The Rise of Binance: Unravelling the Implications Behind the Phenomenon
Cryptocurrencies have become a giant in the financial and investment industry. Much of their success is due to the crypto exchange platform Binance, whose rapid rise to fame has significantly changed the industry forever. Join us as we look into the brand’s evolution and the implications of its growth and success.
Using Binance
Binance has made it easier to not just buy and sell cryptocurrencies, but to use them for a variety of different reasons.
Investments
Crypto investments have become more common despite the volatility in their value. Binance made it easy to buy, trade, and sell cryptocurrencies, which led to more investors entering the market. The thing about cryptos is that there’s a chance your investment drops to zero, but there’s also the chance you can make 10 times what you initially invested, or more.
Casinos
As cryptocurrencies became more popular, many online casinos worldwide started to accept them as a payment method. Some new ones opened exclusively aimed at players who wanted to use cryptocurrencies. All of this means you can often use Binance to fund your casino account to play your favourite slots, table games, live dealer titles, poker online, as well as bet on your favourite sports.
Everyday Purchases
In the last few years, cryptos have grown so much that you can even use them at select everyday stores and shops. Companies like Microsoft, AT&T, Subway, KFC, Burger King, Pizza Hut, CheapAir, and others accept crypto payments.
Binance’s Evolution
Now that we know its uses, we discuss where it started.
The Start
Changpeng Zhao, who generally goes by CZ, founded Binance in 2017. Zhao was a tech expert, especially in finance and computer programming. He didn’t initially have an interest in cryptocurrency, and it was by chance that he got into it.
During a friendly poker match with other entrepreneurs in 2013, another player told him to look into Bitcoin. It piqued his interest, and he started looking into cryptocurrencies. He started working for the wallet app blockhain.io.
He was also one of the founders of OkCoin, a Chinese exchange. In 2017, he managed to raise $15 million to establish his crypto-to-crypto exchange platform.
Its Rise to Fame
It might seem like a make-believe story, but Binance rose to the top within six months. Zhao created an exchange platform that placed its users first.
From the start, the exchange platform was different to previous ones. Binance offers a user-friendly crypto exchange platform that makes it easy to trade. It also prohibited the trading of fiat currencies. Since it wasn’t beholden to any country or regulations, it grew its customer base to three million users in the first six months alone.
Global Dominance
Since then the brand has gone on to become the largest exchange platform globally, its innovative features and approach to the website’s designs influence how the rest of the market does things. Other exchange platforms have tried to replicate its structure, as its strategic decisions shape the industry’s development.
It also started partnering with other companies and several blockchain projects, like YG Entertainment. Partnerships which allowed the brand to grow its influence into sectors like the metaverse, gaming, and NFTs.
The Influence of Binance on the Market
Not only has Binance’s customer base grown over the last few years, but its also brought changes to the global crypto market as a result.
Hacking Attempts
Binance quickly became the leading exchange platform, its size about that of the New York, London, and Hong Kong Stock Exchanges combined. However, that doesn’t mean it didn’t experience the issues that caused other crypto exchanges to go out of business.
Hackers are the main reason many exchange platforms crash, as their security isn’t enough to keep these hackers from stealing millions of dollars in crypto. Zhao ensured that Binance has incredible cybersecurity, so much so that they fought off the first significant hacking attempt in 2018, losing no funds.
This attempt started Binance’s hacker bounty program, where they offer a reward to any person who provides information to them that leads to the legal arrest of a hacker. However, as good as their security is, they didn’t manage to fight off the second significant hacking attempt in 2019.
This time, the company lost $40 million in cryptocurrencies. However, unlike many other exchanges, the company swallowed the expenses, contributing to its popularity among users.
Tensions with Regulators
The biggest obstacle to the brand currently is regulators. There are no main headquarters or offices available. In Zhao’s own words, the concept of a headquarters is “antiquated” and doesn’t apply to the decentralised structure of cryptos.
However, as cryptocurrencies become more popular and frequently used in everyday life, countries are looking to regulate them. The issue with Binance’s platform, as it was discovered in 2021 when Bitcoin crashed and many users lost funds, is that there’s no location you can use when suing the company.
It caused regulators to take a closer look, and suddenly, many countries were concerned about Binance operating within their borders without licencing. Technically, since the platform isn’t based anywhere, it was not breaking any laws.
However, the influence of this exchange platform caused many regulators to start thinking about what they could do to regulate the exchange of cryptos. As such, regulations for crypto started to pick up speed, and several countries created regulated markets for crypto thanks to Binance.
Changes to the System
These tensions with the regulators resulted in several changes to Binance’s user policy. The brand was levied a $4.3 billion penalty for money laundering and breaching global financial sanction charges by the US Treasury. This charge is the most significant penalty ever given in US Treasury history.
This happened after the brand withdrew from the UK market, not accepting any new UK users while existing ones can still access their accounts. Binance is trying to enter the UK market legally again but hasn’t managed to do so at the current time.
Binance Today
Despite these setbacks, Binance remains the largest crypto exchange platform globally, with its trade volume almost double that of the next biggest platform, Gate.io. While its crypto market share decreased to 34% in September, it still has a significant stake. We’ll continue looking to see how the brand navigates the new regulations and what it means for the crypto exchange platform.
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