Binance Coin (BNB) Rating= 295/1000
Technology (0 to 300) = 205
- Speed (0 to 50) = 40
BNB is best known for its fast transaction speeds. It’s claimed they are capable of transacting over 1.4 million transactions per second (tps) on. BNB can be transferred in 1.1 seconds with a $0.02 fee on the Binance chain. There is no solid evidence to back these throughput statistics up though but we do know the chain settles fast.
- Cost (0 to 50) = 50
The cost of transacting with BNB on the Binance exchange is 0.001 BNB which at time of writing is $0.02. Also, you can receive a trading fee discount when you use BNB token on Binance. First-year traders can expect a discount of 50%, which reduces to 25% in the second year, 12.5% in the third year and 6.75% in the fourth year. These discounts substantially cut on the cost of trading on the Binance Exchange.
- Scalability (0 to 50) = 40
Binance Coin uses Tendermint byzantine-fault-tolerant (BFT) consensus mechanism to provide a novel way of structuring and storing transactions. It’s a different implementation to a Proof of Work (POW) blockchain that increases privacy and better network scalability. Users can speed up transaction processing by choosing an Accelerator Node, a node that works in tandem with validator nodes and is owned by an organization. Due to the fully centralised nature of BNB scalability should be as high as they want it.
- Reliability (0 to 50) = 25
Binance coin is indeed reliable with over $1.2 billion in Binance coin (BNB) being transferred since the launch on June 2017. The periodic burning of Binance coins helps keep it valuable and also reliable (it isn’t a real coin burn however as the burned coins do not lower the total supply we know will be capped at 100m). Additionally, users get a special discount on their trading fees if they choose to pay using BNB. The coin ranks 8th among all cryptocurrencies by market capitalization despite being launched less than 2 years ago. Even though BNB is native to Binance, it can also be traded on other marketplaces like Bancor, IDEX, and Gate.io. It’s, therefore, quite reliable but the problem is with Binance and the centralised nature meaning a single point of failure. Binance seems to have an annual summer event where they have been hacked.
- Environmental Impact (0 to 50) = 50
BNB cannot be mined, as it was all pre-mined during Binance’s initial offering which sold out in less than a month. This means that unlike Bitcoin and Litecoin, BNB has a minimal environmental impact.
- Decentralization (0 to 50) = 0
Just like the Binance exchange, which is centralized, BNB is also centralized with Binance Inc having full control over it. Centralization is well evidenced by the coin burning program which seeks to cut the number of coins in circulation from 200 million to 100 million to increase its value. A marketing ploy red herring.
Binance has launched a “decentralized” exchange Binance DEX. The illusion is that the centralization of BNB would certainly decrease. Sadly this is yet another red herring as their decentralized exchange is fully centralized!
Security (-250 to 0) = -190
- Binance KYC Breach & Annual Hacks (-100 to 0) = -100
On August 7, Binance Exchange was hacked where the hacker allegedly gained possession to a huge chunk of the firm’s Know Your Customer (KYC) data (10,000+ personal photos). The hacker demanded a total of 300 Bitcoins from the exchange, or else he/she would release all the data.
Additionally, on May 7, hackers ran away with 7,000 Bitcoins valued at $40 million. Such security breaches caused panic among Binance Coin (BNB) holders with the assumption that Binance would dump BNB to pay for the damages. Following the hack, BNB plunged to $18.30 and recorded a total loss of 17.57% resulting in a huge loses among the holders. This hack was particularly telling coming a year almost to the day since a previous hack which stole a very similar amount.
- Potential for Being Banned (-100 to 0) = -50
Bitcoin Inc. has had poor cryptocurrency censorship resistance as it has experienced poor liquidity issues in China after the country started its censorship efforts on cryptocurrencies. Binance has since moved its headquarters to the crypto-friendly island of Malta although no Maltese banks seem to be willing to open bank accounts for Binance meaning they have had to go further afield to get fiat exchanges active.
Binance has also had to close it’s doors to American customers and the new Binance USA exchange is under different management.
BNB could be seen as a security token.
- Network Vulnerabilities (-50 to 0) = -40
While Binance coin has not been reported any vulnerability, the platform where it’s used has been reported to experience some security vulnerabilities resulting in loss of 7,074 BTC which were stolen from Binance’s hot wallet. The hackers used a variety of techniques, including phishing, viruses, and other attacks. The platform has not revealed the specific security vulnerability, and users are advised to change their API keys as well as 2FA keys. Even with improved security, the centralized creation of keys is still a point of vulnerability, and Binance should change this approach.
Use Case (0 to 500) = 260
- Initial Main Use Case (0 to 100) = 40
Binance Coin was created with the intent of offering an alternative way to pay for fees charged to traders using the exchange. BNB is currently being used to pay Binance’s 0.1 percent per trade fee in addition to its withdrawal fees which is charged when users move their cryptocurrencies from exchange to private wallet. It is also used for paying listing fees or any other fees incurred on the platform. To date, BNB has effectively achieved its main use case.
- Mainnet Live (0 to 200) = 200
Binance coin went Mainnet live on April 23, 2019, as a native coin to power Binance DEX which is built on top of Binance Chain. Users are expected to swap their ERC-20 BNB tokens to BEP-2- BNB on the platform.
- Additional Use Case (0 to 100) = 10
Apart from the main use case, which is to pay transaction fees on Binance Exchange, BNB has multiple use cases. It can also be used for fueling transactions on the Chain, making in-store payments. Binance coin can also be exchanged for other cryptocurrencies on various exchanges including KuCoin, Gate.io, Bitrue, HitBTC, and Exrates among others. We don’t consider these use cases to be worthy of many extra points in additional to the main use case however.
- Additional Working Products (0 to 100) = 10
Binance Coin (BNB) is set to be used as a native token in Binance Inc. upcoming project-Binance Launchpad. Much like ICOs raised ETH in the Ethereum backed sales, BNB would be exchanged for the token that is issued by the project doing the raise. Binance Coin would be the base currency on the Binance DEX and would power the ecosystem. Binance developers are expected to migrate BNB to the Binance Chain when it is launched on the Mainnet.
Core Team, Partnerships & Developers (0 to 200) = 20
- Core Team & Developers (0 to 100) = 10
The team behind BNB is led by Changpeng Zhao, who has both traditional Wall Street finance and cryptocurrency experience. Binance Inc. has a track record of successful startups under their name. The team has worked on and operated several blockchains, and they have accumulated a large network of partners in this space. There remain many questions behind the ethics of the company however:
- The nature of the hacks have raised questions.
- The fake volume on the exchange
- Money laundering issues
- Allowing VIPs to have 200 bot trading sub accounts
- Market manipulation
- The dubious nature of their trading competitions
- Accusations of “match fixing” their IEO launches
- The continued support for Tether USDT which has breached, and continues to breach many of the ” due diligence” terms Binance has offered as a reason to delist other tokens
- Partnerships (0 to 100) = 10
Binance Coin through Binance Inc. has partnered with many institutions, notably EQUAL crypto wallet, which would add Binance Coin to the wallet. Binance Chain also partnered with Binance in an attempt to bring about a new incentivized video economy. This partnership is hoping to pave the way for more global publishers, creators, and advertisers to enter the crypto space. Through the partnership, BNB is available through all the CoinFlip ATMs.
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