The performance of "veteran" cryptocurrencies this year pales in comparison to "rising stars," and according to researchers, this trend may continue. Among the top three cryptocurrencies by market capitalization, Binance Coin (BNB) has significantly outperformed its two major competitors—Bitcoin (BTC) and Ethereum (ETH).
Data from Arcane Research shows that BNB, the exchange token issued by Binance, surged by 1,344% in 2021. In contrast, Bitcoin—often called the "King of Cryptocurrencies"—rose just 65%, while Ethereum, the "perennial runner-up," climbed 408%.
Why BNB Surged in 2021
1. Utility and Demand on Binance
- Users can pay trading fees at a discount using BNB.
- Binance introduced a new auto-burn mechanism, increasing BNB’s deflationary appeal.
2. Binance Smart Chain (BSC) Growth
- BNB serves as the native token of BSC, powering decentralized applications (dApps) and exchanges.
- BSC’s scalable blockchain and rapid ecosystem expansion have attracted developers and users shifting from Ethereum.
3. Ethereum’s Shortcomings
- High gas fees and network congestion drove users to alternatives like BSC.
- While Ethereum 2.0 remains under development, BSC capitalized by offering a DeFi-friendly environment.
BNB’s Market Cap Surpasses Traditional Banks
With a market capitalization of $87.6 billion, BNB has surpassed legacy financial institutions like Santander Bank, Bank of Montreal, and UBS.
FAQs
Why did BNB outperform Bitcoin and Ethereum?
BNB benefited from Binance’s ecosystem growth, BSC adoption, and Ethereum’s scalability issues.
How does BNB’s auto-burn mechanism work?
Binance periodically buys back and burns BNB, reducing supply and increasing scarcity.
Is BSC a long-term competitor to Ethereum?
While Ethereum still dominates, BSC’s low fees and fast transactions make it a strong alternative for DeFi projects.