What is platform currency?

The platform currency is a virtual currency issued by the cryptocurrency exchange itself. Compared with other altcoins, it has a greater value support and a larger appreciation space, so it is loved by investors in the currency circle. Currently, the top three platform tokens by market capitalization are: BNB, OKB, and HT.

Since the beginning of this year, the price of the platform currency has soared, far exceeding the income of Bitcoin. As of press time, the cumulative gains of the three major platform coins this year are OKB (+300%), HT (+158%), and BNB (+140%), while Bitcoin’s gains in the same period were only 91%. Moreover, the highest returns (+537%) of the three major platform currencies far exceed the highest returns of Bitcoin (+270%). The platform tokens of some second-tier trading platforms, such as the MX of the Matcha Exchange, have increased by more than 150 times this year.

Here comes the question, why the price of the platform currency can rise by leaps and bounds this year, and what is the value support of the platform currency? First, platform tokens are supported by application scenarios. Many exchanges, including Binance, support their platform tokens to deduct handling fees, and holders of platform tokens can participate in IEO, enjoy airdrop tokens and other services. The second is that most exchanges support repurchase policies, which support the repurchase and destruction of platform tokens, thus forming a deflationary model. As time goes on, the number of platform tokens decreases, and the relationship between supply and demand drives up the price of platform tokens. The third is that the platform currency is a fundraising method for the platform. Compared with other air coins and altcoins, the exchange is profitable. The foreseeable income sources of the exchange include cash withdrawal, transaction fee collection, currency listing fee, etc. As long as the income of the exchange increases, the rise of the platform currency is also expected.

However, the development of platform currency also has certain problems. First of all, some trading platforms themselves are small in scale, with insufficient trading volume, and their income is difficult to support the rise of platform tokens. The short-term rise is only caused by speculation; secondly, many platform tokens have no application scenarios and are only used by exchanges to raise funds It is a tool without value support; moreover, the price of the platform currency is deeply bound to the exchange, and once the exchange runs away, the platform currency will be directly declared to be zero. To sum up, investment in platform currency should still choose a large exchange.