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In more than a month of explosive price increases in the crypto market, BNB has impressed by more than 540% of its value – peaking at 350 USD / dong compared to the original mark of 40 USD. What is this currency and what are the main drivers of price increases?
BNB – No longer a currency to reduce transaction costs
For those who regularly trade cryptocurrencies, BNB Not an unfamiliar coin, if not very familiar. BNB is issued by Binance – the world’s largest cryptocurrency exchange by volume and 4 years old in the industry.
BNB is also known as one of the commonly used coins to pay transaction fees and many other services on this exchange.
Like many other cryptocurrencies like Bitcoin and Ethereum, at the time of its release, BNB was of very low value. The first two hundred million BNB coins were issued to help the founder of Binance – Changpeng Zhao (also known as CZ) raised more than $ 15 million, creating a premise for Binance to become the largest exchange in the world today.
BNB then also recorded a record price increase; from $ 0.2 to $ 13 just six months later, making the founder of Binance the fastest billionaire owner in the world.
However, after a long period of development, with a policy of discounting transaction fees at a rate from 50% to 6.75% (decreasing year by year and ending at the beginning of 2022) for Binance BNB holders Many cryptocurrency traders are accustomed to seeing BNB as a currency that optimizes transaction costs, not a cryptocurrency of the same level compared to famous and earlier coins such as Bitcoin, or Ethereum.
However, according to data from Coinmarketcap, up to now, BNB is currently the 3rd most commonly traded currency among the top most traded cryptocurrencies, with a market cap of over 41. billion USD.
Also according to Coinmarketcap, the number of traded volumes of this coin on March 18 was 8.6 million units, of the total amount of money issued to more than 154 million.
BNB’s recent five-fold increase in price has also attracted special attention, as it was 20 times faster than the growth rate of Ethereum in the same period. Perhaps until now, it is not possible to see BNB as just a coin created by an exchange and helping to reduce transaction costs.
Instead, BNB should be seen as an on-chain cryptocurrency, the equivalent of Bitcoin and Ethereum.
What are the growth drivers of BNB?
In fact, BNB is the native currency, created on the Binance Chain, just like Bitcoin was created on its blockchain. So BNB is not just a discount coupon currency, it is actually an independent valuable cryptocurrency.
Moreover, thanks to being issued by one of the largest exchanges in the world, BNB is widely used in centralized and decentralized financial platforms; help promote and settle transactions on Binance and many other ecosystems.
Binance is committed to using 20% of its profits to buy back and destroy millions of BNB coins each quarter, bringing the total market supply to a stable 100 million BNB coins in the future.
This sounds surprising, but 14 cancellations have been made by Binance since 2017, and the transactions are public and verified.
In the latest “burning money” on January 19, Binance burned more than 3.6 million BNB, equivalent to 166 million USD. That can be seen as one of the big drivers that caused the price of BNB to skyrocket in recent times, along with the event that this coin is connected to the new Binance Smart Chain.
In addition, it is impossible not to mention the power of BNB as this coin is gradually gaining widespread recognition, in both crypto and conventional trading circles. “Users can now buy BNB for a total of 46 domestic currencies, using different payment methods including debit card, credit card and bank transfer” – Information published in the report report earlier this year by Binance.
Since October 30 of last year, the largest crypto exchange in Korea – Bithumb Global has also launched the BNB / USDT trading pair on the main trading board, as an affirmation of the position of this currency.
In many countries, users can book flights, hotels or bars, cafes, restaurants, but also online games and entertainment scenarios with BNB. Binance has also launched the Binance Pay payment platform, which competes with Paypal.
The final reason to talk about the driving force that makes BNB increasingly valuable is the expansion of the decentralized financial ecosystem in general and the blockchain ecosystem of Binance in particular.
Currently, the decentralized finance platform has developed and created cryptocurrency deposit, lending and borrowing platforms with a variety of special and diverse modes of operation. Among them, BNB coin plays a significant intermediary role with many financial utilities and applications launched by Binance and other financial applications on other linked chains.
In short, if you invested in BNB at the time it launched, you would have had a return rate of 261,000% – compared to Ethereum at 61,000%. However, if you compare the momentum and potential for the long term, it is difficult to compare these two currencies in the same way.
Because, BNB is used a lot in the payment system, has the effect of promoting transaction circulation on the blockchain, helps keep gas fees low and continues to be expected as a currency on many application-specific blockchains.
Meanwhile, Ethereum is heavily focused on being the foundation of Dapps, smart contracts, and decentralized finance. Therefore, it is necessary to independently evaluate the potential of these two currencies in the long term instead of directly comparing the indicators.
However, adding BNB to the list of the most attractive and desirable cryptocurrencies in the year 2021 will likely bring many opportunities for traders in the future.
If you do not have a Binance account, register here: https://CHK.com/go/binance
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