Binance is the world’s largest online cryptocurrency exchange platform by volume. The Binance business model combines digital technology and finance, which enable users to trade cryptocurrencies and other digital assets on the Binance platform. It has a strong focus on altcoin trading, offering crypto-to-crypto trading on more than 600 cryptocurrencies and swotvirtual tokens. It has its own blockchain-based cryptocurrency called Binance Coin (BNB). Binance offers other services like helping its users to make investment decisions, electronic fund transfers, and eligibility to earn interest.
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Binance was founded by two co-founders — Changpeng Zhao and Yi He, back in 2017 in China. The company later moved its headquarters out of China following the Chinese government’s increasing regulation of cryptocurrencies. Binance is currently headquartered in Cayman Island and has 40 office locations across 38 countries and doing business in 180 countries.
Both of them were employees occupying executive positions in OKCoin. During their stay at Okcoin, they gained deep knowledge of the crypto niche, which served as a good foundation for Binance. An Initial Coin Offering (ICO) was organized to finance their new project. They were able to raise over USD 15 million through an offering of 100 million Binance coins (BNB) to investors.
The funds raised were split appropriately to develop the new project: 35% of the fund was used to build and upgrade the platform, 50% was used for branding and marketing, while the remaining 15% was reserved as an emergency fund. In 2021, Binance facilitated trades worth over $9.5 trillion, over two-thirds of all trading volume handled by centralized crypto exchanges.
Binance is currently privately held. It is funded by 12 investors.
Binance’s mission is “To be the infrastructure services provider for the blockchain ecosystem.”
Being the largest cryptocurrency exchange in the world with its own cryptocurrency, Binance has multiple streams of income that fetches its profit.
Binance charges users a fee for trading cryptocurrency on their platform. Users can buy or sell cryptocurrency on the Binance platform. Binance charges 0.1% for each trade a user initiates. Users also pay withdrawal fees whenever they want to withdraw their profit.
In 2020, Binance launched two mining pools for mining Bitcoin and Ethereum. The mining pool charges Bitcoin users 2.5% and Ethereum users 0.5% pool fees.
Binance provides software-as-a-service (SaaS) through its cloud capabilities for users to launch their own digital asset exchanges. Binance charges an annual fee for its cloud products.
Spread is the difference between the buying and selling price of a product, like a token. Although no fee is charged for the buying and selling of tokens, Binance earns through the spread of each transaction.
Through its partnership with Visa, Binance launched a visa debit card in July 2020. To use the card, users need to transfer funds from their cryptocurrency wallet to a spot wallet. An interchange fee is charged when the card is used to make a purchase. Users also pay fees for ATM withdrawals and payments.
Binance has investments in other cryptocurrencies, and distributed technology projects. The company earns dividends from its shares or when it sells the shares.
Binance allows its users to borrow cryptocurrency loans with an interest on them. Users can use their crypto holdings as collateral while the loan period is for a period of 7 to 180 days. Binance earns money through the interest paid on the loans. The interest rate is determined by loan amount, collateral pledged, repayment period, and type of currency.
The Binance Business Model can be explained in the following business model canvas:
Binance’s customer segments consist of:
Binance’s value propositions consist of:
Binance’s channels consist of:
Binance’s customer relationships consist of:
Binance’s revenue streams consist of:
Binance’s key resources consist of:
Binance’s key activities consist of:
Binance’s key partners consist of:
Binance’s cost structure consists of:
Below, there is a detailed swot analysis of Binance:
Since it was founded in 2017, Binance has carved a niche for itself in the crypto space. Within that short time, it has accomplished so much beyond the imagination of most companies. It combined an aggressive expansion policy and smart business practices to blaze the trail of crypto exchange and related businesses. Its rapid growth also quickly caught the attention of authorities worldwide, making it run into regulatory challenges. As the crypto space continues to evolve and more countries adopt cryptocurrencies, Binance is set to become even bigger.
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