FTT - Why Exchange Tokens Are Like Stocks
The word "cryptocurrency" is a bit of a misnomer in some cases. Many cryptocurrencies actually look more like rewards such as air miles or commodities like oil. The focus of this article is to compare a particular class of cryptocurrency to stocks. Exchange tokens are created and issued by centralized cryptocurrency exchanges such as Binance, Crypto.com, and FTX. Each one of them has created its own token: Binance Coin (CRYPTO: BNB) , Cronos (CRYPTO: CRO) , and FTX Token (CRYPTO: FTT) , respectively. I make the case that these tokens look more like the stocks of the company rather than cryptocurrencies.
Binance arguably pioneered the blueprint for exchange tokens. It created Binance Coin in 2017 and sold it to investors to fund the development of its platform. In the beginning, the incentive to buy and hold Binance Coin was to get trading fee discounts on Binance. While this incentive still exists, Binance Coin has grown to have dozens of use cases. One use case is to stake Binance Coin in the network that now runs the token: Binance Chain . Since Binance Chain is a proof-of-stake (PoS) blockchain, users who stake their tokens are entitled to rewards paid out in Binance Coin. While this reward is not explicitly a dividend, it sure looks like one.
Cryptocurrency Exchange Tokens
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Why Exchange Tokens Are Like Stocks