A History of Binance: A Complete Overview of Everything to Know
Binance Coin (BNB) is the cryptocurrency that powers the Binance exchange. Since its initial coin offering (ICO) in July of 2017, the BNB market cap has risen to over $4.5 billion.
With a single BNB coin originally costing 10 cents, nearly two years later one token has a value of $39.57.
Curious how Binance went from an obscure Chinese crypto exchange to the world’s premier platform? Continue reading and we’ll walk you through a history of Binance and look at how they got to be the cryptocurrency powerhouse they are today.
Binance’s History and Humble Beginnings
Before we go into a history of Binance, let’s learn more about its creator. Binance’s founder, Changpeng Zhao, known as CZ, was born in Jiangsu, China. After the government exiled his family for being part of the intellectual class, the Zhao’s moved to Vancouver, Canada in the 80s, when CZ was a teen.
CZ spent his pre-college years working at McDonald’s and doing other odd jobs to help relieve his family’s financial woes. A few years later, he graduated with a degree in computer science from Montreal’s prestigious McGill University.
After college, CZ helped to build a system designed to match trade orders on the Tokyo Stock Exchange. He followed this by creating software for futures trading at Bloomberg’s Tradebook.
Finding the work unsatisfactory, CZ left the stock market space and bounced around various crypto projects. He even worked as head of development at Blockchain.info for 8 months.
A History of Binance Coin
In 2017, CZ noticed the sudden rise in coin offerings and decided to make a coin of his own. On June 24, 2017, after raising $15 million, CZ’s Binance Coin started its initial coin offering with 200 million tokens. 11 days later, the Binance exchange opened.
At the opening of the exchange, the only cryptocurrencies available on Binance were BNB, BTC, NEO, LTC, and ETH. Today, the exchange supports over 120 different coins.
45 days after binance.com went live, the platform had accumulated over 120,000 users with an average growth rate of 5,000 new registered users per day.
Although the company was originally headquartered in China, they soon had to relocate to Japan following China’s ban on crypto trading. After about 165 days of operation, Binance had become the world’s largest cryptocurrency exchange with regards to traded value.
Because many exchanges were operating out of China at the time of the ban, Binance had a unique advantage. As a new platform in the crypto space, Binance was able to quickly mobilize out of China and continue to scale its business while other companies were still figuring out how they would relocate.
After 6 months of being open for business, Binance had accrued a profit of $350 million, mostly from transaction fees. It also boasted 10 million worldwide users.
As Binance continued to grow, the company entered a phase of aggressive expansion. They planned to develop relationships with small island nations where they could build offices and set up partnerships.
In mid-2017, Binance announced that they would be building their global compliance center in Bermuda. They also announced that they would donate $10 million toward tech-related educational programs through their Binance Charity Foundation. They would then invest an additional $5 million into blockchain startups.
Binance also announced that they would help the government of Bermuda to develop a regulatory framework for blockchain and cryptocurrencies.
In September of 2018, Binance teamed up with the Malta Stock Exchange to enable trading of security tokens. Binance also purchased a significant stake in Founders Bank, a Maltese financial institution. Founders Bank works to help crypto and blockchain-related firms secure financial services from traditional banks.
Continuing their island expansion, Binance opened Binance Jersey. This would operate as a fiat-crypto exchange on the British island of Jersey. Binance Jersey works as an independent entity from binance.com, its parent company. The company then launched Binance Uganda, with similar goals for the African continent.
At the start of the year, Binance partnered with Simplex as a way to get involved in the credit card space. Simplex is a FinTech company that provides guaranteed fraudless payment processing. The company operates out of Israel.
The Binance-Simplex partnership allows users to buy cryptocurrencies on Binance’s site with their credit cards. Via Simplex’s software, users can now buy cryptos like Bitcoin, Binance Coin, and Ethereum with a Visa or Mastercard.
In May of 2019, Binance was the victim of a large-scale hack. The thieves stole over $40 million. At the time of the hack, that was worth over 7,000 bitcoins.
According to Binance, the hackers were able to accomplish the security breach by stealing two-factor codes, API keys, and other information. The company was able to trace the theft to a single hot wallet.
The hackers were able to get into the hot wallets of several well-funded accounts and withdraw all at once. A hot wallet is a digital wallet connected to the internet in some way, and thus, easier to access remotely. A cold wallet is not connected to the internet. This theft impacted around 2 percent of Binance’s total bitcoin holdings.
Once the hackers withdrew their money, various alarms in the Binance system triggered. The company halted all withdrawals shortly after. They also halted deposits.
Luckily, Binance has a Secure Asset Fund for Users (SAFU) for occasions like this and was able to cover the losses.
In June 2019, Binance announced that they would be issuing their stablecoin. A stablecoin is a form of cryptocurrency designed to minimize volatility. It works by linking to a fiat currency, thus making it more stable.
The first Binance stablecoin was Binance GBP (BGBP). It is fully backed by reserves of the British pound. This means that 1 BGBP is equivalent in value to 1 GBP.
Users can trade BGBP in a USDC/BGBP trading pair. USDC, which stands for USD Coin, is the US version of the stablecoin. 1 USDC is equivalent to the value of 1 US dollar.
USDC is an Ethereum token while the BGBP is Binance’s first stablecoin. Binance intends to create more stablecoins pegged to different fiat currencies in the future.
While there are several ways to invest in crypto, it is clear that using a platform like Binance is one of the most effective ways to go about it. Since its start in the summer of 2017, Binance has quickly established itself as one of the largest and most powerful cryptocurrency exchanges in the world.
The platform sees 1.2 billion trades every day on average. Over 1.4 million transactions happen every second on the site. Compare that to Coinbase, which began in 2012 and falls way behind on those metrics.
Currently, Binance has no official headquarters. They aim to keep the locations for many of their properties a secret for security purposes. Aside from the locations already mentioned – such as Jersy, Malta, Bermuda, and Japan, many believe that they have offices and servers in Hong Kong, Taiwan, and Korea.
Along with offering a high-quality exchange, Binance has expanded into exploring other areas within the crypto space as well.
Binance Academy offers videos, guides, and quizzes on topics relating to blockchain, security, and economics. All the material is available for free on their Academy page. The program helps make blockchain more accessible and easy to understand.
The company’s Blockchain Charity Foundation (BCF) has raised millions of dollars for a variety of charities around the world. The organization is attempting to solve large-scale issues such as poverty and world hunger. It is the first non-profit charity to accept donations made with cryptocurrencies on its blockchain-enabled platform.
Binance Labs invests in incubators and other projects that empower cryptocurrency entrepreneurs and communities.
The Future of Binance
No matter how you look at it, it is clear that in only two short years, Binance has accomplished more than most companies could ever imagine. Entering the crypto sphere at the right time while using an aggressive expansion policy and smart business practices have all been factors in Binance’s unique success.
But the company isn’t resting on its laurels. They already have much more in store as they continue to grow and evolve. Let’s take a look at some features that they should be rolling out in the coming year.
Binance recently released an online sign-up form for people to gain early access to margin trading. Margin trading allows a user to leverage themselves through a borrowed position so that they can increase their buying power.
Currently, BitMex is the top exchange that offers margin trading. Binance is sure to take a significant portion of their customer base once they start to offer this underutilized feature.
In the world of crypto, trading futures is brand new. In futures trading, a trader agrees to buy a commodity at a set price at a set time in the future.
If a trader thinks the value of BNB will be higher in the future, they will be able to buy shares on a future exchange at a set price that they believe with be lower than the actual price that BNB will be worth in the future.
Understanding the History of Binance
Looking at a history of Binance, such as the detailed summary above, should give you a better understanding and appreciation of this unique organization.