BNB: Binance Coin Is A Buy

Thesis Summary

Binance Coin (BNB-USD) is the native token of the Binance exchange and was launched in 2017. It has come a long way since, and its blockchain has grown significantly. The BNB token is necessary to operate on the BNB blockchain and is also an integral part of the BNB exchange ecosystem.

Given the popularity of the exchange and how fast the network is growing, I believe BNB is a good buy at today’s price.

The BNB Chain

The Binance blockchain used to be made up of two layers. On the governance side, we had the Binance Beacon Chain, and on the execution side, we had the BNB Smart Chain (BSC). Since February, these have merged to create the single Binance Chain.

With this move, Binance aims to create an ecosystem beyond the Binance exchange. The Binance Chain is EVM compatible and allows for creating smart contracts and DApps that can be used cross-chain.

BNB uses Proof-of-Stake Authority, which allows it to attain fast transaction speeds. The company has stated it has reached 1.4 million TPS. However, the chain was limited to 21 validators, but this has recently been increased to 40.

The BNB chain aims to be a place to develop “MetaFi”. The objective of MetaFi is to allow for the development of a wide variety of blockchain functionalities. These blockchains applications will be able to coexist in one single ecosystem, thanks to the network’s multi-chain capabilities.

Security, Scalability and Decentralization

Now, let’s talk about Security, Scalability and Decentralization. The Binance coin is quite centralized. It is controlled by only 40 validators, and it is supported by the Binance exchange. With that said, the current merge aims to, at least, improve on-chain governance.

In terms of Security and Scalability, BNB does excel, though. Binance is perhaps one of the fastest blockchains out there, being able to complete 1.4 million TPS. Binance is also one of the most secure exchanges, and although there have been some hacks within its ecosystem, the main chain has not been attacked successfully.

The Binance Smart Chain is a great place for new startups to launch their blockchain projects. The big caveat is that it is a centralized blockchain, and it also doesn’t help that the company was founded in China, although, given the current laws, it does not operate there anymore.

Ecosystem

Here are some popular dApps that BNB powers through the BSC network.

Pundi X: The dApp is a digital payments solution integrated with BNB. The dApp provides its partner merchants with point-of-sale devices that enable them to accept cryptocurrencies like BNB as payments for transactions. Binance developers would be able to use the tokens listed on Pundi X’s open platform in 25 countries.

HTC: HTC is the brains behind ‘EXODUS 1’, a crypto phone compatible with Binance Coin. It’s like having a mini-bank in one’s pocket. The device offers native support for Binance Coin in Zion, which allows EXODUS users to access the platform.

Decentraland (MANA-USD): BNB users can also take advantage of the products and services offered by DeFi gaming platform Decentraland. The token can be used for various auctions and competitions hosted on the platform. Moreover, users can directly participate in these events via Binance’s Trust Wallet dApp browser.

ADAMANT Messenger: The decentralized messaging platform offers cryptocurrency transfers and BNB among its listed digital assets.

Tokenomics

The BNB Token supply is capped at 200 M. To deal with price fluctuations, Binance keeps the supply of its tokens scarce through various measures like repurchase and burn events. The platform uses 20% of its profits to repurchase tokens and burn them. The process continues until the platform possesses 50% of all tokens, i.e., 100 M BNB. Eventually, the platform burns all the repurchased tokens so that only 100 M tokens remain in circulation. Users can use the token to pay any fee on the platform, including the listing fee, exchange fee and withdrawing fee.

Recently, Binance also introduced BEP-95, a proposal that expands on the current burn mechanism. With BEP-95, some BNB is burned with every transaction. This ratio will be determined through on-chain governance.

Overall, the current tokenomics makes BNB quite deflationary, which is good for investors.

Price Target

BNB has many uses, both within the exchange and outside of it. The supply is capped, and tokens are regularly being burned. With that said, let’s look at the price forecast based on EWT.

Like many other cryptos, I see BNB as having completed a wave 1 up into $700, which ended around May 2021. Since then, we have been correcting in an A-B-C structure, and based on the recent action, I believe the low could be in.

If this is the case, the next wave 3 up should take us to the 1.618 fib extension of wave 1, measured from the low struck in wave 2.

This is why my long-term target for BNB is over $1200.

Other Considerations

With that said, there are some risks to our bullish thesis. On the more immediate side of things, there’s still room for BNB to make one more low to complete this correction. The upcoming Fed meeting will be a crucial catalyst.

On the other hand, we have to consider that BNB relies on the existence of the Binance exchange. The problem with this is that crypto exchanges are facing increased regulatory pressure. For example, Binance was recently fined by the Dutch government.

Takeaway

In conclusion, I find that Binance Coin is a compelling cryptocurrency. It has many great uses and is supported by a significant exchange. The biggest problem is the centralisation, but not all cryptos have to be decentralised.