Binance.com launched on July 14th, 11 days after its ICO which raised $15m, is on its way to become the premiere NEO based ICO platform, especially in China. In roughly two months, I believe it ranked once coinmarketcap.com top 10 exchanges by 24 hour volume. The futuristic exchange received VC funding from Blackhole Capital and Funcity Capital. I'm a b-schooler with fin/econ focus, so I have been forced to learn that fundamentals matter in the long run. For the same reason, I'm a big NEO fan as well and have a few NEOs. I looked at CZ led Binance team and Binance's business model. The team have excellent track record having affiliation with industry leaders. Entirely new to crytospace, I went pretty much all in at much higher than current price. I don't regret cancelling my sell order at 69k sats; not because I believe BNB will rise, but because I learnt about markets. I witnessed Binance team strategically handling this current Chinese bitcoin/bitcoin exchanges/ICOs ban news/FUDs. That's another story. Binance is the first community I'm kind of active and this happens to be my first post. This is a just a summary of what I found elsewhere (see references, official stats announcement):
Binance as a business
Total supply is 200M. 20% of Binance.com's quarterly profits will be used to buy-and-destroy BNB tokens, eventually leaving 100M in constant circulation. Binance's already lower than industry average (0.2%) trading fees reduce to only 0.05% when paid in BNB. It's one of the rarest tokens that provide real-life utility. This is their discounted fee schedule:
Forget about BNB's plan to build a decentralized exchange in which BNB will be used as GAS. For now I try to estimate, or guesstimate or yet better, daydream about BNB's actual demand in coming years. Assume a risk-premium (amount above valuation) though, for BNB might actually be the fuel of the planet's most powerful decentralized exchange.
Assumptions and valuation
Statisticians assume a lot of things, usually in their favor. I'm too assuming things about BNB:
24h volume now 15k BTC. I'm being optimistic and ignoring current slowdown (to 9k BTC) due to Chinese ICO related news/FUDs. I'm not sure if BNB actually hit top ten exchanges, documented highest it reached is #12 with ~15k BTC.
A steady 0.5% weekly increase in volume which seems likely based on how Binance is growing. It currently lists only a select few coins/tokens. Volume will increase as more coins are added. Cryptospace in genereal is increasing. So 15k daily trade, which increases 0.5% weekly for four years (~400 weeks). The volume sure will have at some point have an upper bound, but Initial burst will be more than 0.5%. So things balance out. 15000 * (1.005400) = ~110k
Only Bittrex and Bitfinex have crossed that 100k+ daily volume milestone. Binance has to be of course one of the be global leaders and and ahead of OKcoin.cn, in order for the valuation to hold. It seems daunting, but I think is possible. For the sake of simplicity, I shamelessly generalized calculations and used round numbers. Since BNB provides utility entitling users to pay discounted fees, any rational user would grab the opportunity. I hope Binance has a 50k BTC daily volume, on average, in the next four years. Though discount will be decreasing over time, I assume only 0.05% fees in the entire period. The calculation does not include demands for deposits/withdrawals/listings/ICOs that will use Binance platform.
Congrats! You've smartly handled this recent tsunami, which unfortunately happened to be just when you started. Take it as an opportunity and prove that YES, IT'S POSSIBLE. BNB's success depends on your success.
There are ~200 weeks in four years, not ~400. Because I couldn't include some obviously positive variables in valuation and since final number makes sense, I'm leaving it as it is. Binance is going to have the assumed 50k volume soon anyway, I hope.
Cryptocurrencies are largely red as study finds 400% increase in demand for blockchain engineers
A long-awaited draft of the Russian bill concerning cryptocurrencies and blockchain regulation has been made public and it will reportedly let privately held businesses and legal entities ‘digitize’ their shares and store them on a blockchain ledger. The draft bill, “On Digital Financial Assets” was obtained by local news outlet, Vedomosti, and details the legalization of so-called, “digital financial outlets (DFA)” that would act as digitized equity for a company -- a DFA is essentially a cryptocurrency token, just under a different name. The new bill, if approved, would apply to limited liability companies as well as non-public stock companies.
A study conducted by Hired, called the 2018 State of Salaries Report, finds that the average salary of a blockchain engineer in 2018 has soared to between USD$150,000 and USD$175,000 per year -- this is notably higher than software engineers’ average salary of USD$135,000. While speaking to CNBC, Paul Mehul, CEO of Hired, said, “There’s a ton of demand for blockchain. Software engineers are in very short supply, but this is even more acute and that’s why salaries are even higher.” According to the Hired report, demand for blockchain engineers has risen 400% since a year ago despite the cryptocurrency bear market. A CNBC article also notes that demand for blockchain engineers have been further bolstered by tech giants like Facebook, Amazon, IBM, and Microsoft.
Bitmain, one of the world’s largest producers of cryptocurrency mining devices, has released a new software update for its Bitcoin mining device, Antminer s9, that activates a controversial code to mine Bitcoin more efficiently. The code in the update is controversial because it exploits a flaw in Bitcoin’s proof-of-work algorithm that allows Bitmain’s Antminer s9 to mine Bitcoin 20% more efficiently. The exploit also saves miners roughly 13% on energy costs.
Experts are beginning to weigh in on the potentially gargantuan impact that Fidelity Investments could have on cryptocurrency markets after the investment management firm announced the launch of a new arm, Fidelity Digital Asset Management. According to BKCM CEO, Brian Kelly, the new stamp of approval by Fidelity on cryptocurrency markets is enough to appeal to institutional investors, including hedge funds, pensions, and endowments. Yesterday, Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, said on Twitter, “What happens when a fund like Fidelity allocates a mere 5% of their portfolio to crypto? Have you calculated how much that is?”5% of Fidelity’s assets under management equals roughly USD$360 billion, which would nearly triple the current size of cryptocurrency markets.
Stephen Hammond, a UK Member of Parliament, has joined the advisory board of IronX, a retail-focused cryptocurrency exchange, to offer guidance on government relations. IronX is a joint-venture by IronFX, a digital trading firm, and EmurgoHK, the developers of the world’s ninth largest cryptocurrency by market capitalization, Cardano (ADA). The platform’s mission is to, “bring crypto trading to the mass retail trading market.” Hammond has served as a Member of Parliament since 2005 prior to a 20-year career in financial markets -- today, Hammond was quoted saying, “We are all on a steep learning curve to understand this new asset class.”
The Australian Securities and Investments Commission (ASIC) has halted an initial coin offering (ICO) being conducted by Global Tech Exchange (GTE) that was launched in the Summer of 2018. Global Tech Exchange had a fundraising goal of USD$50 million to create an education-based trading and exchange platform. The ICO by Global Tech Exchange gained popularity after being endorsed by Michael Clarke, a former Australian cricket captain. On Global Tech Exchange’s website, however, a statement reads that Michael Clarke, “is no longer associated with Global Tech Exchange and the Global Tech Exchange Blockchain and awareness program”. Earlier in the fall, the ASIC announced plans to increase scrutiny of cryptocurrency exchanges and to crackdown on ICOs taking place in the country.
Visa announced in a press release on Sunday that it is set to launch its blockchain-based identity system in partnership with IBM in the first quarter of 2019. Dubbed Visa B2B Connect, the platform will offer financial institutions a way to securely process cross-border payments while verifying users’ identities. Global Head of Visa’s Business Solutions, Kevin Phalen, said in regards to the system, “B2B Connect’s digital identity greatly reduces the opportunity for fraud that might otherwise exist with checks, ACH and wire transfers today, while also helping companies remain compliant as part of the regulated financial ecosystem.”
Bank of England adviser tells Bloomberg that cryptos fail fundamental financial tests
Crypto Market Recap
Cryptocurrencies are mostly higher in midday trading as the price of Bitcoin (BTC) is 0.90% higher in the last 24 hours to USD$3,612.13. Bitcoin Cash (BCH), EOS (EOS), and TRON (TRX) are leading the gains in major coin today, all up more than 5% to USD$129.51, USD$2.48, and USD$0.026568, respectively. Ripple (XRP) and Binance Coin (BNB) are lagging major coin in today’s trading, meanwhile, down 0.29% and 0.71% to USD$0.319089 and USD$6.49, respectively.
Crypto Developments in Financial Services
US-based crypto exchange Coinbase has launched cross-border wire transfer services via the SWIFT network for high-volume Coinbase Pro and Prime users in Europe and Asia, according to an official announcement Tuesday. Additionally, the post details that, “select Coinbase Prime customers globally will also have access to our US and European over-the-counter (OTC) trading desks and Coinbase Custody.” Coinbase Custody is a service mainly for institutional customers that stores large amounts of cryptocurrencies.
The London Stock Exchange Group confirmed in an official post on Tuesday that its Millennium Exchange trade-matching technology will power AAX, a new crypto exchange venture launched by Hong Kong-based ATOM Group. AAX will reportedly launch in the first half of 2019 and aims to provide a, “scalable,” and, “compliant,” cryptocurrency trading platform, according to ATOM Group. AAX will be the first cryptocurrency exchange to use the London Stock Exchange Group’s Millennium Exchange trade-matching technology.
Bakkt, the long-awaited cryptocurrency platform venture by the Intercontinental Exchange, announced in a Tweet on Tuesday that is in search of a number of high-ranking positions. The tweet by Bakkt contains vacancies for eight different high-ranking positions, including a director of blockchain engineering, a blockchain developer, a director of security engineering, and a senior full stack engineer. Bakkt is hiring for US positions in Atlanta and New York City and international positions in Hong Kong, Tokyo, San Francisco, London, Tel Aviv, and Singapore.
Crypto Regulatory Environment
A new report published by the Bank for International Settlement (BIS) finds that problems in Bitcoin (BTC) will only be solved if the network departs from a proof-of-work (PoW) verification protocol. As per the report published on Monday, “Simple calculations suggest that once block rewards are zero, it could take months before a Bitcoin payment is final, unless new technologies are deployed to speed up payment finality.” The report goes on to discuss that, although second-layer network solutions like the Lightning Network may help scaling, “the only fundamental remedy would be to depart from proof-of-work.” The report notes that such a departure from PoW would likely come from social coordination or institutionalization.
De Nederlandsche Bank (DNB), the Dutch central bank, and the Netherlands Authority for the Financial Markets, the country’s financial regulator, are planning a regulatory framework that could introduce a licensing scheme for domestic cryptocurrency exchanges and wallet service providers. A joint report published by the two Dutch authorities cites, “high financial crime risks,” as reasoning for the licensing scheme pertaining to domestic cryptocurrency industry.
Huw van Steenis, a senior adviser to Bank of England (BOE) Governor Mark Carney, said in an interview with Bloomberg on Monday that cryptocurrencies fail fundamental financial tests. Van Steenis, who boasts tenure at Schroders and Morgan Stanley, responded when asked about the potential threat cryptos pose to economic stability, “I’m not so worried about cryptocurrencies. They fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.”
General Crypto News
A report published by crypto analytics firm Diar indicates that on-chain Ethereum (ETH) transaction value hit an all-time high in December 2018. Users conducted transactions worth 115mm ETH in December 2018, the largest monthly total excluding activity following a hard fork caused by a DAO hack in 2016. The US dollar value of ETH on-chain transactions in December 2018, however, recorded a 22-month low of USD$815mm, down from USD$1.1bn a year prior.
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