Conversation with CZ from Binance: in between Crypto

本文编译转载自「 晚点LatePost

Conversation with Zhao Changpeng from Binance: in between Crypto

Decentralized, but not completely.  

Author | Duan Xu

Editor | Cheng Manqi

Conversation with CZ from Binance: in between Crypto

For most of the time during the recent year , CZ has stayed in a room less than 10 square meters in Singapore, connecting with the outside world online. 

This 44-year old Chinese Canadian, widely known as CZ, is the founder and CEO of the largest crypto exchange (Binance) in the world. He steers a hundred billion company in a cramped room in this tiny country[1].

Before the pandemic, CZ was “remotely controlling” Binance from everywhere: Japan, Malta, Uganda and Singapore. He traveled around countries and regions that have loose crypto policies, meeting local industry participants and governmental officials, including the President of Uganda and the Premier of Malta. 

The pandemic struck, and he stayed in Singapore, connecting with near 3,000 Binance team members from over 60 countries and regions via online conference tools. He equipped himself with a “large piece of equipment” – a green screen, in front of which he would stand during official online activities and substituted the room environment with a virtual background featuring the light yellow Binance logo.

CZ is not a typical figure in the crypto industry. Neither a firm believer, nor a fanatic evangelist, but this guy created Binance, and has huge power in the crypto world. 

He is characterized by his lack of characteristics. He’s got a buzz cut, medium height, medium body shape, which to some extent mirrors his way of thinking and acting: he’s the man walking in the middle in the blockchain industry. 

He was attracted to the crypto world by its “freedom”. Since he sold his house in Shanghai in 2014 and invested in Bitcoin, he gradually converted most of his assets to crypto. According to him, crypto makes up 99% of his assets. Since then, he hasn’t bought any house or other fixed assets, because they are “of poor liquidity”.  

While he cares a lot about freedom and liquidity, CZ has a positive view on governmental regulation on crypto. He claimed himself not a radical anarchist. He couldn’t image how the society can keep moving and how people can protect themselves without the government and police.  

Even Binance, the platform he created, is an “intermediate product”.

Binance is not a typical company. It has no headquarters, no offices. The 3,000 team members work from home all around the world. According to one Binance employee, he flew to the HR’s city and completed his on-boarding process in the HR’s home. 

However, Binance is neither a typical decentralized organization. It has its CEO CZ, its senior executives and all the reporting hierarchies. Binance employed both the OKR and the KPI systems, in which CZ determines his OKR, and the others break down his OKR into theirs – the same approach as adopted in most Internet companies under the OKR system.  

Behind all these middle paths and inclusion of conflicting things is CZ’s pragmatism. Decentralized or centralized, firm or hesitant – he doesn’t care much about these blockchain-specifievaluation criteria. He holds onto one standard on most things: is this reasonable, beneficial and necessary?  

For example, CZ is not a person who loves to stand in the spotlight, but he’s been very active on Twitter. He has 2.6 million followers, 700k more than Vitalik Buterin, the founder of Ethereum. He says that helps him communicate with users.  

To promote BSC (Binance Smart Chain, hereafter referred to as “BSC”), a key deployment of Binance in Decentralized Finance (hereafter referred to as DeFi), CZ would sometimes “attack” Ethereum on purpose , as a result of which people would think BSC is benchmarking Ethereum. “This could benefit BSC while it is still smaller than Ethereum.”

Take actions that are reasonable, practical and useful—- this is CZ’s standard. So he doesn’t cling to blockchain and crypto. He sold his house and bought crypto in 2014 as if he’s all in. But during the bear run in 2015~ 2017, he actually left the industry and went into cultural product trading, which was quite popular at that time. He established a company providing trading system for collectible stamps, currencies and phone cards. 

However, results show that not being all in doesn’t stop him and Binance from being successful in the crypto space. According to CZ, crypto exchange is not different from similar products in the past when it comes to core competitiveness: providing the best services for users. And being practical, inclusive and diverse helps them serve as many global users as possible. 

In the latest bullish run and market volatility, we talked with CZ about Bitcoin trends and valuation, Binance’s business transformation and organization management, as well as his observation on industrial regulation and how he feels in such a complicated environment.  

In 1989, the then 12-year old CZ left Jiangsu Province, China and moved to Vancouver, Canada with his family. We can find a lot of hints for what he achieved today in his past. During middle school years, he was the leader of the school volleyball team for 4 years. He said that he was more of an “adhesive” role on the playground – not the tallest, not the sharpest, not the “killer”, but the coordinator of the whole game. 

Conversation with CZ from Binance: in between Crypto

1 “Bitcoin is a new technological platform, not an asset”

LatePostSince April, Bitcoin has been dropping from its $65,000 high, and once reached $30,000. What’s your view on such high volatility? 

CZ: The market surges and plummets. It’s just how it worksI and people around me don’t care too much. 

LatePostAfter Bitcoin reached $50,000 in February, you said on Twitter: “for Bitcoin, $50,000 now is $10,000 soon. You’ll regret if you don’t buy it.” Why are you so optimistic about Bitcoin?

CZ: I’ve never predicted Bitcoin prince on Twitter. But the industry is still in very early stage, with only 1%~ 2% of the world population holding digital currencies. From this perspective, I think there are 50-100 folds of growth space.

LatePostOne of the prevailing opinions is that over-issuance of USD is an important driving force behind the bullish run later last year. Bitcoin surged not because it was a good money, but because the outside world was too bad. How do you see the reasons behind this bullish run? 

CZ: The over-issuance of USD did contributed a lot to crypto. 42% of the dollars were printed last year, and holding dollars means depreciating. So many American organizations started to buy Bitcoin.   

And there are industrial factors too. DeFi (Decentralized Finance) last year and NFT (Non-fungible Tokens) this year went popular, and there were many innovations around them. Besides, Bitcoin halved last year[4], and new coins(感觉币圈现在说token都特指以太坊项目上的代币了) came out much slower. No one is 100% sure which factor contributed the most.  

LatePostBefore the 2017 bull market, Bitcoin has accounted for over 80% of the total market cap of crypto. After 2018, this figure has dropped and been moving within the 30-70% range, currently slightly over 40%. How will the Bitcoin market dominance change subsequently in your opinion?  

CZ: From a long-term perspective, the Bitcoin market dominance will continue to decrease. Bitcoin is the first digital currency, it has a network effect, while barely playing the role of “global reservcurrency” in the digital currency world. However, itinnovation do not come out as rapidly as new projects, and sooner or later its market share will be taken over bit by bit by other projects, but I can’t say which project by now.

LatePostEven including Ethereum and BNB (Binance Coin), the token issued by Binance itself? 

CZ: Even them. Ethereum once had a chance. Because for all the things Bitcoin can do, it can. And it has a lot of innovations and an active community. But it came to performance bottleneck very soon. It is actual quite difficult for existing crypto currencies to surpass Bitcoin in market cap. Bitcoin is the most decentralized crypto because its founder is not present. 

LatePostBitcoin’s value is largely dependent on how people define it. What do you think Bitcoin is by nature? A currency, an asset, or something else?  

CZ: I think Bitcoin represents a new set of technologies. When the Internet emerged, people thought it was another way of communicating: we had telephone, radio, TV, and now the Internet. However, the Internet is actually a new technological platform. There will be internet version of radios, videos and social media. While the social media didn’t exist prior to the introduction of the Internet, the TV and radio are traditional things. So the Internet is not something parallel on the application layer, it is an underlying infrastructure. 

Blockchain and Bitcoin are underlying infrastructures, too. Inside digital currencies, there will be currencies, assets, securities, bonds and many other things, so this is a new platform, not some singular asset. Many people just have no idea how big it is. After a new platform comes into being, there will be a new version of everything traditional, plus many brand new things on top of it. 

LatePostBut it seems that the “many other things” are not existent yet. There is no “killer” application in the blockchain industry. Why?

CZ: The first reason is that the whole digital currency industry is still niche, so there is no popular killer application. 

Second, there are indeed some very good applications in the crypto market. For example, “Initial Coin Offering” (public offering of tradable tokens, similar to stock issuance) in 2017, I call it “global fundraising by blockchain”. This is a killer application. Before it, there were no way for entrepreneurs to raise funds globally. Imagine you are an individual investor in China, you are not able to invest in any early-stage projects in the U.S, such as Uber and Tesla. But through “Initial Coin Offering”, you can. And it is still in use. Of course, there are a lot of frauds, too. The recent NFT is another new model, allowing artists or content creators to monetize their works better. All these applications are not supported by traditional finance. 

2 “Do something, and get it right. That’s fine”

LatePostHow did you shift from traditional finance to crypto?

CZ: Around mid of 2013, I read the Bitcoin whitepaper. After learning about the technology, I thought it might work. But decentralization needs a community. I had to see whether such community exists, and what kind of people they are. So later in 2013, I went to Las Vegas for a summit, and all the industry leaders nowadays were there, including Vitalik

After I went there, I found that these kids are a group of sincere and hard-working people. I remember one guy who tried to teach me how to use a wallet. He transferred some tokens to me, back then worth around $300 (several thousand RMB), not so much, but definitely not a small amount. He just left those coins to me, and told me to use them to teach the next person. They are not some drug dealers like what were described in those newspapers. They are not scammers, they are just a group of geek kids

When I was at the airport, I said I would sell my house and buy Bitcoin. I shoulder quit my job and throw myself into this industry, even just coding. 

LatePostIs it worthwhile to sell your house just for a new opportunity you’re interested in?

CZ: Back to then that’s basically all I got. So I would concentrate them on one investment. I never told anyone else to all in, but I can bear the risks myself. In the worst case scenario where Bitcoin busts to zero, I would go back to bank industry. That’s fine. 

LatePostAre you still holding the Bitcoins you bought in 2014? Crypto went bear soon after that. 

CZ: Yes, I’m still holding them. I remember less than 1 year after I sold the house, the house prices in Shanghai grew a fold, and Bitcoin fell by 2/3. It was a 600% loss. I surely felt pressured then. Was everyone wrong? Or was I wrong? Of course it was me, from the perspective of probability. But I just couldn’t find out why, because I believed that’s the future. Looking back at the 2001 Internet bust, Amazon, eBay and Google fell by 98%. Everyone has gone through that.  

LatePostTo compare blockchain with the Internet, was that your thought back then, or your conclusion after the whole event? 

CZ: To be honest, it was the latter. One couldn’t see it clearly when one was in it. I was just thinking: how long sI suffer? 5 years? 10 years? Fortunately, it was less than 3 years.

LatePostHow do you allocate your assets now? Have you bought any houses or other fixed assets? 

CZ: Basically, 99% of my assets are cryptos, most of them in BNB, only a small portion in Bitcoin. I didn’t buy houses any more, they are lack of liquidity.   

LatePostYou sold your house and bought crypto in 2014 as if you are all in. But in 2015~ 2017 before you created Binance, you actually left the industry and joined Bijie Network Technology, a company providing trading system for collectible stamps, currencies and phone cards. Why did you do this? 

CZ: Bijie was planning to build a digital currency exchange in Japan, but then we found that it was very difficult if you don’t know any Japanese. Then stamps and antique exchange in China became popular and someone asked us if we could provide them exchange system. We said yes if you are willing to pay. We didn’t expect to launch an exchange until May 2017. 

LatePostWhat happened in May 2017? Why did you come back?

CZ: The most direct reason was I thought the bull was coming. The industry needed this, and building exchanges is what I’m good at. 

From a longer-term perspective, in the human history, whenever we were able to increase the freedom of something without compromising its security and accessibility, we brought the civilization a large step forward. I believed in the future decades, the freedom of money will be increased, and the security and accessibility of it will be maintained, or even enhanced. This is what Binance wants to achieve. We want to provide this industry with some underlying infrastructure and services.    

LatePostOne of the key reasons why blockchain technologies can bring more freedom and security to money is decentralization. But you were working for centralized companies, such as wallets and exchanges since 2014 until you built Binance. Why didn’t you go directly to blockchain-based decentralized projects?

CZ: I think we need to find the combination of three things: what you can do, what you like to do, and what values you can bring to others. Not everyone understands chips or know how to mine, or algorithms and blockchains. My experience was in the trading system, so the most reasonable choice to me was to continue building exchanges.  

LatePostExchanges can also be decentralized. Recently you said: decentralized exchanges will defeat centralized ones in the future 5-10 years. So you changed your mind again? 

CZ: Decentralized exchanges are indeed on fast track of development. But there are still gaps in terms of transaction volume and security coefficients between them and the centralized ones up until now. So there are barriers for most new comers.  

Of course, when you’re in the water, you’ll feel where the waves go. DeFi did bring pressure to I’m now more optimistic about decentralization than earlier. I think it is the future. 

LatePostMany people in the blockchain industry stick to their values and directions they chose. Some are committed to decentralization, some Bitcoin for payment, while others efficiency improvement; you seem more pragmatic on this, and choose to go with the trend. Some people may think you are not firm enough on what you believe. How do you see such personality in you? 

CZ: Any industry should allow the co-existence of people with different ideas and characteristics. I think as long as you do something, and get it right, that’s fine, no matter what your choice is. 

3 “If the 2018 bullish run continued, Binance might not become what it is today”

LatePostBinance has been the largest crypto exchange in the world in transaction volume. What do you think are the core competitiveness of Binance?  

CZ: I think it’s the user-centered value of Binance. This is reflected in some long- and short-term strategies, such as token selections upon launch and functional design of the products

We also put 10% of all transaction fee incomes to SAFU (Secure Asset Fund for Users) Fund to protect user interests and respond to extreme conditions. 

LatePostDuring extreme market volatilities, Binance, Coinbase and Huobi still encounter time-lags and downtimes, or “the token withdrawal function is temporarily closed due to traffic surge”. Some people believe the exchanges are manipulating behind all these so-called “breakdowns”. 

CZ: If you look at the transaction volume of Binance, it would be sufficient income just from the transaction fees. We don’t need to manipulate to earn short-term money. Smart people protect their long-term reputation.  

LatePostSince you have sufficient human resources and money, why didn’t you solve the downtime and time-lag issues?  

CZ: This is not easy. Ordinary users without much knowledge on the system would say: it would all be settled if you just buy more servers. If it’s a money problem, we would have solved it already.  

On traditional exchanges, such as Shanghai Stock Exchange and New York Stock Exchange, individual investors hand over their orders to the broker, and the broker forwards them to the exchange. An exchange normally serves hundreds of brokers. For us, we as an exchange is directly serving millions of users from all over the world. I think we are the largest financial matching market in the human history. It is a complete different magnitude of pressure on the system, and can’t be solved by just adding servers. What we have to do is to upsize a Boeing 838 by ten folds, but it is still one plane, and it still can fly. That’s where the difficulties lie. 

We are currently growing out of our own expectations in 2018. We are rolling out multiple optimizations. But as we grow, difficulties lie ahead. 

LatePostOuof your expectations in which aspects? 

 CZ: Mainly the user volume. It has grown far exceeding our expectation. In 2017, the peak price of Bitcoin was $20,000, and it climbed to over $50,000, by 2.5 folds. But the volume of active users has grown by 20 folds. We were expanding our system by 5 folds, 10 folds, but we could merely handle it. 

LatePostAs you mentioned before, this bullish run is characterized by institution entry. How did institution entry grow on your platform? Did you observe any entry by Chinese institution s? 

CZ: The overall number was increasing exponentially, especially in the past half year. Chinese organizations didn’t take up a large part of the whole market, while American organizations account for 80-90%. China is the opposite, individual users account for 80-90%. Even the billionaires in China are operating with their individual account. 

LatePostHow do you attract institutional users? 

CZ: Institutions have completely different requirements on APIs and transaction speed. For example, institutions are teams, there are bosses, team directors and small groups, each with different level of authorization, which we called “sub-account” function. Back in 2017, exchanges seldom had such function, neither did we. But now, we all have it.  

LatePostWhen did you start to prepare this? 

CZ: The sub-account function was launched around later 2018, when there was a bear market. We were preparing ourselves. Back then we were strong at core matching, but weak at peripheral systems, because we were growing too fast in 2017 and we couldn’t catch up. We were concerned that Binance might encounter time-lags and lose our leading position if a bull market were to come in 2018. 

So in 2018, all I told the team to do was to improve the performance and expand the system. The bull market would come and we need not have to worry. I’ve been through bear markets and has grown strong. 

LatePostSo the bear market beginning in early 2018 was, in the contrast, a favorable environment for Binance? 

CZ: Yes. If the prices kept going up, and we lost control, Binance may not become what it is today. 

LatePostWhat are your expectations for the future growth? What preparations will you do?  

CZ: We are not able to predict the future. But we think it’s highly possible that user number will continue to increase, so we need to at least prepare for capacity expansion. If it doesn’t happen, we’ll be wasting some money, and that’s ok; but if it does, we can’t miss the opportunity

LatePostCurrently, many new comers are flooding into the crypto market. They might not have proper risk awareness and trading techniques, but they can easily access high leverages on exchanges like Binance and Huobi, which might lead to significant loss. How do you deal with this problem? 

CZ: Binance might be the only digital currency exchange that has a “responsible trading program”. Firstly, if individual users trade options or futures on our platform, we will ask them two questions: 1. What do you think is the probability that you lose money? If his answer is lower than 50%, we won’t let him in, cause he doesn’t have the appropriate attitude; 2. If you lose money, who do you think should bear the responsibilities? If he thinks that Binance or any other party should bear the responsibilities, we won’t let him in. We will ask him to go to the spot market.

Secondly, if a new individual user is losing money to a certain extent, our system will tell him to stop trading, and block his transactions for 48 hours. I believe we are the only exchange that stops users from trading. 

LatePostHow many people have you stopped from trading? And what are the trade-offs? 

CZ: I don’t have the data, but I think the number is not small. But it won’t affect our revenues significantly, because such users can only hurt themselves rather than help us. He would stop trading, just sooner or later. If we ask him to stop early, he would lose less, and it’s totally fine for us to earn several dollars less. We will retain the long-term users. If they learn how to profit, we will profit more. 

LatePostUsers care a lot about the security of your platform as a custodian. When Xu Mingxing, who manages OKEx’s wallet keys was investigated, it caused a panic escape in the users. How do you manage the wallet keys? 

CZ: Binance is now using the multi-signature mechanism. We are not relying on individuals since very early. Our largest wallet requires the signatures of 7 people out of 15, and these people don’t know each other. And only very few people know all of them. All publicly known members from Binance, including me, are excluded from the signer list, so withdrawal on Binance has nothing to do with me, and I couldn’t steal anything from the platform. 

LatePostBut such mechanism does rely on some coordinator, right? Will that bring in risks? 

CZ: It purely relies on tools. Wallet managers will have their tasks pop up in the software, and operators don’t know who they are. 

LatePostHow to avoid collusion among people in the singer list? 

CZ: They’ve got very high pay from Binance, so we’re reducing their intentions to steal in the first place. And if he still does, he needs to collude with 8, 9 persons. He’s got high chance to be revealed while he’s trying to figure out who these people are. If someone’s revealed, it’s fine. The software will remove the person and add a new person. 

We will select people that we’re familiar with to a certain extent, who are stable and reliable, and who have a family and kids. Single persons might not be that stable. And these people will be distributed around the world, but not concentrated in a single country or region, just to prevent earthquakes, floods and Internet disconnection. Currently, perhaps there is only one country in the world that doesn’t have Internet access.   

4 “You accused me of copying Benz, but I’m 10 times faster than Benz”

LatePostBesides the existing centralized exchange, your new direction is DeFi. How is this going so far?  

CZ: Now the daily transaction volume on BSC is nearly 4, 5 times higher than on Ethereum. We now have hundreds of projects in the ecosystem, but we’ve just launched since 9 months ago. It is growing out of our expectation. Besides BSC, we are also building DEX (Decentralized Exchange), and we’ve invested in many projects on Ethereum and Polkadot

LatePostIn fact DeFi projects can also choose Ethereum. For example, Uniswap, the DEX with the largest trading volume, is an Ethereum project. Why don’t you just leverage existing resources, but launched BSC last September? 

CZ: Please allow me to explain. BSC is not our work. We were building cooperation relationships with the community when we were building BNB. So BSC was built by the community members. They said they wanted to build a smart contract chain similar to Ethereum, and ask for our funding. They were willing to use BNB as the native token of BSC, which means that BNB will be used in any transaction happening on BSC. And that’s beneficial to Binance, because we’re the largest holder of BNB.  

So I didn’t participate much in BSC. This is a community project, but its developers don’t like to stand in the spotlight. I did nothing actually. I’m just not competent enough to achieve all that.  

LatePostIs Binance’s centralized holding of BNB not conflicting with the decentralization direction claimed by BSC? 

CZ: There are two questions to consider. Is BNB holding very centralized? Yes. But these are the transaction fees that we earned by providing services. When we first issued BNB, we reserved 40% for the team. But as Binance reached the profiting point very soon, we never spent or sold these tokens, and promised to burn them all. This is quite different from other token issuance mechanism, and regarding the question of whether we are over-centralized, you may have your own answer. 

Second, only after complete decentralization can BSC increase its value and BNB gain higher valuation, attracting users with a stronger network effect. So from the incentives perspective, we DO want to decentralize BSC, and that’s what we are doing.  

Besides, if a centralized institution holds a lot of tokens, it is not a bad thing. We will not hurt the community, or damage the market. This is very costly and will not do us any good.  

LatePostSome people think Ethereum is a more ideal blockchain because it is more distributed, and its founder Vitalik doesn’t hold too many ETH. Will BSC develop towards this? 

CZ: We are not thinking in this way. Maybe a lot of people think it is fairer for everyone to have some of the tokens. But if there are only small fish and no whales, there is only one reason: large organizations are not bullish about it. 

In around 2017, Vitalik sold some ETH for $30 million. It might be that he’s very fair, or he’s long on the USD.

Why are we holding BNB instead of USD? Because we believe in it. 

LatePostPeople think BSC is benchmarking Ethereum. How do you see the competition between the two? 

CZ: I don’t think BSC is competing with Ethereum. The existing users of the two blockchains are quite different. 

Some people prefer Ethereum because Vitalik is holding less ETH, or it is more decentralized, etc. But they are facing expensive fees, very expensive to be honest. It costs $10 to complete one transaction, and nearly $100 to use a more complicated contract. You won’t afford it unless you are trading on the million dollar level. 

However in Southeast Asia, India and Africa, there are a lot of users at the bottom of the pyramid. There is a huge number of them. And we’re providing them with a cheaper network, making blockchain accessible to more people. 

After BSC was launched, there was no decrease in trading volume on Ethereum, but there was no growth either. That’s because it was encountering bottlenecks in technologies. Its max. capacity is 15-20 transactions/s. And we are growing because we are yet to reach our higher limit. So there is no competition. It’s just that we are serving the people they are unable to serve.  

LatePostCan’t the Ethereum community further evolve their technologies? 

CZ: Yes, of course. But it takes time. They have a different positioning than BSC. They have to synchronize millions of ledgers, and process millions of orders every second. That’s very demanding on technologies and may not be achieved in recent years. 

Vitalik is posting less on Twitter now. I think he’s in seclusion. I really hope he can solve this problem, so that the industry can grow larger. 

LatePostBSC is faster and cheaper than Ethereum, is that because it is required to synchronize much less ledgers? 

CZ:  This is one reason. We have 21 nodes. And our nodes are larger, with higher mechanical performance. And we’ve made some changes on the architecture. 

Many people say BSC is not innovating, it is just copying Ethereum. But we’re improving the performance by tens and hundreds of times, and that’s innovation. You accused me of copying Benz, but I’m 10 times faster than Benz. Isn’t that an innovation? 

5 “Decentralization is grey, it’s not black or white”

LatePostRecently, governments are showing different attitudes towards crypto currency – some are very open to it; some are stricter; some are including it into the existing regulation system. For example, it is said that OCC, FED and FDIC are planning to establish an “inter-departmental panel” for crypto regulation. How do you think governmental attitudes will affect the global blockchain spectrum? 

CZ: Sorry, I don’t publicly comment on regulators and their policies. But Binance will actively communicate with regulators around the world. Currently, each country has their own policies, and this is a good thing, because we can subsequently see which ones are beneficial to the industry’s development. We’ve got many references

LatePostFrom your experience of interacting with regulators, which issues are of their common concern? What are some common thoughts and perceptions from the governments? 

CZ: When we met with them 2, 3 years ago, they asked if this was used by terrorists. It sounds quite ridiculous and lack of common sense when I bring it up now. Now they care more about AML and crimes. In fact, since data on blockchains are transparent, they are easier to track and analyze. Some local regulator are actually promoting such technologies, because they suddenly realized that blockchain and crypto are not making you lose control, but gain more detailed control.  

LatePostHow will the governments’ compliance requirements affect crypto? Freedom is deemed one of the main new values of crypto. 

CZ: Freedom is related with compliance to a certain extent, but they are not mutually conflicting. 

I think compliance is still very important. There are a few people in the blockchain and digital currency industry that are ultraliberals. They want to get rid of the government and the police, and live by themselves. I don’t think people can be that civilized. How can we protect ourselves in a world without governments and police? Should we all employ private guards? 

So we do need rules. And we do need regulations. 

But it doesn’t make sense, on the other hand, to develop an industry after all the rules are made. Because rules are tried out in practice. Regulations do need case studies, and it is impossible to develop an industry with people telling you what to do and what not to do when nothing has happened yet. 

LatePostWhat types of governments are more active on crypto? Is it related to the size of the country, or the economic model? 

CZ: I personally observed that small countries were more active in the previous few years, because larger countries have more complicated situations. In large countries like the U.S. and China, people will sneak some advantages if the rules are not made detailed enough. But it’s also very hard to make detailed rules in the early stage of an industry. Take Bermuda for example, it has a population of just 70,000, just the size of a residential block in Shanghai. They don’t need any regulations. They just review cases one by one, and they have the capacity to do that. And small countries don’t have to make large efforts to protect their currencies. They care less about conflicts, but believe that conflicts can help them gain leadership in new arenas, such as fin-tech. 

Now it’s kind of the reverse. The large countries are competing. If China wants RMB to become a basic global currency, it can just issue RMB in digital form, and that will be very helpful if it gets accepted. 

LatePostDo you think the digital currencies issued by central banks are truly blockchain applications? 

CZ: This is nuanced. In their first versionmost of digital currencies issued by central banks are relatively centralized. It has an issuer, who can increase the supply, control the whole network, and reject some transactions. They did use the blockchain technologies, but the nodes are not transparent. It could be regard as blockchain, it could be not. But I think it’s useless to argue on the definition. Decentralization is grey, it’s not black or white. If you are highly decentralized but charge very expensive fees, your blockchain is not so accessible. There are nuances in it. 

Ultimately, security, accessibility and freedom are what people look for. If a project does well in these aspects, it will become popular; but if not, you’ll have to force people to use it. But it’s never easy to force people. 

LatePostHow will central bank digital currencies affect digital currencies without governmental endorsement? 

CZ: They are two systems with limited mutual influence. But if there’s a chance for them to become mutually compatible, magical things will happen. 

6 “I’m not the killer in the game”

LatePostBinance doesn’t have headquarters and all employees work at home. How do you ensure the operation? 

CZ: We have less than 3,000 people, distributed in over 60 countries and regions around the world. We use office software, such as Google Docs and Google Meet to collaborate remotely.

LatePostDid someone ask to receive salaries in digital currency? 

CZ: Yes, and the number is increasing recently, because BNB is appreciating quite a lot. 

LatePostHow do you pay tax? 

CZ: Everyone pays their individual income tax, and all companies (Binance has registered entities in several countries) pay local taxes. If you are in a community, you may not be paying tax. For example, the Ethereum community is not paying tax. But companies pay tax. 

LatePostYou are using “company” to describe Binance. So you’re a company?

CZ: We almost never use the word “company” internally. I just used this word here for you to understand better. We use the word “organization” internally. And we also don’t use the word “employee” much. We use “team members”. 

Binance doesn’t have a lot of company traditions. We don’t need headquarters and offices, we don’t need to register somewhere. But we can gather a group of people and do things. We have trust and incentives between us. 

LatePostAs we know, Binance is using the OKR and KPI systems, which are commonly used by centralized companies. 

CZ: Having goals doesn’t mean centralization.  

LatePostAre there any changes in your role as Binance grows?  

CZ:  I won’t do a lot of things now, because that’s of very low efficiency. For example, I would approve and sign all marketing budgets before, but now only those of over $3 million.

Currently, my value lies in consolidating the team, retaining competitive talents and attracting elites to our team. So I’m spend most of my time calling, chatting with people. 

LatePostAnd you are spending quite some time on social media. You tweeted quite frequently. 

CZ: Twitter is my tool to interact with the community. I post to promote our projects, and to understand the community’s complains or sentiments. 

In fact, I don’t like to stand under the spotlight. But I would sometimes “attack” Ethereum to promote BNB and BSC. The tricks work quite well. And if they scold back, it’s not necessarily a bad thing. Having a group of people watching us fighting each other would be beneficial to BSC when it’s still smaller than Ethereum. 

LatePostIt seems that your judgement on what to do and how to do are all made based on rationality and interests. If you think something’s beneficial, you’ll do it.  

CZ: I have several responsibilities: I’m leading a team, I have to do it well and grow the business. Some of these may not be “responsibilities”, but they are my missions. I’m living to do these things.   

There are some works that I don’t like, but I really like the sense of mission of the whole thing. Based on that, I can abstract myself to an extent where I just do what I should do. I’m feeling peaceful, and there are no moments of extreme excitements or sorrow. 

LatePostHow did this state of tranquility come into being? 

CZ: I have quite a stable personality. I don’t know how, but I’ve been very stable since I was a child. I never scolded at people, including when Binance was hacked and tokens were stolen. 

LatePostYou’ve changed quite a lot of places before you created Binance. You lived in Jiangsu until 12, and went to Vancouver with your family. Your worked in Tokyo and New York, and you started your own business in Shanghai. How does such migration lifestyle affect you ?

CZ: I really like to live in mixed cultures. I think this is very helpful to grow Binance globally. 

And this is also one of the reasons why I was attracted by Bitcoin. When I finished my works in Tokyo and went to New York, I found it very troublesome to transfer the money, and I have to pay very high fees. With Bitcoin, I don’t have to worry about that, it’s freer, and cheaper, so it was very easy for me to understand it. 

LatePostOf all the places you’ve been to, which one has greater impact on your personalities and thinking? 

 CZ: I spent my adolescence in Canada. It is a country of immigrants, where people of different ethnics and nationalities live together. But kids from mainland China would mostly form a quite closed friend circle among themselves. I was an exception. I was playing volleyball and was the school team leader for 4 years out of the 5 years of middle school. There are different members in my team. So I have very good friends that are white, Korean, Indian and black. Some of my Chinese friends would complain about racism, but I never felt that. 

LatePostWhat’s your style in the game? You were the killer? The sharp one? Or you just led everyone to play? 

CZ: In fact, the leader of a volleyball team takes the role of “cohesive”. He should be a setter, who is responsible to coordinate the whole team. He may not be the sharpest one. There are quite a few kids on my team that are taller and stronger than me, jump higher than me, and more of a killer than me. I was not the killer.  

– FIN –

 [1] Currently, Binance is seeing nearly $30 billion in daily spot trading volume, which is over 5 times of that of Coinbase, the platform went public one and a half months ago. Coinbase is valued at around $50 billion. Based on that, Binance might be valued at over $100 billion.

 [2] DeFi (Decentralized Finance): financial applications based on decentralized blockchain networks, such as DEX, decentralized lending, etc. The security and credits of DeFi are not secured by some organization, but smart contracts and community mechanisms. 

 [3] NFT (non-fungible token): digital tokens that are not divisible or fungible. NFT can be bonded with paintings or music contents. Currently, NFT is used for digital currency trading. 

 [4]Halving: according to the design by Satoshi, the inventor of Bitcoin, The Bitcoins minted by single blocks will be halved every 4 years, which means that the rewards of the same amount of computing power will be reduced by 50%.