A Conversation with CZ Zhao Changpeng, Founder of Binance: In the Middle of Cryptocurrency

Decentralized, but not completely decentralized.

A Conversation with CZ Zhao Changpeng, Founder of Binance: In the Middle of Cryptocurrency

Article | Duan Xu

Editor | Manqi Cheng

For most of the last year, Changpeng Zhao has spent his time in a small room of less than 10 square meters in Singapore, connecting online.

In this cramped space in a tiny country, the 44-year-old Chinese Canadian remotely runs a $100 billion company [1]. In the online virtual world, Changpeng Zhao is more widely known as CZ, the founder and CEO of Binance, the world’s largest cryptocurrency exchange.

Before the epidemic, Zhao Changpeng remotely controlled Binance from Japan, Malta, Uganda, and Singapore, traveling to countries and regions with relatively lax cryptocurrency policies, meeting with local practitioners and government officials, such as the president of Uganda and the prime minister of Malta.

After the epidemic, he stopped in Singapore, connecting nearly 3,000 Binance members in more than 60 countries and regions around the world with online meetings. He added a “big device” to this new state of affairs – a green screen. When there is an official online event, he will step in front of the green screen, erase the real environment of the room and replace it with a virtual background with a bright yellow Binance logo.

Zhao Changpeng, who founded Binance with his own hands and has tremendous power in the cryptocurrency world, does not have the typical persona of an entrepreneur in this field; he is not a firm believer or a fanatical evangelist.

He is characterized by a “lack of character”. Zhao Changpeng has an inch haircut and is not tall, not short, not fat, not thin. He thinks and acts in the same way, and within the blockchain industry, he is the one who walks in the middle.

He was initially attracted to the freedom of cryptocurrencies, and since selling his Shanghai home in 2014 to buy bitcoin, he has gradually moved most of his personal assets to them. According to him, cryptocurrency assets now account for 99% of his personal wealth. He never bought another fixed asset such as a house because it was “too illiquid”.

On the other hand, Zhao Changpeng, who values freedom and liquidity, also views government regulation of cryptocurrencies positively. He claims that he is by no means an extreme anarchist, and that he cannot imagine how society would function and how crowds would protect themselves without the government and police.

Binance, founded by Changpeng Zhao, is also an intermediate product.

Binance is not your typical company. It has no headquarters, no offices. Its nearly 3,000 members around the world all work from home. One Binance employee said that he flew to HR’s home in the city where he was based to do his onboarding.

But Binance is not a typical decentralized community organization, it still has CEO Zhao Changpeng, executive positions and reporting relationships. It uses both OKR and KPI task assessment systems, and when determining OKR, Zhao Changpeng will first set his own OKR, and others will then break down Zhao Changpeng’s OKR – just like most Internet companies that use OKR.

Behind the middle course and the compatibility of contradictory things, there is Zhao Changpeng’s pragmatism. Centralized or decentralized, firm or wobbly – he doesn’t put much emphasis on these evaluation dimensions with blockchain characteristics. His criteria for judging many things are: whether they are reasonable, beneficial and necessary.

On social media, for example, although it goes against his “unpredictable” nature, Changpeng is very active because it helps him communicate with users. He has 2.6 million followers on Twitter, 700,000 more than Vitalik Buterin, the founder of Ethereum.

In order to promote Binance’s key layout in Decentralized Finance (DeFi)[2], BSC (Binance Smart Chain), Zhao Changpeng sometimes even deliberately dislikes ethereum –The outside world sees BSC as a benchmark for Ether. “It’s good for BSC in that BSC is smaller than Ether.”

Acting on reasonable, pragmatic and useful criteria, Zhao Changpeng is also less obsessed with blockchain and cryptocurrencies per se. He entered the industry in 2014 by selling his house and buying coins in a seemingly determined posture. However, during the market downturn from 2015 to 2017, he left the cryptocurrency field for a time and entered the cultural goods trading industry, which was very popular at that time, as a company providing trading systems for postal coin cards (collectibles such as stamps, coins and phone cards).

From the results, the incomplete firmness on cryptocurrencies did not affect the success of Zhao Changpeng and Binance in this field. According to Zhao Changpeng, the core competitiveness of cryptocurrency exchanges is no different from similar products in the past, which still serve users well. A pragmatic, compatible and diversified style can help them serve as many global users as possible.

In the context of the new bull market and shocks in cryptocurrencies, we talked with Zhao Changpeng about the market and value of Bitcoin, Binance’s business transformation and organizational management, his observations on industry regulation and his own state of affairs in a complex environment.

In 1989, at the age of 12, Changpeng Zhao left his birthplace in Jiangsu, China and immigrated to Vancouver, Canada with his family. Many things were laid down at that time. During his high school years, Zhao Changpeng was captain of the varsity volleyball team for four years, and says he was more like the glue on the court – not the tallest, not the most aggressive, he “wasn’t the one killing the ball,” he was responsible for coordinating the entire court.

1 “Bitcoin is a new technology platform and not some asset”

Late Edition: Since mid-April, Bitcoin has fallen from a high of nearly $65,000 to as low as $30,000 at one point, what do you make of this huge volatility?

Changpeng Zhao: It’s normal for markets to have big rallies and then big drops. I and the people around me are not particularly concerned.

Late Edition: After the price of bitcoin broke $50,000 in February, you said on Twitter, “$50,000 in bitcoin is the new $10,000, so if you don’t buy now, you’ll regret it.” Why are you so bullish on bitcoin?

Changpeng Zhao: I’ve never predicted the price of bitcoin on Twitter. But it’s still very early days in the industry, and only about 1% to 2% of the world’s population has digital currency. From that perspective, there should be 50x to 100x more room for growth.

Late Edition: A common view is that the dollar overdraft was a key driver of the bull market that started in the second half of last year, and that bitcoin is rising not because it’s so good, but because the world outside is so bad. What do you think about the reasons for this bull market?

Zhao Changpeng: The U.S. printing of money has really contributed to cryptocurrencies. 42% of the U.S. dollar was printed last year, and taking the dollar was a huge devaluation, so many U.S. institutions started buying bitcoin.

There are also some intra-industry factors. DeFi (decentralized finance) last year and NFT (non-homogenized tokens) [3] this year are relatively hot and have a lot of innovation. Also, bitcoin mining was cut in half [4] last year, and new bitcoins are coming out much slower. No one can say 100% which one had the bigger impact.

Late Edition: Before the 2017 bull market, bitcoin’s share of total cryptocurrency market capitalization stayed above 80%, and after 2018, that value started to oscillate between 30% and 70%, and is currently slightly more than 40%. How do you think bitcoin’s share will change next?

Changpeng Zhao: In the long run, the proportion of bitcoin will decrease. Bitcoin is the first digital currency, and it has a network effect, like a global reserve currency in digital currency. But Bitcoin doesn’t innovate as fast as new projects, and sooner or later something else will eat into Bitcoin’s share, but we haven’t seen what it is yet.

Evening Standard: Does that include ethereum and Binance’s own BNB (Binance Coin, the name of the token issued by Binance)?

Zhao Changpeng: They are included. Ether used to have a chance because it could do everything Bitcoin could do, and it had a lot of innovation and a very active community. But ethereum quickly hit a performance bottleneck. It’s pretty hard for cryptocurrencies to surpass Bitcoin in terms of market cap these days. Bitcoin is the most decentralized because its founder isn’t around.

Late Edition: The value of bitcoin depends a lot on how people define it. What do you think the essence of bitcoin is? A currency, an asset, or something else?

Changpeng Zhao: I think Bitcoin is a new set of technologies rather than something. When the Internet first came out, people would think of the Internet as another communication channel; we had the telephone, the radio, the TV, and now the Internet. But the Internet is actually a new technology platform, and the Internet will have Internet radio, video, and social media. Social media is not traditionally available, television and radio are traditionally available. So the Internet is not parallel to them at the level of specific applications; the Internet is the underlying architecture.

Blockchain and Bitcoin are also the underlying architecture. In digital currency there will be digital currency currencies, assets, securities, bonds and all sorts of other things, and this is a new platform not some asset. A lot of people don’t understand how big this is, that a new platform comes along with a new version of everything traditional on it, plus more things that are not traditional.

Late: But “all kinds” of things seem to have not yet appeared, and there is no killer application in the blockchain field, why is that?

Zhao Changpeng: One is that the whole digital currency industry is still very niche, so there is no mass killer application.

Secondly there are actually applications within the cryptocurrency market that are doing quite well, such as the “Initial Coin Offering” (i.e. public issuance of tradable tokens, similar to issuing stocks) in 2017, which I call “Blockchain Global financing”, which is a killer application. Previously, entrepreneurs didn’t have the tools to raise money globally. If you were a small Chinese retail investor, you couldn’t invest in early-stage U.S. projects like Uber and Tesla. But “initial public offerings” can, and it’s still in use, but of course there are a lot of scammers. The recent NFT is another new model that allows artists or content creators to better cash in on their work. All of these applications are not supported by traditional finance.


2 “Just do something and get it done”

Late: How did you cross over from the traditional finance industry to cryptocurrency?

Changpeng Zhao: I read the Bitcoin white paper around mid-2013. After learning about the technology, I thought it might work, but decentralization requires a community. I needed to see if this community existed, and what kind of people it was. So at the end of 2013, I went to Las Vegas to attend a summit where all the big names in the industry, including Vitalik and others, were present.

After I went there, I found that these kids were very sincere and very hardworking. At that time, one person transferred some coins to me in order to teach me how to use the wallet, and after I learned it, I said I’ll transfer the coins back to you, but he said no, you keep it, you can use this coin to teach the next person. I looked at it, it’s about $300, a few thousand yuan, not a lot, but not bad either. They are really not out to scam money, not the drug bosses as the newspapers say, they are a bunch of technical kids.

When I was ready to leave the airport after the meeting, I said I was going to sell my house and buy bitcoin, and I was going to quit my job and join the industry 100%, no matter what I did, I could write code.

Evening Standard: Interested in a new opportunity, do you need to do this step of selling your house?

Zhao Changpeng: I had so little money at the time, so I stopped diversifying, young, and put it all in one place. I never say to others that you all in, but I can take the risk myself. The worst case scenario is to do two years, bitcoin goes to zero, and I go back to work for the bank.

Late Edition: Did you hold on to the bitcoins you bought in 2014? The cryptocurrency went into a bear market shortly after that.

Changpeng Zhao: Luckily, I kept it. I remember less than a year after I sold my house, the price of Shanghai doubled, and bitcoin dropped to a third of its original value, which is a six-fold difference. At that time, I was under pressure, was everyone wrong, or was I the only one wrong? The odds are that I was wrong. But I couldn’t see why I was wrong, because I thought it was the future. Looking back, when the Internet bubble burst in 2001, Amazon, eBay, including Google then also fell 98%. We all went through that phase.

Late: Did you have this idea of comparing blockchain to the Internet at that time or did you summarize it afterwards?

Zhao Changpeng: To be honest, it came to me later, people can’t see it in the authorities. I was just thinking, how long will this thing last, five or ten years? But fortunately, it was just over two years.

Evening Standard: How do you allocate your personal assets now? Have you bought any more fixed assets such as houses?

Changpeng Zhao: I basically have 99% in cryptocurrencies, which should all be in BNB, and only a small portion in bitcoin. I’m not buying a house right now, it’s too illiquid.

Late: You were very determined when you joined the industry in 2014, but between 2015 and 2017 before you founded Binance, you left the cryptocurrency industry and made a trading system for postage cards (stamps, coins, phone cards, and other collectibles), why did you go into this midway?

Changpeng Zhao: Bijie originally wanted to do its own digital currency exchange in Japan, but found it hard to do it with only technical knowledge but not Japanese. Later on, China’s postage and currency cards were very hot, so people came to us and asked if we could provide them, and we said we would sell them if you were willing to pay. Until May 2017, we didn’t even think about doing an exchange.

Late: What happened in May 2017 and why did you come back?

Zhao Changpeng: The most immediate reason was that I thought a wave of market was coming, the industry needed it, and the trading platform was my specialty.

In the longer term, I think any time in human history when we can increase the freedom of a thing and not reduce its security and ease of use, civilization has made great progress. I think in the next few decades, money will become more free while security and ease of use can be maintained, or even become higher, and that’s what Binance wants to do. We want to provide some infrastructure services for this industry.

Evening Standard: One of the key reasons why blockchain technology can make the flow of money freer and more secure is its decentralized nature. You have been a centralized company in the wallet and exchange industries from the time you started in 2014 to the time you founded Binance, so why not just do a decentralized project based on blockchain network?

Zhao Changpeng: I think people have to find a combination of three things: one is what they know, two is what they like, and three is whether this thing has value to others. Not everyone is particularly knowledgeable about chips, knows how to mine, and is familiar with mathematical algorithms blockchain. My experience has been on the trading system side, and the most logical thing for me is to continue to do the trading platform.

Late: The trading platform can also be made into a decentralized form. Recently you said that decentralized exchanges will beat centralized exchanges in the next five to ten years. Does it look like you’ve changed your mind again?

Changpeng Zhao: Decentralized exchanges are really growing fast, but until now, their trading volume and security factor are still different from centralized exchanges, and there is a threshold for most novice users.

Of course, you can feel the direction of the wave when you are in the water. deFi does put pressure on the main Binance site. I’m much more bullish on the decentralized direction than I was much earlier on, and I think that’s the future.

Late Edition: Many people in the blockchain industry have consistent values and directional choices, such as some are obsessed with decentralization, some are obsessed with using bitcoin for payments, and some value improving efficiency; you seem to be more pragmatic and choose to change with the situation. This can be seen by some as not being firm enough, what do you think of this characteristic of yourself?

Changpeng Zhao: An industry has to allow people with different ideas and different traits to coexist. I think it’s okay to do something for the industry and get things done, no matter what the choice is.


3 “If it continues to rise again in 2018, there is not necessarily Binance today”

Late: Binance has been the largest cryptocurrency exchange in the world in terms of trading volume from 6 months after its establishment until now. What do you think is the core competence of Binance?

Zhao Changpeng: It’s still because we have always insisted on the user as the core, right? This is reflected in some long and short-term interest games, such as the choice of coin uploading and product function design.

We also put 10% of all transaction fee income into SAFU (Secure Asset Fund for Users) to protect users’ interests and deal with extreme situations.

Late: Nowadays, exchanges such as Binance, Coinbase and Firecoin still experience lag, downtime and “suspension of withdrawals due to traffic spikes” when the market fluctuates dramatically. Some people believe that the exchanges are behind the apparent glitches.

Zhao Changpeng: With Binance’s trading volume today, the fee revenue is quite a lot, so there is no need to make short-term money by manipulating anything. Smart people will protect the long-term trust.

Late: You are not short of people and money, why haven’t you solved the problems of downtime and lag?

Zhao Changpeng: It’s not that simple. Ordinary retail investors who don’t know much about the system often say, don’t you solve it by buying more servers? If we can spend money to solve the problem, we would have spent money earlier.

Traditional exchanges, such as the SSE and NYSE are retail investors to give orders to brokerage firms, brokerage firms then combine orders to the exchange, the exchange only serves a few hundred brokerage firms. We are millions of users around the world directly to the exchange, I think we are the largest financial aggregation market ever seen by mankind, the architectural pressure is completely different. This is not something that can be solved by adding servers in parallel. What we’re trying to do is make the Boeing 838 ten times bigger, but it’s still a separate plane that can still fly, which is harder.

The growth at this stage is completely beyond what we expected in 2018, and we’re still doing multiple optimizations, but we’ll probably hit a few more bumps as we continue to go up.

Late: Which specific aspects exceeded expectations?

Zhao Changpeng: The main thing is the number of users, which far exceeded expectations. 2017 Bitcoin peaked at $20,000, and some time ago it went to more than $50,000, up 2.5 times, but the number of active users went up twenty times. At that time, it was already expanding five or ten times, but it still couldn’t be carried.

Late: You mentioned earlier that the entry of institutions is a characteristic of this bull market, how is the growth of your institutional users? Can you observe the entry of Chinese institutional forces?

Zhao Changpeng: The total institutional data is growing exponentially, especially in the past six months. In the overall market, Chinese institutions do not account for a large percentage. U.S. institutions account for roughly 80 to 90 percent of the market, and the reverse is true in China, where retail investors account for 80 to 90 percent, and people with hundreds of millions of dollars in China are operating an account on their own.

Late: How do you attract institutional users?

Zhao Changpeng: Institutional trading requirements for API, trading speed and retail investors are completely different. For example, institutions are team operations, with bosses, team leaders, and small teams, each with different permissions, which we call the sub-account function. Not many exchanges had these features in 2017, and we didn’t either, but now we have them all.

Late: When did you start making these preparations?

Zhao Changpeng: The sub-account was around the end of 2018, when it was a bear market. In fact, at that time, we were mainly practicing internal strength, our core aggregation was faster at that time, but the peripheral system was not enough, and the growth in 2017 was too fast to keep up. At that time, we were worried that if a very bullish bull market came in 2018, Binance would be very stuck and we might lose our leading position instead.

So in 2018, all I communicated to the internal is to improve performance and expand the system, the bull market will come, don’t worry. Personally, I had experienced a bear market before, and my psychological quality was already very good at that time.

Late: So the bear market that started in early 2018 was a favorable external environment for Binance?

Zhao Changpeng: Yes, if it had continued to rise, we wouldn’t have been able to carry it, and we wouldn’t necessarily have Binance today.

Late: What is your forecast for future growth? What preparations will be made in advance?

Zhao Changpeng: We can’t predict the future at all. But we judge that the probability of user volume will rise again, and we should at least prepare for the scalability first. There is a possibility that it will not happen, then we will waste some money, not a big problem; but it happens, we can not waste the opportunity.

Evening Standard: Many new users are now flooding into the cryptocurrency market. Their risk awareness and trading skills may not be good, but exchanges like Binance and Firecoin can easily add leverage, and it’s easy to lose money with leverage. How do you deal with this problem?

Zhao Changpeng: Binance should be the only digital currency exchange that has a “responsible trading program”, which we call the responsible trading program. First, what do you think the odds are of losing money? If he writes less than 50%, we won’t let him play, you are not in the right mindset; second, if he loses money, whose responsibility does he think it is? If he thinks it’s someone else’s responsibility, the responsibility of Binance, then you don’t play, you go play spot.

Secondly, if it is a new retail trader, when he loses money to a certain level, our system will tell him not to trade anymore and stop him from trading for 48 hours. I believe we are the only trading platform that blocks users from trading.

Evening Standard: How many people have you blocked in total? What is the cost of blocking?

Zhao Changpeng: I don’t have the data, there should be a lot of people, but this will not have much loss of revenue for us. Because this kind of user, he will only hurt himself, will not particularly help us. After being injured, he will still stop, just stop early and stop late. We let him stop a day earlier, he loses less money, we earn a few dozen less fees it does not matter, we retain long-term users. He learns how to make money, we will have more income.

Evening Standard: Exchange users are particularly concerned about the safety of the assets hosted with you. When Xu Mingxing, who was in charge of the OKEx exchange’s wallet keys, was investigated, it led to a mass panic among users. How do you manage the secret wallet keys?

Zhao Changpeng: Binance is now completely multi-signature mechanism and does not rely on a single person for a long time. Our largest wallet requires the signatures of 7 out of 15 people. They don’t know who these people are, they don’t know each other, and very few people know who all of them are. Binance withdrawals are completely independent of me, and I can’t even steal coins if I wanted to.

Late: But the mechanism still requires someone to coordinate in the middle, right? Will this bring some risks?

Zhao Changpeng: All the tools are used. The person who manages the wallet has a pop-up in his software for tasks that need to be handled. The people who do the operation management don’t know who is in charge of the wallet.

Late: How do you ensure that the people in the multi-signature list are not colluding with each other?

Zhao Changpeng: They get relatively high treatment from Binance, and we remove his willingness to try to steal first. And it’s not possible for just one person to steal, he has to collude with about 8 or 9 people. When he goes to inquire about who the others are, it is very easy to leak. It doesn’t matter if something happens to someone. The software can move people out and add new people in.

We will choose people who have some familiarity, are stable and reliable, have families with children, singles feel less stable. Location on the global distribution, as long as there is Internet on the line, but not all in one country or region, to prevent earthquakes, floods, disconnections. Now there is probably only one country in the world that does not have the Internet.


4 “You say I copied the Mercedes, but my car is 10 times faster than his”

What is the overall progress of your new direction of decentralized finance, outside of the current centralized exchanges?

Zhao Changpeng: The daily trading volume of BSC now exceeds that of Ether by about four or five times, and there are hundreds of ecological projects, but BSC has only been launched for more than nine months, and it has risen faster than we thought. In addition to BSC, we are also working on DEX (Decentralized Exchange), and we have invested in many projects in the ethereum and polka ecology.

For example, Uniswap, the decentralized exchange with the largest trading volume, is an ethereal ecological project, why did you launch BSC in September last year instead of using something ready-made?

Zhao Changpeng: Let me explain, BSC is not made by us. When we did BNB on our own, we slowly cooperated with the community a lot. So when it came to BSC, a group of people in the community came to us and said they wanted to make a smart contract chain, close to Ether, and hoped we would give them a sum of money. They were willing to use BNB as the main coin of the chain, and any transactions on the chain would use BNB afterwards, which was good for Binance because we were the largest holder of BNB.

So BSC I have very little involvement, it’s a community project, just the developers are not very willing to show up, actually I didn’t do anything, I don’t have that ability.

Late: Is there no conflict between Binance’s centralized holdings of BNB and BSC’s declared direction of decentralized community?

Zhao Changpeng: There are two parts to this: is BNB very centralized? Yes. But it is a fee that we earn through our services. When we first issued BNB, we left 40% for the team, but because Binance quickly reached profitability, we never spent or sold this part of the coin and promised to destroy it all afterwards. This is not the same as other coin issuance mechanisms, so you can consider whether we are too centralized.

Secondly, the value of BSC is only greater after it is completely decentralized, the market value of the whole BNB will be higher, and the network effect of attracting users will be greater. So in terms of interest-driven, we want to decentralize, and we are doing so.

Also, if there is a centralized organization holding a lot of coins, that’s not a bad thing, we’re not going to hurt the community and smash the board, which costs a huge amount and doesn’t do us any good.

Late: Some people may feel that Ether is a more ideal state for blockchain projects, it is more decentralized and its founder Vitalik does not hold too much Ether, will this be the direction BSC wants to develop?

Zhao Changpeng: Our understanding is not like this. Maybe many people think that in this coin, everyone has a little bit more fair. But if only small fish come in and no whales come in, there may be only one reason why big institutions don’t see it.

Around 2017, Vitalik sold a part of Ether for $30 million, which may mean he was particularly fair, or it may mean he valued dollars more at that time.

Why we are not willing to take dollars and willing to take BNB?

Evening News: The outside world thinks BSC is the benchmark of Ether, how do you see the competition between the two?

Zhao Changpeng: I don’t think BSC is competing with Ether. Now the people who use Ether and BSC are not the same.

Some people prefer ethereum because Vitalik takes less coins and is more decentralized. But their fees are more expensive, and to be honest, they are very expensive. It’s $10 for a transfer, and hundreds of dollars for a more complex contract. Unless you’re doing millions of transactions at a time, you can’t pay the fees.

In Southeast Asia, India and Africa, there are many users at the bottom of the pyramid, and there are many of them, so we can provide them with a cheaper network, so that more people can use and enter the blockchain.

After BSC came up, the volume of Ether transactions didn’t get smaller, but it also stopped growing because it hit a technical bottleneck, and the maximum capacity of the network was 15 to 20 transactions per second. We’re slowly getting more because we haven’t hit the ceiling yet. So there is no competition, it’s just that we can now serve the users they couldn’t serve.

Evening Standard: Can’t the ethereum community make the technology evolve further?

Zhao Changpeng: Definitely, but it will take time. They have a different positioning from BSC, which has to be able to fully synchronize millions of ledgers and process millions of orders per second at the same time.

Recently I see Vitalik tweeting less, he should be on a retreat. I hope he can solve this problem, so that the whole industry will become bigger again.

Evening: BSC is faster and cheaper than Ether because there are fewer nodes to synchronize the ledger, right?

Zhao Changpeng: This is one of the aspects, we have 21 nodes. In addition, our nodes are bigger, our machine performance is higher, and we have made some changes in the architecture.

Many people say that BSC is not innovative, but just a copy of Ether, but in fact, a performance increase of tens or hundreds of times is an innovation. You say I copied Mercedes-Benz, but my car is 10 times faster than it, is that an innovation?

5 “Decentralization is shades of gray, not black and white”

Late Edition: There have been some different statements recently from governments about cryptocurrencies – some are very open to cryptocurrencies; some are on the harsh side; and others are incorporating cryptocurrencies into the existing regulatory system, such as the recent news that the U.S. Office of the Comptroller of the Currency (OCC), the Federal Reserve and the Federal Deposit Insurance Corporation are considering the creation of an “interdepartmental group” for cryptocurrency regulation. How do you think national attitudes will affect the global blockchain industry landscape?

Changpeng Zhao: Sorry, I won’t comment publicly on specific regulators and their policies, but Binance is definitely actively communicating with global regulators. The current terms are not quite the same in every country, which is good to see which terms are more conducive to development and to have multiple references.

Evening Standard: From your contacts, what are the common concerns of countries? What are some common ideas and perceptions of governments?

Zhao Changpeng: When we went to communicate two or three years ago, people asked if this stuff was for terrorists. It would be more humiliating to say that now, as if there is no common sense. Now they are more concerned about how to prevent money laundering and crime. In fact, the data on the blockchain is transparent, instead of better analysis and tracking. Some local regulation is pushing this stuff instead, and they suddenly understand that blockchain and cryptocurrencies are not making you more out of control, but making you more finely controlled.

Late Edition: How will government compliance claims affect cryptocurrencies? Freedom is seen as a major new value for cryptocurrencies.

Changpeng Zhao: There is a relationship between freedom and compliance, but it’s not a conflict.

I think compliance is still very important. There is a group of people in the blockchain, digital currency industry who are ultra-libertarian, who want no government, no police, just a group of people living on their own. I don’t think humans can be civilized to that extent. In a society with no government or police at all, how can everyone protect themselves and hire private security guards for all of them?
We still need some rules, and frankly, we still need some regulation.

But it may not be right to wait for people to set all the rules and then start doing the industry, because the rules are done for a while before they are figured out. Regulation needs cases. It’s impossible to tell you can do this and can’t do this in an industry that doesn’t exist yet and let the industry go.

Evening Standard: What type of government is more active in cryptocurrencies, and does it have to do with the size of the country or the type of economy?

Zhao Changpeng: I personally feel that in the first few years it was small countries because big countries are more complicated. In large countries like China and the U.S., if the rules are not set fine enough, there are a lot of people who take advantage of the loopholes. But the early stage of the industry, and you can hardly set a particularly fine. But for example, Bermuda, the entire country on 70,000 people, and a small district in Shanghai, he does not need to specify, on a case by case look, he can see over. And small countries do not need to protect their own currency, they do not care much about the impact, but think that this thing can help them to lead in new areas, such as financial technology.

Now it’s kind of the other way around, with several big countries competing. If China wants to make the yuan a global base currency, it could be very helpful for you to issue a central bank digital currency and for this thing to be accepted.

The Evening Standard: Do you think the digital currencies issued by central banks are real blockchain applications?

Zhao Changpeng: It’s very delicate here. The first version of digital currency issued by most central banks is still relatively centralized, it has an issuer, and this issuer can increase the issuance, can control the whole network, and can also reject some transactions. It does use blockchain technology, but most of its nodes are not publicly available. You say it is a blockchain, and it is, and you say it is not, and it is not. But I don’t think we need to get so hung up on the definition. Decentralization itself is also shades of gray, not black and white. For example, if you are particularly decentralized, but the fees are particularly expensive, this is not so easy to use, there are very fine trade-offs.

In the end it comes down to whether it’s secure enough, easy to use and free. If these are high, they will be used by many people; if they are low, unless you force people to use them, but it is too difficult to force people.

Evening Standard: What impact will a central bank digital currency have on digital currencies like Bitcoin that don’t have government backing?

Zhao Changpeng: For now these are two systems that have little impact on each other. But if there are opportunities for mutual compatibility in the future, it should spawn magical reactions.


6 “I’m not the one who killed the ball”

Late: Binance does not have a headquarters, all employees work from home, how do you ensure the operation?

Zhao Changpeng: We now have less than 3,000 people, located in more than 60 countries and regions around the world. We use various office software to collaborate remotely, such as Google Docs, Google Meet, etc.

Evening Standard: Do people ask to be paid in digital currency?

Changpeng Zhao: Recently, there are more requests. Because this year, BNB has gone up more.

Late: How do you pay taxes?

Zhao Changpeng: Everyone pays their share of personal income tax, and then all companies (Binance has different registered entities in multiple countries) need to pay the tax of the place where the company is registered. If you’re a community, you don’t necessarily have to pay taxes. The ethereum community doesn’t have the concept of paying taxes, but companies do.

Evening Standard: When describing Binance, you used the word “company”, so you are still a company?

Zhao Changpeng: We basically never use the word company internally, I just use this word when I talk to you because it is better to understand. We use the word “organization” internally. We also generally don’t use the word employee too much, it’s called team member.

A lot of the traditional Binance of the company doesn’t have it. We don’t need a headquarters or an office, we don’t need to be registered in a particular place. But we can get a group of people together to do things. We have trust and incentives between us.

Evening Standard: We understand that Binance is using both OKR and KPI, which are the most common management tools used by centralized companies.

Zhao Changpeng: Having goals doesn’t mean being centralized.

Evening Standard: How has your role changed since Binance developed?

Zhao Changpeng: Now I don’t do a lot of things by myself, it’s very inefficient to do it by myself. For example, in the past, I was sometimes asked for approval for marketing activities, but now I basically don’t have to intervene in marketing expenses below $3 million.

Now my biggest value in Binance is to gather the team, to attract strong people and to pull in external elites. That’s why I’m on the phone all day and spend a lot of time talking.

Late: You also spend a lot of time on social media, you tweet quite frequently.

Changpeng Zhao: Twitter is a tool for me to interact with the community. I talk on Twitter to help us do some promotion, and it also helps me understand the complaints or sentiments of the community.

In fact, I don’t like to show my face too much, but in order to promote BNB and BSC, sometimes I will dislike people from Ether, and deliberately stir up some trouble, and this kind of small skill is also used. It’s not necessarily a bad thing for them to scold back, it’s good for us when two people scold each other around a circle of people watching, when BSC is smaller than Ether.

Evening News: Your judgment on what to do and how to do it seems to be motivated by reasonableness and interest, and you will do it if you think there are benefits.

Changpeng Zhao: I have several responsibilities: I lead a team to get the job done and to make the whole thing bigger. This is not necessarily a responsibility, this is my mission, I now live to do something.

Although not every job in the breakdown I like, I especially like the overall mission of this thing. Based on this consideration, I can abstract myself to a degree that I can do whatever I should do, and my mood is very calm, not particularly excited and not particularly sad.

Late: How did this state of calmness come about?

Zhao Changpeng: It’s been like this since I was a child, my personality has always been very smooth, and I don’t know how. I have never yelled at anyone, including when Binance was stolen and lost its coins.

Late: Before founding Binance, you changed places a lot, staying in Jiangsu until you were 12 years old, then going to Vancouver with your family, working in Tokyo and New York, and starting your own business in Shanghai, how did this long-term migration affect you?

Changpeng Zhao: I really like the mix of different cultures, which helps Binance to be more global.

That’s what attracted me to Bitcoin in the first place. When I went to New York after working in Tokyo, I found that it was a lot of hassle to transfer money and the fees were very expensive. I don’t have that problem with Bitcoin, and it’s easy for me to understand that there’s more freedom and lower fees.

Late: Of all the places you’ve been, where has been the biggest influence on your personality and thoughts?

Changpeng Zhao: The most important part of my adolescence was in Canada. Canada is a country of immigrants, with people of all nationalities and nationalities. I played volleyball all the time, and I was the captain of the varsity team for four of the five years in high school. I had all kinds of people on the varsity team. I had good white friends, Korean friends, Indian friends and black friends. Some of my Chinese friends would complain about racism, but I never felt it.

Late Edition: What was your style on the court before? Aggressive, sharp, or did you bring everyone along for the ride?

Zhao Changpeng: Actually, the volleyball team captain is a bonding agent concept. He is usually the second passer, responsible for organizing and coordinating the whole field, not necessarily the strongest attacker. There are several people on our team who are taller than me, stronger than me, jump higher than me, and kill the ball harder. I’m not the one who kills the ball.

  • FIN – 

    [1] Binance is now trading close to $30 billion a day in spot volume, which is more than 5 times the volume of Coinbase, which went public a month and a half ago. coinbase’s current market cap is close to $50 billion, which would put Binance’s valuation well over $100 billion.

    [2] DeFi, Decentralized Finance, i.e. financial applications built on decentralized blockchain networks, such as decentralized exchanges, decentralized lending and so on. The security and credit of decentralized finance are not guaranteed by an institution, but by smart contracts and community mechanisms.

    [3] NFT, non-fungible token, is a digital currency that is indivisible and irreplaceable per token and can be tied to content such as paintings and music. It is currently used for trading of digital assets.

    [4] halved, according to the design of Satoshi Nakamoto, the inventor of Bitcoin, the number of bitcoins mined from a single block is halved every four years, which means the return for paying the same amount of arithmetic shrinks by 50 %.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/a-conversation-with-cz-zhao-changpeng-founder-of-binance-in-the-middle-of-cryptocurrency/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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