Binance is the world’s most popular cryptocurrency exchange. Its rise has been meteoric; in less than two years, it went from being a tiny start-up to the largest exchange on the planet in terms of trading volume.
So, what happened? How did Binance become so popular among crypto users? Keep reading to learn more…
1. An Ideal CEO
The founder and CEO of Binance—Changpeng Zhao—is one of the most well-known faces in the crypto world. Given the organization he’s running, that’s no surprise. A delve into CZ’s past, however, reveal that he lived through a perfect set of experiences to ready him for the launch of Binance.
Zhao was born in China but moved to Canada during his childhood. He studied Computer Science at McGill University in Montreal before heading to Japan to develop trading matching software for the Tokyo Stock Exchange. After leaving Tokyo, he furthered his trading app knowledge by developing futures trading software for Bloomberg and creating one of the world’s fastest high-frequency trading apps for his own company, Fusion Systems.
In 2013, he jumped into crypto. He worked at Blockchain.info and OKCoin before eventually leaving the latter to create Binance.
2. Perfect Timing
Make no mistake; the Binance leadership has continually shown its brilliance in numerous ways. Without some of the decisions it has taken, Binance would not be the company it is today.
However, it’s also true to say that Binance benefited considerably from the timing of its launch. By going live in mid-2017, it was able to hoover up new crypto users just as the bull market really started to take hold.
Had the company launched nine months later after the crash, it’s hard to believe that it would have been quite so successful.
3. Avoiding Fiat Currency
Lots of people criticize Binance for not offering fiat trading pairs. But that shows a lack of understanding of the underlying reasons for the decision.
By not letting users trade USD, GBP, EUR, or any of the other major global monies, the company was able to sidestep the strict regulatory requirements that arise when dealing with national currencies.
The company’s ability to circumvent regulations allowed it to grow its userbase much more quickly than its competitors. By the end of 2017—just six months after its launch—Binance already had three million users. There were only 15 countries in the world that Binance did not serve.
4. Rapidly Adding New Assets
Binance capitalized on the crypto boom by quickly expanding the number of assets available on its platform. In a period when every altcoin felt like it could be the next Bitcoin, it was a smart move. Users fell over themselves to invest increasingly large amounts of money into the diverse projects.
In contrast, Coinbase (which had been the leading crypto on-ramp in the US) spent the entirety of the crypto bull market offering just four coins. It wasn’t until the crash and the subsequent loss of users that the company started to look at expanding its offering. By then, it was arguably too late.
Rumors suggest Binance charges more than 400 BTC to list a new coin on its platform. Again, that provides the company with considerable amounts of capital that it can invest back into its other services.
5. The Rise of BNB Coin
BNB has been integral to the growth of Binance. Some people would argue it’s the most important aspect of Binance’s success.
The coin’s integration into the Binance platform helped the company to retain users, even during the 2018 crash. Indeed, BNB was one of the few coins whose market cap and value held steady during those difficult months. It is also one of the only major coins that saw a new all-time high during the crypto renaissance in spring 2019.
But BNB’s success goes deeper than mere numbers. The coin has become central to the entire exchange. Perks such as discounted trading fees, community votes, and the ability to use the coin outside of Binance (such as for collateral on crypto loans with Nexo), mean that holders of BNB are actively invested in the success of the Binance business. Not using BNB is also one of the main ways Binance users are missing out!
Read our BNB coin study to learn more.
6. Initial Exchange Offerings
Initial Exchange Offerings (IEOs) are similar to ICOs—they allow a crypto start-up to raise capital from investors.
But there are also some key differences. For example, IEOs are operated by an exchange rather than the start-up’s team. That means users can make investments using their existing exchange wallets, safe in the knowledge that the exchange has fully researched the project. It massively reduces the risk of falling victim to scams and other frauds.
Although Binance is not the only exchange to offer IEOs, it is undoubtedly the most successful. It’s Binance LaunchPad service has received considerable praise.
Significantly, users can invest in IEOs using BNB, thus further expanding the ecosystem surrounding the coin. There is now a self-fulfilling circle of hype surrounding each new release. Some of the IEO coins (perhaps most notably Matic, Harmony, and BitTorrent) have quickly become established crypto names and have allowed investors to make large profits.
We’ve written about the differences between ICOs and IEOs in more detail elsewhere on the site.
7. Customer Experience
Binance’s customer experience is unrivaled on other exchanges.
Unlike so many of its competitors, the site is slick, well-designed, and easy-to-use—even for beginners. Binance is also one of the few crypto exchanges that offer a desktop app, and its mobile apps are crisp and clear.
But there are other aspects at play, too. For example, the Binance Academy is one of the best crypto learning resources anywhere on the web. All the material is entirely free (even for people who don’t have a Binance account).
And what about Binance’s response to the 2019 hack? It was open and honest about what happened and moved quickly to refund customers who had lost money. The response was in stark contrast to the way some other exchanges have handled similar situations.
The Future of Binance?
So, what does the future hold? Binance is already showing us hints of its “next big thing” with investments in its decentralized exchange. It has the potential to disrupt the world of crypto exchanges all over again.
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