Could Binance push Ethereum into extinction?

17 Mar, 2019 | Updated: 17 Mar, 2019
by Joeri Cant
Analysis
Could Binance push Ethereum into extinction?

The world's most popular cryptocurrency exchange, Binance, took a massive leap forward in crypto exchange technology with the launch of Binance Launchpad, Chain and DEX, the company's new decentralized exchange that utilizes BNB as a base pair. Labeled as the future of cryptocurrency, what impact will the exchange have on the Ethereum platform? Could Binance push Ethereum into extinction?

Binance Chain is much faster and cheaper than Ethereum

Even before the successful launch of Binance DEX, Binance’s CEO, Changpeng Zhao, already said that large Ethereum-based ERC20 tokens are planning to leave the Ethereum network and switch over to Binance Chain, and that there was no real reason for anyone to stay on the Ethereum platform, if they are only using ERC20 as a token.

According to CZ, Binance Chain, whos functions are very similar to how Ethereum and ERC-20 tokens operate, is much faster and cheaper for tokens that are strictly currencies and do not utilize any of the smart contract features that Ethereum offers.

Read more: 7 Ethereum long-term price predictions by crypto experts: $1 million?!

'If you’re only using ERC20 as a token, there’s no real reason for you to stay on Ethereum', he said.

'Binance Chain has near-instant transaction finality, with one-second block times. One confirmation is final. So it’s a much faster chain and the transaction fees are cheaper.'

'With the core Binance Chain technology, Binance DEX can handle the same trading volume as Binance.com is handling today. This solves the issues many other decentralized exchanges face with speed and power.'

'So there’s a lot of advantages in moving to Binance Chain, which uses a native DEX', CZ explained.

Read more: Binance DEX AND Chain are now on public testnet - this is how you start

CZ further explained that if a token uses a smart contract feature other than the issuance of tokens, then it will not be supported on Binance Chain just yet. However, Zhao didn't seem to rule out the possibility that Binance Chain may facilitate an upgrade in the future to support those tokens as well.

Read more: Binance DEX receives positive feedback from community after public testing

In an interview with the Youtuber known as ‘Ivan on Tech', the Binance CEO reiterated that new blocks created on the Binance chain take just one second.

'What’s also interesting about the Binance Chain is that the blocks are one-second blocks. So every second there's new blocks, and every one block is final. So basically, now when you send somebody some coins or some tokens … within one second you get confirmation and that’s final.'

CZ added that these capabilities have some interesting applications within e-commerce, stating that it may be 'faster than traditional payment methods.'

It was on this interview that Zhao dropped the bombshell that Binance chain had already managed to convince multiple Ethereum-based projects to migrate from the Ethereum platform to Binance Chain.

'We already have more than 8 projects confirming they will migrate from ERC-20 token to the Binance Chain … so this is huge', he said.

Read more: 9 Ethereum price predictions for 2019 by crypto experts

CZ said that he continues to persuade other projects to jump Ethereum's ship, and even motivate more projects to launch on Binance Chain by making clear that new projects on the Binance Chain will be prioritized for a listing on Binance.com.

In an ‘ask me anything’ livestream, CZ continued to explain that the benefits of moving to the Binance Chain consist of it being a faster chain with less congestion and the ability to send and receive tokens with ease.

'Creating a token on Binance Chain is very easy', CZ said. 'In a broad sense all you have to do is supply a few parameters, give a project name, and before you know it, you have a token. There are no smart contracts to program, it is more secure and there is less room for bugs. Once moving to the Binance Chain you will gain Binance as a partner, which will in turn help you with marketing, with the Binance marketing engine working on your side.'

Read more: Binance's CZ says: "Let's put Bitcoin on Mars!"

The crypto legend is convinced that cryptocurrency transactions should be instantaneous. 'Yet, especially in case of the Bitcoin network', he said, 'transactions almost always take upwards of 10 minutes to settle.'

'Initially blockchains did that.' The Binance CEO added that as Bitcoin and Ethereum have drastically grown in popularity, not only can transaction fees spike, but so can the speed of transfers. At the time, CZ noted that with Binance Chain, faster and cheap transactions should be possible yet again, which he sees as the 'original inspiration for crypto' and related technologies.

'If you pay for coffee, you don't want to stand there, waiting for 10 minutes, to confirm a payment of $5', he said.

Read more: 5 Highlights of the interview from Pomp with Binance CEO CZ

Could BNB overtake Ethereum?

Binance's native token, BNB, hit a low of $5.90 in January and has since rallied to $15.20, which is headed in the direction of a 3x surge that far outperforms the rest of the cryptocurrency markets.

This massive rise, despite the bearish nature within the space, has encouraged some to suggest BNB could overtake Ethereum. However, as things stand today, that seems highly unrealistic, with Ethereum sitting in second place, with a total market cap of $14 billion, and BNB currently in seventh place, with a much smaller total market cap of $2.1 billion.

Yet, momentum is clearly in Binance Coin's favor, as there is steady rise since the turn of the year in comparison to Ethereum, which is trading at the exact same price as it did in the beginning of 2019.

Clearly impressed with BNB's unstoppable, bullish price behaviour, Tron's CEO Justin Sun has chiped in his two cents, calling BNB 'the new Bitcoin', after it recently surged massively.

Read more: Is Binance DEX really decentralized? Some critics are saying it's not

Binance Chain almost certainly will propel Binance into a new era, and at the very least expand the operation far beyond its humble beginnings as a cryptocurrency exchange. BNB will play a massive role as it will now inhabit its own blockchain, emerging from its native ERC20 cocoon, and swapping onto the newly minted mainnet.

Binance Chain will allow projects to fundraise via BNB which is used as the intermediate payment currency, which is similar to the ETH’s third-party payment currency function and will surely foster a further use case for BNB.

The future development of Binance Chain and DEX will without a doubt become more and more important, and BNB, as an important part of the two ecosystems, is bound to achieve great development.

In a recent live stream on Periscope, CZ was quick to point out that BNB probably has more use cases than any other coin in the crypto verse, and that he is actively pushing for the adoption of BNB in the real world, with an increasing number of platforms announcing support for the coin in recent months.

'There’s so many places you can use BNB. I will not iterate all of them. But you can use it to buy airplane tickets, hotels. You can use it for collateral for loans. You can buy a number of things with it. We focus on increasing utility of BNB. This is why it’s really hard to calculate the value using a formula.'

'I think right now the BNB token probably has more use cases than most other coins out there. And we continue to build.'

Although today it seems highly unlikely that Ethereum would be overtaken by BNB, perhaps in the not-so-far-away future it could actually happen. It certainly has all the momentum on its side.

Will Ethereum be able to keep up?

With Binance already profiling itself as the leading company within the cryptocurrency universe, and now turning its focus to token creation and development, the competition between Binance and Ethereum is definitely heating up.

Perhaps the most immediate threat to the Ethereum platform will be Binance Launchpad. Until now the only real use case so far for Ethereum has been its role as a fundraising platform for ICOs. However, Binance is now taking that away with Launchpad, by breathing new life into the ICO world, while ETH ICOs don't have any hype left.

Obviously, as an investor, there are many tempting reasons to participate in ICOs on Binance, but the guarantee that your token will be listed on the world's most popular exchange, which most likely comes with an instant and decent amount of volume, must be on the top of any investor's wish list.

Despite the many powerful forward movements of Binance, it is too early to rule out Ethereum. It can be expected that the Ethereum blockchain continues to be a successful project that will continue to dominate the smart contract sector.

After all, Ethereum does offer more than just a secure means of payment or a store of value.

Read more: The long-awaited Ethereum’s Constantinople Hard Fork has been launched

Some of its biggest supporters present Ethereum as nothing less than the future of the internet. Buying Ethereum today, they say, is the equivalent of picking up a few shares of Apple back in the day, when it was practically run out of Steve Job's garage.

Brian Schuster, by far the biggest Ethereum bull in the cryptocurrency universe, is one of those cryptocurrency experts who has predicted that Ethereum will hit $100,000 in value. As a leading blockchain advisor and entrepreneur, he predicts that the worlds second most popular cryptocurrency could reach astronomical highs if it develops as a market store, similar to gold.

Schuster himself, admits that these numbers are exorbitant and are missing a lot of variables that would most certainly impact the future value of Ethereum.

'Ethereum has strong competition from Cardano, NEO, EOS and no less than 12 other competitors', he says.

'New cryptocurrencies are being developed to make the current solutions obsolete, not to mention that every cryptocurrency still gets outshined by Bitcoin’s market dominance in the media and on exchanges.'

Another Ethereum supporter, Steve Wozniak, the tech heavyweight who co-founded Apple, Inc., that the Ethereum platform was just like his former company Apple and that in the long term, Ethereum has the same potential to become as influential as the Apple company is today.

Read more: Is Ethereum at $100,000 really possible?

Although Ethereum is still occupying the second most popular cryptocurrency spot, and despite the many bullish price predictions, many point to the fact that 15 transactions per second just isn't good enough.

There are so many different smart contract platforms out there that can perform so much better than Ethereum. So if the Ethereum platform doesn’t fix their multitude of issues quickly, they could lose out to the competing blockchains and there is absolutely no doubt that Binance will be one of many who would happily take Ethereum's place.

Surely Ethereum must see the big shadow that Binance casts upon the entire cryptocurrency universe. It will be up to the Ethereum project, which has some of the best developers in the industry, to keep up or even outpace the competition.

If they become complacent, even just a tad, they will lose the battle and face extinction.

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