Binance Coin should do with Ethereum what Bitcoin is doing with gold: devouring a good portion of its market capitalization by acting as a better alternative.
This was basically what Changpeng Zhao, the founder / CEO of cryptocurrency exchange Binance, dictated in his series of tweets on February 28th while pitting his Binance Smart Chain against Vitalik Buterin’s open source blockchain Ethereum.
Mr. Zhao compared the second largest public ledger to the social media platforms of the past, such as Friendster and MySpace, which had to close due to their inability to “deal with the competition”. Ethereum, he noted, is growing like a chain, but its services remain slow and expensive.
In comparison, Binance Smart Chain (BSC), a centralized blockchain protocol with smart contract features, can handle more transactions for a lower fee.
“The BSC is not an ETH killer,” tweeted the 44-year-old executive. “It is built on learning from ETH and tries to help solve an important problem, the high fees. It was not designed that way, or at least, it was not presented to me as such. “
Zhao’s warnings about Ethereum made a splash in the crypto universe. An analyst based on Zhao’s comments provided five reasons why the Binance ecosystem’s native BNB token would increase to $ 500, almost double its value as of now, as traders chose it over Ethereum’s ETH cryptocurrency .
The catalysts for high
BNB serves as a de facto currency on all Binance platforms, including a cryptocurrency exchange, a crowdfunding platform for emerging blockchain projects, interest yield pools and two separate blockchains (BSC one among them).
Merchants use BNB to pay discounted fees for Binance’s services. Meanwhile, projects that wish to list their tokens on the Binance exchange can also pay the company through BNB.
Overall, the growth of the Binance ecosystem vaguely translates into more adoption of its native cryptocurrency, BNB. Meanwhile, the company used to burn 20% of its BNB revenue each quarter, ensuring a shortage against rising demand.
However, in March 2019, Binance changed its white paper so that BNB was burned based on “volumes”. Its treasure has 32 million and 16.5 million BNB frozen and circulating.
For many, the BSC is a driver of BNB demand because it directly challenges Ethereum’s status quo.
The outlook saw the BNB / USD exchange rate rise from $ 36.96 earlier this year to an increase of $ 348.69 on February 19. The pair reaped the benefits of the newfound attention at the BSC as the Ethereum network experienced network clogging and higher gas rate problems.
“BNB is at US $ 250, 4.6 times lower than ETH at the limit. The growth potential exists ”, noted the analyst. “Write down my words: minimum of $ 500 very achievable with all the fundamentals and market conditions as they are.”
BNB was trading at $ 252 at the time of writing.