Bithumb to Join List of Cryptocurrency Exchanges With Native Tokens
In a major development, Bithumb – one of South Korea’s largest cryptocurrency exchanges – announced its plans to issue a native digital token called Bithumb Coin later in 2018.
Bithumb’s ICO Aspirations
A local Bithumb subsidiary is developing the token, according to a person with close knowledge of the matter. However, the subsidiary’s details remain unknown.
According to reports, the token aims to attract institutional investors. However, it remains uncertain as to how much of the tokens are allocated to “private sales” – which are reserved for investors who invest large amounts of money.
A lack of detailed information regarding the ICO is attributed to legalities associated with Bithumb’s ownership. The company is wholly owned by BTCKorea, which is required by law to publicly present all company (and its related subsidiary’s) information, data, and earnings. Hence, Bithumb’s ICO becomes complicated to be clearly displayed in an annual company report, and until these intricacies are ironed out, the company is abided by law not to release any details.
After the ban on the contentious fundraising technique of ICOs in South Korea during 2017, Bithumb can not issue tokens in their homeland. Hence, the company would follow the lead of Korean platform token Icon (ICX), which issued its tokens in Switzerland to avoid complications. Reportedly, Bithumb is considering Singapore to establish its ICO.
Exchange Tokens The Latest Norm
Exchange-issued tokens are specific digital assets that are used as alternate currency trading pairs apart from the usual BTC, ETH, and USD. Also, they allow users to pay lower exchange fees.
Bithumb joins an increasing list of exchanges that are raising funds via an ICO, by offering their own tokens. In January 2018, Chinese crypto exchange Huobi developed and delivered an ERC20 standard token aptly named Huobi Token (HT), with supply limited to 500 million. However, there was no ICO for the HT – which trades at $2.07 at the time of writing – and it is offered only registered Huobi users.
The world’s largest cryptocurrency exchange by volume, Binance, also has its own digital currency – the Binance Coin (BNB). Alongside discounted fees, Binance conducts a quarterly ‘coin burn.’ The burn cuts down total coin supply by several notches, in turn increasing the coin’s value.
As explained in Binance’s whitepaper, the company would use 20 percent of their quarterly earnings to buy back BNB and “burn” them, until 50 percent of all the BNB, i.e., 100 million BNBs, are brought back. Every buyback is logged on the Ethereum blockchain, as BNB is an ERC20 token.
To read BTCManager’s review of exchange coins for 2018, click here.