Changpeng Zhao: Binance has been investing in the future

秦晓峰

Odaily资深作者

@QinXiaofeng888

2021-01-07 11:19 (UTC+8)

This article is about 3836 words, reading the full article takes about 6 minutes

It's still early days in the industry, and Bitcoin is still a good buy.

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It's still early days in the industry, and Bitcoin is still a good buy.

Editor | Hao Fangzhou

Produced|Odaily

This event was initiated by Odaily and 36kr, co-hosted by Deepcoin, Conflux and Findora, BCA exclusive art empowerment, LBank, Cocos-BCX, 58COIN, Jubi Labs, ForTube, Biying, BiKi, Farmland, Bifrost, Mars Cloud Mining, AAX strategic support. We sincerely invite every pioneer, participant, and collaborator in the industry to join us in making a voice for the value blockchain. (Live room link:

In the first event in the morning, Odaily had a dialogue with Binance founder Changpeng Zhao (CZ).

Zhao Changpeng said that in the long run, decentralized exchanges (DEX) will have greater prospects for development, which is the future of industry development, and more centralized exchanges (CEX) will gradually be replaced. However, there are still many problems and deficiencies in DEX at present, such as security. For Binance, at present, DEX and CEX are both grasping and advancing together. If DEX increases faster in the future, Binance will adjust its focus accordingly.

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The following is the transcript of the conversation, organized by Odaily:

Odaily: DeFi is booming this year, and DEX led by Uniswap is on the rise. In fact, CZ has said many times that he believes in the development prospects of DEX. Standing at this juncture today, what do you think of the relationship between DEX and CEX in the future? What do you think the ending of the two will be like?

CZ：I think in the long run, DEX will definitely win in the end. If we take a long-term view, 10, 20, and 50 years later, there may still be centralized exchanges (CEX), but the scale may be very small. Just like now, the vast majority of people send emails, and physical mail only accounts for a small proportion.

Although it will take some time to transform from CEX to DEX, the trend of CEX is unstoppable and definitely the future. However, at present, CEX also has many problems, such as security. At present, most wallet solutions have relatively high technical requirements for users. Wallet products still need to be greatly improved so that ordinary people can safely hold coins. So I think, in the short term, this should be a bottleneck that hinders the development of DEX.

As far as Binance is concerned, we are currently focusing on both, promoting both DEX and CEX, allowing users to choose by themselves. At a certain stage, if DEX develops very fast and the user growth exceeds CEX, then our focus will be adjusted accordingly.

In the past year, DeFi has developed very well, but there are still many problems that need to be solved urgently. In the long run, DeFi will eventually move towards a brighter road.

Odaily: I can feel that BSC is very important in Binance's strategy in the near future. Binance has invested a lot of resources in this regard. Why does it attach so much importance to BSC? What is your long-term plan for BSC?

CZ：Binance Smart Chain (BSC) has been around since the beginning of this year. In fact, Binance began to develop Binance chain (Binance chain) as early as 2018, the development of decentralized exchanges or decentralized blockchains. Cycles are very long. But we have always felt that decentralized exchanges or decentralized financial services are the future, so when we launched our centralized exchange Binance, we have also been investing in decentralized technologies.

We may have a different philosophy from other centralized exchanges. We have been investing for the future. Other exchanges may hold on to this piece of cake because of the relatively high profits and user numbers of CEX. But our thinking is that we see what the future looks like, and we should subvert ourselves instead of waiting for the industry to subvert us. Therefore, we have always invested heavily in DEX, supported many community projects, and invested in them. We will invest in decentralized financial businesses for a long time.

In fact, in the ecosystem of BSC or BC, we are only a small part. At the beginning of the project development, we brought in many developers from the community and consulted them. Regardless of whether it is Ethereum, Bitcoin, or other currencies, we have contacts and cooperation with developers and development communities in various ecosystems. They have also done various operations on BSC. It’s just that our community may not be as big as Ethereum or other communities at present, but the number of users of Binance as a whole is very high, and we are quite optimistic about the future development prospects.

For BSC, we are also a big contributor, no matter in terms of manpower or finance, we have given a lot of support to the community. A few months ago, we passed a $100 million community support fund. As long as it is a project that is helpful to the community, we will give 100,000, 200,000, 300,000, and 500,000 US dollars as an incentive. We also now have Binance Labs, dedicated to supporting early developers. This money is given directly, and there is no discussion of shares or currency.

Therefore, I think the role of Binance is to activate the entire community, and the remaining core work development, etc., still needs to be done by the community. After the community can operate independently, we will continue to provide support within our capabilities. I believe that the entire Binance Smart Chain community will soon go far beyond Binance, and our contribution should be only a small part.

Odaily: You recently revealed that Binance’s profit this year is between 800 million and 1 billion US dollars, which is almost twice that of last year. Is the main growth in contract transactions? What are your plans for next year?

CZ：In fact, this profit figure was asked by a reporter from Bloomberg. I just estimated it in my head and said a figure. I didn't expect it to spread so widely.

A direct reason for the increase in profits is the increase in currency prices. Our income is mainly in BNB, but also in Bitcoin and other currencies. We will always hold these cryptocurrencies, and we will exchange some when we need to spend money, and rarely take legal currency. This also makes it difficult to calculate our profit at any time, because the price last year is different from the current price. According to the currency price at a certain time last year, we estimate that last year's profit was 500 million US dollars; but if it is based on today's currency price, last year's profit actually increased accordingly. It is also difficult to calculate in US dollars, because now the Federal Reserve is printing money, and the US dollar has depreciated by 30% compared to last year. But in general, this year's profit growth is certain.

Plus, Binance’s business has really grown. With the rise in prices this year, more users have poured into the encryption industry, which has also caused the systems of many exchanges in the industry to be overwhelmed. For us, the business volume in 2020 will definitely increase. The overall business volume has more than doubled, and some businesses have reached 5-10 times, but our fees have been reduced instead.

In fact, Binance does not have any specific plans for next year. We have always had a relatively loose management model, and everyone has a lot of freedom. Starting a project on Binance is relatively simple. Everyone can do whatever they want, but they have to produce results. If we can’t do it for a while, we may stop the project.

Binance should be a very decentralized model, with personnel distributed and not managed from top to bottom. It's not that CZ said what is the strategy for this year, list 3 or 5, and then subdivide each level.

Although there is no long-term plan, the price of Bitcoin continues to break through new highs and may continue to rise. Then our biggest short-term goal is to be able to withstand the next wave of traffic. The pressure of a large number of users on the system is still very high of. We want to ensure the stability, security and applicability of the system.

Next year, our core business will continue, and we will also try several new areas, such as payment. We now have Binance Card, we may spend more effort on payment, and continue to promote decentralized applications and businesses.

Odaily: The biggest topic in the industry this year must be Bitcoin’s breakthrough to a record high, and Grayscale keeps increasing its holdings. Many traditional investors who once bad-mouthed Bitcoin have chosen to reduce their holdings of gold and invest in Bitcoin this year. What do you think? Looking at this time window, how does Binance maximize its influence in the traditional world?

CZ：The products and services provided by Binance are open to everyone. We hope that our products are the safest and most stable, and we have not developed some products specifically for traditional finance.

At present, the traditional financial industry in various countries has different policies on encryption. The United States has some compliance requirements for custody insurance, etc. Currently, Binance Us also has some products that meet the requirements in this regard. The requirements of other national institutions are not so clear. They can easily invest their assets in digital currency, so they should learn how to manage currency safely and so on.

In fact, traditional institutions have a deeper understanding of finance. They realize that the legal currency is depreciating rapidly, and they must find other targets for investment. Gold is a good target, but there are also many restrictions: gold is not convenient to carry, trade, cut...

In contrast, digital currency has great advantages in this regard, and has gradually been understood by everyone. From an institutional point of view this year, their perception of digital currency should have completely changed. The rise of Bitcoin this year is largely due to the fact that a small number of institutions have converted a small portion of the company’s assets into digital currencies, which has led to a rise, and some institutions are even silently buying. So from the perspective of the industry as a whole, I have always been very optimistic.

Odaily: Will some traditional bigwigs come to you for advice on when to buy Bitcoin?

CZ：Yes, indeed many people ask me. But I am not good at trading, and I am not sure when is the best time to buy, because short-term price fluctuations are very difficult to judge. From my personal point of view, you can buy Bitcoin at any time. In fact, we are still in the early stage of the industry. We are now equivalent to the Internet in 2000, so there is still a lot of room for development in the future.

Many people ask me this question, and I usually tell him that if you have money, you can buy it now, but the risk must be well controlled, and you should not use the money you have to pay rent this month to buy Bitcoin, because the price fluctuates within a month What will happen is very difficult to judge. But if your money can be put there for 2 or 5 years, then you can invest now, I think there is no problem. If you don’t worry about food, clothing, or rent, then you should put a large part of your assets in digital currency. Just buy a few every month, and you don't need to catch high points, low points, or frequent transactions. Although frequent transactions will be better for our business volume growth, but we generally pay more attention to the number of users.

To sum up, it is still early days, just be a coin hoarding party. Now we look at the people who bought coins 5 years ago and think they are so lucky. I think 5 years later, when we look at people who buy coins today, we will still have the same evaluation.

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