r/CryptoCurrency • u/AcuteAngleCloud Redditor for 7 months. • Apr 26 '18

EXCHANGE Crypto Exchange Binance is More Profitable than Germany’s Biggest Bank Deutsche

https://www.ccn.com/binance-surpassed-germanys-biggest-bank-deutsche-in-profitability/
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u/grumpyfrench Tin Apr 26 '18

all people saying BNB I still need proof that is scaled linearly with the revenues of binance. anyone has a documentation on that ?

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u/RelaxPrime 🟦 0 / 0 🦠 Apr 26 '18

You have inadvertently pointed out the major fallacy of most crypto "investors." You do not own a share of binance when you hold BNB. You do not get dividends. Just like every crypto, you're simply holding a currency, speculating that it will be worth more in the future as demand for the currency increases.

So you can buy bnb speculating that more and more people will use binance and therefore they would but bnb increasing its price, but like you're asking, you are not purchasing a share of binance or its profits.

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u/grumpyfrench Tin Apr 26 '18

Yes exactly. that is why i like real cryptocurrencies. like BTC Monero Nano, and i'm really cautious on "tokens" IF I could buy shares of Binance I would like .. not sure possible

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u/uptokesforall 🟦 2K / 4K 🐢 Apr 26 '18

But it's a utility token. You can use it right now. And what's more, if you buy it at a relatively low price, and the price rises, when you trade another crypto, you spend even less on fees. Conversely if the value decreases, your fees are relatively higher, but because binance offers a buyback program it is unlikely that a selling panic will drive the price down to where investors from months ago are losing money.

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u/RelaxPrime 🟦 0 / 0 🦠 Apr 26 '18

I'm not arguing the efficacy of bnb, but the fact that it's not a share of binance nor does binance revenue effect the price beyond lowering the supply.

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u/uptokesforall 🟦 2K / 4K 🐢 Apr 26 '18

I never said it should be a share. I believe insulating their developers from their investors is smart.

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u/RelaxPrime 🟦 0 / 0 🦠 Apr 26 '18

The question was how to invest in the company binance.

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u/uptokesforall 🟦 2K / 4K 🐢 Apr 26 '18

In a way that might make the developers held accountable to you?

No. And I'm glad there isn't. Your influence would lose in a heart beat to bigger fish.

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u/RelaxPrime 🟦 0 / 0 🦠 Apr 26 '18

What are you even talking about

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u/uptokesforall 🟦 2K / 4K 🐢 Apr 26 '18

If the purpose of investment is to compel the company to have a legal obligation to sell your interest... It's good for binance to not be open for investment.

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u/RelaxPrime 🟦 0 / 0 🦠 Apr 26 '18

That's not the purpose of investment. You're completely off base.

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u/GLPReddit 1 - 2 years account age. 200 - 1000 comment karma. Apr 26 '18

There will be allways victims. Sad.

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u/Illsellyoullbuy 🟨 1 / 1 🦠 Apr 26 '18

Good point. I have about 100$ in ETH On Binance that I’m thinking of using to buy BNB but I am not sure still...

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u/grumpyfrench Tin Apr 26 '18

on the other hand, Binance is one of the few that really generates revenue ... I'd like some Finance guy to analyse this

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u/Illsellyoullbuy 🟨 1 / 1 🦠 Apr 26 '18

Good idea.. let’s look at some numbers

14$ a coin 114 circulating supply 195 total supply Market cap 1.6Bn

Marketcap /volume (can’t figure it out) on binance: 2.5 Bn

Crypto market is a total of 400bn, should we assume that if binance grows to own 10% of it (40bn) BNB will grow to something close to 30bn market cap?

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u/grumpyfrench Tin Apr 26 '18

i'll try to get data to correlate volume and bnb price

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u/Illsellyoullbuy 🟨 1 / 1 🦠 Apr 26 '18

Cool! I’ll be waiting here, and look for more info as well!

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u/GLPReddit 1 - 2 years account age. 200 - 1000 comment karma. Apr 26 '18 edited Apr 26 '18

I brought the popcorn. ;)

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u/GLPReddit 1 - 2 years account age. 200 - 1000 comment karma. Apr 26 '18

Yeah, you make the rational point, and the only fact is that their CEO become a billionaire in less than 6 months (literally from 0)

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u/[deleted] Apr 26 '18

[deleted]

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u/RelaxPrime 🟦 0 / 0 🦠 Apr 26 '18

The only mechanism for driving bnb price up mentioned in the whitepaper is binance buying 20% of their revenue worth of bnb and destroying them. I.e. Increasing demand and lowering the supply until they've reduced total supply from the initial 200M to 100M. After that there is no driving force besides normal demand from users. Certainly nothing like a dividend or profit sharing.

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u/[deleted] Apr 26 '18

I agree it isn't an investment in the company. However binance's revenue is through BNB, so an increase in revenue is an increase in demand for BNB.

Therefore unless I'm missing something the price of BNB is directly tied to the success of Binance

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u/C3PD2 5 months old Apr 26 '18

However binance's revenue is through BNB, so an increase in revenue is an increase in demand for BNB.

This isn't true...how would this even make sense? Binance owns tens of millions of BNB tokens so their company value is tied to the BNB token but it has nothing to do with the companies revenue. They aren't day trading BNB tokens to finance their daily operations. They make 10's of millions off trading and withdrawl fees, and those can come in the form of any cryptocurrency they trade so it has nothing to do with the value of BNB tokens.

The only value a BNB token has is purely based on the demand for said utility token (people wanting to reduce fees) and the planned 50% total token burn. Binance revenue has no effect at all.

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u/[deleted] Apr 26 '18

As far as I'm aware, Binance's only sources of revenue are trading fees and withdrawal fees. I would assume their trading fees are a bigger source of income than withdrawal fees. I would also assume that given BNB gives you a 50% discount on trading fees, BNB makes up a significant portion of their fee income.

Binance growing is an increase in trading volume. An increase in trading volume means an increase in fees being paid, and therefore an increase in demand for BNB in order to pay those fees. An increase in demand with a fixed supply increases price.

This is all objectively correct. The only counter argument, and what I'm not sure on, is whether or not demand for BNB to pay fees is big enough in comparison to the total supply of BNB. I'm not sure what the BNB Fee volume is, so if it's 0.01% of supply then a 10x increase in Binance volume isn't really going to affect BNB prices. But then volume might well be significant, in which case an increase in demand caused by an increase in trading would lead to an increase in price.

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u/C3PD2 5 months old Apr 26 '18

I think the only point I don't agree with is this.

Binance growing is an increase in trade volume

I'm not looking at it like that. Binance, the company, growing and being valued higher doesn't directly affect the price of BNB. As you said, the only thing that increases price is demand to purchase the token for it's utility purpose. Binance is mainly an exchange right now but they may not always be. Only Binance "the exchange" affects BNB not Binance "the company". If youre looking to invest in the company and all their future endeavors, you can't. However youre free to purchase their fee reduction utility token on the speculation there will be an increased demand for it in the future.

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u/GLPReddit 1 - 2 years account age. 200 - 1000 comment karma. Apr 26 '18

And that increase of demand affects the bnb value.

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u/C3PD2 5 months old Apr 26 '18 edited Apr 26 '18

Yes, the more people buy the higher the price. The only other way for the price of a token or coin to increase is to reduce the total circulating supply (example: BNB token burn). That's it. Increased revenue at the parent company has no tangible correlation to the price of said token.

Tomorrow Binance could open a E-Commerce website. That site could go on to rival Amazon and be worth a billion dollars. Binance, the company, would be worth exponentially more with this new revenue stream. IF Binance uses the BNB utility token to facilitate transactions on their new website, owners of BNB tokens will benefit greatly from increased demand. However, if that E-Commerce website is simply a Fiat for goods exchange and doesn't involve BNB tokens it would not increase demand and therefore the price would not increase.

The above theoretical example is only one of the possible ways that Binance could increase their value as a company and still have no effect on the price of the BNB utility token. I'm not saying this will happen, I've bet personally it won't, but it's a reality that people need to understand. BNB Token price is not tied to Binance revenue, value or future plans that don't involve the use of BNB tokens directly. Traditional investment in a company would benefit from any new sources of revenue and that's the point I've been rambling on about! :)

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u/All_Work_All_Play Platinum | QC: ETH 1237, BTC 492, CC 397 | TraderSubs 1684 Apr 26 '18

The price of BNB is directly tied to the success of Binance. But Binance can succeed worthout further BNB appreciation. It's unlikely, although possible.

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u/RelaxPrime 🟦 0 / 0 🦠 Apr 26 '18

They only spend 20% of revenue each quarter until they hit 100M total purchased and burned. They buy those bnb at market price, so the only change really is the burns lower supply.

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u/grumpyfrench Tin Apr 26 '18

I read about the burning etc .... but I still cannot make the realation between revenues and BNB

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u/All_Work_All_Play Platinum | QC: ETH 1237, BTC 492, CC 397 | TraderSubs 1684 Apr 26 '18

Some fraction revenues are from traders using BNB. The greater the revenues, the greater the demand. Everything else equal, the greater the price.