A few weeks ago, I spoke with Changpeng Zhao, the founder and CEO of Binance, the world's largest cryptocurrency exchange by trading volume. He is mostly known as just CZ in the crypto world. During this in-depth interview, we discussed almost everything including the current financial system, the CoinMarketCap Acquisition, new developments at Binance, the most high pressure moments in CZ’s life, and even J.K. Rowling. It was incredibly interesting, so I recommend not missing this piece.
You can also watch the full interview on our YouTube channel:
U.Today: So the world is currently suffering from a new financial crisis. What are your thoughts on it? How will it affect the crypto industry, in your opinion?
CZ: I think it's going to have some really interesting impacts. I think basically most of the traditional production has stopped, right? So a lot of people are at home, some people are still working, but mostly in online industries that do not require a physical presence and industries which are essential services. Most of the other industries have stopped. I think that's going to have a pretty negative impact on the production. No matter how much money we print, I think we're going to go into a recession. As a result, the government is printing a large amount of money. So all of those things that are negative for the overall economy, are actually positive for crypto, because the government had very heavy-handed interventions, printing lots of money.
All of these things are actually what Bitcoin is made for. So, I think it's going to have a very positive impact on the cryptocurrency economy. We're seeing that already. We're seeing trading volumes are larger, more people are involved. We're seeing new user registrations increasing very significantly and trading volumes are high and the revenues are high. So I think we're just seeing that the data shows that people are coming into the industry now. So it's bad for the overall economy, but it's actually good for crypto. So we'll kind of be in a lucky spot.
U.Today: Yeah. Even J.K. Rowling has started talking about Bitcoin, which is pretty interesting, right?
CZ: Yes. So now we've got a very famous author with 14 million followers talking about crypto, so that's good. Yeah. I think the next Harry Potter probably will have some crypto units.
U.Today: Can you tell us about the most significant of Binance’s recent achievements? What has been the most important news piece from Binance in your opinion?
CZ: There's quite a lot. So, Binance has more of a decentralized team. Everyone's working on different things and then when they release something, I find out most of them don't talk to me that often. Anyway, I think on top of my head. Futures is a big one. The Binance futures platform reached number one in the world and achieved all-time high trading volumes of over $10 billion per 24 hours. So I think that's a pretty big achievement.
We released the mining pool, which hit the top 10 in the world, you know, just in less than a month. Trust wallet. Our decentralized wallet app now has 1 million active monthly users. So that's also quite strong. We recently added 40, 42, major Fiat currency support on binance.com. Now you can use different currencies, including Russian rubles, to buy cryptocurrencies on binance.com directly and through multiple channels. There are multiple payment channels. There's also P2P.
We have one of the largest BNB burns in history, with 52 million US dollars worth of BNB burned for quarter one. So those are really strong results. We acquired CMC. That's one of the largest traffic sites in this industry. We partner with Brave browser. I don't know if you ever use Brave browser. If you use it, you see the bonus widget on the site all the time, which is really cool.
We also released a white paper for Binance Smart Chain (Binance Chain is a blockchain software system developed by Binance and its community. By “we” here CZ means the Binance Chain team). So that's a new parallel Chain for Binance Chain that's going to come up in a couple of weeks. So there's a lot of stuff going on. I'm not sure which one’s the most significant but we'll see.
U.Today: The Coinmarketcap acquisition has been a loud topic recently. What led to that decision? What are your plans for that project?
CZ: Basically it's just a very valuable platform in the industry. Binance provides access to liquidity. If you want to trade, you want to buy or sell, Binance is one of the best places to do it. We have the largest volumes and liquidity, which basically means you get a better price. So I think we got the trading part covered relatively well. There are other players in the industry as well, which is fine. CoinMarketCap provides access to information in crypto, access to data. So, I think that's the piece that we did not have before. And having that is really, really valuable. Their founder, Brandon, ran it for seven years but they didn't focus on the business model. They just focus on the user experience. So they got a large number of users, people use it but I think the team's grown to a point where we felt we can help it grow further. So that's really the main reason for the acquisition.
So, there's a lot of confusion, et cetera, because yes, we are an exchange and CoinMarketCap ranks exchanges, but we want to stay neutral.
Binance was already the biggest exchange by most metrics even before the acquisition. We don't really need special favors from CoinMarketCap to help us. So, both the exchange and CoinMarketCap will continue to grow relatively independently. I'm confident they can both compete independently and be the best platform in their respective sectors. So I think we just want to help make the product better and give more funding to help grow the product.
U.Today: You also launched Binance DEX last year. Are you satisfied with this project? Will it be your main focus in the years to come? (Editor’s note: The Binance Chain team launched Binance DEX, with Binance being a major contributor)
CZ: Yes, I think I'm satisfied with the project from a team delivery perspective. I'm not super satisfied with the number of traders on Binance DEX. I'll just be very honest about it, I thought the number of traders on DEX would be higher. So with Binance DEX, the user experience is better than most other DEXes out there. But I think the industry is just not ready for it just yet. That does not mean that DEX is not important. I just don't spend all of my time on it, but I'm certain that we will continue to invest in the DEX project for many years to come.
So we'll continue to launch on Binance Smart Chain, add more features, add smart contracts. I do believe that decentralized exchanges are the future. It may not be next month, it may not be next year, but it may be three years later, five years later, 10 years later. It may be 20 years later, but we're ready for it. I just want us to be ready for it if it happens. So we'll continue to invest in that and we will offer both choices. So this is used by a smaller number of people for Binance DEX, but that's okay. The technology is for advanced users that want to hold their own cryptocurrencies, et cetera. And it's also good now for guys who complain, “Hey, your keys, your funds.”
So look, there's Binance DEX. We offered that option (together with the community developers). So, from a delivery perspective, I think the team did a really good job, but I think we're just a little bit early on the market timing, but we'll continue to invest in it. We'll keep it going for many years to come.
U.Today: What do you think might be the reason people aren’t yet ready for DEX exchanges?
CZ: I have a guess, which I'm not sure if it's correct or not. Today the numbers show that most people are not able or do not want to hold coins on themselves. I think most hardware wallets are actually pretty secure now. But you know, hardware wallets have one significant requirement for the user, which is to safely store the backup phrase, right?
You have a seed phrase that you need to store a backup phrase and you can't lose it. You can't let other people steal it. So you can't store it on a computer. If you store it in the cloud or encrypt it, hackers are going to have a pretty easy time stealing it. You gotta have a way to pass it to your kid if you pass away, et cetera. So there has to be an inheritance plan. And depending on your relationship with your kid, you may not want them to have it today because you may not want your kid to run away with all your funds today. So just that one piece may already make self custody less favorable to most users. And the centralized exchange’s user experience is much more natural to most users today.
Most users are used to using a password, an email and password, to log into a website. And when there's a problem, they can call someone. Today if you want to do the encryption, use a backup USB stick, give it to multiple copies around different parts of the world, prevent against flooding, etc. All of these things are not natural to most people. I would say 99% of people are not capable of securely backing up their passwords s, their backup seed and encrypting it in a very secure way. I think that's basically the main reason. From a DEX perspective, once you can get over it, once you can securely save your backup seed, the trading experience on DEX is actually not bad at all. It's one second block, so every second there's a match, so it’s not bad. But for a number of reasons, people obviously prefer centralized exchanges more today.
I think, given enough time, the technology will improve and there will be better ways to safely backup your keys so that you can take care of all the issues we've talked about and people will probably use DEXes more.
U.Today: How do you list tokens on Binance? What are the criteria?
CZ: There's a couple of different things that we go by. The main thing that we go by is the number of users. So if you have a token and you have a community, we can see clearly that there's a large number of users and a community, i.e. a Telegram group, a Facebook page, Twitter followers or just people using your app or your token holders. So there's a number of ways to judge how many users you have. If you have a large number of users, then your token coin has utility. A lot of people use it, so it has useful value. So that's the easiest way to evaluate a project. It's just to get the number of users, the data on the number of users.
If you don't have a large number of users, then it gets trickier. Most likely you are the earliest stage project. And then yes, we do look at a project team, product-market fit, white papers, et cetera. But that gets very subjective. So today we don't list that many coins at early stages because Binance is now a relatively large platform. We don't want to take the risk of taking super early-stage projects. So the number of users is really the most simple way. Of course, there's a number of other factors that we consider, but look, if you're a good project, if you have like, I don't know, 100,000, 200,000 or a million users (on top of other metrics), I think that we will list you for sure.
U.Today: I recently spoke with Max Keiser, a famous financial journalist, maybe you know of him. Mr. Keiser said that he thinks all altcoins are exit scams. What do you think about that?
CZ: Okay. I think that's an overgeneralization. When you generalize something like all, everything's bad, then that's usually incorrect by definition. I guess he's a Bitcoin maximalist, which I'm not. I think Bitcoin is great. I'm very pro-Bitcoin, but I think in the decentralized world, we want to promote freedom. And if we promote freedom, then in a freedom world people are free to do what they want. In the freedom world, I encourage people not to criticize other people, but more focus on what you do to contribute value yourself. I think in a freedom driven world people can create tokens and people will create tokens. You can create a token for yourself, for your project, for your company, for your team, for your country, for your province.
So I think there will be millions of tokens. Again, most of them are probably not very good. Especially in the early days. But there will be people who create tokens that have value.
So Ethereum obviously has value, BNB has value. Should the internet just be run by one company? No. Right?
So there are multiple companies in the internet space that create value. If we just want to limit everyone to one currency, saying that everything else is bad, I don't think that would work. Blockchain allows a very easy way for anyone to create a token and as long as the tokens are used in the right way and there’s value associated with it, then it's a good token.
I think by definition, not all tokens are bad. So I would disagree with him on that. I think we got to take a more realistic view, a large number of tokens because they're new projects, they will fail, but it's like the internet startup scene, right? So many companies will fail, but a few will succeed, so you cannot say that apart from one company everyone else is bad.
U.Today: What about your future plans? What should we expect from Binance in the future? Any new projects?
CZ: Oh, that's also a hard one. We have lots of different projects going on at any given time and I try not to disclose all of them because anytime I say something, the next day it's like, “is it released yet? Is it released yet?” So, we don't like to make so many pre-announcements, but a couple of things: we're adding more Fiat on-ramps. That's not a secret anymore. So we're adding more support for Fiat. We are adding more products to the Futures platform as well. So for futures, right now, we have a perpetual contract. That's very popular, but we're looking to add more different contract types and more products there and enhancing the mobile experience, et cetera.
We're adding options, leveraged tokens, et cetera. We're continuing to invest in many other different ecosystem players, different wallets, different Fiat channels, et cetera. There's one interesting project which we publicly sort of disclosed that we are working on. It’s a Binance card, which is a debit card that you can just swipe and spend your crypto directly. So this way that's a direct Fiat, off-ramp. This way you don't have to sort of say, “okay, I got to sell my Bitcoin first and then withdraw it, put it to my bank account and then spend it.” So now if you're hardcore crypto enthusiast, you can just stay in crypto.
So the minute you want to spend money, just swipe your card. And the merchant gets Fiat because we do the conversion for them.
So this way, the consumer can stay in crypto if they want, and the merchants stay in Fiat if they want. We bridge the two. I think having those kinds of off-ramps will allow people to hold crypto more, they have no reason to sell Bitcoin. So, these are a few of those things that we're working on and the card is one of the first off-ramps we will offer. So we'll see how that goes.
U.Today: That is great! I would try it. So let's speak about you. What projects or people in the crypto industry do you respect the most?
CZ: Oh, it's dangerous for me to say that. Well, I think I respect a lot of people in the crypto industry. Though most of them have flaws. I respect Vitalik, I respect a lot of the top 10 project founders. Vitalik has some flaws as well. He often misspeaks and he hates centralized exchanges, which is fine. I think he doesn't recognize the value of centralized exchanges with the bridge. Without the bridge, there's no crypto. But there's a lot of less famous founders as well, which I respect, but I don't really want to name them. If I name one, I've got to name a whole bunch, it gets a little bit tricky.
But I think there are a lot of hardworking people in this industry who deserve respect. So, that's also why I'm very confident in this industry. It's not just the blockchain technology, it is not just Bitcoin, I see a very strong community. There is fraud, there are scammers, but there are really hard-working, good people in this industry.
U.Today: What's the biggest challenge you've ever faced in connection with your company and job?
CZ: Oh, okay. There is a clear one, which was right after our ICO. So we did our ICO in 2017, something from June 20th to July 2nd. And then July 14th, we launched the platform. We launched the exchange and then we listed BNB on the first day. And the BNB token price dropped from the ICO price all the way down to like 65%-ish and stayed there for about two and a half weeks. We tried everything. We tried to release more features, do more podcasts, tried to list more coins, but the price just wasn't coming up. It was during that time I felt a lot of pressure because basically thousands of people just invested in our coin and they invested in our project. They invested in us basically.
So they put in trust on the line and they put their funds on the line and now they're all losing money. So that was a period when I felt a lot of pressure. I was like, “okay, we got to make this work, we've got to make this work.” The team was under pressure as well. Like we were basically working for like two months nonstop already at that point. But luckily, through a sequence of events, we got back up after two and a half weeks or so. And then we never did below the ICO price. In fact, the price went up about 10X in about the end of the third week.
So when it drops, it drops really quickly and when it goes up, it goes up also very quickly. So that was by far the most stressful time I would say in my life, to be honest, because the way I live my life is I usually don't owe anybody anything. So I never really had big loans. I don't owe people money. I don't owe people favors that I cannot repay, et cetera. So, that period was really tough for me because now there's a lot of people who put that trust in us and they're losing money. So, after we went up 10X, that pressure kind of went away because there are fluctuations in trading and I can't guarantee everyone makes money because then the price has to go in a straight line, that's not possible.
So, today we're at about 150-170 X the ICO price. So we're pretty comfortable. There are fluctuations. If you're a bad trader, you lose money. I always recommend people to hold only. So that was by far the highest pressure period in my life.
U.Today: Thanks for sharing. That’s a really inspiring story! What would you personally change in the community if you could?
CZ: Ooh, there's a lot of stuff we could. I think based on what I said before, in a freedom driven community, people are free to do whatever they want and people are free to criticize everyone else that they want to, but I think that's just not super productive. I think basically, look, unless somebody is hurting you, we should just complain less about others and focus on doing more ourselves. So just build more value. If I could change something, I would just mute all the whiners or the complainers in the community and have them work on something productive. But it's human nature. People like to complain as it’s much easier. It's much more satisfying, but it is what it is. It's fine. But if you ask me, if I could have our limited power to change the community, that's what I would recommend. But I don't really worry about that too much based on that principle. I don't complain about others too much. Just focus on what I do.
U.Today: Okay. I have only one question left. I ask it to everyone from the community that I have a chance to speak with. What will the price of one Bitcoin be at the end of 2020?
CZ: I don't want to make price predictions in the short term because that would be seen as fluctuations, but I'm always very bullish on this industry. So I think the price of Bitcoin and most of the strong cryptocurrencies will be... I think that the direction’s up. I don't want this to be financial advice but I think in the short term, there is going to be a lot of fluctuations. But long term I think I'm very confident in this industry. I think we probably have a hundred X, a thousand X to grow. So if Bitcoin is $10,000 today, in a couple of years, Bitcoin can be $100,000, um, $1,000,000 or more. I think that's all possible, but when it's going to happen I'm not sure.
The end of 2020 is pretty close. I think we should be able to see some effects of some of the macro changes in the industry. Quantitative easing with the FED printing a lot of money and every other country keeping up with it. So now there is a lot more Fiat. The Fiat supply, by most reasonable measures, is probably double or triple already by the circulating supplies. So I think we should see the price on everything increase, not just Bitcoin. I mean the price of rice and food is probably going to increase, and then also Bitcoin halved, right? So the number of new Bitcoins coming on to the market is now much less than before. It's only 50% compared to before. So I think all of those points should be very positive for Bitcoin. Logic says that the price should go up. But again, in a trading market, the logic doesn't always apply to the short term. So, the end of 2020 is like a few months away, kind of midterm in terms of trading goals. So I think those effects would probably kick in and we should see those effects in our industry.
U.Today: Okay. Thank you so much for your time. It was a pleasure. Thank you.
CZ: Yeah, thanks for having me, Rimma. Good to speak to you.