Binance and Their KYC Protocols
Binance is the world’s leading cryptocurrency exchange that handles over 1,400,000 transactions per second. Alongside this, Binance also maintains and updates its ecosystem of products and services. This even includes its crypto token known as BNB that has a community-driven blockchain system.
Recently, Binance decided to tighten the security on its exchange by adapting mandatory know-your-customer (KYC) protocols for all users who want to use the ecosystem of applications.
The New KYC
Sudden KYC rules require all new Binance users to submit government-issued IDs. This includes passports, driver’s licenses, and more to protect against fraudulent activity on the platform.
This KYC update was desperately needed as malicious users could previously bypass local restrictions and regulations using a VPN. These actions caused accusations to be thrown at Binance that they weren’t obeying financial regulators around the world.
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Despite the possibility that Binance’s popularity may slightly diminish momentarily now that the platform has less anonymity, this update will most likely help prevent any money laundering practices that malicious individuals are trying to attend to. This will also increase the security of the platform, while also building Binance’s credibility as a reliable platform to buy, sell, hold, transact, and more.
This step was crucially important for Binance to move its business into the next stage of long-term growth as users will recognize the new safety systems in place.
Even though cryptocurrencies are decentralized, centralized platforms are beneficial so that the economy can more easily integrate into the cryptocurrency world. These platforms need to have heavy compliance and security so that these technologies become trusted by the majority over time.
The Lead Role
Binance’s role in the cryptocurrency world is massive. It is the most popular cryptocurrency exchange in the world by volume with an average of over $2 billion per day. It’s safe to say that It accounts for a massive portion of the cryptocurrency industry’s transactions.
The strengths of its business model can be seen through the diversified applications which they have integrated into its exchange platform.
The weaknesses are the potential competition which could theoretically eat away at its pre-existing customer list. However, considering the fast-growing rate at which the industry is experiencing. it’s unlikely, but something to note.
Without Binance, the cryptocurrency world would look vastly different. They have built a reliable name for themselves over the years, as well as other cryptocurrency exchanges.
Competition
Despite Binance’s phenomenal ecosystem of products and services, there is competition lurking in the crypto industry. A major competitor is Coinbase, a publicly traded cryptocurrency exchange that operates on heavy KYC and AML practices. Because of these characteristics, they have gained tremendous trust in the public’s eyes which seems to be growing over time.
According to the second-quarter results, trading volume on Coinbase’s platform grew to $462 billion that represented an increase of 38% compared to the first quarter of this year.
Coinbase however is just one competitor amongst many more exchanges that are centralized and occasionally decentralized that are supported on networks such as Ethereum. These decentralized exchanges are called DEX’s.
The competition will likely heat up, but the rate at which the population is becoming introduced to crypto is faster. The fight for portions of this industry will likely occur when growth slows, which won’t be very many years.
Closing Thoughts
It’s become clear that Binance wants to remain at the top of the cryptocurrency chain because of its recent actions to prove to worldwide regulators that its platform can be trusted in all environments with its expansion into further KYC protocols.
Throughout the long term, I don’t see a massive negative catalyst for Binance as long as they continue to bring steady compliance across its platform to prove to regulators its platform is safe and secure for all users.
Overall, Binance will likely remain a trusted exchange for years to come as the cryptocurrency economy unravels.
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