04.03.2024

Binance Coin Outlook: Could BNB Take ETH’s Place On The Crypto Market?

In 2021, the place of the second cryptocurrency no longer looks as unshakable as before, as Ethereum’s direct competitors, Cardano and Polkadot, have become more active. But who really surprised and showed phenomenal growth in recent months is BNB, the token of the largest cryptocurrency exchange Binance.

BNB has already broken into third place in terms of capitalization among all cryptocurrencies, and given the development of the situation, it seems that this is not the limit.

Since the beginning of 2021 alone, the price of BNB has increased by more than 700%, and has added more than 2300% over the year. Such a rapid growth in the BNB rate is primarily due to the expansion of the practical use of the token in the Binance ecosystems – DeFi and CeFi.

Undoubtedly, a significant contribution to the growth of BNB quotes was made by the general bullish trend in the crypto market and a significant increase in the popularity of the crypto exchange among users, and as a result, additional registrations, trading volumes and the use of BNB by traders for discounts on commissions and staking.

Why is the potential value of BNB higher than its current price?

Many people are accustomed to perceive the BNB token as other crypto-exchange tokens, the only use of which is to get a discount on transactions. In fact, it was at first, but over the past years, Binance has created an entire ecosystem, as a result of which BNB has evolved into a Utility token with many use cases.

“BNB has long grown from being a“ discount coupon ”of a centralized exchange to become a full-fledged native coin on two blockchains. Its use cases have expanded to hundreds of applications across numerous platforms and projects in the crypto ecosystem. This is the reason for its growing price « , Binance CEO Changpeng Zhao.

Thus, the BNB token has significantly expanded its potential, since it began to perform a much larger number of functions, since it is involved and in demand within the entire Binance ecosystem. In addition to the crypto exchange itself, the Binance ecosystem includes the Binance Smart Chain (BSC) blockchain, DeFi and CeFi services, the Binance Pay payment system, bank crypto payment cards Binance Visa Card and other projects that use the BNB token.

It’s also worth noting that there is a large and diverse community in the Binance ecosystem that continues to innovate in search of strong use cases for BNB.

How is BNB being used in the Binance ecosystem?

In addition to receiving a 50% discount on fees from the exchange itself, BNB is also used across all Binance products. The evolution of BNB has significantly expanded the reach of this asset and made it a full-fledged utility token in the ecosystem.

Its two main areas of development are CeFi (centralized financial processes) and DeFi (decentralized finance).

Binance ecosystem

BNB Application in CeFi

  • Payment of trading fees on the Binance exchange, VIP statuses (additional privileges).
  • Binance Visa Card is a crypto payment card that allows you to pay for purchases with cryptocurrency, which is converted into the required fiat currency at the time of payment, and supports more than 60 million merchants around the world.
  • Already fully launched  Binance Pay  (competitor to PayPal). It is a contactless, seamless and secure cryptocurrency payment technology. Allows you to transfer and receive cryptocurrency from users around the world. The opportunity is available to verified users. The service supports most of the popular cryptocurrencies, including BNB.
  • Conducting payment transactions within the framework of third-party services (Crypto.com, Pundi X, Monetha, CoinGate, CoinPayments, HTC, NOWPayments, Coinify).
  • Reservation of plane tickets and hotels (TravelByBit, Travala.com, Trip.io).
  • Entertainment, betting, buying NFT (Gifto, Axie Infinity, Decentraland, Loom Network, Aeron, Adamant Messenger, BNB-Lotto, Steemmonster, VIBE, MachiX).
  • Buying services on the Internet (BitTorrent, Storm, MyWish, PureVPN, CenterServ, Canya, DENT).
  • Financial transactions – lending, trading (Nexo, Aave, LNDR, Moeda, NAGA, Bitcoin Suisse.

Applying BNB to DeFi

  • Fuel for transactions in Binance Chain and Binance Smart Chain (transfer between wallets, trading on Binance DEX, Binance Liquid Swap).
  • BSC Ecosystem: Roadmap for 2021.
  • The total transaction volume and the number of unique active wallets surpassed ETH.
  • BNB staking and other types of passive earnings.
  • Farming new tokens on Binance Launchpool.

That being said, the development of BNB is not limited to Binance only, it is accepted by the wider community:

  • Binance launched 28 fiat channels this year, allowing users to buy BNB in ​​46 fiat currencies using a variety of payment methods including debit card, credit card, and bank transfer. This is a very important stage for the adoption of the cryptoindustry as a whole.
  • With the help of BNB, you can not only book flights, hotels, bars, cafes, restaurants, but also buy online games and even take out a mortgage (not in Russia, of course). According to the latest data, BNB currently has over 200 use cases.
  • Over 150 crypto ATMs support BNB worldwide.

In addition, third-party exchanges also add support for the BNB token, for example Bithumb Global, the largest crypto exchange in South Korea, launched the BNB / USDT trading pair, which undoubtedly played into the hands of popularizing the token.

“The long-term vision is for BNB to become the native token for a variety of blockchain-specific applications. BNB is not intended to replace Bitcoin or Ethereum. To become truly mainstream, a coin must provide the ability to conduct billions of transactions per day. We still have a long way to go to achieve this result. We are working on it, ” said Changpeng Zhao.

How is BNB involved in the Binance Chain and Binance Smart Chain blockchains?

BNB is the digital fuel for BSC, a blockchain that has been launched specifically to comfortably interact with decentralized applications. The peculiarities of the chain are the presence of all the necessary options for creating and working with dApps, compatibility with Ethereum, high throughput (a block is created every five seconds).

Binance Smart Chain (BSC) blockchain

The Binance Chain was launched in 2019 to issue and exchange tokens. The digital fuel of the blockchain is the BNB cryptocurrency. Binance Chain has high bandwidth but is not suitable for dApps development. Therefore, binance specialists launched a new  Binance Smart Chain . It works in parallel with the main blockchain, is completely autonomous and compatible with the Ethereum virtual machine.

Unlike the core network, Binance Smart Chain provides a complete working environment for releasing decentralized applications while maintaining high throughput and reliability. The time to create a block in a new network is approximately 5 seconds , which ensures effective trading for users.

Programmers can migrate their already released apps from the Ethereum blockchain. Even if all projects do this at the same time, they will not be able to significantly slow down the ecosystem, which is very important when performing financial transactions. Thanks to cross-chain compatibility, the new network allows for the transfer of assets between chains. The internal Smart Chain BNB token is used to pay fees when launching smart contracts and  dApps .

BNB works for BSC in the same way that ETH works for Ethereum, so it will remain the “native token” for both BSC and BC. Clients can use internal BNBs to:

  • Fees for deploying smart contracts on BSC;
  • Bets on selected validators;
  • Performing cross-chain operations.

When a new branch was launched, a certain amount of BNB was burned on BC and then minted on BSC. This is how a start-up fund was created to support the network. Assets are used to pay transaction fees to reallocate BNB between BC and BSC networks using a cross-chain mechanism.

BSC  uses the Proof of Staked Authority consensus algorithm  . Validators place bets in BNB tokens to participate in block creation. The protocol does not provide for block subsidies of BNB, that is, when creating new blocks, trusted nodes do not receive a dime, being content only with transaction processing fees. To prevent inflation, the Binance team buys and burns coins on a regular basis.

BSC can work with the Ethereum blockchain and ERC 20 tokens, which are designated BEP2E in the new binance network  . BSC and BC work synchronously so that one token can be used in both formats. Binance Chain has piebald tokens backed by cryptoassets BTC, LTC, ETH, EOS, or Ripple. The extensive functionality of Binance Smart Chain allows not only exchanging crypto coins, but also investing them in defi projects or using them when voting.

Which asset is more promising for investment: ETH or BNB?

Which altcoin should be considered as the best option for investing ETH or BNB? Of course, only time can definitely answer this question, but it is already obvious that the degree of practical application of BNB is growing much faster than ETH, and the speed and, most importantly, the cost of transactions in the Binance Chain blockchain cannot be compared with Ether.

In addition, the Binance ecosystem includes the BNB token burning, which takes place every three months, while the volume of tokens burned depends on the trading volume on the exchange. Regular burning of a part of tokens certainly has a positive effect on the price of the token, especially considering that the maximum emission of BNB is strictly limited. This favorably distinguishes BNB from ETH, in which there is no mechanism for burning tokens and the maximum emission is not specified, i.e. in fact, the total number of ETH tokens is not limited.

As a consequence, the question arises, which cryptocurrency has the greatest potential for growth? If Binance maintains the set pace of implementation and popularization of its services, then BNB will obviously emerge victorious from this duel. But of course, ETH should not be discounted, especially after the full transition of the Ethereum blockchain to version 2.0. Ethereum is also still the largest platform for decentralized finance – 9.2 million ETH is locked in the DeFi ecosystem, which is about 8.2% of the total altcoin supply.

Like the entire cryptocurrency market, ETH and BNB are extremely dependent on the general trend that bitcoin sets, so their movement cannot be considered in isolation from the general market situation.

Recently, the head of the Binance cryptocurrency exchange, Changpeng Zhao, took a tough walk on Ethereum on Twitter. He wrote that he likes Ethereum, but he no longer uses it. And also that everyone who continues to work with this blockchain will very soon become poor. This was a direct allusion to extremely high transaction fees.

Here are some statistics: in February, Ethereum miners earned $ 1.36 billion, exactly as much as Bitcoin miners. Moreover, half of this money came from commissions, the average value for today is $ 13, and at the end of February they at the moment grew to $ 38:

It turns out that Changpeng Zhao is right and it’s time to look for a new cryptocurrency in second place after bitcoin? But in fact, Ethereum is not so bad, do not forget about such important factors as the accumulation of Ethereum by the Grayscale crypto fund, this is their second largest trust after Bitcoin. And the continuation of the rapid development of the ecosystem of DeFi projects on the Ethereum blockchain.

Although here it is just worth making a reservation that now many DeFi projects already prefer to launch not on Ethereum, but on faster blockchains with cheap commissions. This is where the potential of Binance Smart Chain can be fully unleashed, which will undoubtedly cause a new surge in the growth of BNB quotes.

Comparison Chart: BNB vs ETH

Token Bnb ETH
Ecosystem Powered by Cefi (Binance) and DeFi (BSC), fuels the entire Binance ecosystem Large ecosystem, consisting mainly of ICOs launched in 2017/2018 and DeFi projects
Tokens in circulation 154 532 785 BNB 115 068 546 ETH
Total number of tokens  100 million (with part of the tokens burned on a quarterly basis). Unknown, theoretically unlimited (impossible to calculate). There is only an annual maximum emission per year – 18 million ETH. No combustion mechanism
Blockchain Binance Chain – ETH Compatible, Fasttransactions with lower fees. The Ethereum machine is currently running on POW, but with the transition to ETH 2.0, the consensus mechanism will change to POS. ETH also has a difficulty bomb that allows developers to control miners’ rewards.
Market capitalization $ 39 billion $ 195 billion
Data Addresses: XX, total transaction volume, market capitalization Addresses: 143 million, transaction volume over 1 million per day
Token profitability for all time 216 956.56% 63 148.73%
Usefulness and acceptance Used within the ecosystem for: payment, gas in BSC, staking, burning.

Outside the ecosystem: as fuel for the blockchain, pay transaction fees on the Binance exchange, make in-store payments, and more.

BNB is accepted for payment from various merchants through POS systems (for example, Pundi X, TravelbyBit), and for goods and services through Crypto.com.

Used for dApps and DeFi.

Conclusion

The value of the Binance Coin coin increases over time, the growing rate is one of the indicators of this process. However, BNB has not used its full potential. The increase in the number of applications, the installation of cryptomats with this currency, the expansion of the functionality and the number of users of the exchange itself – all this contributes to the further growth of the coin.

In our opinion, if the second wave of growth, which many analysts predict, begins now, it will be BNB that will be able to derive the maximum benefit from it. Especially if Binance comes up with additional ways to pump the price of their token, using it as part of the development of their ecosystem, as history shows, they do it very well.

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