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Tokens issued by the world’s largest exchange may have found a new lease of life as a payments option – according to Changpeng Zhao (CZ) at least.
CZ, the founder of popular cryptocurrency exchange Binance, said he planned to turn Binance Coin (BNB) into a payment token. He told Crypto Briefing he would “certainly hope” BNB could become the asset of choice for retail users. An independent blockchain, he said, would make it suitable for an everyday user to purchase goods and services with.
“Right now, BNB is still an ERC 20 token, which will incur relatively expensive (same as ETH) network transfer fees”, CZ said. “When the Binance Chain comes out, the network fees will be cheaper, and faster. We probably will go for 1-second blocks, which should make it very suitable for retail, in addition to being a decentralized exchange.”
Binance Coins are utility tokens; a total of 200m being sold in the exchange’s ICO last year. It gives holders access to cheaper trades on the exchange’s servers. Trades conducted in BNB pay less in transaction fees.
Up until the summer this used to be a 50% discount, but this has now been halved to 25%. Binance also introduced discounts based on a user’s 30-day trading activity, as well as on their BNB coin balance.
The token was initially sold as a crowdsourcing method. Binance buys back a tranche every quarter and burns them. So far it has repurchased and destroyed 10m BNB.
Binance’s recent investment into TravelbyBit, an Australian startup pushing for wider crypto adoption in the retail sector, was swayed by the argument that tourism would be encouraged if visitors can pay for things in tokens and virtual currency, rather than in the local Australian dollar.
TravelbyBit isn’t the first project to onboard Binance Coin. BNB is a compatible coin in Pundi X (NPXS) and Crypto.com (formerly Monaco), two projects interested in making cryptocurrency a spendable asset in daily life through crypto credit cards.
Binance highlighted in its Medium blog post, announcing the TravelbyBit investment, that it wants to be known as more than just an exchange. Its new mission is to become the main advocate for the freedom of money.
Despite this, CZ emphasized that the purpose of Binance Coin was still the same. In line with the exchange’s new mission statement, the new implementations were a way to create more use-cases for BNB holders. “[The] purpose of BNB token has not changed”, he said. “But we are always trying to add more utility value to it.”
“The more it is used (and more use-cases), the higher the value. We certainly want to make it a payment coin”, he added.
With all that said and done, Binance is still burning BNB. The exchange is marking its first full year of operation with the repurchase and destruction of 1.6m Binance Coins, worth approximately $15m at current prices.
Within four years, most of the loyalty perks for BNB holders will have gone. Although the scale of the buyback is based on Binance’s profits, the token’s supply is still being reduced every quarter. At some point in the future, the total Binance Coin supply will be reduced to 100m. Just under half of where it is now.
Crypto Briefing raised this with CZ. He said that reduced supply didn’t effect BNB’s implementation. “The beauty of crypto currency [is] it’s infinitely divisible”, he said “Even if there is only 1 BNB left, it will still be enough. It simply means we will spend very small decimals of it for each transaction, and the 1 BNB will be worth a lot.”
Sure, that one BNB could be worth a lot. That doesn’t mean it could become a workable payments system worldwide. A diminishing supply will likely push users to other virtual currencies specifically designed for the retail sector. There are certainly enough to choose from. Three coins in the top-ten: bitcoin (BTC), Bitcoin Cash (BCH) and Litecoin (LTC) were all designed to be used as an alternative to fiat currency.
Whether BNB will be used to buy didgeridoos and wide-brimmed hats with corks on them, especially if it’s to an infinitesimal decimal place, remains to be seen.
The author is invested in BTC and ETH, which are mentioned in this article.
Senior Journalist Paddy Baker is based in London. His interests in global finance and cryptocurrency may seem at odds with his background as a lover of history - but he asserts that understanding the past is the key to understanding the future. Paddy lives a short bike-ride away from ten million other people, and has yet to be seen in public without his laptop.
“A diminishing supply will likely push users to other virtual currencies specifically designed for the retail sector. … Three coins in the top-ten: bitcoin (BTC), Bitcoin Cash (BCH) and Litecoin (LTC) …”
That is not true. A diminishing supply will not adversely affect users in any way. Furthermore, BTC, BCH, and LTC are all expected to have diminishing supplies in the future as coins are lost, so perhaps the author might want to revise that section of the article.