Changpeng Zhao on Ethereum, Solana and the Prospects of Crypto
Binance founder Changpeng Zhao (CZ) spoke in an interview with Colin Wu about the formation of the exchange, his views on the problems of Ethereum and Solana.
Binance founder Changpeng Zhao (CZ) spoke in an interview with Colin Wu about the formation of the exchange, his views on Ethereum's problems, the reasons behind the boom in the Solana meme token, and the outlook for the cryptocurrency industry.
Interview with Binance founder CZ
We discussed CZ's childhood and college experience; how Binance succeeded in just one year; whether FTX can be saved; CEX's listing dilemma; why Solana exploded; the difficulties Vitalik faced; the future development of the United States and... pic.twitter.com/hkzVB9Vcvt
According to CZ, he has fond memories of his childhood in China. His parents were teachers and the family lived mainly on university campuses. Their earnings ensured a fairly comfortable life and his father's business trips abroad brought a good additional income.
"Life was carefree when I was a child. Our family was not rich, but I did not feel the lack of money. I was happy with everything," Zhao said.
CZ's parents moved to Canada when he was 12. He noted that the financial situation did not worsen, but the family found themselves in the low-income group, even though they belonged to the middle class in their home country.
His mother was forced to work as a seamstress in a factory, as other jobs were precluded due to the language barrier. Her father found employment as a university assistant.
"The salary was not high, but the university provided a housing allowance. So we lived in a small house, which was actually more spacious than the one I lived in in China," CZ added.
In general, the family's income was close to the minimum, but it allowed them to cover basic needs without problems, he said.
Binance's Success
CZ pointed to the following main factors behind the rapid growth of Binance, which was founded in 2017:
its 20 years of experience in technology and trading, including five years in the crypto industry;
a skilled team and community support;
a customer-focused approach;
the ICO boom.
The majority of projects issuing tokens use the Ethereum ERC-20 standard. The dominant exchanges of the time, such as Coinbase, OKCoin and Huobi, were mainly focused on Bitcoin trading and did not pay enough attention to such assets.
At that time, Binance itself had launched BNB based on ERC-20, thus managing to initially support the standard and quickly become a platform for ICO coins, the entrepreneur pointed out.
According to him, in those years, users could wait up to two or three months for a response from the crypto exchanges' support service. From the outset, Binance had set a goal of responding to requests within 24 hours. Now, the response time has been reduced to five minutes, Zhao pointed out.
According to Chinese regulations, ICO projects had to return funds to investors if they operated at a loss. However, many token issuers listed on Binance lost money and failed to return investments to users.
The exchange team decided to cover the losses of the investors involved, which amounted to a total of USD 6 million. The amount represented 40 per cent of the newly raised $15 million, while the exchange itself had not yet turned a profit.
"These factors - our 'user first' approach, a strong product, timing and, of course, a bit of luck - allowed Binance to grow so quickly," CZ noted.
Challenges and Innovations
According to Zhao, one of the critical tasks since the exchange's inception has been ensuring the security of assets.
"Here's a little-known detail that many may have forgotten: in the first four months, from July to mid/end of October, all withdrawals from Binance were processed manually," CZ said.
The process took several hours, and overnight it was not done at all.
But the main problem at that time was still the performance of the rapidly growing platform, the entrepreneur admitted.
"Even though our matching engine was fast, the surrounding functionalities, such as registration, KYC, deposit and withdrawal systems, often became bottlenecks," he explained.
Zhao acknowledged the problem of low-capitalisation tokens being placed on large centralised platforms. Binance and other platforms favour more stable assets, while decentralised exchanges benefit from supporting volatile coins such as meme coins.
The CEX (centralised exchanges) can succeed in this growing segment, CZ believes. He sees innovation zones and direct support for assets in Web3 wallets as possible solutions.
As for the reasons for the meme token boom, the entrepreneur made his hypothesis:
"Solana had close ties to FTX, and after the latter collapsed, many people in the blockchain ecosystem who lost money and did not receive support from the exchange turned to Pump & Dump schemes."
In terms of regulation, CZ expressed confidence that centralised exchanges will increasingly seek compliance as they scale.
Implementing compliance solutions requires additional costs. Second-tier platforms, which are often quite large, avoid the restrictions imposed on industry leaders.
The heterogeneity of regulators' approach is a problem, but compliance with standards and regulations offers great opportunities for growth, he pointed out.
Zhao expressed the expectation that under Donald Trump's presidency, the US will create a more favourable regulatory environment for the industry. According to the entrepreneur, the regulation of cryptocurrencies in the world's largest economy will become "more progressive and clearer".
The Problems of Ethereum
Recently, criticism of the Ethereum Foundation and, personally, blockchain project co-founder Vitalik Buterin has been on the rise on social media. According to CZ, this is rather due to a public relations crisis.
"Ethereum is still very strong. If you look at market capitalisation, it is second only to Bitcoin. Solana's growth has been fast, but the numbers are still behind in terms of market value," he said.
Zhao was sceptical about Tron founder Justin Sun's recommendation to Buterin. He remarked that it sounds like a recommendation of a small project to a big platform.
"Frankly, Sun has always been a big fan of hype, and he's a good PR guy," CZ said.
Zhao urged tolerance for Buterin's controversial statement about his exclusive control of the project:
"His way of speaking may not be the most pleasant. He's a techie, so he's direct and rude, and he's young."
According to CZ, Buterin's contribution to Ethereum is "huge" and impossible to ignore.
Cryptocurrency Market Perspectives
Zhao did not predict the future price of Bitcoin, noting only that digital gold has not yet peaked.
He has high hopes for crypto initiatives under the Trump administration.
"I expect some positive developments in the near future. I've always been optimistic about the industry, even during the worst bear markets, and the same goes for bull market periods," CZ said.
He added that he does not expect a radical change in favourable policies towards the industry after Trump leaves office. Investors in cryptocurrencies have become a significant part of American society, whose interests cannot be ignored by any politician, Zhao pointed out.
Remember that in September 2024, the entrepreneur was released from prison after serving a four-month sentence in the US for money laundering and other illegal activities related to Binance.
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DeepSeek, a Chinese startup, is accused of stealing data from OpenAI to train its models. This has triggered reactions in the world of artificial intelligence and cryptocurrency, with significant impacts on stocks and the cryptocurrency market.
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Binance founder Changpeng Zhao (CZ) spoke in an interview with Colin Wu about the formation of the exchange, his views on Ethereum's problems, the reasons behind the boom in the Solana meme token, and the outlook for the cryptocurrency industry.
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Birth and Emigration
According to CZ, he has fond memories of his childhood in China. His parents were teachers and the family lived mainly on university campuses. Their earnings ensured a fairly comfortable life and his father's business trips abroad brought a good additional income.
CZ's parents moved to Canada when he was 12. He noted that the financial situation did not worsen, but the family found themselves in the low-income group, even though they belonged to the middle class in their home country.
His mother was forced to work as a seamstress in a factory, as other jobs were precluded due to the language barrier. Her father found employment as a university assistant.
In general, the family's income was close to the minimum, but it allowed them to cover basic needs without problems, he said.
Binance's Success
CZ pointed to the following main factors behind the rapid growth of Binance, which was founded in 2017:
The majority of projects issuing tokens use the Ethereum ERC-20 standard. The dominant exchanges of the time, such as Coinbase, OKCoin and Huobi, were mainly focused on Bitcoin trading and did not pay enough attention to such assets.
At that time, Binance itself had launched BNB based on ERC-20, thus managing to initially support the standard and quickly become a platform for ICO coins, the entrepreneur pointed out.
According to him, in those years, users could wait up to two or three months for a response from the crypto exchanges' support service. From the outset, Binance had set a goal of responding to requests within 24 hours. Now, the response time has been reduced to five minutes, Zhao pointed out.
According to Chinese regulations, ICO projects had to return funds to investors if they operated at a loss. However, many token issuers listed on Binance lost money and failed to return investments to users.
The exchange team decided to cover the losses of the investors involved, which amounted to a total of USD 6 million. The amount represented 40 per cent of the newly raised $15 million, while the exchange itself had not yet turned a profit.
Challenges and Innovations
According to Zhao, one of the critical tasks since the exchange's inception has been ensuring the security of assets.
The process took several hours, and overnight it was not done at all.
But the main problem at that time was still the performance of the rapidly growing platform, the entrepreneur admitted.
Zhao acknowledged the problem of low-capitalisation tokens being placed on large centralised platforms. Binance and other platforms favour more stable assets, while decentralised exchanges benefit from supporting volatile coins such as meme coins.
The CEX (centralised exchanges) can succeed in this growing segment, CZ believes. He sees innovation zones and direct support for assets in Web3 wallets as possible solutions.
As for the reasons for the meme token boom, the entrepreneur made his hypothesis:
In terms of regulation, CZ expressed confidence that centralised exchanges will increasingly seek compliance as they scale.
Implementing compliance solutions requires additional costs. Second-tier platforms, which are often quite large, avoid the restrictions imposed on industry leaders.
The heterogeneity of regulators' approach is a problem, but compliance with standards and regulations offers great opportunities for growth, he pointed out.
Zhao expressed the expectation that under Donald Trump's presidency, the US will create a more favourable regulatory environment for the industry. According to the entrepreneur, the regulation of cryptocurrencies in the world's largest economy will become "more progressive and clearer".
The Problems of Ethereum
Recently, criticism of the Ethereum Foundation and, personally, blockchain project co-founder Vitalik Buterin has been on the rise on social media. According to CZ, this is rather due to a public relations crisis.
Zhao was sceptical about Tron founder Justin Sun's recommendation to Buterin. He remarked that it sounds like a recommendation of a small project to a big platform.
Zhao urged tolerance for Buterin's controversial statement about his exclusive control of the project:
According to CZ, Buterin's contribution to Ethereum is "huge" and impossible to ignore.
Cryptocurrency Market Perspectives
Zhao did not predict the future price of Bitcoin, noting only that digital gold has not yet peaked.
He has high hopes for crypto initiatives under the Trump administration.
"I expect some positive developments in the near future. I've always been optimistic about the industry, even during the worst bear markets, and the same goes for bull market periods," CZ said.
He added that he does not expect a radical change in favourable policies towards the industry after Trump leaves office. Investors in cryptocurrencies have become a significant part of American society, whose interests cannot be ignored by any politician, Zhao pointed out.
Remember that in September 2024, the entrepreneur was released from prison after serving a four-month sentence in the US for money laundering and other illegal activities related to Binance.
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