What is Binance?
Binance is a cryptocurrency exchange platform which provides an ideal environment to trade over 200 cryptocurrencies. According to coinmarketcap, the platform is currently the largest crypto to crypto exchange platform worldwide, in terms of the trading volume. Binance has its cryptocurrency token known as the Binance Coin (BNB). This can be used to access the platform’s apps, services and also to trade against other cryptocurrency coins.
Looking to explore Binance’s services? Keep Reading. This guide will provide you with everything you need to know about this exchange platform including its background, advantages, and disadvantages, who it is suitable for, how to sign up, trading procedures and trading fees. You will also get to know Binance’s current market position and whether it is wise and safe to transact via the platform. You can also find more complete information about other features of this ecosystem in Binance review on cryptototem.com website here.
The platform was developed in 2017 by two co-founders namely Changpeng Zhao and Yi He. Both were previous employees of OKCoin, where they held executive positions. They left OKCoin to create Binance, a cryptocurrency platform whose operations were mainly based in China. The name ’Binance’ was derived from a combination of binary and finance. These two words summarize the functions of the platform.
Following the co-founders’ experience in the crypto space, they had gained a deeper understanding of the needs and requirements of users, which set a good foundation for Binance. To finance their new project, they organized for fundraising through an Initial Coin Offering (ICO) where they offered 100 million Binance coins (BNB) to investors. Through the event, the platform managed to raise over 15 Million USD – thanks to the excitement users had over cryptocurrency coins at that time. 35 percent of the raised funds were used to building the platform and perform system upgrades, 50% was allocated to marketing and branding exercises while the remaining 15% was put aside to cater for emergencies.
Binance’s useful native utility token, innovative solutions, and brilliant management quickly made the platform popular among users. Within the first six months, it had already scaled to three million users. To top that up, the platform was named among the top three cryptocurrency exchanges in the world.
Unfortunately, it was forced to exit China too soon, after the Chinese government banned cryptocurrency trading. The authorities issued a command to all initial coin offering exchanges demanding that they should promptly return funds collected from investors. Binance complied by not only returning the funds but also doing so at the original investment rate.
Seeing that the platform was keen to protect user’s investments, traders from other countries decided to embrace it and make use of its services. This contributed to the growth and establishment of offices in countries that were more receptive to cryptocurrencies. These include Japan, Taiwan, and Malta. Now, traders from all the parts of the world (excluding only 15 countries) trade via the platform.
Binance Coin (BNB)
Initially, the token was launched on the Ethereum blockchain before being transferred to the Binance chain- the platform’s proprietary blockchain. According to Yi He (Binance co-founder), the token has greatly contributed to Binance success. He describes it as the fuel to Binance Engine.
The coin was created to raise funds for the platform and also offer a suitable alternative to pay for transaction fees charged to traders. Binance separates user properties of BNB tokens in 3 categories: useBNB, buyBNB, and storeBNB.
From the 200 million BNB presented during the initial coin offering, 10 percent of the total number of coins (10 million BNB was offered to angel investors, 40 percent (80 million BNB) to the founding team and the remaining percentage (100 million BNB) to any other interested person.
Investors who acquire BNB tokens are referred to as ‘Binancers’. They can use the native utility token (BNB) to trade in exchange for other cryptocurrency coins. The token earns them special privileges such as discounted trading fees.
They are accorded a 50% discount during the first year, a 25% discount for the second year, a 12.5% discount the third year and a final 6.75 discount for the fourth year. After four years the trader goes back to the normal transaction rates imposed by the platform.
Considering that the utility token’s discount rate depreciates with time, the same is also expected for the actual token. To counteract this, the platform has come up with a process called ‘The Burn’ which destroys BNB tokens every quarter following its trading volume. This will go on until half of the total supply (100 million tokens) is done. The main purpose of ‘the burn’ is to stabilize the price of BNB tokens to fit the market requirements and changes.
Now, BNB is not only used as a utility token within the platform but has also gained more case adoption. For example, you can use it to pay for goods and services through POS systems such as Pundi X, TravelbyBit and crypto.com. It is also acceptable as collateral for crypto-backed loans by NEXO.
Shortly after entering the crypto market, Binance’s management went ahead to launch its proprietary blockchain the Binance chain, after which they moved BNB tokens from Ethereum to the new blockchain.
This move made Ethereum incur losses as the tokens had contributed to earning Ethereum a trading volume of $430 million. Also, some projects, which were based on Ethereum, decided to jump ship and move to Binance Chain.
Almost at the same time, the platform launched a decentralized exchange – Binance DEX. The main aim of creating it was to get rid of centralized custody of funds which enables traders to take control over their private keys and investments. Moreover, the platform looks forward to supporting new projects hoping to raise money or liquidity.
“Binance Chain brings a new level of freedom for traders as well as to projects that are looking to raise money or liquidity. With its core Binance Chain Technology, Binance DEX can handle the same trading volume as Binance.com handles today.”
He also adds,
“Binance DEX solves the critical issues with speed and power that many traders have faced when using other decentralized exchanges.”
Binance Subsidiary Platforms
Cryptocurrencies are not embraced by most government authorities as they are considered a highly risky venture. Some states have put in place extremely tough measures to try regulate them. Good examples would be the UK, US, and China. Since most crypto users come from these countries, cryptocurrency platforms try to comply as much as they can to existing government regulations.
To address the specific concerns of various authorities and also serve its users better, Binance has created several subsidiary platforms for specific regions. These include:
It offers fiat to crypto services within Europe and the U.K. Binance Jersey (Binance.je) is as a result of a partnership between Digital Jersey and Binance. It was formed to support the growing blockchain system in Jersey. Through the platform, traders can trade Euro (EUR) and British Pounds (GBP) in exchange for Bitcoin and Ethereum. Trading pairs include BTC/ GBP, ETH/ GBP, BTC/EUR, and ETH/EUR. Once you create an account on Binance Jersey and verify your account (KYC) you are granted immediate access to begin trading.
According to Wei Zhou, Binance CFO, the platform opens up new opportunities for traders within Europe and also grants them freedom from the uncertainties that come with Brexit.
“Through Binance Jersey, we want to help bridge the crypto-Fiat channel for Europe and the UK as part of our global expansion to support broader cryptocurrency adoption”, said Wei Zhou.
Binance most recently launched Binance.US, a Fiat to crypto exchange platform which is tailor-made for U.S residents. Through it, traders can purchase available cryptocurrency coins in exchange for USD. Though Binance had planned to have about 30 cryptocurrency tokens in the new platform, the regulatory measures within the U.S soil have forced Binance to only include 8 tokens in its listing. These are Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), XRP, US Dollar Tether (USDT), Litecoin (LTC) and Binance Coin (BNB). Also, not all states shall be free to use the new platform – users from North Carolina, Idaho, Texas, Washington, Vermont, Connecticut, Alabama, Alaska, Hawaii, Louisiana, New York, Georgia, and Florida cannot access it for now.
The BAM Trading services run the U.S based platform which is designed on Binance’s wallet and matching technologies. Once you successfully set up an account in Binance.US, you can log in and begin trading within minutes.
In July 2019, Binance launched yet another subsidiary to be based in Singapore – (Binance.SG) This is a fiat-crypto exchange platform that enables users to purchase cryptocurrency coins including Bitcoin, Ethereum and Binance, using Singapore Dollars (SGD).
Since its launch, the platform has experienced a user growth of about 20% per week. Changpeng Zhao seems very much elated by this progress.
“We are humbled by the positive market response to Binance Singapore this far, which is largely due to our strategic investment partner”, he said.
The platform was formed from a partnership between Binance and Vertex Ventures (a global network of operators and investors who combine efforts to manage portfolios in India, Israel, Southeast Asia, China, and the U.S. A local payment partner and platform Xfers (Fintech startup) is also part of the deal. Xfers helps support the Binance Singapore platform’s transactions with an integrated account onboarding process.
These partnerships and its core technology have enabled Binance to come up with favorable transaction rates. Currently, it charges the lowest transaction fees within the Singapore crypto market.
It is a fiat to crypto cryptocurrency trading platform designed to serve the people of Uganda. The platform allows traders to buy Bitcoin and Ethereum tokens in exchange for Ugandan shillings (UGX) Available trading pairs include BTC/UGX and ETH/UGX.
Within the first week of launching, Binance managed to sign over 40,000 users. This was an impressive achievement considering that over 70% of Ugandans do not have bank accounts. To facilitate payment, Binance conducts transactions via mobile money.
Wei Zhou recently told CoinDesk,
“They just have to have the money within the mobile payment system. They don’t have to have bank accounts.”
Nevertheless, in the long run, Binance Uganda plans to open Bank accounts.
Before Binance, they had no choice but to rely on peer to peer exchanges like LocalBitcoins which paid little attention to the fact that most locals were unbanked. Also, converting local currency to an acceptable currency in such exchanges was quite costly.
According to Kwame Rugunda, Chairman of the Ugandan Blockchain Association, the subsidiary was an answered prayer to the people of Uganda who were “hungry” for cryptocurrency.
People in this country explore cryptocurrencies as a source of livelihood as the rate of employment is quite high. Also, the demand for imported products has popularized the crypto market as some major world suppliers do accept tokens as a form of payment.
In the future, Binance hopes to open similar subsidiaries in other countries within Africa including, Kenya, Nigeria, and South Africa. Generally, opening tailor-made subsidiaries has worked to the advantage of Binance as it helps the platform better focus on the particular needs of a given market. This earns them more customers thus leading to growth.
Who is Binance Suitable for?
Binance is open for trading to anyone above the age of 18. You also need to be in a country that is receptive to the platform. Unlike the age limit which is clearly stated on the platform’s terms and conditions of use, Binance does not directly point out the countries where you should not use it from. Nevertheless, some countries are known to be hostile towards cryptocurrencies, such include Bangladesh, Bolivia, China, India, South Korea, Iceland, Kenya and to some extent the U.S.A.
Before signing up on Binance, first, find out your country’s position on cryptocurrencies. You can get some information from the ministry of trade and commerce or over the internet. If trading cryptocurrencies is prohibited, you can try using a VPN.
How to Open an Account
Creating an account with Binance is pretty easy. Below are the steps involved:
Step 1: Visit the Binance website and click on the Register tab. This will lead you to a subscription form that you need to fill.
Step 2: Key in relevant information on the provided form and click on create an account. Before moving on to the next step you will be required to fill slide a puzzle piece to its correct position to prove you are not a robot.
Step 3: A link shall be sent to the email you’ve provided. Open your mail and click on the confirmation link to have your account activated.
Step 4: Once your account is active, you can log in through the Binance official portal. It is recommended to first secure your account before embarking on any trading process. You can do this by clicking on the security of your account tab and choosing either via SMS or Google authenticator. Either of the options will provide easy to follow through instructions on how to protect your account.
Step 5: Fill in the details required in the Know Your Customer (KYC) form. This includes personal data such as your names and address. To back up provided information you will be required to upload the front and back of a preferred identity document. This could either be an ID card, passport or driver’s license. You may also need to download Binance App and upload a selfie.
After completing the above steps, your account shall be ready to start trading.
How to Fund Your Account
Binance supports over 100 different types of cryptocurrencies, if you have some coins in your digital wallet, first look over Binance list of supported coins to ensure yours is among them. To deposit some funds from your digital wallet, click on the profile icon on your homepage. The drop-down menu will provide you with a ‘deposit’ option. Click on it to find the deposit page. Here you will be provided with a list of coins where you can choose which one you wish to deposit. In case a coin is listed but deposits are unavailable, it could be because the wallet is undergoing maintenance. You can scale the issue with support to find the exact reason and when it shall be made available for deposits. For each coin, you will choose there are specific processes you will need to follow to successfully deposit. Ensure to follow provided instructions carefully to avoid losing your investment. Once you have keyed in the required deposit details you will be able to open your digital wallet and select the particular coin that you wish to deposit to your Binance account. Follow provided instructions to complete the process.
Alternatively, you can purchase cryptocurrency coins using a credit card by clicking on the ‘Buy with Credit Card’ icon and selecting which coin you want to buy and the number. You will be able to view the total charge to be incurred including the coin’s current market price. If satisfied, click on ‘Go to Payment’. You’ll be directed to a page where you shall fill in some personal details and agree to the terms and conditions. You will also provide your Mastercard or Visa card details. Once the order process is complete, you will have to wait for about 10-30 minutes for the funds to reflect in your account.
Incase buying via credit card seems too expensive for you, a cheaper option would be to purchase tokens by funding your Kraken or Bitstamp account via a bank account transfer.
You could also go old school by first purchasing some cryptocurrency coins from platforms that accept fiat currency then using the purchased tokens to trade in Binance. Try out Coinmama, CEX.IO or Coinbase. After acquiring some cryptocurrency tokens, you can use them to trade over 200 coins via Binance.
How to Trade Via Binance
There are two trading platforms available:
- Basic trading platform – It features a detailed chart with technical indicators that can be overlaid over the charts. It allows you to efficiently manage your transactions.
- Advanced trading platform – It performs almost similar functions to the basic trading platform only that it can perform a more detailed analysis. It uses more complex tools that can be used to perform an analysis over longer periods.
To begin trading, move to the homepage where you will see a list of cryptocurrency coins available for trade.
For example, you have some Bitcoins in your wallet but need to exchange them for Ethereum tokens. Since you want to purchase using Bitcoin you will need to click on the Bitcoin Markets Tab, then key in Ethereum. Click on a suitable row and you’ll be directed to a page where the actual trading shall be conducted. On the left part of the screen is the order book which displays the active buy and sells limit orders. These reflect given traders desired prices to either buy or sell. The red part is used to fill in the limit sell orders whereas the green part is used to fill limit buy orders.
The right side of the screen displays other cryptocurrencies that can also be sold/ bought. You are also provided with the public trade history of the coin you intend to buy. At the center of the screen is a chat feature that includes real-time price action and relevant indicators. Below the chart is where you need to key in the specific details of what you intend to purchase.
At this stage, you should either select a limit/stop order limit or market order.
- Limit/stop order limit. This applies if you want to purchase tokens at the desired price. In this case, fill in the price in the provided slot and the number of tokens you need.
- Market Order. Choose this option if the certainty of execution is your main priority. Click on the Market order tab then key in how many tokens you need plus the number of Bitcoins you would like to spend.
For both options, check at the bottom of your screen to view their status. If the order is yet to be executed it will indicate ‘open if it’s been filled, the status turns to ‘Filled’.
Follow the same procedure to sell cryptocurrency tokens only that this time you shall execute a market or limit sell order.
Generally, first-time users may find it a bit challenging finding their way through Binance during the first few times. However, as you get used to its settings you will quickly move from beginner status to an expert.
How to Withdraw Funds
It is wise not to keep your funds in your Binance account for long. If not planning to trade for some time always move your funds to a digital wallet for security purposes. This is because hackers mostly target platforms since they are centralized and handle lots of money. If an attack is successful, they usually try to siphon as many funds as they can from users’ accounts.
To initiate a withdrawal, you need to first key in the address you would like your funds transferred to. In case you have activated the whitelist function you can withdraw to any of the provided addresses. Apart from security reasons, activating this function saves you the trouble of having to key in an address every time. Next, you will need to select the type of coin you wish to withdraw and the exact amount. The platform will automatically calculate your withdrawal fee and display it on your screen together with the final withdrawal amount. Click submit to authorize the process. To ascertain it’s you, the platform will ask for your 2FA authentication. Check your mail to confirm your withdrawal request. Ensure everything is in order before clicking on ‘Confirm Request’. Once that’s done, a page pops up informing you whether your withdrawal is successful or not.
The amount of cryptocurrency coins you can withdraw is dictated by your verification level. Level 1 allows for not more than 2BTC in a day whereas level 2 account holders can withdraw up to 100 BTC in a day. To be classified in either of these two levels will depend on the amount of information you shall provide. Everyone who successfully opens an account in Binance automatically becomes a level 1 account holder, To qualify for Level 2, you need to secure your account using Google Authenticator or 2FA security. You also need to provide every requested personal detail and document that proves your identity. Such include Your country, First name, Gender, Last name, passport ID, Passport photo, Selfie with a passport.
How to Use Binance Safely
With so many cases of hack attacks with the intruders getting away with stolen cryptocurrency coins, you need to exercise caution to protect your investment. Here’s how:
Enforce a two Factor Authentification (2FA)
Incorporating a 2FA involves creating an added layer of security by using two locks. Normally three factors are used to promote security- a password, phone, and fingerprints. Any of the two qualifies as 2FA. For Binance, you only need a password and an SMS or a Google authentication code. After setting your preferred password you need to choose between phone verification or using a Google authenticator. Though both are great, using a Google authenticator provides stronger encryption. You will find the two options under the ‘security’ tab in your account’s dashboard. Click on either and follow the provided instructions to safeguard your account.
Use the Official Binance URL
Beware that scammers notoriously send emails, pop-ups, and SMS luring users to click on a particular URL to access the services of the platform. To be safe, anytime you want to access Binance be sure only to do via its official website’s URL. You could also bookmark it to avoid the hustle of having to ascertain its authenticity every time.
Do not Give Private Information
Ignore any requests from anyone asking to have your passwords, 2FA codes or directing you to send your coins to a “safe place”. This includes the Binance staff. Only you have the right to own such information.
Use Strong AntiVirus
Ensure that your devices are free from malware by making use of a strong antivirus. This can prevent losing or leaking of vital information.
Advantages of the Binance Exchange Platform
- Low Transactions Fees. The fact that the platform was funded by its own Initial Coin Offering (BNB) enables it to keep transaction fees on the lower side. All deposits are free of charge. You only get to pay during transactions or transferring funds to a digital wallet. Paying via BNB earns users 50% off this fee.
- Numerous Trading Pairs. Currently, there are more than 100 crypto coins available for trading via the platform. These include popular coins such as Bitcoin, Ethereum and Litecoin. Besides, the platform is known to encourage and support new coins, hence you are likely to find newly listed tokens often.
- User-Friendly Interface. Binance exchange platform is easy to understand and use. You do not need to be a technical expert to carry out transactions. Also, the platform provides easy to follow through instructions that guides their users.
- Mobile App. The platform introduced a mobile app that works conveniently with mobile phones. You can conveniently log in and trade anywhere you are. Whether in a train, bus, out exercising, in the park – anywhere you like. You can also receive regular updates from the platform which will enable you to quickly take relevant actions. The mobile app is easy to install and works with both iOS and Android phones.
- Secure Platform. Balance has put in place security systems which make it tough for hackers to get through. This is meant to protect user’s investments. Additionally, the platform has adopted a proactive approach to tackle any hack attempts by setting aside a USD 10 million bounties that shall be rewarded to persons who provide sufficient information that leads to the arrest of anyone who may try to hack their systems.
- Supports Multiple Languages. The platform is ideal for use by traders from different parts of the world as it supports several languages including; English, Korean, Japanese, French, German, Spanish, Russian and Chinese.
- Scalability. The platform can handle over 1.4 million orders in a single second, thus enabling it to efficiently serve its worldwide users without slowing down or stalling.
- Giveaways. To give back to their loyal users, Binance occasionally gives away gifts and incentives. Though most of the time they have been cryptocurrencies, these gifts change from time to time. At one time Binance surprised users by giving away a Maserati car!
- Liquidity. Consistently, Balance has portrayed a high trading volume. This proves that investors are actively trading via the platform daily. Which means that if you put up some tokens for sale you are likely to quickly find a buyer.
- Internet of Things (IOTA) Available for trading. IOTA tokens are available for trading within the Binance platform at any time of the year.
Fiat Money is Not Acceptable
In the past, Binance did not accept fiat currency in exchange for cryptocurrency coins. On one hand, this was an advantage, as the platform was not subject to government regulations regarding fiat currency. On the other hand, it was a disadvantage to users who preferred to purchase tokens using money. To do so, they were forced to first purchase cryptocurrency coins in other platforms that accept fiat currency such as Coinmama then move over to Binance to trade.
Now, things are slowly changing as recently Binance struck a deal with payment processor simplex to provide cryptocurrency purchases with a credit or debit card. Though this is a commendable step, there still exists a gap in fiat payment methods. Paying via credit cards is quite expensive as every transaction you make a 3.5% fee or $10USD is charged (whichever is higher). To avoid incurring such costs some traders would prefer the old method of buying tokens in other platforms before coming to trade via Binance. This is quite tedious and is also not good for business – such traders could be tempted to stay on and trade via these platforms.
If only Binance could provide several fiat payment options, then traders would get a wider variety to choose from in terms of convenience, fees charged and ease of use.
Recurrent Hack Attempts
There have been several hack attempts against Binance. The very first case was reported in March 2018 where hackers managed to launch a large-scale attack in less than two minutes. Fortunately, the Binance risk management system was sufficient enough to stop the attack and prevent any illegal transactions. However, the platform wasn’t so lucky when another hack attack was made in May 2019. This time the hackers got away with $40 million. Though the platform decided to absorb the loss, the damage had already been done.
Still, in 2019, another hack attack was reported whereby the hacker released over 10,000 Know Your Customer (KYC profiles) of Binance users. Any user who submitted their KYC data between 2018 and 2019 risked being affected. Binance is still investigating the matter and looking for a way out of it.
Lacks Live Support
The Binance platform neither provides a telephone number for inquiries nor a live chat support system. In case you need to contact support you have to do so via mail or submit a ticket. Most users find this quite inconvenient as they may not have the time to sit around and wait hoping the support team will get back to them. Besides, some matters may be urgent thus require a quicker response time like that accorded by live chat support.
There are so many platforms in the crypto world, all competing to get users’ attention. To stand out from the crowd, a platform has to be incredible and Binance has done exactly that. From its technology to daily operations, it has created an ideal environment to trade cryptocurrency. Also, looking at its history and progress it is evident that Binance continues to constantly seek better methods to serve its users. The platform sure deserves to be at the top. However, if it intends to stay there, its management should find effective ways to address its weaknesses.