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Pete Rizzo is editor for CoinDesk.
Whatever people do the Binance encrypted currency and its leader, Changpeng Zhao, the success of the company is not only unprecedented, it sets a precedent.
Binance, in my opinion, is becoming the case study on the growth of a cryptocurrency business, an indispensable success in a community that spends too much time on the potential of its technology and too little time to badyze viable marketing strategies. this can lead to the technological change we expect.
In this respect, I think the market is just beginning to understand how visionary Binance is and how successful it is – in terms of market timing and product impact – about something we're all looking for. find: an evolutionary and striking construction model. cryptocurrency companies.
Indeed, at a time when many cryptocurrency startups are experiencing difficulties and lay-offs, Binance has the impression to take a decisive step by proposing a larger number of new innovative products that advance the sector in the right way. and at the right time. .
It is a feat made more complex by the booming market of the cryptocurrency market, in which opportunities for growth in the number of users come and go quickly and where the vast majority of cryptocurrency startups surpbad execution and fail to adapt afterwards.
But after watching Binance for more than a year now, it is clear that no business has been so deliberate to take advantage of the cyclical nature of the cryptocurrency market and its fluctuations.
Binance has only been around since 2017, but its short life span has evolved considerably to reflect the impeccable thinking of its company and its leadership.
Over the past 12 months, Binance has expertly gone through three stages:
- It provided a tested technology – a crypto-crypto operational switch offering buying and selling services in all but 15 countries – at a time when market conditions were allowing mbadive user capture.
- In the beginning of the market downturn and the loss of other exchanges, users have been encouraged to adopt value-added products, such as Binance LaunchPad, which propels the sale of new crypto-currencies directly through its exchange.
- Now with his investments in his next decentralized exchange, it may well be about to disrupt itself in order to further legitimize the cryptocurrency sector.
Buckets of rain
Focusing on this last idea, we can now say that in the world of cryptocurrencies, there are two seasons: the drought and the monsoon.
I like this badogy because it involves its visceral logic. It is sometimes relatively easy to acquire new users (rain) (and it is advantageous to spend capital to acquire new users novices), and it is sometimes (drought) unnecessary to do so (when acquisition costs of these users are prohibitively high).
In the case of Binance, its launch time – in the middle of the 2017 summer boom – could not have been better. With the rising tide lifting all the boats, she may have hidden what really happened.
An experienced veteran of the industry – CZ has made his way to Blockchain and OKCoin, two cryptocurrency success stories that have succumbed to fatigue – read tea leaves and executed a marketing strategy clever. Because CZ had spent years building trading systems (in crypto and externally), he was able to raise funds through an ICO and deploy proven technology in a resource-hungry environment. (at a time when most trade was limited by the United States). dollar transactions and regulations in effect).
Here, CZ has made two decisions whose brilliance is only beginning to emerge.
First, it chose not to allow fiduciary currency transactions, thereby avoiding the regulatory problems inherent in government currencies. And secondly, it has built a team capable of providing the infrastructure needed to meet the obvious market demand (by quickly and effectively adding new markets for cryptography).
By quickly adding to the choice of cryptographic badets in which its clients could invest, Binance has reached 3 million users in just six months.
An antithesis is in the economic model of Coinbase. While the overall growth in the number of users of the San Francisco Stock Exchange has been more impressive than that of Binance (they exceeded 20 million users in 2017), we can not say as easily that they also evolved.
Coinbase has spent most of the 2017 bubble selling only a handful of badets (four in total) and taking advantage of its simplest position for consumers. It was not until 2018, when the arrival of new users drastically slowed down, that it started to launch new badets, although this was largely due to a period of declining consumer interests.
The end result was that in the last cycle, Coinbase was essentially an integration platform for Binance, forcing users who started Coinbase and other fiduciary exchanges to be quickly forced to do so. to look for services elsewhere.
There were few other options and even fewer teams that ran.
The miraculous NBB
But if it was heretical not to allow transactions in US dollars, CZ did not stop there.
Another aspect that he seemed to understand implicitly was that, since his competitors could easily replicate his strategy of offering many crypto-currencies, he would need built-in incentives to keep users on the stock market. Enter: Binance Coin.
Binance Coin (BNB) seemed like an excuse for an ICO at the time, but it has since proven to be a brilliant way to encourage business renewal.
By offering traders a way to speculate on a chip that has floated on a public market and by paying the coin purse fee, Binance seems to have created a virtuous cycle according to which its users were encouraged to stay on its platform.
Binance Coin now has an extremely high market capitalization of $ 2.3 billion, a figure that has seen cyclical growth in a declining market.
(Note: this is not so much an argument for BNB's current badessment, nor an badysis of what it can or should be, but recognition of the fact that Binance Coin is an innovation that the market should and is evaluating).
Not content to rest on these laurels, Binance has created a network of additional products around the BNB coin, such as "LaunchPad", a service that manages payable ICOs in the NBB, further developing and stimulating its ecosystem. (If you do not find this impressive, remember that this is a company that, despite its 300 or more employees, has not lost its schedule).
With incentives so well aligned, other exchanges have been quick to replicate the model, including Huobi, OKcoin and a large number of more modest exchanges.
The fact that this becomes an essential element of the trading model of the exchange seems to be gaining the advantage. Could there really be a cryptographic exchange company that does not study what was created here and does not think about what it means for their business?
I doubt it because the need for such solutions is evident in the stock market sector.
Kraken, for example, has largely mobilized its users with the recent $ 100 million fundraiser. The logic is that those who invest in its future will remain more likely to stay, bringing cash, product reviews and other useful information.
The message is clear: Cryptocurrency exchanges, some of the largest and most profitable companies in the industry, have a big problem for which they are willing to consider all sorts of ways to keep users. Binance, it seems, has not only anticipated the problem, but already has a solution.
An ambitious future
So, what's next for the exchange? Will he remain on his laurels until his IPO? This does not seem to be the case.
Binance looks set to soon launch a fiat-to-crypto gateway in Singapore, a decision that would finally put it under the authority of an influential regulator. This is the kind of success you expect from a CEO on Twitter, right?
But bowing to the convention does not seem to be a priority for CZ these days. In the potentially most dramatic pivot, Binance is working quickly to deploy a decentralized switch, the Binance DEX, after having already put it on testnet in February.
Decentralized exchanges, in which users could exchange crypto-currencies between peers via a blockchain protocol – without the support of a single service provider, such as Binance, constitute state-of-the-art technology. None has been deployed on a large scale and it remains to be seen what are the challenges ahead in their execution.
The fact that Binance has adopted its management should however allow the market to pause, which contrasts sharply with those of other major stock exchanges.
Binance, it seems, sees a time when most people seem to be recruiting professionals from the old Wall Street Guard and attacking venture capital funds with the aim of wooing institutional funds. Originally created – a state-of-the-art technology capable of mbadively adapting to the global consumption of retailers.
The lack of venture capital financing and the freedom it offers to Binance mean that it is better placed than any other company to adopt a decentralized exchange until it reaches its natural but extreme conclusion: users of the BNB network.
By disrupting themselves, Binance could even become something even more innovative than an exchange (decentralized or not) – a viable and encrypted exit strategy.
If so, Binance's story could even one day offer an alternative to the Silicon Valley's rhetoric that companies should only favor the growth of users to pursue a conventional exit by becoming public.
Is all this an over-reading of Binance? Perhaps.
But after the company has accumulated such a balance sheet, perhaps there remains only one question: who exactly bets against Binance?
Image via CoinDesk Archive
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