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Time to buy-nance?
Binance Coin (BNB) is the native coin of the Binance exchange. Its price was sitting around US$8 at the start 2018, and is looking to treble soon, having topped a new high of $24.
The main reason for the sudden growth is that Binance is super popular, and frequent users can get very solid value for money with BNB. Just yesterday Binance signed up a almost a quarter of a million new users in a single hour and it's previously said it tends to grow by "a couple million" users a week.
BNB suddenly has a lot of new buyers, and you don't need to be a market guru to figure that BNB is going to be a hot commodity right now.
The coin's main application right now is alleviating the sometimes-jarring exchange fees (0.1% trading fees to hit the big spenders, and flat withdrawal fees to hit the small spenders). You can pay any Binance fees with BNB instead of another currency to get an easy 50% discount.
The value for money of using BNB to pay fees will remain the same regardless of its price -- people need a set value of BNB rather than a certain number of coins -- so there's no real reason why it won't keep rising further, directly in line with Binance's increasing popularity.
Binance definitively and aggressively cemented its status as the world's number one exchange in recent days, so a price rise can be expected.
What will stop it from increasing?
The discount you get from BNB will decrease over time.
It's 50% off fees in the first year, but "only" 25% in the second year, 12.5% in the third year, 6.75% in the fourth year and then zero after that. But throughout you can expect BNB to remain just as worthwhile, for the reasons described above, as long as the exchange stays popular.
BNB prices are likely to keep trending upwards, with the usual crypto ups and downs, until sometime in year 4, or maybe year 3. At this point people will start divesting themselves of remaining BNB before the prices drop.
Towards the end of that lifecycle it will start turning into a game of chicken, hanging onto BNB to maximise one's use, but dropping it before the value falls too much.
This will be affected by the coin burn scheme. Every quarter, 20% of the public BNB supply will be bought-back (if needed) and destroyed by Binance. The first one happened in October 2017, accompanied by a minor bump in BNB prices.
Some of the current rise could also be in anticipation of the next burn, which should be happening around the end of January, but this probably isn't making much of a difference. The coins being burned are almost certainly out of circulation, having already been used to pay fees, so Binance won't need to go around buying up its own coins ahead of the bonfire.
Binance isn't the only exchange with its own native currency, and others like Kucoin Shares are arguably better value for money in the long run. The beauty of BNB though is that its worthiness is very clear and easy to calculate.
- Learn more: How to buy Binance BNB.
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