A year ago, no one had heard of Binance. That’s because the cryptocurrency exchange — which is now the 376th-most popular website in the world — would not launch for another six months.
Binance Goes from ICO to World’s Largest Cryptocurrency Exchange in Six Months
Binance was bootstrapped through a July 2017 ICO that raised approximately $15 million, and its early user base was characterized by a heavy geographic concentration in China.
Consequently, the exchange was disproportionately affected by China’s September cryptocurrency exchange ban, which ordered the closure of domestic bitcoin exchanges and forced Binance to immediately bar a significant number of its users from trading on the platform.
Despite this setback — and stiff competition from other exchanges that have been operating for far longer — Binance has managed to become the world’s highest-volume cryptocurrency exchange that does not support fiat trading pairs, and it often outpaces exchanges that do offer fiat pairs.
In the past day, Binance has processed $4.3 billion in trading volume, and CEO Zhao Changpeng told Bloomberg that the exchange has been registering “a couple of million” new users every week, forcing the company to limit the number of new users while it scrambles to keep up with demand.
On Jan. 10, Binance opened up registrations for new users for one hour, and more than 240,000 users signed up for the platform during that brief period.
“We have a guy whose full-time job is just requesting servers,” Zhao said. “Every day they say, ‘OK, here are 200 more,’ but we just ask for more.”
“We did not expect this kind of growth, to be honest,” Zhao continued, adding that while the exchange’s average customer is a 25-30 year-old male with deep pockets, it has seen increasing interest from institutional investors.
Referrals, Lambos, and Bitcoin Forks Drive Demand
Several factors appear to have contributed to Binance’s remarkable ascent.
The company has an aggressive referral program that pays out a 20 percent commission, and one user has netted more than 76 bitcoins through this program.
The exchange has also used its ICO funds to launch several high-profile promotions, including one recently-concluded giveaway that earned one lucky user a 2018 Lamborghini Huracan RWD Coupe.
However, perhaps the strongest driver of demand is its comprehensive support for altcoins created through forks of the main bitcoin blockchain. While most exchanges have restricted their support to bitcoin cash — far and away the largest of these forks — Binance also supports the lesser-known bitcoin gold and bitcoin diamond forks.
Despite the exchange’s phenomenal growth, Zhao said that the company does not intend to rest on its laurels. Next on the agenda? Obtaining a license from bitcoin-friendly Japan’s Financial Services Agency and moving the exchange to Tokyo, positioning it at the center of one of the world’s most feverish cryptocurrency trading markets.
Featured image from Shutterstock.
Last modified: March 4, 2021 5:03 PM