In July of 2017, Changpene Zhao (CZ) launched a new cryptocurrency exchange platform: Binance. The name is a blend between the two words “Bitcoin” and “finance”, and it is now one of the leading cryptocurrency exchanges in the world. In 2021, the platform facilitated a trading volume of $7.7 trillion with its estimated user base of 28.5 million users.

History of Binance 

While Changpene Zhao may be one of the richest billionaires in the world today, he started off small as a Chinese-born immigrant living in Canada. In 2013, he first learned about Bitcoin and began his journey in the world of cryptocurrency. 

Fast forward to 2017, CZ launched Binance with the help of an initial coin offering (ICO), a process in which blockchain startups raise capital by selling the tokens that are integrated within their network. For Binance, the token was called Binance Coin (BNB), which was originally an utility token meant for reducing transaction fees. In total, the company created 200 million Binance coins where 80 million BNB would be distributed to the founding team, 20 million BNB would be distributed to angel investors, and 100 million BNB would be distributed via ICO. Through this process, Binance was able to raise $15 million. 

With the company’s dedication to create a cryptocurrency trading platform that could support high volumes and users with low transaction fees, Binance had launched as one of the most successful exchanges to date. 

What is Binance?

Binance is a cryptocurrency exchange which enables users to trade their cryptocurrencies with other users. Similar to the stock market, Binance acts as a marketplace. The crypto exchange keeps track of all buy and sell orders, then matches these orders up to facilitate trade. Through the exchange, Binance takes a transaction fee in order to generate revenue. 

It is also important to note that in September of 2019, Binance banned US customers from using the exchange due to an increasing hurdle of regulations. As an alternative, Binance created its US arm Binance.US through cooperation with BAM Trading Services

What is Binance Coin (BNB)?

Originally, Binance coin ran on the Ethereum blockchain as a standard ERC-20 token before Binance released its own blockchain in April of 2019, and it is the fifth largest cryptocurrency today.

As previously stated, BNB had originally found its appeal by reducing transaction fees for traders, but it has now evolved to accomplish a variety of tasks, including but not limited to: 

• Exchanging cryptocurrencies 
• Paying for and reducing transaction fees
• Booking travel plans

It is also important to note Binance’s quarterly BNB burning, a process in which Binance buys back BNB and takes it out of circulation—essentially “burning” them. The burning happens in order to decrease the supply of BNB, which in turn will increase scarcity and value of each individual coin. Binance carries the burning process at the end of each quarter, and the most recent burning took place on April 15th of 2021, when they destroyed just shy of $600 million.

Controversy surrounding Binance

At the time of writing, Binance has proved itself as the leading force in the cryptocurrency world, boasting a $11.54 billion 24 hour trading volume. However, it has recently come under fire as the SEC has begun investigating its ICO process in 2017 on whether Binance broke any securities rule. No concrete results have come up from the process. Additionally, Reuters recently published a lengthy report on malpractices Binance was allegedly involved in. The report accuses Binance for becoming a haven for money laundering, drug trafficking, and hacking due to its weak security and verification system. 

ABOUT THE WRITER 

Daniel Shin is a contributor to Identity Review from the University of Southern California. Do you have information to share with Identity Review? Email us at press@identityreview.com. Find us on Twitter.

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