Binance Business Model: How Does Binance Make Money?

You might be aware of the Binance platform.

Don’t you?

Well, Binance is one of the leading financial technology businesses that have successfully marked its presence in more than 180 countries across the globe. Apart from this, it offers its users the leverage to exchange more than 600 different currencies.

Now you might start wondering about the Binance business model. Your mind will be flooded with questions like how Binance works, how Binance makes money and what are some of the apps like Binance that are performing exceptionally well.

Well, this blog will raise the curtain to all the questions arising within your mind and will educate you on the Binance business model in detail.

So let’s begin the journey to explore Binance Business Model without any delay.

What is Binance: A Leading Digital Asset Trading Platform

In terms of trading volume, Binance is the biggest digital asset trading platform in the world. This platfrom was created especially for safely purchasing, disposing of, or exchanging a variety of crypto assets.

Being a centralized cryptocurrency exchange platform, Binance places a great emphasis on trading between fiat currencies and other cryptocurrencies. The native coin of Binance is known as BNB in the international market, and the company has its own blockchain dubbed BNB chain. 

BNB was initially released as a utility token in 2017, but it is now one of the top cryptocurrencies according to CoinMarketCap. And right now, it provides both holders and traders with a wealth of advantages. When a user exchanges tokens on the BNB chain in the DeFi exchange, such as Pancakeswap, Bakeryswap, etc., BNB coins can be utilized as a gas fee.

Because it offers a wide range of cryptocurrency services in one location, Binance is a hybrid exchange. A simple P2P trading option, an order book system, an OTC desk, staking, learn-to-earn, flexible earnings, Binance Launchpad, Binance DEX, and other such features makes Binance one of the top crypto trading platforms.

A Brief History of Binance

Binance was established in 2017 by Changpeng Zhao (often known as “CZ”) in China, and it has since risen to the top of the cryptocurrency industry.

Changpeng Zhao has experience creating high-frequency trading algorithms for stockbrokers before he entered the nascent cryptocurrency industry and rose to prominence.

Binance began operating in 2017 and eventually moved its offices around to other nations in an effort to evade regulation and legal action. The business would eventually relocate to the Cayman Islands, with a subsidiary, Binance.US, situated in the United States.

Even the largest cryptocurrency exchange in the world by January 2018 with daily trading volume in the billions of dollars was Binance. The business outperformed all rivals in 2021, reaching a peak 24-hour volume of approximately $76 billion.

In addition, BNB, a crypto-token launched by Binance, quickly overtook Bitcoin and Ethereum as the third most traded tokens in the world after its launch. At the moment, Binance is at the center of a global scandal. However, by a wide margin, it continues to hold the top rank as the cryptocurrency exchange with the biggest volume worldwide.

To get a clear idea of how it earned its reputation, let’s go through how Binance has transformed itself through the years.

2017: Changpeng Zhao, the current CEO of Binance, started the company in 2017. It was initially established in China, but by September 2017, when the Chinese government started to strictly regulate the cryptocurrency sector, it had shifted its servers to Japan. The business introduced its own token, BNB, in June. Later, it rose to become the third-most traded token globally.

2018: With a market valuation of more than $1.3 billion by 2018, Binance had already surpassed all other cryptocurrency exchanges to become the biggest in the world. As Japan started implementing harsher cryptocurrency rules in March, the company made an attempt to relocate its headquarters there.

Additionally, the business would file the necessary papers with Malta and Bermuda to create a platform for trading securities. In the same year, the business unveiled Binance Jersey, a separate organization from Binance that is based in Jersey, an island nation close to the French coast. Binance Jersey would enable Binance to provide fiat-to-crypto exchanges utilizing the Euro and the British Pound.

2019: To enable cryptocurrency purchases with a debit or credit card, Binance teamed up with Simplex in January 2019. The corporation was the target of an attack in which $40 million was taken, it was revealed in May. The business started providing perpetual futures contracts in September, allowing for a 125x leverage on the transactions.

2020: According to documents leaked by Forbes staff in October 2020, Changpeng Zhao had built a framework intended to fool US regulators and make money from investors there. The business introduced the blockchain ecosystem known as BSC, or Binance Smart Chain, in September.

2021: The IRS and the US Department of Justice began looking into Binance in May 2021 for possible money laundering and tax evasion. These inquiries would go on and are already in progress.

2022: Binance acquired a sizable $200 million holding in Forbes in February 2022, the business that had just published paperwork. In sharp contrast to the rest of the world, the corporation also declared it wouldn’t stop operating in Russia that year. Later, when they started banning Russians with more than 10,000 Euros from trading on the platform, their position would alter.

Here are some key stats of Binance as of July 2023:

• 24hrs Trading Volume on the Binance Exchange: 38 billion USD
• Cryptocurrencies Listed: 350+
• Number of Registered Users: 140 million
• Lowest Transaction Fees: <0.10%
• Popular Cryptocurrency: BNB

Binance Business Model: How Does Binance Work?

You might be curious to know what value proposition Binance offers to its customers and how its business model has acted as a helping hand behind its huge success.

Well, let’s go through the business model of Binance to understand how it is making money.

1. Customer Segmentation

Customers of Binance can be split into two categories:

Traders: The ones who were looking for a safe and quick platform to trade or swap their digital assets.

Innovators: Innovators in the cryptocurrency space who are constantly eager to publish their concepts.

2. Binance Channels

Being a well-known cryptocurrency platform, Binance features a website as well as apps for iOS and Android.

3. Key Operations

On the Internet, questions and searches about Binance’s main operations and activities are more frequent. Well, it contains

• Trading
• SaaS (software as a service)
• Swap Farming

4. Value Proposition

Among Binance’s value propositions are

Traders: Access to a secure cryptocurrency trading platform with high liquidity and low transaction fees.

Crypto Innovators: In order to support innovative pre-ICO ventures, Binance Labs – a technology incubator, and LaunchPad – a hosting platform for new apps & API interfaces, are made available which is a plus point.

5. Cost Structure of Binance

Binance undoubtedly generates income in a variety of ways, but its cost structure includes,

• I.T. operations salaries,
• (Online/Offline) marketing
• Maintenance of its apps and website
  

6. Binance’s Customer Relationships

In addition to its operations, Binance is also known for the customer support it offers through a variety of channels, including

• Email
• Social Media Sites
• Telephones
• Community and Academy of Binance
  

How Does Binance Make Money: Binance Revenue Model

After going through the business model of Binance, you must be clear about how it has established its roots in the crypto exchange market. Now let’s dive deep into the process that Binance follows to make money.

When it comes to making money, trading commissions, margin charges, interest on cryptocurrency loans, spreads, withdrawal costs, and broker program costs are all ways that Binance generates revenue. Additionally, it generates income from its investments, mining services, cloud offerings, and interchange fees.

• Trading Fees

If we talk about the major source of  Binance’s revenue, trading fees are the answer. There is a 0.1% spot trading fee and a whopping 0.5% buy/sell cryptocurrency fee.

The thing is, any cryptocurrency investments will be subtracted from this total in case you have BNB in your trading account. Due to the presence of BNB in their accounts, traders who want to leverage this option pay a cost that is 25% lower, Isn’t it amazing?

Moreover, trading commissions for both individual traders and institutions keep on changing as per the trading volume over a 30-day period. With lower trading volumes, fees will be lesser; and with bigger trading volumes, fees will be slightly higher.

Additionally, Binance receives revenue from the trading commissions levied by other cryptocurrency exchanges using the Binance Broker Program.

• Deposit & Withdrawal Fees

For cryptocurrency deposits, Binance does not charge a fee. However, depending on where the wallet is being received, they assess a withdrawal fee. Withdrawal rates are based on blockchain networks and are subject to sudden changes due to things like network congestion.

Fiat currency deposits and withdrawals are charged a fee. There are no fees associated with wire transfers made in USD via SWIFT or Signet. Domestic USD withdrawal fees in the US are $15, but the fee for international wire transfers is substantially higher ($35). The use of an ACH transfer for deposits or withdrawals is fee-free.

In addition to other costs, using a debit card for deposits carries a fee of 4.5%. International users of Binance can buy cryptocurrency using credit cards. Credit card purchases cannot be made by US citizens.

• Margin Fees

The interest rate on a margin account is calculated hourly by Binance. Therefore, whether you borrow money for a minute or practically an hour, the fee will be the same.

• Loan Fees For Cryptocurrencies

The terms of Binance’s cryptocurrency-backed loans range from 7 to 180 days. On the site, users’ crypto assets can be used as collateral for loans. Interest fees are how Binance generates revenue.

The amount borrowed, the quantity of collateral posted, the type of currency borrowed, and the payback time chosen all affect the interest rate.

• Exchange Costs For Transactions Using a Crypto Card

Similar to banks that provide debit or credit cards in fiat currency, Binance makes money through transaction fees levied when customers use their Binance crypto cards to make purchases or withdraw cash from an ATM in fiat currency.

• Mining pool Fees

To join Binance’s mining pool, users must pay a 2.5% pool fee for Bitcoin and a 0.5% pool cost for Ether. You can mine coins like BCH, LTC, and others. When using Binance’s mining pool, the fee specific to each cryptocurrency being mined is applied.

Also Read: A Comprehensive Guide to Create a Custom Payment Gateway

Why Hire Apptunix To Build Apps Like Binance?

After going through the business model of Binance, you must have gained some valuable insights into how Binance works. Well, here we come to the next step where you can have your own platform like Binance.

Yes, you heard it right. You can have your own app like Binance. All you need is a crypto exchange development service provider like Apptunix.

At Apptunix, you can get a completely customizable white-label NFT marketplace platform that supports several blockchains. Trade your NFTs to give the purchasers a smooth bidding and purchasing experience. Why keep waiting? Building and launching a custom NFT platform can help you boost your online visibility, especially in the world of cryptocurrency trading. Create, list, and sell your favorite works of art using the centralized white-label NFT market. 

As a top developer of all-encompassing blockchain solutions, Apptunix focuses on creating NFT marketplaces and specialized cryptocurrency trading platforms. Apptunix provides feature-rich NFT marketplace development services for industries including art, digital collectibles, gaming, and asset tokenization. It has vast experience in blockchain development and stands out due to its dedication to excellence and meticulousness.

In addition to this, Apptunix’s Bitcoin exchange development services meet a variety of purposes by providing strong security features and a variety of payment options for increased convenience and security. To learn more, get in touch with Apptunix right away.