Thread by @NTmoney

Shorting cryptocurrencies is a losing game. But if I had to short a cryptocurrency right now, it would be Binance Coin. Here’s why (from my western bias):

Binance’s competitive advantage is regulatory arbitrage. Minimal KYC requirements and trading limits and aggressively adding new coins allowed the company to go from 0 to ~ 40% exchange market share in less than 2 yrs.

Binance captured this large market share quickly despite a poorly designed product. Binance.com is not pushing the space forward in a meaningful way and the UI/UX is worse than many decentralized exchanges.

But Bitcoin’s competitive advantage is regulatory arbitrage too, so what’s wrong with that for Binance?

Bitcoin is an open-source project that can’t be shut down & enabled a new product. Binance is a centralized company that can be shut down and does not enable anything new.

A bull case for Binance Coin requires you to either believe that Binance will continue to maintain or grow its centralized exchange market share, or successfully transition to a decentralized org and launch a DEX that becomes widely used.

For the company to maintain market share, it needs to add fiat onramps & attract institutional investors. Their regulatory approach to date makes it difficult for them to work with banks & institutions, who generally prefer partners with expertise complying with existing regs

If they are able to pull off Binance DEX and transition to a decentralized org, I may be proven wrong. But a DEX is a completely different product and investing at over $1B market cap BNB today for a product that doesn’t exist feels like a bad risk adjusted bet

Finally, from what I can tell the community of Binance Coin holders doesn’t stand for much beyond making money. At the end of the day a community of believers is what gives cryptocurrencies value. Something tells me BNB holders will be on to the next money making opportunity soon