Analytics firm Weiss Ratings said that Binance’s BNB is successful because of its centralization, despite the association of cryptocurrency with decentralized networks.
According to a tweet published on July 25, Weiss Ratings is arguing that binance coin, the sixth-largest cryptocurrency by market capitalization, has been successful in large part due to its centralization.
Weiss claims that the coin’s creator Binance has been pumping the price of BNB through regular new use cases. As opposed to the market determining the value for binance coin, the exchange has largely driven its growth through programs that encourage investment.
As the ratings agency frames it,
Because #BNB is centralized, its creators are constantly creating new use cases for it, which increases its market cap and keeps the asset going. BNB is successful BECAUSE it’s centralized. Interesting.#BinanceCoin #BTC #Altcoins #crypto #cryptocurrency
— Weiss Ratings (@WeissRatings) July 25, 2019
The tweet follows claims from the cryptocurrency exchange’s management that BNB has more than 80 legitimate use cases, up from the 55 compiled by Binance’s research team in March 2019. According to the report, the majority of use cases for BNB are derived from the launch of Binance Chain. On top of that, more than 24 cryptocurrency projects have publicly declared that they will launch their tokens on the Binance Chain.
Similar to the demand created for ethereum through the abundance of ERC-20 tokens, the value of BNB has increased with the number of proposed projects utilizing the exchange’s blockchain. The report claims that each coin launched on Binance Chain will require BNB to pay fees, thereby creating more demand for the exchange’s native token.
Binance Coin Top Performer
Binance has been creative in giving clients a reason to buy and hold its cryptocurrency. The exchange completely revamped their new token launchpad service, instituting a lottery structure as opposed to their previous first-come, first-served model.
However, investors hoping to purchase tokens at launch are required to hold a minimum of 100 BNB in their accounts, with 500 BNB (worth $14,500 as of writing) necessary to receive the highest chance of winning a lottery ticket.
More recently, the Binance team announced they would be destroying the entire 80 million supply of BNB allocated to employees, worth a whopping $2.4 billion, as a part of their quarterly coin burn which will reduce the total supply to 100 million coins over time.
The 80 million BNB was originally outlined in the whitepaper as a reward for Binance staff, but the exchange reports being more committed to growing their ecosystem then cashing in on a payday.
Not everyone agreed with Weiss’ take on the long-term outlook for centralized currencies.
Regulations will kill that.
— Perebass (@Perebass1) July 25, 2019
However, the meteoric price rise for bnb throughout 2019, already up 373%, is in no small part due to the efforts of the Binance team and the coin’s close association to one of the world’s leading crypto exchanges.