The Future According To CZ
Known in the crypto world as ‘CZ’, Changpeng Zhao, CEO of Binance, the world’s largest bitcoin exchange and altcoin crypto exchange by volume, was in Cyprus recently. Binance has been granted a Class 3 registration by the Cyprus Securities and Exchange Commission (CySEC) to expand operations on the island as a Crypto Asset Services Provider (CASP). In an exclusive interview with University of Nicosia CEO Antonis Polemitis, CZ revealed his thoughts on current developments in the industry and gave his predictions for its future.
“I got into crypto in 2013. I was an entrepreneur and a startup guy back then. I had been running a startup for eight years at that point but I was the most junior partner out of six guys. I’d done a couple of other different startups in between and Binance was probably my fifth,” CZ recalled, noting how he had also worked on the Tokyo Stock Exchange software and Bloomberg Tradebook Futures trading platforms as well as startups including Raptor, which he described as “an ultra-low latency trading solution.” Three years’ work on cryptos (2014-2017) led to the formation of Binance. “It took many years to get there but there was still a lot of luck involved. We were very lucky. In 2017, there was a change in the market: from a Bitcoin industry to the ICO (Initial Coin Offering) industry,” he noted.
As well as carrying a wider range of cryptocurrencies at the time, Binance also stood out from its competition by emphasizing customer support and protecting users from early on. “We excelled at customer support,” CZ said, adding that subsequent decisions to protect users had initially cost the company financially but paid off in the long term.
“We made many decisions that actually cost us a lot of money but we protected our users and today the users are very, very smart. We have social media, people talk among each other. Word of mouth is the strongest marketing tool,” he elaborated.
Among many other talking points during the interview, CZ outlined the differences between crypto exchanges and traditional exchange infrastructures, suggesting that the former were far more advanced, “especially in terms of technology, and security too.”
The Binance CEO went on to explain: “There are some fundamental differences when you trade stocks. Stock exchanges only operate a few hours a day. They start at 9am typically and finish at 3 pm and then they can do all the kind of stuff they want to do – system upgrades, deployments, testing and reconciliation. All of this can happen in batch jobs after the exchange is closed. Crypto runs 24/ 7. We don’t close for Christmas! We don’t close for anything, so all the upgrades need to be done in real time and securely.”
CZ said that these differences between stock exchanges and crypto exchanges also meant that while hackers targeting a traditional stock exchange could cause chaos, they could not walk away with money as such.
“If a crypto exchange gets hacked, hackers get hundreds of billions of dollars. So, there’s that much more incentive for hackers to attack crypto exchanges. Security is top-notch. It has to be,” he continued.
Another difference between crypto exchanges and stock exchanges is the immediacy with which crypto exchanges have to provide and process information. Purchases and sales have to be processed immediately and be visible to users right away as a sale or purchase has an instant impact on prices.
“The closest comparison would be with Google, Facebook, or Twitter. They have users all around the world. Messages are submitted and processed. If you write a tweet and your friend doesn’t see it for 30 seconds, you don’t complain. But, if you place an order and you don’t see it in three seconds and the price has moved, you will complain,” he explained.
“Traditional exchanges don’t deal with this at all,” CZ continued, adding, “So luckily, we’re one step beyond the evolution. We hire the best large Internet application guys. We hire the best talent from Google, Facebook, Twitter, Tencent, etc., and then we say ‘Figure out how to do this, how to solve this more challenging problem.’”
When asked to comment on the recent bankruptcy of BlockFi and FTX, CZ commented, “No matter how mature the industry is, you cannot prevent people from acting badly. It is not a crypto-specific problem.”
As the head of a company with offices and subscribers around the world, CZ was able to draw on his own professional experience to comment that, in the United States, the financial and banking infrastructure for crypto is more mature, but the EU has a more unified approach to regulatory matters. He went on to say that “we are still early in the development of the industry”, and that “regulations are much needed” in an appropriate manner for the sector.
When asked about the future of the industry a decade from now, the Binance CEO said that it was very hard to predict, especially given the fast pace of developments, but the industry, much like the Internet, would inevitably evolve and more and more people would end up using it.
“You cannot prevent technology innovation”, CZ said. “You can shut down the Internet or Bitcoin but other concepts will arise. Over one million people are now working in the crypto industry. Those people will continue pushing it forward”, he added.
The Binance CEO said that he was visiting Cyprus as part of his mission to get to know all places around the world that are “crypto-friendly” and he announced that Binance would be opening offices here very soon. Currently, the platform’s largest offices are in Dubai.
View the full interview in full on UNIC’s official YouTube channel.