Here’s Why Binance Coin (BNB) Could Be A Top Three Coin Within Three Years

An exchange issuing its own cryptocurrency seems a little bit strange at first glance. Binance has done just that, however, and over the last month or so the coin has caught fire. At the time of writing (early morning ET), Binance Coin (BNB) goes for $8.33, having traded as low as $0.70 a piece back at the start of the final quarter of this year.

From the start of the quarter lows to highs recorded last week just shy of $11 a piece, this one gained closed to 1500%.

BNB Daily Chart

Sometimes, the logic behind a long-term thesis on these sorts of young, relatively low market cap cryptocurrencies can be a bit murky. They are reliant on companies developing technologies that are experimental at best and, beyond that, the technologies finding (and successfully growing into) its target marketplace.

None of this is true of Binance Coin.

This is one of the clearest and simplest long-term strength arguments we’ve seen in the sector to date and – as such – we don’t expect this one to hang around at current levels, even given the gains outlined above, for long.

How can we be so confident?

Well, Binance (as many reading will already be aware) is one of the most popular cryptocurrency exchanges in the world. As of today, it’s got more than 3 million registered users and it’s built a reputation for being one of the most secure, reputable and user-centric exchanges on the market. To put this another way, if there’s an exchange out there right now that we would expect to be one of the, if not the, fastest growing exchange over the next five years, it’s Binance.

And where does Binace Coin come in to all this?

The coin was issued earlier this year for one (primary) purpose – to allow Binance users to pay fees in a native cryptocurrency, as opposed to using something like BTC or fiat. And why would users want to pay in BNB as opposed to BTC? Because Binance offers a discount (and a steep one, at that) for any user that covers their trading and platform fees with its native coin.

Specifically, when a user pays fees in BNB, they receive a 50% discount on fees for the first year of fee payment. This then reduces to a 25%, a 125.5% and a 6.75% discount for the second, third and fourth years respectively.

And here are the economics of our prediction:

• Assumption one: as Binance increases in popularity, more and more users are going to want to pay fees in BNB so as to reduce the costs associated with their trading.
• Assumption two: in order to pay fees in BNB, users have to buy BNB.
• Assumption three: an increased demand for BNB that arises on the back of Assumption one and Assumption two, as outlined above, will push up the price of the token.

It’s really that simple.

Combine this with the fact that the company is buying back tokens and burning them every quarter and we get a reducing supply input to turbocharge the above-discussed set of assumptions.

The company also has plans to build a decentralized version of its current platform, as part of which BNB will be used as one of the key base assets as well as gas to be spent.

So, really, the only way that this coin isn’t going to increase in value is if Binance goes under. This is cryptocurrency, so that’s not a risk we can take lightly, but as far as risk reward profiles go in this sector right now, that which Binance Coin (BNB) offers is one of the most solid we’ve seen.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Image courtesy of Binance