The History of Binance: The World’s Current Largest Crypto Exchange
#TMBT or Take-Me-Back Tuesdays will be NFTing’s featured articles that will discuss the history of NFTs, cryptos, metaverses, blockchain, and everything that is about the web 3.0.
Our fifth #TMBT feature will discuss the humble beginnings of the world’s current largest crypto exchange — the Binance.
Binance is a cryptocurrency exchange platform introduced in 2017. Its founders, Yi He and Changpeng Zhao designed this platform to provide an ideal environment to trade over 200 cryptocurrencies. As of this writing, Binance is considered the largest cryptocurrency exchange platform in terms of trading volume.
In addition, it also offers its cryptocurrency token, the Binance Coin (BNB). Members can use the token to access the platform’s services and apps and trade against other cryptocurrency coins.
Binance’s brilliant management, innovative solutions, and native utility token made the platform famous among users. It garnered more than 3 million users in its first six months. On top of that, the platform was ranked one of the top three cryptocurrency exchanges in the world.
So, it’s best to learn more about the platform’s history to maximize trading experience.
What Are Cryptocurrency Exchanges?
Cryptocurrency exchanges help users trade cryptocurrencies for other assets, including fiat and digital currencies — in short, they work as an intermediary between a seller and buyer. It also facilitates making money through transaction fees and commissions.
For example, you can trade $100 for a Bitcoin of the same value. Then, you can sell that to Ethereum of equivalent value.
The Humble Beginnings of Binance and Its Founder
Changpeng Zhao (commonly referred as CZ) launched Binance in July 2017. However, his journey wasn’t easy. As a Chinese-born immigrant in Canada, he had to take on odd jobs to help support his family. In fact, he worked at a McDonald’s at one point.
Over time, his hard work paid off. CZ graduated with a computer science degree from McGill University in Montreal, Canada. After graduating, he built innovative trading software programs for the Tokyo Stock Exchange and Bloomberg’s Tradebook.
Then, he learned about Bitcoin during a poker game, which influenced him to dedicate his life to cryptocurrency. He even sold his apartment to buy Bitcoin tokens.
During his journey, Bitcoin’s value sank from $600 to $200, but that didn’t stop CZ.
At one point, he became a technology leader at the crypto marketplace OkCoin and crypto wallet provider Blockchain. But he decided to leave and build his exchange, combining the tech performance of high-frequency trading platforms he developed.
To finance his new project, CZ organized fundraising through an Initial Coin Offering (ICO), where they offered investors 100 million Binance coins (BNB).
He raised $15 million through the event due to the users’ excitement over cryptocurrency coins.
CZ used 35% of the raised funds to build the platform and complete system upgrades, while he spent 50% on branding and marketing strategies. And the remaining 15% was allocated for emergencies.
Despite that, he faced numerous challenges, especially during the early days of Binance. He and his colleagues had difficulties when Binance’s cryptocurrency sank below the ICO price.
In response, he transformed Binance into a decentralized operation with a nimble global workforce.
Though they encountered numerous challenges, Binance became the most popular platform for cryptocurrency exchange — it remains in this position to this day.
Because Binance was keen on protecting the user’s investments, global traders decided to embrace the platform and take advantage of its services. That contributed to Binance’s growth and the establishment of international offices that were more receptive to cryptocurrencies.
Binance built its offices in Malta, Taiwan, and Japan. Now, global traders (excluding only users from 15 countries) trade via the platform.
The Launch of Binance Coin (BNB)
Before being transferred to the Binance chain, the platform’s proprietary blockchain, the Binance coin or BNB was launched on the Ethereum blockchain. Yi He, Binance’s co-founder, said the token has significantly contributed to the platform’s success. He even described it as the one fueling the Binance engine. To raise funds for Binance, CZ and Yi He made BNB. In addition, it offers a suitable alternative to pay for transaction fees charged to traders.
BNB tokens have three different categories: storeBNB, buyBNB, and useBNB.
During the ICO, both founders presented 200 million BNB. He offered 10% (10 million BNB) to angel investors, 40% (80 million BNB) to the founding team, and the remaining 50% (100 million BNB) to interested individuals.
Investors were called Binancers, and they can use the native utility token to trade with other cryptocurrency exchanges. Doing that earns them special privileges like discounted trading fees.
In the first year, they get a 50% discount and a 25% discount in the second year. In the third year, Binancers get a 12.5% discount and a final 6.75% discount in the fourth year. After that period, the trader has to pay the platform’s standard transaction rates.
Because BNB’s discount rate depreciates over time, the same circumstance is also expected for the actual token. To address this problem, the founders came up with the process called “The Burn.” It’s the process that destroys BNB tokens every quarter following its trading volume.
It’s expected to continue until half of the total supply (100 million tokens) is done. Ultimately, the process’s goal is to stabilize the token’s price to fit the market changes and requirements.
Today, Binance Coin isn’t only used within the platform. It has also gained more case adoption. For example, you can use BNB to pay for day-to-day transactions through POS systems such as crypto.com, TravelbyBit, and Pundi X. You can also use it as collateral for crypto-backed loans by NEXO.
Changpeng Zhao (CZ) and Yi He founded Binance in China; however, most of their servers moved to Japan in September 2017. That’s because the Chinese government started heavily regulating the crypto market.
In June, they launched their native utility token, Binance Coin or BNB, which became the world’s third most traded token.
Binance has become the largest cryptocurrency exchange platform in the world, with revenue exceeding $1.3 billion. In March, CZ tried to move its headquarters to Malta because Japan began implementing stricter crypto regulations. In addition, the company started to initiate paperwork with Malta and Bermuda to develop a security trading platform.
In the same year, the company announced Binance Jersey, a separate organization from Binance. It’s located in Jersey, an island near the coast of France. Over time, Binance Jersey would allow Binance to offer fiat-cryptocurrency exchanges using the Euro and British Pound.
Binance also acquired Trust Wallet — a cryptocurrency wallet that operates on mobile phones. That purchase allowed Binance to further expand its offers to its users.
In January 2019, Binance worked with Simplex to provide crypto purchases with a credit or debit card. In May, Binance announced they were victims of an attack where they lost $40 million. In September of the same year, they started offering perpetual futures contracts that allow 125x leveraging.
In addition, the company launched Binance.us in nearly all of the United States.
Binance also purchased Binance JEX, WazirX, and DappReview.
In October, Forbes released documents that showed Changpeng Zhao had created a structure designed to deceive US regulators and profit from US-based investors. In September, they launched their blockchain ecosystem BSC, or Binance Smart Chain.
In the same year, they also purchased BxB, CoinMarketCap, and Swipe.io.
In May 2021, the US Department of Justice and IRS investigated the company for potential tax avoidance and money laundering. Today, these investigations are currently ongoing.
In February, Binance invested in Forbes for $200 million. That same year, they also announced they wouldn’t cease operations in Russia. Over time, that claim would change, as they began restricting Russians with more than 10,000 Euros from trading on the platform.
Binance Is Here to Stay
In this digital age, numerous cryptocurrency exchange platforms are competing to pique users’ attention. A cryptocurrency exchange platform should have incredible offers to stand out from the rest of the competition, and that’s what Binance offers.
Binance is well-known for creating an ideal environment to trade cryptocurrency. In addition, Binance continues to constantly better approaches to serve its users.
That said, the platform deserves its hard-earned reputation.
However, they should also find ways to address its problems if they intend to stay in the game.
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