Changpeng Zhao

The Meteoric Rise of Crypto Exchange Binance

The rise of Binance is one of the most astonishing stories in the blockchain space. Within less than a year of its launch, Binance has become the most popular crypto exchange trading over $2bn per day. In the past quarter, Binance made profits of $200m, likely the fastest company ever to reach this success.

Binance Founder and CEO Changpeng Zhao (“CZ”) joined us to discuss why he started Binance and the extraordinary organization they built. We discussed the role of the Binance token, how their strong commitment to values helped build a loyal community, and how he sees the organization evolve in the future.

Topics we discussed in this episode
  • CZ’s journey in the blockchain space from blockchain.info, to OKCoin to founding Binance
  • The astonishing rise of Binance to $200m/quarter profits in less than 1 year
  • How Binance went from deciding to do an ICO to finishing it in 2 weeks
  • Why strong values are a key differentiator for Binance
  • How Binance built a vibrant and loyal community
  • The critical role of the Binance token in its success
  • The principles CZ uses to run an efficient distributed organization
  • How regulatory competition is rapidly improving the conditions to build crypto companies
  • Binance’s plans to build a decentralized exchange
Transcript

Meher Roy: Today we have a very special guest on the show, Changpeng Zhao, who is the CEO of Binance. Many of our viewers and listeners probably have traded on Binance, which is a crypto to crypto exchange and we’ll talk to CZ as he’s gone about his story and founding Binance, how it grew and the challenges and opportunities for the future. CZ, welcome to the show.

Changpeng Zhao: Hi, guys. It’s my pleasure to be here.

Meher: Tell us a bit about how you got to be involved in the blockchain space and how you entered this space.

CZ: Sure. I think that goes back to mid-2013. A friend of mine, his name is Ron Cao. He asked me to look into Bitcoin and said it was kind of interesting and he also asked me to look into Ripple at the same time. So he’s the institutional investor into BTC China, one of the oldest exchanges to actually recently stopped operations. So that’s when I, that’s how I got into this, that’s how I got exposed to the Bitcoin industry back then. That’s what it’s called. And even back then, I was kind of interested to do, the first idea was, of course, for many people was to do like change. And I think back then, it was like Mt. Gox, I think, trade it’ll probably just stopped. So it was a bunch of various early, sort of very, very early exchanges. But somehow, I joined blockchain.info because I bumped into Roger Ver at the time. So that’s kind of the early start. And then, so that’s kind of how I got into this industry.

Brian: What was that like working at blockchain.info? What was your role there and what were kind of two things you learned about this industry from that experience?

CZ: Sure. Actually, there’s some really valuable insights from that experience. So I was the third person in. There was Ben Reeves, who’s the founder. There was Nicolas Cary who was the CEO, and then there was myself. So I was a third person in. Ben Reeves is a very smart guy but he’s a young kid that just wanted to focus on technology. He’s not a very social guy who doesn’t want to talk, he doesn’t like to talk too much. And blockchain.info back in those days has some very interesting properties. It’s a decentralized team. So when we had about 18 people, there were spread out in, I forgot, like a dozen countries that don’t have an office back then. They also don’t have a bank account. So everything was done in crypto in 2013. So that’s kind of, everything was done in Bitcoin back then, basically. I think Ethereum wasn’t even started. So that was probably one of the very unique companies back then and it kind of gives a very interesting exposure to be a pure crypto company. A company with no bank account, no offices, fully relatively decentralized. So we actually have adopted some of those philosophies into Binance even today.

Brian: I mean, this is definitely one of the topics I wanna speak a lot about, how Binance is run, but when you think back to blockchain.info, how well did this work? You know, this decentralized company and crypto only and what we’re setting up the pros and cons of that?

CZ: I mean, basically, in a decentralized fashion, they are, especially when the teams decentralized, there are some disadvantages and advantages. The advantages: you can hire people from all over the world. You’re not limited to your own talent pool. But there’s some very interesting disadvantages. Everybody’s in a different time zone. Just trying to get a meeting together takes a few emails back and forth. And then usually takes a day to organize a meeting because people are spread around all different kinds of time zones, so the efficiency actually does go down and especially if you have to make decisions or discussions or stuff like that. It’s a little bit difficult. And there are ways to overcome it. Basically, you gotta have, you’ve got to empower the people, so each individual can make a relatively large number of decisions and they can be siloed off. So there are different tradeoffs and different ways to sort of run this kind of operation. And you also need guys who are very proactive, self-motivators, who were very proactive. So you want to find guys who are really into, who really like what I do, who are really into doing this stuff, so they don’t need to be asked what to do. They don’t need to be told what to do, they will just find stuff to do on their own. So there are some, there’s a lot of challenges. So it’s not a very simple, straightforward thing.

Brian: Do you feel that worked well at blockchain.info?

CZ: To be honest, I think that blockchain.info, at the beginning when we had a smaller team, it worked out well, but when the team got larger, I don’t think he worked out well. So I think basically, when the team got larger, if you don’t get, when a team is small, when the early founding teams are all very hardcore crypto guys, so they share their vision, they understand the vision, they kind worked very hard around it. But when you got a larger, when the team become larger, it’s kind of hard to make, well, I shouldn’t really comment, but I think in the last couple of years, I didn’t really follow blockchain.info very closely, but I think the speed of progress is a little bit slower than I expected, to be honest.

Brian: What was the decision for you to leave blockchain.info? How did you make that decision? How did you know it was the right time?

CZ: I’ve always been working on trading systems, mostly like trading systems for brokers, for the exchanges. So I’ve been working about 18 to 20 years now, so I’ve always been on the trading side. And blockchain.info is a blog, is power plus a wallet. And it wasn’t really aware of my specialty is. I mean, the technology is okay. And so in 2014, my current business partner, she joined OKCoin first. And then she recruited me, she said, hey, do you want to work on the exchange? And so I joined OKCoin as their third co-founder. So that’s how I left a blockchain.info.

Meher: So your experiences on the technology side to build technologies for exchanges at Bloomberg Futures Trading, it’s always been on that side, on the technology side?

CZ: Even when I was an intern, I worked at a company in Tokyo, who are working on trading systems related to the Tokyo Stock Exchange. Even before I graduated, I was interning, I was writing software, mostly C, C++ code for trading systems for Tokyo market. When I graduated, I took the same job, went back to the same company and then later I went to Bloomberg in New York. I was in charge of the Bloomberg Tradebook Futures’ development team. So I was working, managing a relatively sizable development team for Tradebook, for futures trading systems. I’ve always been working on the trading side of things. I was a developer, I was writing code and later on moved into management in Bloomberg. And then I went back to Shanghai to start my own company with a couple of other guys. And we were doing trading systems for brokers as well. So I’ve always been in this kind of field. So it took 20 years, basically. [Laughs]

Meher: You were at OKCoin and you were CTO there and then you work for OKCoin for around a year and you then left on some differences. Tell us about that experience.

CZ: So one of the key differences is that it’s a place where regulations change very quickly. And that’s basically, very high degrees of regulatory uncertainty. People are relatively short sighted. They would just want to make quick money. Basically if you have a 10-year plan and the regulation changes every three to six months and there’s a high degree of uncertainty, that 10-year plan usually doesn’t work very well. So people are forced to have a shorter-term vision. When you go with more and more short-term vision, people are more into short-term gains and they get into sort of questionable gray areas. And that’s kind of different from the values, or the values that I’ve been brought up from the international, from more of the international exposure. So I didn’t agree with a lot of other ways that our values are generated in there. So I left. I didn’t get, there’s a lot of decisions I didn’t really agree with. I won’t get into the details, but I just said, look, this is not really for me. And I left.

Brian: Yeah, I remember at the time reading about your departure because there was a lot of discussion around it, I think. Was there also a hack around then? I remember there was something where there was a lot of discussion around OKCoin and then kind of your departure as well came.

CZ: So the discussion came three months afterwards, over a contract between Roger Ver and OKCoin. It’s a contract that I facilitated when I was at OKCoin. But basically, when I left at the contract was reviewed by both parties and was fine. And three months later, it came out of nowhere saying a bunch of debates and so it is what it is.

Brian: So after OKCoin, you started your own company, right? Then the company is, as far as I understand, it was to focus on building exchange technology. So can you walk us through like what was the decision making or the thinking behind starting that company and how did it turn out?

CZ: Sure. So that company is called a BGTech in early 2015. And I thought about building exchange again and to be honest, I first thought about beauty in Bitcoin exchange, like STR to Bitcoin exchange, that’s what most exchanges are back then. And I looked around, I was missing, I had a couple tech guys who actually pin me and wanted to do something together and so we had the tech team, very small team, like a three-people team back then. But then we were missing the marketing and operations and customer support side of things. And when we were building, it was like, well, it’s going to be very hard for us to build this exchange, just only having a tech strength. So when we were talking with a couple of other guys who were, a couple of other people who are either already have exchanges or who we’re planning to build exchanges and they said, well, hey Changpeng, why don’t you just build a technology platform and we’ll buy from you?

And so that gave me an idea. I said, hey, we could sell the platform as a technology platform. So we kind of morphed the business into that only within a couple of months and we were selling systems. And then something happened in July 2017 where there was a lot of other, what we call cultural exchanges in China that basically trade stamps, art antiques and all this other crazy stuff. And they had a very archaic system, very slow. And they said, hey, Changpeng, you have this really fast system, can we use, can you adapt your system to our needs? Well, I said fine. That’s kind of what we do. And we adapted that. So in China, there was a peak, there was about 2000 of those types of exchanges. So over the next two years, we sold above 30 copies of our exchange system and it always provided us as a platform as a service, so people pay a monthly fee and they get to exchange system and we provide the back end, the front end, the mobile apps and everything. So we did that for two years, had 30 clients and so that’s the exchange system. We built from scratch. But when we built it, we wanted that system to be very high performance. So everything was engineered, everything is engineered and not like a script from the first cut of a prototype. It was always, if it’s something that’s really advanced, that’s really difficult, but can you improve the performance? We always took the longer route. So it took us a good two and a half years to build out that system. We actually stumbled on many problems during that two and a half years. And then at the end of two and a half years, actually what happened is the Chinese government shut down all of those cultural exchanges. So most of the business dried up, we all say, well, now we’re looking at Apollo network was pretty big when the early 2017. We said about now that market is quite big, we could do that. And so that’s how Binance was kind of conceptualize.

Meher: Wow. So what must have seemed like a disaster, like the Chinese government changing regulations turned out to be a blessing in disguise.

CZ: That happened to us a few times, actually. So we got lucky a lot of places. [Laughs]

Meher: Okay. That’s when you hit on the idea of crypto to crypto exchange. Now, the crypto to crypto exchanges are actually pretty old, they’ve been around since 2014, 2015, 2016. Didn’t you feel in 2017 that it was too late to start a crypto to crypto exchange?

CZ: So we actually, so in 2013, even back into blockchain.info, we had discussions about a crypto to crypto exchange. So we said the fiat to crypto is the bridge. And once you’re into crypto, you can do crypto to crypto. And so that was way back five years ago, so we discussed that. Of course the market wasn’t quite there, most of the ELDs at that time wasn’t really worth trading. So there was really only Bitcoin. I guess Ripple was there, people were using it. But so in 2015, we actually looked at that as well and that’s when I think Poloniex was just starting and they were quite small. We said, well, the volume is not that big. And in 2017 though, we looked at it again. They’re making a lot of money. They’re making millions of dollars a day, which is very impressive. But we look at the system, we said, well, we can definitely improve on that. And I talked with a couple of other guys, including [indiscernible 0:16:06], who used to be, who used to work at OKCoin now works for Fun [ph]. He said, look, if you guys build another crypto to crypto exchange that fast and that has customer service or decent customer service, we’re going to switch very quickly. So there was a lot of unsatisfied demand in the market. I think even today, there’s probably still unsatisfied demand. I mean, we’re not perfect. We have a lot of room to grow, so I think this market is still very new so it’s never too late. You just got to start and push forward.

Brian: Yeah. Often, it looks like that right there. So that, you know, in retrospect, you say, actually, this was very new, there were still lots of opportunity, but then at the time, you see all these other companies doing it, maybe I’m too late. Or you didn’t, I mean, I guess with your background and having built exchanges and if you always, if you see that, okay, there’s all of those things I can clearly do better. Maybe it was obvious that there was that opportunity there.

CZ: Yeah. Well, the way I view things, it’s actually a little bit different. I always think there are more opportunities in the future than there have been in the past. It’s just the opportunities may be slightly different. So we did a few things slightly differently. So it is a crypto to crypto exchange, but we made a user’s experience, there’s a lot of different, there’s a lot of small differences. So for the demo, we didn’t just focus on English where Poloniex, and then some of the other established players only had English interface. They pretty much only had a PC, a web client. So we said, okay, well, we got to do better, right? We’re gonna have multiple devices, we’re going to have an Android apps, iOS apps, we’re going to have native PC client, native Mac client. We’re going to do multiple languages. So we did, I think right now, we have about 10 languages. So we’re going to focus on countries that don’t speak English or English is not the main language. So there’s a lot of different ways you can play. And at the time, even at that time, I was pretty confident this is, there’s a lot of opportunity. But one thing I will say though, I thought it would take us a lot longer to become the world’s number one exchange, even when we started. And even like a week before we became the world’s number one exchange, I just thought it was going to take another, another good six months. So things, some of the things were surprise. Yeah.

Brian: I mean, it’s just something to point out here, right? We haven’t really highlighted this and some listeners may be aware of this, but I’m sure many others are not. So Binance is a company, right? So you talked about July 2017 when Binance started. Of course, there was some work before that kind of accelerated this, but still it’s less than a year. And in last quarter, you guys made a profit of $200 million dollars. So the quarterly profit of $200 million in less than a year of operation. I mean, this is absolutely insane in a way. And before the show, I was briefly asking you because I haven’t ever heard of a company that so quickly reached such a level of profitability, so it seems that it may well be the fastest company in the history of all companies to reach that level of profitability in such a short time. And then of course, also in terms of company growth, I think you’re 200 or 300 employees at this point, maybe already more, in such a, you know, less than a year. So it just completely insane growth and an insane business that you’ve built in incredibly short time.

CZ: Yeah. I think a lot of that is surprising to us as well, I think. But there’s a lot of factors contributing to it though. I think, basically, companies will continue to grow faster and faster because now the technology, the Internet is there, ecommerce is there, and then crypto is there. So there’s a lot of things that facilitate, there’s a lot of things other people have built which ensures much higher freedom and the foundations are much more solid. So company also will continue to become faster and faster. But I think also, one of the things we were lucky on is basically, we are—exchanges are a very special type of business where we’re kind of in the center of the value exchange and we got lucky a lot of places. I think our product is superior and we have a service as decent and we also, our value proposition or not our proposition, our current values system. So like what we believe in kind of rings very true with the community. So I think that helped us, that help people to understand what we do, why we do it, and they agree with our mission, with our principles, so they agree with why we do it. And so that kind of help people to be more loyal or more, to us as well. So there’s a combination of different factors that helps, but I think there’s a lot of luck too. So I think we just started doing the right thing at the right time and the market exploded. So if everything starts over again, I’m not sure if it’s going to be the same result, to be honest.

Meher: [Laughs] Super interesting. So you mentioned in your previous answer, value system. What is the value system that you focus Binance on?

CZ: Sure. I think basically, our value is to spread the freedom. So I think, basically, crypto offers a different level of freedom in terms of investments, exchange of value and holding different assets. So it’s this freedom that we think are very beneficial to the society and it’s spreading this freedom, that’s our core mission. So this is what we focus on and we actually haven’t really talked about this a lot in a lot of detail to our users and we have always emphasizing protecting user benefits. So this is something that we don’t really say, but we actually do, and people understand it. So people, actually, a lot of our users tell us that, okay, you guys really take our interest in, you guys do really understand, you guys are really working hard to protect us. So I think that kind of message, that kind of stuff helps. It’s very important to build a very strong community. So I think we probably have one of the most loyal and most supportive communities of any business. So we have guys working, we have a lot of guys working for us basically for free on volunteer basis. We just give them recognition and we give them access to our team and that’s all and they are, and actually most of them are financially free and some of them are financially free because of us, because they buy into the Binance coins early on. So we now have like financially free, wealthy people working as volunteers helping our other users. So it’s a very unique, it’s a very unique situation, but I think, that’s only part—and other people have tried to copy that model. But you can’t copy that model unless you have that kind of mission, unless you have that kind of value system. So I think that’s kind of unique right now.

Brian: So you mentioned this focus on spreading freedom and on protecting your users. But you said you guys didn’t actually talk so much about this, but can you give some examples of decisions you’ve made, or you know, maybe one could’ve gone or could have taken the decision to, you know, in favor of freedom, of protecting music benefits, you know, that actually created that culture. Like what were some of the critical decisions that you had to make to create this?

CZ: Sure, yeah. There’s some very clear decisions when I look back. So the first one came about two months, a month and a half-ish after we went live. So back then, so this is September, early September, Chinese governments that any ICO projects should return the funds to the investors to the extent basically possible. They didn’t say how you do it, so because of the news, the price of most ICO coins actually dropped and so now the investors are actually losing money and now they got to return the funds to the investors. Most projects don’t have, well, because the coins dropped in price, they actually don’t have more money to make up the difference. So for the ICOs that we facilitated during that time, there was five projects. We actually set as a platform not our own coin, like this is other people’s coins. So we said we will cover the differences to return that to the investors. We calculated how much it would cost us at that time. It’s going cost us, it costed us actually about $6 million in total. This is back when we were one month and a half old. So we didn’t have as much money as we had today. So we looked at our financials, we raised $15 million, $15 million in the ICO. We spent quite a bunch of it already and we now, we had, I think we had about, I don’t know, we had some money, we were able to cover it, but it was 6 million is a big chunk of this, of the savings that we had. But we said, okay, no, we got to protect our users, we’re going to make up the difference. We will cover the costs, we’ll cover the differences even for coins that’s not related to our project.

So when we did that, the Chinese, and this is mostly in China back then, so the Chinese community loved us. They were like, they were, everyone was saying, we were setting the gold standard, the new standard for how to protect users. And when the other exchanges in China got shut down and all the users, guess where they went? They all came to us. So it actually worked out in the long run. It worked out very well in the long run. But at the time, it was a really tough decision. And if things continue to go bad, we could be out of business, right? So we didn’t know what, how the regulators are going to play out. So that’s a very clear example of how some of the difficult decisions have been made, but we always follow our principles. So we have a principle and we make the decisions according to that principle.

Brian: Now, this is amazing. Yeah. And I can imagine that decision, right? Let’s say you raise $50 million, you spend it on something like that, and then if 50 percent of your money, because okay, this is you feel like the right way. And obviously, at that point, if it goes wrong, you also have the people who invested in your token sale and your ICO, right? They would then also suffer. So that’s very impressive. And I can see that will be a very powerful decision to also establish that culture in community.

CZ: Yeah. And also, so today, we make a lot of those kinds of decisions without my involvement anymore. So once you have the mission and value system established, now the team knows what decisions, how to make decisions, so they just make decisions on their own according to those kinds of values. So a lot of times, those kind of decisions, they just make it all their own.

Meher: So you did an ICO to fund Binance and you raised 15 million. So presumably, in this episode, you yourself would have been required to return that $15 million back to your original investors. So how were you able to spend 6 million when you yourself are returning 15?

CZ: So that’s another lucky break we had. By September, so a month and a half later, by early September, our coin actually went up 10x already. So we sold half of our coins and we still had half, like 40 percent of our coins and the coins we had actually, and we also collected trading fees in our own coin, in the Binance coin, and the coins we collected and the coins we had, which we actually ended up never touching, went up 10x. So now instead of the $15 million we raised, in theory, the $15 million we had sort of our own coins, roughly. The 15 million in Binance coins we had is now worth 150 million. So it wasn’t completely that we were okay, but we decided lock all 80 million of our coins. So we decided to lock up basically 100 percent of our coins. We didn’t really touch it. So we have some leeway. But we were, it was a bit easier because the Binance coin price already went up to 10x.

Brian: So what happened was that the Chinese said, okay, you have to return the money. And then so people have the coin and they go back to money, at least the Chinese people, that they spent on the coin, is that correct?

CZ: Well, no. They have to return the tokens that they bought with. And then the product team supposed to return the PTC or ETFs that day that they purchased with.

Brian: Okay. So basically, the Chinese said, okay, every project that did an ICO, they have to give the choice to the people that they can either keep the coin or they can return the coin and get their original money back. Is that what happened?

CZ: Well, I think the Chinese government didn’t say there was a choice. The Chinese government wanted to say everybody has to return everything. But then a lot of, for the coins that went up in value, nobody actually wanted to give it back. And you can’t force users, you can’t force individuals that way. You can force platforms and project teams because they’re kind of more identified entities. But for them, the Binance coins, it went up 10x in value and nobody would really want to return it. And if they did, we said, fine, we’ll just buy it back at a market value, which is fine for us. But the government forced the projects and the exchanges, but they couldn’t force the individuals.

Meher: Super interesting. So of course, this sort of brings back the question of why did you go from ICO in the first place, why not venture capital?

CZ: So when we first, I think we kind of conceptualized Binance the end of May in 2017, early June. So when, at that time, the first person, actually, the first outside person I actually talked to is Da Hongfei, the founder of NEO. He’s a very good friend of mine, been my friend for a few years. And we were all early blog centers in the Chinese community scene. So we’ve known each other for quite a few years. So he was actually, I said he’s the first guy I spoke to. And I said, look, Hongfei, I’m thinking about doing this exchange, crypto to crypto exchange. I think that’s pretty much all I said. And he said, okay, I want to invest. And so he was the very first investor in our organization, in Binance. And so at the time, we were thinking about going to the VC route. But then, at early June, I saw another project doing an ICO in China and I know the founder quite well. And he raised $15 million dollars in 10 days. And then mid-June, I went to a potluck dinner organized by Chandler Guo in Chongqing in China. And everybody there is talking about ICO and everybody there said, CZ, you got to do an ICO, you should do the ICO instead of doing VC funding. And when I saw the other ICO done in early June in 10 days, I know the funder really well. I thought to myself, wait a second, if this guy, if this team can raise $15 million in this period of time, I’m relatively confident I could as well. I mean, from a reputation, from an execution, from all, just from all around, I think I’m no worse. Then that team [laughs] said, okay, let’s try it. So we started. And then it worked out.

Meher: Would you say it was relatively easy ICO for you to do and easy to raise the 15 million?

CZ: So ICO process, looking back, was all relatively smooth, to be honest. But I wouldn’t say it’s easy. It was one of the most demanding two weeks off my career, I think. So just give me an idea. I lost about six kilos in that two weeks. [Laughs] So that’s just my body weight. So I did not sleep at all. And so what happened is basically, on June 14th, on the potluck dinner, everyone’s like, okay, CZ, you’ve got to do an ICO. I said fine, we’re going to do an ICO. So after that dinner, I made a call to my team who’s in a different location; and I just said, okay, we’re going to do an ICO and let’s start writing the whitepaper now and we need both Chinese and English versions. And that it was, I think, that was about 11 PM. And we kind of continued on until like 4 AM. And as we continue the next day. So for the next two or three days, we were just writing this thing. And we were writing the English and Chinese version at the same time. By June 17th, so three days later, we had both versions ready and with other advisors’ section. So, and then, I started emailing that version out to all my initial advisors. I think I got about 20 of them in about 24 hours. They basically all said, fine, I’ll be your advisor. And then we started doing our ICO and we did five sessions. Each session lasted about 10 to 15 minutes. So in total, we spent, in terms of the fundraising time, it took us about a really, literally six an hour-ish in total time to raise about 15 million, but it was spread out over two weeks.

But we wanted to raise most of our money on our own platform. So we actually, we programmed that platform, we measure people who register at our platform. First, we’ll get the ICO allocations. So we did a lot of programming. We did the initial site with a user database and everything else during that two weeks. And we actually had a couple hiccups as well. And originally, I thought about doing a round the world tour like we go in San Francisco, Europe, to do like roadshows, going to Shanghai, Shenzhen, Tokyo. We ended up not doing a single roadshow. So we stayed in, I stayed in the office the whole time. So instead, we did a few live streams. So we just used the internet, basically. So we didn’t really sleep much and there was a lot of, just so much stuff to cover. We started with, so we had a team of about 30 people, now for like 35-36 people. So we use that team to do this thing. But then there were so many questions from users. We created, I think we created about ten WeChat groups. Each group holding above only 500 people in about three days. And they were just like, so they’re just so much, there’s just so much going on. So that was from a demand, from a workload and demand perspective, I think that’s one of the toughest periods in terms of workload and there was just so much going on in that two weeks. But the good thing is, in two weeks, you raise 50 million, you’re done. And do, well, at least you’re not worried, you’re not too worried about money anymore. So it’s a very intense experience. But I think, for any serious entrepreneur who is serious about that project, that experience is definitely worth it.

Brian: So you basically went from potluck dinner, people talking about ICO and you’re like, okay, I want to do that and was that, you do that the next day or the same day? And then three days of whitepaper writing and then the ICO or like. And so the time from dinner to ICO actually running was how long?

CZ: I got back to the hotel at 10PM and I called the team, said we’re going to do that. We’re gonna do the ICO. And to be honest, some of the team members said, what’s the ICO? [Laughs] Actually, so before this, before I own an ICO, I’ve never participated in the ICO. I’ve never done one. I’ve never advised one. I’ve never bought an ICO coins before. So to me, like it was new, but I kind of, I at least kind of knew what ICO is. But to some of the team members, like I would say, please contribute to the whitepaper, they said what’s the ICO? So well, better read about it quickly. So, but we got started on the same night, and we just worked on until morning. And so three days later, after about sending iterations, about seven major iterations of the whitepaper, we kind of, we were happy with both the English and Chinese version. So, and then, so that was—so the potluck dinner was on June 14th and we finished the ICO on July 2nd. So that’s the whole process from the minute we decided to do it to like having $15 million equivalent of crypto in our wallets. And this actually, a couple of guys who were very influential in that decision making. So I met Kris, the founder of Monaco, in the potluck dinner on June 14th, in Tundu in China. I did not know him before then. So that’s the first time meeting him. He said he’s been, he was in the middle of his ICO, he’s already raised about $50 million. As he was talking, I was 20. And he said, look, from his decision to execution, it was 10 days. So he said, you can definitely do it in 10 days. I was like, seriously? So that was like evening, that was like afternoon, evening on June 14th, 2017. So and then he said, no, seriously, you can do it. And I talked to a bunch of other people. They all said, yeah. Okay, let’s do it. [Laughs]

Brian: I think this is a little bit of the answer to how did you manage to grow a company, you know, within less than a year from nothing to 200 million in revenues. Hundreds of employees, that speed of execution and decision making is just absolutely insane and extremely impressive to, you know, so quickly make that decision, move quickly, no time lost on anything. So yeah, hats off. That’s really something, right?

CZ: Yeah. So I can elaborate on that a little bit if you’re interested, basically. So one of the things, I think, is very critical is we really don’t waste a lot of time on decision making. We spend most of our time on execution. So while the unique structures in our team is people do give me a lot of respect. So basically, usually when I make a decision, people just execute. And they’re very strong in execution so they get things done and their execution is so much faster than—usually, when they say I’m done with something, it’s usually before I think they could be done with it. So they usually, they’re very strong on the execution side of things. So we have a very simple decision-making process and we don’t really dwell on it. And once we decided, we just execute. So that always been the Binance model. The other thing that’s very important is, there are a lot of times when we’re not exactly sure what, well, whether something we do will be beneficial or not, but we would experiment. We would just do it. And then some, a lot of times, those things happen.

So I’ll give you another example. For example, when Malta is a country I’m actually not too familiar with before, but we heard good things about that and it’s quite far away from Asia. But people recommended I slide there and meet a bunch of guys and find things out. But to me, it was like far away; things are unclear. I don’t really know anybody there, but I flew there to meet the guys and find out and that turned out to be a really good decision that helped us like literally a month later. So there’s a lot of those kinds of things where you just have to execute. So that’s kind of what we do.

Brian: You mentioned you guys use a very simple decision-making process. What’s that decision-making process?

CZ: So basically, I tell all my team, if you feel very comfortable with a decision you have to make, if you feel relatively confident about that decision, then just make it and just execute. And if you’re not too confident about the decision, then ask two or three people beside you, whoever that is. He might be a colleague, he might be a boss, he might your subordinate, it doesn’t matter. And if you’re really not sure, then ask me. I have a decision-making a philosophy that if I make like 80 percent good decisions, it’s usually okay. As long as the 20 percent decisions are not fatal, major decisions. So when I make major decisions, I usually consult somebody. But we also avoid large team decisions. So I specifically said, look, if your decision process involves more than like four people, that’s usually not good. That’s usually not a good way to make decisions. I feel like we never have like 10, 20 people in a room trying to make decisions. That’s usually bad. It wastes a lot of time and you make decisions that are usually compromises. So we are very, so we keep our decision process very simple. And sometimes, hey, look, if we make a not so good decision, we’ll kind of go sideways and all we got to do is make sure that we come back to our main trunk quickly enough. So that’s kind of what we do.

Meher: So now going back to this ICO, Binance actually took over the unique model with the ICO. Because in some senses at that point, you were building decentralized exchange and generally we tend to think that coins fit decentralized networks better than centralized exchange businesses. So you bridged the gap using a special model. So tell us what the model for Binance token is.

CZ: So I think Binance, the Binance coins is one of the first token that I know of that’s used for centralized business. And it’s used in such a way that it’s not so much a blockchain business. It’s not, our token is just ERC20 tokens, so far. And it’s used, it has benefits tied to our project. And actually, initially, some of our, some of the people that I consult say, you probably cannot do the ICO of this. Because you’re not doing blockchain, strictly, it’s not a blockchain project. You’re building a centralized exchange, which is a different. I kind of ignored that. I said, look, you have a digital blockchain token that people can trust and if it has an association with ERC project and your project as well, and this token will rise in value. I think that model will work. So we tied the token with utility on our platform. So basically, if you hold the token, I mean, when you use the token to pay, when you trade on our platform, we can deduct the trading fees from your token reserve and you’ll get a 50 percent discount. So we adopted that early model and later on, when we build, when we actually build a decentralized exchange like a blockchain based exchange and we can cover that token onto the native token on that blockchain. So we did that, and it was a relatively novel idea at the time. But to me, the economics makes total sense. Some people got it right away; some people asked a lot of questions. But I think so far, it kind of worked out pretty well. And now, a lot of people are copying our model, which is great. We want them to copy, from a token economics model, we want people to copy as much as they can.

Brian: Yeah. And one thing that you haven’t mentioned here in terms of the model is that Binance, the company, Binance company makes profits and those profits, first of all, unrelated to the token, although I guess some of them are, that you directly earn revenues in token. Because people pay less fees if they paid fees in token and then every quarter, you spend 20 percent of the profits in buying the Binance token and destroying it. I mean, that’s also very interesting model. Because it’s almost like a dividend, at least economically. Of course, it does have the downside of a dividend, which is dividends is probably like taxable income for the recipients. Whereas this would be a capital gain thing more. And then of course, it directly ties to the value of the token to the success of the company, which is clearly very powerful. So yeah, I think the token economics make a lot of sense of what you’ve created.

CZ: Yeah. So actually, a lot of people didn’t understand the burning part. So that’s a very interesting aspect of it because the advanced people, the advanced users or the block, the savvier investors, understanding right away, but there’s so much misconception around it. The burn, so every quarter, we use 20 percent of our profits and we burned that equivalent value in Binance coins. So as you said, that removes a lot of the problems like the taxation, the distribution mechanism, we have to pay network fees, transaction fees. So when we destroy a portion of it, that way, financially, it should be identical to distribute that dividend to other people. But then, mechanically, it’s not a dividend. So we are of course always free to destroy our own coins. Anybody can destroy their own coins if they wish to. When you destroy it, the total supply goes down and the Binance coins still have to represent the value it was representing before. So this is the exact opposite when you print more money, right? So when you do quantitative easing, you literally basically taking money away from everybody’s, people’s, every person’s bank account. And if you did that, people will complain. But when you print more money, people don’t complain for whatever reason, which I kind of don’t understand. Yeah. So that’s kind of our mechanism to do, to spread the benefits of our profits to the user, but without actually doing any, without doing the actual sending of money, we just burn what we have and that works out quite well. So I’m surprised not more people have copied that model. Many people have copied the buyback, but they don’t burn, which is kind of cheating.

Meher: But to me, this is an interesting question. So presumably, you have your company and that are shareholders and then you have the token and then there are token holders. And ultimately, in your model, it’s like if $1 is coming into our company as profit, this dollar must now be split into two communities, the token holders and shareholders, right? So 20 percent right now goes to the token holders and presumably, 80 percent goes to the shareholders. But in reality, for the shareholders, it’s reinvested and things like that. So now you have basically like these two communities and their interests might not always be the same. So doesn’t this model like create the basis, the fault line for a future conflict between these two communities?

CZ: These two points here, I kind of want to touch upon. Why is the shareholder versus coin holder a situation? So the coin holders hold the coins and we use, the profits going to the company and we use 20 percent of it to burn and which basically destroy that, which benefits the coin holders, you know, indirect way, but very financially applicable, right? But for the shareholders, they would tend the other 80 percent, we will tend the other 80 percent in the company and we either reinvest in the company development or at a later stage we may actually do a dividend payout, so which the shareholders will get directly. And also, the shareholders get a few different things for them, for Binance as a company. And if the company valuation goes up, the shareholders are benefited. The coin holders, they hold the coin and if the coin value rises up. So there’s a couple of different dynamics, right? So basically, for example, if the platform is doing well and one of the key metrics of doing well is the number of users. So let’s say the number of users increased quite a bit. So now, the trading commissions that has to be spent on the platform increases, which increases the utility value of the Binance coin. The Binance coin price will go up. When the Binance coin price goes up, the amount of coins that the team holds will go up. So the value, it increased the value to the company. For the shareholders, the platform value also goes up. So that’s another benefit to that. So there are different dynamics at play; but the shareholders don’t have the liquidity of the coin holders. So the shareholders, because we’re a private company and they don’t have that kind of liquidity, whereas the coin holders, they can pick and choose to sell their coins at any time on our exchange. So there’s some interesting dynamics. People still don’t really quite understand and to be honest, I think we’re still in early stages in this type of structure.

In terms of balancing the benefits, I think that’s a very simple thing. We very clearly promised what were the benefits or the Binance coins are, and we honor that very strictly. So we’ve got to make sure that we honor that and usually, probably, have been more. So we gave incentives to our coin holders very often. The basic part of it is obligation, right? So we make a promise, we’ve got to keep it. That’s just integrity, credibility and that’s very, very important. And then overtime, we do other stuff to sort of help our community grow. You can consider that as marketing dollars or helping the community, however you call it, including the amount of money that we said we’re going to cover the differences for the ICO returns, the $6 million. So that’s a decision that as a company, as a company operation, we will make us operation team. So how we spend our money, which affects our shareholder interest. But that’s a very common, typical, that’s like that exists in any company that doesn’t do an ICO. So for me, the separations are very clear and the different aspects of the balancing the benefits of the two parties are very easy to do. So that’s just our structure. You know, other structures maybe a little bit different. So we’ll see.

Meher: Maybe I can explain a situation and see how you would decide. So in any balance sheet, in any account statements. So there’s the statement, the balance sheet and there’s the cash flow statement. So that’s true for your company. Now, let’s say it’s 2020 and you’re making your account statement, so it’s early on in the year and you’re deciding, you’re making decisions that are going to impact the account statement for this 2020. Now, how much you are going to spend for research and development and determine what ends up as profit. So let’s say you make revenue of, right now it’s a $800 million in there and so let’s say you make a revenue of $2 billion. And whether you decide to spend $200 million in R&D or $500 million in R&D is going to determine what gets left as profit. And then, what they will get left as profit. 20 percent of that goes to the coin holders, right? So in some senses, you as CEO have decision making capability on R&D that is going to determine how much actually goes to the coin holders. Now the shareholders, obviously, wanted to do more in R&D because that might create a future product unrelated to the coin holder. So let’s say you have a different product idea that is not limited to the coin holders at all, but that will benefit the shareholders. The shareholders wanted to do more R&D but the coin holders rationally wanted to do less R&D because that is greater profits.

CZ: So I think with that kind of situation, what you described there is a very short-term vision for the coin holders. So, well, I think there’s two things, right? So we should not be, if we’re spending our profits on some other products unrelated to our coin, and that benefits our shareholders later and that does not benefit coin holders. That’s not good. So that’s just unethical, in my opinion. So that’s why you will see that we actually have included many other businesses in Binance and all of them have used by as coin. So we did not do another ICO. We did not do, so we actually have a media platform, we have an ICO platform. So all of our new businesses are directly tied to Binance coin. So I think basically, you should not use the profit, we should not use our profits from our exchange to do some other unrelated business that does not benefit our platform or basically our coin holders.

The second thing you describe is the coin holder just wants the price to go up without us doing any R&D work. That doesn’t really make sense, because if we don’t invest in our product, if we don’t make new features, if we don’t keep our products competitive and if we don’t innovate, over the long run, the coin price would drop, right? So basically, let’s say we just keep that platform, if we go to wide extreme, it’ll be quite easy to understand. Let’s say that we do no R&D, that’s not good for the coin holders. So let’s say we fire all of our developers and so now we can save costs. So now our profits will go up. But guess what? We will not be competitive. The Binance don’t come, we’ll stay exactly the same. We’ll just keep the operation team; and hoping that this way, you give us the highest profit for this quarter. But guess what happens next quarter? Our competitors are going to continue to improve and everybody’s going to go to them. And let’s say we want the maximum profits so we don’t want to reinvest, and we still don’t hire developers. Over like a couple months later, nobody will be using our platform. Guess what’s going to happen to the coin price? It will drop to zero. So I think in that, so what you described is just a long-term versus short-term gain and that applies equally to coin holders and shareholders. And if both of them wants the platform to be bigger, wants the platform to have more users more valuable, when the platform does that, both the coin price will go up and the shareholder value will go up. So I think that this form in the current situation for Binance, I don’t see we have that problem at all. So that’s kind of my view on that issue.

Brian: That makes sense. Now we talked a lot already about Binance. Now let’s move a little bit to some general topics now. In particular, one that’s very interesting is the topic of regulations. So you started in China, right? So regulations, even though early on shaped the company, right? And that it kind of shut down your customers. And then you decided to start Binance. So can you just run us through what are the different ways that regulation has kind of shaped the course off Binance up to this point?

CZ: Sure. I think different regulations affect us different ways. Basically, we have always adopted a stance where we will not go against any government, we will not go against any regulation. We will always be operating legally in any country, any jurisdiction. So if a country’s regulations are shaping that it does, either does not allow cryptocurrency businesses or exchanges, we weren’t playing move, we will move to a different country. And we want, we’re looking for countries that have favorable regulations. Interestingly, some of the negative regulations actually helped us a few times. [Laughs] So when the Chinese regulations said no more exchanges in China, they shut down all the exchanges in China. We luckily moved out right that before that. And that was a very lucky decision to be honest. When we stayed alive actually, a lot of users come to our platform and that helped us boost our initial user base. And then recently, this year, we are seeing a lot more countries who are realizing that favorable regulations towards the blockchain industry would encourage economic development.

And now this year, we’re seeing a lot more favorable regulation coming out. So now, exchanges, there are legal exchange license in many, many countries now including the US, including many other country, including Malta, including Bermuda, including, hopefully soon, Taiwan. So now, we have more, we have a lot more choices to go. Including Africa, Uganda, right? So the regulatory space is actually very, very important. But I think we have come past the point where all countries view blockchain or crypto as negative. I think now a lot of countries realize that this is positive. So now, I believe we’ll see more adoption, we’ll see more regulatory adoption and more positive regulatory changes in this space, which is going to be extremely beneficial for Binance. So for Binance, we are looking for countries who have, we’re always on the lookout for countries who are extremely positive towards blockchain. So Malta is extremely positive. I think Bermuda will become very positive very soon as well. So I think before, there was always a risk factor to us, like people kind of worry about regulations killing this industry, but I think that worry can be pretty much, that worry is gone. Right now, it’s just a matter of speed, how fast each country adopts blockchain regulations that are favorable. And I think there’s gonna be a lot of competition among different jurisdictions. So I think which will be very good for us.

Brian: So I certainly agree with you that a lot of different countries will see this as an opportunity to attract business and so we will not have to, you know, the whole world and all the country say no, but if you look at the US where there’s been a lot of attention around regulation right there, the US interpretation tends to be very broad. And now if, you know, they say, okay, let’s say somebody has US customers, you know, US regulations apply to them. And particularly if the ACC, this seems to be clearly the trend that they will treat many if not the vast majority of token sales as securities and you know, maybe down the line, tokens can become, you know, non-securities and tradable. But you know, of course, securities mean, you know, accredited investors, registration, all kinds of stuff like that. So I’m curious, how do you deal with that in Binance both regarding Binance token, but also regarding many of the tokens that will be traded on the platform, you know, to have that risk of potentially being classified as a security. And then of course, potentially having a regulatory risk towards Binance the company.

CZ: Sure. So for the security aspect of it, we take a very simple approach. We just ask projects’ teams to supply a legal opinion stating that they are not a security. So we leave that level to their lawyers. So they need to find a lawyer in whatever jurisdiction they are operating, or their teams are operating. And they basically got to have the legal opinions that they’re not a security. Even that can sometimes have issues because, for example, if the lawyers in one location and sometimes a different jurisdiction in different location may not honor the lawyer’s opinion, and then we will ask the project team to say, hey, look, can you get a second lawyer’s opinion if you need it. So that have happened so far, that have happened. So that’s a relatively easier problem for us to solve.

Your previous point about, basically, for example, a lot of the regulations right now, today, are overly strict and overly complex. I think what people don’t realize just yet is you can’t just copy the existing regulations into crypto. That approach is almost guaranteed to not work well. So it’s a very simple analogy to it. You don’t want a copy how you run a postal office into how you run an email, a web or an email server, right? So those are two different businesses. You can’t just move one set of management practices onto the next one. So you can’t manage the internet business the same way as you manage a traditional, say factory. But I think different regulators are now slowly understanding this. So I personally believe that the regulations have to adopt or the regulators or their regulatory approach have to adopt a new industry. You can’t just take the old one until the new one. Unfortunately, there are different forces at play. Of course, a lot of the regulatory bodies or the regulators, a lot of them may want to retain their power, their influence and et cetera. So there will be some missteps in this endeavor. Not everybody’s going to be making perfect decisions every time, but I think enough people will make good decisions and the competition will keep the industry going. So that’s just how evolution works. So I’m pretty confident at this point, basically.

Meher: What specifically attracted you to Malta?

CZ: Initially, it was one of our users on France who recommended me to go to Malta and meet with a bunch of relatively senior people. So I went there. But after going there, it becomes very, very clear. Malta understands the importance of leading the next tech revolution. So they understand. So Malta has traditionally been a financial hub. They were very forward in terms of a multiple financial regulations including the gaming, online gaming industry, including the online poker gambling industry as well. So they kind of understand that this type of industries and the traditional finance industries have been a little bit of a decline recently around the world and they kind of felt that as well. And as a relatively small country with limited natural resources, they understand they need to leverage their own management leadership or basically, management of the country, management of the industries well to be able to compete. So they understand this mentality, they have this mentality that they need to service the industry. So when I went there, it was very clear. From the prime minister down to the current party in power to the opposition party, to the ministry of finance, to the parliamentary secretary. Everyone wants to make this work. Everyone knows the importance of properly, healthily grow this blockchain industry. So when I went there, different to many other countries, there was the education that I have to do. I don’t have to tell them why, what is a blockchain, how transactions work, what is a token. They understood all of this and more, they know that this is important. They know this is good. So it was quite a very easy conversation. And after going there and seeing the proposed the bill that they had in place, after reading that, all the comments that I had to give them, was you’ve got to make this place a little bit stricter, you can’t be too loose here. So they were overly easy, actually, on the regulation. So it was quite an easy, it was quite an easy decision afterwards.

Meher: Very interesting. So, actually, this is the interesting piece that now with Binance, I hope Binance succeeds in order of magnitude bigger and we actually have, you know, like multibillion unicorn company that came out of an ICO. And so, you know, because these things will also set examples for the future, right? So from that sense also, I think as time progresses and successes, Binance emerges, maybe the value proposition is easier to communicate to the regulators as well. One of the final topics we’d like to get into on this show is the topic of decentralized exchange and Binance has plans up there. So many people think that in the medium to long-term, at least in the crypto to crypto space, exchanges between users will be decentralized rather than centralized as they are today. What are your thoughts on this topic and where the future lies for crypto to crypto exchanges?

CZ: Sure. So just back on your first point a little bit. Yeah. I am very honored to have Binance be the example people looking for on and learn, so that’s a really good thing. So we’re happy for that to happen. And I really want to see more and more unicorns are going through this model and I think we will see that very, very soon. I think we’re going to see many unicorns going through the ICO model, which may or may not be blockchain based projects. But the more startup, the more unicorns they are, the more quicker our overall economic or technology advancements are. So I’m very hopeful to that.

In terms of a decentralized exchanges, I think both centralized exchanges and decentralized exchanges will get this for quite a while. I think the decentralized exchanges in concept is quite good, but in practice or in real life, there are some shortcomings in terms of technology or what the technology capabilities are, and you will take a while for them to fully eliminate centralized exchanges. So for Binance, we are doing both, but of course, we do the centralized one first. So many, so conceptually, decentralized exchange has many benefits. The exchange does not have to hold custody of the users’ phones. The user can stay anonymous, everything happens on the blockchain so that there’s no regulation or there’ll be a little a regulation so it’s freer, or there’s higher degrees of freedom. But in reality, the current, when you have a blockchain, that means there’s a network of computers that need to synchronize with each other. That yourself by default will be slower than a single computer making a decision, save the results and you’re done. So for the foreseeable future, the centralized exchanges will always be faster. And also, from a competitive point of view, say if we want to do a decentralized Uber, right? So technically, it can be done. I think conceptually, it can be done. But guess what? If we have a centralized Uber right now, if the decentralized ones’ kind of gaining momentum, the centralized one could say, we’re going to run a campaign, we’re going to rebate $10 for every ride you take. And the decentralized one, it’s going to be, kind of hard to do that. So with a decentralized organization, you have to really plan ahead on how your ecosystem works and you can’t do this short-term, quick adjustments or marketing campaigns, free gifts, a lot of this stuff.

So technology wise, until the decentralized exchange becomes fast enough, they will not have the liquidity that centralized exchanges do, and liquidity matters a lot when you trade. High liquidity exchange, whether that’s very deep books, when you can buy or sell very large quantities without moving the price and which will basically save you a lot of money. So for the short-term, centralized exchanges will be there and they will serve different purposes. Over the long run, I think eventually, a decentralized exchange probably will become the norm when the technology gets better. So and we’re very happy for that to happen and we’re making our own decentralized exchanges, so we have multiple implementations of our decentralized exchange and we’re actually promoting other decentralized exchange implementations as well. So we want others to try to disrupt us and at the same time, we’re trying to disrupt ourselves so we’ll see how that goes, but I think that’s going to take a few years.

Brian: So this actually does kind of tie into something I wanted to ask about before but then didn’t get to. So you mentioned, okay, let’s say you have the decentralized Uber, then some of the decision making, let’s say marketing spend, you know, gets maybe more complex and of course, there is the idea of having, you know, decentralized autonomous organization, basically entire organization where the coin holders can participate in the decision making. And do you think in the long run, actually, Binance as a company, will also move towards a more decentralized model so that, you know, maybe it could be fully decentralized?

CZ: Yes, absolutely. We are trying very seriously to turn Binance from a company into a community. So, but I think this transition will take some time. So we first, turn it into from a pure company into like distributed teams, distributed people. Were walking around the globe on Binance. The second step would be, let’s say, we would want our Binance chain, they did our decentralized chain implementation to be live first. In the earlier versions of that, some of the decision makings or the governance of the development may still be lying heavily with a core team. But over time, we actually want to shift a lot of the governance out towards the community. So even today, even in our centralized exchange, we rely on a very large number of volunteers where we call Binance angels to sort of run, to run our community and our ecosystem, really. So we are exploring multiple ways both in the centralized and decentralized models to be more decentralized, to be more community based. So I think that’s going to be a theme we will continue to push. And in my mind, I’m really hoping five or ten years later, it will be a fully decentralized thing, where hopefully, I don’t have to do anything. [Laughs] Just hold my coins and do video interviews here and there, and the whole thing works itself, I’d be very happy. So that’s kind of the ultimate goal.

Meher: You mentioned that Binance might disrupt itself, like you might invest on decentralized exchanges and build some of your own. Do you have any thoughts on what the design for your decentralized exchange would look like?

CZ: Sure. So we encourage almost every kind of decentralized exchange and we’ll list them, we help them get liquidity, we promote them. But for the Binance chain, my philosophy is quite simple. We want to do a chain that issues tokens and trades tokens. So those are the two main features we want to do. So from my perspective, I think that’s very important. So our chain will not have a lot of complicated or advanced features like a lot of this other chains have really strong smart contracts, different meta platforms, side chains, they have all these bells and whistles. I think the Binance chain will be more focused on the actual exchange feature. So we want to be able to trade one token against another, but we want to focus more on performance and speed. It is my belief that for an exchange, performance is probably more important than the features. I mean, today, if you look at Binance exchange, we actually have less features than some of the other exchange platforms, but we are fast. And people like the fast, faster aspects of it. So that’s kind of, you know, not at a very high-level design decision that driving our chain design.

Brian: Okay. So you actually see the Binance chain and also functioning as kind of an ICO chain where you can issue tokens, you know, maybe a little bit like in Ethereum on ERC20 standard, which has been very powerful in issuing tokens and doing ICOs. So if you could do that on the Binance chain and I know you guys have done some work in helping people do ICOs, then you can issue them on there and trade them straight away.

CZ: So that’s exactly the idea. So with the Ethereum, you can do a lot more other stuff. The smart contracts, Solidity, you can do a lot of other stuff. So our aim is more of a specialized chain, issue tokens and trade tokens. And so we will not have all the bells and whistles of the Ethereum, but we probably want our blockchain to be faster in terms of, and a higher capacity in terms of processing capability.

Brian: Well, this is fascinating. So let’s do one last thing, one last question before we wrap up. So what are your thoughts on the crypto markets, where do you see things going in next year? Do you think we’re going to see a lot of growth for how is regulation going to affect this? What are your kind of expectations for how this space will evolve?

CZ: Sure. So I think in terms of regulations, as I said just a little bit earlier, I think we’ll see more and more countries adopting more and more favorable regulations and more and more smarter regulations or more fit regulations for the blockchain industry. So I think this will be extremely positive for the entire industry development and progress. From the ecosystem side, I think we will see a lot more coins. So I think more and more projects are going to, a lot more projects are going to use ICOs to raise money than a traditional VC route. So as a result of that, we’re going to see a lot more coins. With a lot more coins, we’re going to need the exchanges to provide liquidity to all of those coins or change between the coins. So I think exchanges will continue to provide a very important role. I think we’re going to see a lot more exchanges as well. And the other thing that’s, in terms of the ecosystem, we need to see a lot more wallet. Right now, I think there’s still a lot of re-improvements or room for improvement in the wallet space. We need different type of wallets. Hardware, software, more secure, industrial wallets that can handle millions of addresses, millions for transactions in one installation. So that aspect of it, I think we will see a lot more wallets. I think mining, mining is and industry I kind of understand but don’t really know them in detail and it’s a very big, very important industry. So I think things will continue to happen there, but I’m not an expert. We should see a lot more payment gateways, a lot more merchants, a lot more merchant adoption.

So I think, in all of these areas, we’ll see a lot more growth. I think basically, the currency exchanges are going to get probably hundred to a thousand times bigger over the next few years. And I think that’s mainly going to be as a result of the industry getting a thousand times bigger. And when the industry does that, the coin price is probably going to do similar things. So I don’t really want to make any sort of hard predictions on where the coin price is going to be, but I think we have a lot of room to grow.

Brian: Cool. Fantastic. Well, thanks so much for coming on. That was absolutely fascinating, interesting conversation and loved learning more about Binance and what you’ve built there. So thanks so much for joining us today.

CZ: Thank you very much for having me here. It’s a pleasure.

Brian: So of course, we’re going to have show notes, links to Binance and some of the resources around Binance if people want to learn more or use the platform and trade on that, so we list it to check out. And thanks so much for listening, for once again, tuning in. So we put out new episodes of Epicenter. Everybody can subscribe to the show in iTunes, SoundCloud, or your favorite podcast app or watch the videos on youtube.com/epicenterbitcoin. And yeah, if you want to support the show, you can leave an iTunes review. And otherwise, thanks so much for the support. We’ll be back next week.