Some exchanges have chosen to offer themselves to cryptocurrency investors by issuing a proprietary token, also known as native crypto.
Binance represents one of the best crypto exchanges in the world, especially for retail investors. Binance, like many other similar sites, can offer its own cryptocurrency, known as “native crypto”.
The reason for creating a native cryptocurrency can vary: facilitating internal exchanges within the company, creating a financing instrument for the internal structure, creating a proprietary payment method…
Amid the countless different projects proposed in the early days of crypto, exchanges undoubtedly represent one of the most profitable businesses involving the blockchain.
With the boom of crypto in 2017, many cryptocurrencies recorded incredible yields. After a shaky 2022 (mostly caused by the fall of FTX), the sector is seemingly back on its feet with the recent approval by the SEC of 11 Bitcoin ETFs.
However, is it actually worthwhile investing in native cryptocurrencies? In this article, we’ll explore the most popular of them: Binance.
Binance (BNB)
Binance is a globally leading blockchain ecosystem. The services offered by Binance go beyond the mere exchange of crypto by placing itself on the market as a centralized or all-around cryptocurrency hub. What makes Binance unique is its blockchain called BNB Chain.
The token that powers the ecosystem that revolves around the Binance blockchain is BNB.
Binance Coin (BNB) is among the most used utility tokens in the world. Within Binance it is spent to pay for goods and services through the Binance Card. In trading, it can be used to pay transaction fees. In the earn section it is used to participate in exclusive auctions and for many other activities.
Furthermore, the ownership of BNB gives the holders the right to a series of monetary benefits including substantial savings on commission expenses.
The value of the token is supported by a particular economic procedure called "burn": BNB uses a auto-burn system to constantly reduce the total supply. This mechanism burns a certain amount of BNB tokens every quarter based on a predefined calculation.
On launch day, a BNB was worth less than a dollar, and in 2021 it went as high as $640. In 2022, the price collapsed and even reached the value of $200, a figure that is much higher than the entry price in the crypto world.
As of January 2024, BNB is worth $297, up 54% since 6 months ago. However, BNB’s value fell by 5.26% year-to-date. Investors might therefore prefer to wait on purchasing this native cryptocurrency, as its recent rally may be over and this could be the start of a market correction.
Does it make sense to buy native cryptocurrencies?
The crypto market is currently undergoing a strong upsizing. For this reason, many investors are looking to place their bets now.
However, as veteran investors usually say, “buy the rumor, sell the news”. Native cryptocurrencies could be already pricing in the recent Bitcoin rally, and might therefore stabilize in the next few weeks.
Investors should therefore consider setting up an accumulation plan in order to avoid any big losses in the near future.
Original article published on Money.it Italy 2022-10-19 19:30:00.
Original title: Cosa sono (e perché devi conoscere) le criptovalute native
