WHAT IS BNB?
BNB is another of the newer cryptocurrencies; it was released in 2017 by Changpeng Zhao Yi He. BNB is the token to be used on the Binance platform, in a similar style to the way that Ether is the token used on the Ethereum platform. BNB is a token that allows users to save money on transactions, as well as making users eligible for some discounts on travel expenses.
Binance is the largest cryptocurrency trading platform in the world by volume. Clearly, the platform is a massive success. Therefore, people that use this as their primary platform may find it well worthwhile to invest in several units of BNB to get a discount on the 0.1% trading fee.
The aim of Binance is to develop a stable alternative coin that is immune to the volatility of other cryptocurrencies. This means that investing in Binance may be a far steadier venture than investing in one of the higher risk cryptocurrencies, such as Bitcoin.
WHAT IS THE HISTORY OF BINANCE?
In 2005, Changpeng Zhao worked for Fusion systems in Shanghai in order to create high-frequency trading systems for businesses that would allow them to process transactions more quickly. 2013 is when he first delved into cryptocurrency; he joined Blockchain.info as a member of the cryptocurrency wallet team. He then cemented his understanding of cryptocurrency and blockchain by working at OKCoin for a little under a year. OkCoin is a platform for trading between traditional and digital assets.
He then went on to found Binance in China, but very quickly moved all servers and headquarters to Japan. This is because, in September 2017, China placed a ban on all cryptocurrency trading in the country. Then, in 2018, the company grew to establish offices in Taiwan as well.
At the start of 2018, Binance had achieved a market capitalization of $1.3 billion. This made it the largest global cryptocurrency exchange and seemed ready to grow to new heights.
In March of 2018, Binance began the process to open a new collection of offices in Malta. This was a result of stricter regulation of cryptocurrency trading in Japan. Then, in April and the following months, Binance signed a Memorandum of understanding with both the Maltese and Bermudan governments, with the intention of developing a platform for trading security tokens. This later came to fruition with Binance Jersey, a separate entity designed to bring the cryptocurrency to fiat exchange platform to European markets.
By August, Binance had raised $32 million to fund the development of a stable altcoin, without any of the volatility of earlier iterations of cryptocurrency and other digital assets.
By 2019, Binance had partnered with Simplex (a payment processing company) in order to enable cryptocurrency purchases with debit and credit cards, although this was limited to Bitcoin, Ethereum, Litecoin, and XRP.
Then, in May of the same year, Binance suffered a huge hacking issue. 7000 BTC, worth around $40 million at the time, had been stolen through a variety of hacking methods. In response, Binance halted all withdrawals and pledged to reimburse all affected customers.
The Malta Financial Services Authority released a statement months later noting that Binance is not authorized by the MFSA, and is not subject to any regulatory oversight.
TIPS FOR INVESTING IN BINANCE
Given the security issues that Binance has suffered in recent years, some investors may question the stability of investing in Binance. Despite rising to great prominence in its early years of trade, it now seems that Binance may be a less lucrative investment.
Check out the current price of Binance on Coinbase!
Despite its promise to create a stable altcoin, the value of the BNB (the coin used by Binance) is one of the less stable cryptocurrencies. It did not experience a major peak during the cryptocurrency bubble in 2017, although it did somewhat grow and then fall in value.
After the major security breach suffered by Binance in 2019, the value of BNB tumbled. It recovered, but then tanked again before making a stable recovery. In the last year alone, the value of BNB has more than halved. The company may not recover from its recent issues, but as one of the largest cryptocurrency exchange platforms outside of Europe, it is likely that it will, making now a good time to invest to take advantage of the company growing again.
BNB is one of the more volatile cryptocurrencies. This makes it an extremely high-risk investment, especially given the security and regulatory issues surrounding the company in the last few years. Despite this, Binance remains one of the big names in cryptocurrency exchange platforms and is set to maintain its high value for some time.
In cryptocurrency trading and investing, the risk is high but there is also a huge potential for massive profit yields. The risk is high due to a lack of centralized control, governance, or regulation, which means that the market fluctuates entirely at the risk of buyers and sellers. In order to mitigate this risk, many traders utilize the 80/20 rule to keep their portfolios diverse and protected from major losses. This means investing 80% of your portfolio into low-risk low reward businesses, shares, and currencies in order to create a slow, long term profit. This is then squared against a high-risk section of the portfolio that has the potential to have a high yield, but with the caveat that the investment may also lose much value due to market fluctuations.
Obviously, it is important to consider the risks and potential yield when placing money into any investment. Binance has the potential to be quite lucrative, with high risk as a side effect, so maybe better for more seasoned investors.
Want to learn more about cryptos check out this article as well!
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