Binance's BNB Coin, The King of Utility - Issue #8
As we venture into our 8th newsletter profiling crypto coins, we’ll cover Binance’s continued push to make BNB the king of utility.
If you are an investor, trader or just curious about cryptocurrencies, subscribe to our weekly newsletter to get better insights into this space. For example, did you know that BNB made gains of 450% from its low in March?
The Short of It.
Why should I hold BNB? There are trading discounts of 25%, cash-back perks on their new Visa of up to 8%, and fundamentally, Binance is the biggest crypto exchange globally. But is it as good of an investment as other coins such as BTC? But first, let us look at how our portfolios are doing.
This portfolio section gives you an idea of what sort of return you can get when investing in cryptocurrencies. Over time, we will introduce other portfolios with different crypto assets.
The BTC Hold is up 78% since October 1st, 2020. Since this is a long term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long term hold position as our best stable alternative.
The BTC/USD fund is up 41% since November 2nd. This past week bitcoin has been ranging between $17,580 and $19,420 USD in value.
FUND 3 started on November 16, 2020, with $1000 USD in value and invested into BTC, LTC, ETH and ADA. The BTC value has dropped from last week’s 7.7% to 7% gain since starting. Against USD, it is almost the same as last week, up 23% since the start. We will hold these positions to see how well it does against our BTC-only portfolios. LTC hit the top bearish trendline on November 24th and continued to get rejected a couple more times and is trending down and is now 1% in the loss against BTC. ETH continues going down for the third week against BTC; ETH is up 10.7% against BTC since the start. ADA is the same from last week at 30% gain since the start but down from 40% two weeks ago against BTC.
The BNB token was launched via an ICO for Binance.com as an ERC20 token on the Ethereum blockchain in 2017. In the spring of 2019, it was migrated to its own blockchain. BNB was created to be a utility token and has become the best example of such in the cryptocurrency world. You won’t find smart contracts or any technological innovations in the mainnet blockchain (they have Smart Chain for that), but as long as crypto keeps growing, there will be speculation and trading on the Binance platform. The Binance exchange is easily the largest and has the most volume, with no real competitors in sight. BNB is a prime coin to own for those interested in mainly the financial side of crypto.
Binance is the creation of developer and business executive Changpeng Zhao or otherwise known as CZ. He is well educated and started a career at Bloomberg, later founding Fusion Systems. Once he learned of cryptocurrency, he quit his financial career and began work at OKCoin exchange, and soon after left there and started up Binance.
The Binance blockchain, and the Binance Smart Chain (BSC), uses Proof of Staked Authority (PoSA) for consensus with only a handful of “validator nodes” controlled by the highest stakers. This has led some to complain that it is not decentralized enough -- but that was never the primary intent for BNB. With block generation times of approximately 3 seconds, it is a high-speed system for transactions. The official BNB explorer can be accessed at https://explorer.binance.org/, and their decentralized exchange can be used at https://www.binance.org/en/trade/.
Smart contracts were not added to their mainnet blockchain to keep speed and scalability at the highest possible level for transaction purposes. Instead, if you require decentralized app development, look into their Binance Smart Chain (BSC), which is separate from but fully interoperable with their mainnet. It is also compatible with the Ethereum ERC20 standard.
All trading fees can be paid using BNB on their trading platforms, and if you hold at least 500 BNB in your wallet, you get fee discounts as well as better referral rewards and voting power (for what coin will be listed next). Listing fees are also cheaper if paid using BNB. Holders also have a say in their Launchpad developments, where new token projects, or Initial Exchange Offerings (IEO), are launched. Other exchanges, such as Bittrex and KuCoin, have tried issuing their own tokens but have not had anywhere near the same success.
Coin burns are done every quarter to create scarcity and subsequently increase value. The plan is to keep burning 0.5% to 1.75% of the total supply every quarter until there are only 100 million BNB left. There is currently about 150 million in circulating supply. Binance is coming up with new use cases for their utility token all the time, keeping the value rising. For example, you can get a BNB credit card. Earlier this year, they purchased coinmarketcap.com, which you are probably very familiar with if you are into cryptocurrency in any capacity. Also, they acquired Trust Wallet and India’s largest exchange Wazirx last year. Most recently, they acquired the Swipe payment system.
With the continual gobbling up of other large financial entities and constant pushing of usage cases for BNB, it is sure to remain a highly sought-after cryptocurrency. It may be too late to get in at the ground level, but there is still tons of potential for value mooning.
From late 2017 to mid-2019, BNB rose 3000%. Since those highs, we have lost 68% of those gains. It is any-ones guess if this downward trend is done. On this weekly chart against BTC, you can clearly see the current bear trend. Will that bottom support line hold as it has bounced off it at least five time now or does it go up to the top of the resistance line for a gain of 35% or so. If you follow TD Sequential patterns, the weekly is on a red 9 and at the bottom support line.
On this daily chart, again paired to BTC, you can see the last two daily candles looking for that bounce upwards. Do we see the start of the upward trend in BNB and other alts while BTC hovers in the $19,000 range, or will bitcoin ruin the party and push up past $20k?
The YouTuber named Skinny gives a quick 3-minute analysis on BNB price action for the next several months. On BNB/BTC pairing, will it hover between the top resistance and the bottom support lines in 2021? Will it form a head and shoulders? On BNB/USDT, the macd is forming lower highs, and maybe the wheels on the BNB coin are exhausted from going up 450% from the lows in March. Could it take a bit of a downward break before continuing up? So, in short, he is not seeing a great trade in BNB at this time. Video posted Dec.10, 2020.
CZ posted in October about their 13th BNB burn that happened between July to September 2020. When looking at the BNB/BTC chart above, that is the time when the price broke out of the trendlines and went up 85% before reversing back down to the bottom support.
The Binance Smart Chain is still in its early days compared to ETH or Polkadot, but it is attracting plenty of developers to it.
YouTuber Anthony Pompliano interviewing Raoul Pal from Real Vision and a hedge fund millionaire and why he sees Bitcoin as the best hedge against inflation.
MadCapX research newsletter is written by the Madbyte Team. This newsletter is a paid subscription and supports the team and the Madbyte projects. Subscribe and get access to our archives. You can learn more about Madbyte and MadCapX on our websites.
Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.