Why is the price of Binance Coin (BNB) going up?

Andrew Munro 12 January 2018

binance snip

Time to buy-nance?

Binance Coin (BNB) is the native coin of the Binance exchange. Its price was sitting around US$8 at the start of 2018 and is looking to treble soon, having topped a new high of US$24.

The main reason for the sudden growth is that Binance is super popular and frequent users can get very solid value for money with BNB. Just yesterday Binance signed up almost a quarter of a million new users in a single hour and has previously said it tends to grow by "a couple million" users a week.

BNB suddenly has a lot of new buyers, and you don't need to be a market guru to figure out that BNB is going to be a hot commodity right now.

Presently, the coin's main application is alleviating the sometimes-jarring exchange fees (0.1% trading fees to hit the big spenders and flat withdrawal fees to hit the small spenders). You can pay any Binance fees with BNB instead of another currency to get an easy 50% discount.

The value for money of using BNB to pay fees will remain the same regardless of its price – people need a set value of BNB rather than a certain number of coins – so there's no real reason why it won't keep rising further, directly in line with Binance's increasing popularity.

Binance definitively and aggressively cemented its status as the world's number one exchange in recent days, so a price rise can be expected.

What will stop it from increasing?

The discount you get from BNB will decrease over time.

It has 50% off fees in the first year, but "only" 25% in the second year, 12.5% in the third year, 6.75% in the fourth year and then zero after that. But throughout you can expect BNB to remain just as worthwhile, for the reasons described above, as long as the exchange stays popular.

BNB prices are likely to keep trending upwards, with the usual crypto ups and downs, until sometime in year 4, or maybe year 3. At this point, people will start divesting themselves of remaining BNB before the prices drop.

Towards the end of that lifecycle, it will start turning into a game of chicken, hanging onto BNB to maximise one's use, but dropping it before the value falls too much.

This will be affected by the coin burn scheme. Every quarter, 20% of the public BNB supply will be bought-back (if needed) and destroyed by Binance. The first one happened in October 2017, accompanied by a minor bump in BNB prices.

Some of the current rise could also be in anticipation of the next burn, which should be happening around the end of January. However, this probably isn't making much of a difference. The coins being burned are almost certainly out of circulation, having already been used to pay fees, so Binance won't need to go around buying up its own coins ahead of the bonfire.

Binance isn't the only exchange with its own native currency, and others like Kucoin Shares are arguably better value for money in the long run. The beauty of BNB though is that its worthiness is very clear and easy to calculate.


This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Latest cryptocurrency news

Picture: Binance

Latest crypto guides

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
Go to site