coin is the 7th largest digital currency in the market. Each BNB can be purchased for $22.82 and it has a market capitalization of $3.22 billion, according to CoinMarketCap.
DisclaimerThe writer’s views are expressed as a personal opinion and are for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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