On September 26th Binance’s CEO Changpeng Zhao was interviewed by 8BTC , a leading media platform for crypto and blockchain news in China. China Crypto News translated the whole interview for you and we hope you can find some value for yourself.
8BTC: Mr. Zhao, you mentioned in the Consensus Conference that hopefully there will be 5-10 fiat exchanges launched by Binance by this time next year. Could you tell us where these exchanges will be?
CZ: Well, Malta, Jersey and Liechtenstein are the ones with the relatively high probability for the moment. But I’d better not disclose the others for now because any premature disclosure of information may pose threats or obstacles to the ongoing negotiation between Binance and the local authorities. My hope of for the future is to have one or two exchanges in every continent of the world.
8BTC: What are similarities and differences of these countries when it comes to providing an environment for digital currencies? And what are your or the company’s considerations in starting business in countries that are different from one another in so many ways?
CZ: Every country has got its features and for us it is like doing experiments. Many companies focus only on the developed countries, where of course, lies more profit. But we believe in what we are doing is meaningful to the whole world and can contribute to the progress of the whole world.
Currently, in fact it is the less developed nations that are showing greater desires for cryptocurrencies. For example, in a few African regions where only 11% of the population own bank accounts, people wonder why they can not just help themselves to some P2P systems and let the banks focus on providing corporate services only.
Europe is also a special region since its people do not have as strong sense of nationality as elsewhere. When you look across nations within the European Union, you won’t notice that you are travelling from one to another. Neither will you see many checkpoints or toll stations. So in this part of the world, cross-border payment enjoys relatively high user-acceptance.
We want to try different regions and ways to see which will develop faster and what the different regions can learn from each other’s experience. For instance, we would tell the regulatory authorities in African countries how we are doing things in Europe so that they can learn from it. And we also have suggestions for Europe. In this way, we are able to do things in a multi-dimensioned manner. The business we are in is still in its infancy, without much prior experience or textbooks telling us what to do, so we have to experiment and try different combinations of methods.
8BTC: You talked about economic environments, mostly, just now. What about political environments? Will the political system of a nation, whether it is a republic or whether it has got a parliament, affect your business expansion in the very nation?
CZ: Generally, every country responds to our offers at a different pace. Some countries may need to wait for the parliament’s votes of approval while some, with an efficient and highly coordinated system, respond very fast. In some countries, both the ruling party and the opposition party are optimistic about the future of blockchain and are therefore welcoming us. Some other countries, however, despite having only one party in the nation, are entangled in internal frictions or conflicts.
Therefore it does not matter to us what the political system is like. What we really care about is whether we and our projects are welcomed in the nation. The more efficient the communication is and the faster our projects are pushed forward, the merrier. Liechtenstein, for example, is a monarchy, but its king is very forward-thinking and pays great attention to economic development. So it’s great for us.
8BTC: Did you personally take part in negotiations about of fiat exchanges in the counties? What kind of coordinative work have you got to do in the process? Any interesting stories to share?
CZ: I did not go through all the negotiations in person. Sometimes I showed up in the country when the negotiation was almost successfully done and for Jercy, I have never been there up to this point. And, well, I did experience quite a few interesting things. Every country has its own social customs. The anecdote of wearing shorts in Bermuda has got very popular on the Internet. I think it’s fun. Another interesting thing was when I met with the President of Uganda. He did not have a clue about digital currency at that time but he was a smart man. He talked to me for about 40 minutes and figured out his own way to understand it. A month later, he expressed opinions in favor of the digital currency, so our project in the country has been promoted very fast. There are many fun things like these.
8BTC: In June, you announced the plan of setting up headquarters in Malta and the plan for having business in Jersy Island, but we haven’t been able to see any. Is there any resistance?
CZ: First of all, we do not have concept of headquarters in the company and generally Malta is not considered as our headquarters. Similarly, the personnel structure of Binance is also decentralized. If I have to tell, then the headquarters is wherever I go or it goes wherever I go.
Then about Malta, we have not experienced any resistance there, not at all. Malta will officially pass its terms of regulation over the exchanges in October. We just want to save our bigger moves and steps until the terms are official. We do not want to cause the local governments too much trouble or have them make difficult choices although we have been through a lot of communication with them and they openly welcomed us. Up to this point, adequate preparations have been made, about the banks, payment channels, compliance, KYC and so on. Furthermore, we have set up a charity fund in cooperation with the president. We also have two cooperative projects with the Stock Exchange in Malta, one centralized and the other decentralized. We have big plans for Malta. No resistance there at all. Everything is going very smoothly.
8BTC: Any new plans to be announced for the near future?
CZ: Besides currency exchanges, we are planning to set up decentralized exchanges, which has already been announced in April and May this year. Now, everything is going well and we will probably launch in the end of this year or in the beginning of the next. We would rather not be obsessed with a fixed date, there are still many uncertainties. In addition, Binance’s charity fund just had a meeting with the UN, and things are going well in this regard too.
8BTC: Binance has been very active in charity lately. Are you hoping to leave a good impression in the various countries, so they are willing to provide a better environment for the launch of Binance’s exchanges?
CZ: Frankly speaking，we are trying to promote the blockchain/digital currency industry by means of charity. There are two reasons for this.
On the one hand, the charity in the past, we believe, is not transparent enough. Some statistics show that often times the majority of charity money does not end up in the pockets of those in need. We are sure that blockchain technology can easily fix the problem of lack of transparency in charity.
On the other hand, we also want to promote the blockchain industry with the help of charity. We want transparent charity where every coin can be traced to its beneficiary. In order for this to happen, the beneficiaries need to accept digital currency. And the charity fund will teach them to install a digital wallet, receive the currency, and understand what the currency is. The charity is in fact playing the role of educating the public about digital currency. In this way, we have a win-win situation.
8BTC: Binance has recently launched the service of PAX recharge and you say that the regulated stable coin offers more freedom than fiat currency. Can you explain why Binance has done so and what role the stable coin plays in the system that Binance is building ?
CZ: I think stable coin is a quite meaningful innovation although it enjoys less freedom of use than digital currencies. Regulated stable coin is more creditable than currencies launched by companies but is also subject to relatively more restrictions. So I would say it is in the middleground where the traditional financial authorities are able to regulate a stable coin that is pegged with a fiat currency. If this model works, it would be a great inspiration for those nations or regions wanting to launch a fiat cryptocurrency. It has yet to be seen whether it is for the better or for the worse. But it is at least something new, another alternative for us. So I say it is a meaningful innovation.
8BTC: Now, it’s generally believed that it is a bear market for digital currency, but you recently said that the digital money market will increase 1000 times in the next few years. Why are you so confident?
CZ: Both bear market and bull market are relative terms. I have witnessed five or six such fluctuations in this market. A market will always pull back after a rise and only with the pullbacks a support line can be drawn. Bitcoin price rose from a few cents in the beginning to one dollar, only to fall back to a few cents later. Then it rose to ¥35 yuan before falling to ¥2 yuan. After that, it jumped to ¥90 yuan, fell back 70 yuan, stayed there for quite a while, then rose to ¥1,000 yuan and dropped back to ¥200 yuan where it, again, stayed for a long time. It rose to $20 thousand last year, and now it has been at $6000 for some time. All these fluctuations are very normal. The price of digital currency has increased 2 million times in the past eight years and I think it is easy for it to increase another 1000 times in the future.
8BTC: In addition to the volatility and trend moves of the digital currency prices, what is the core aspect of the market that will be responsible for expansion and popularization?
CZ: Surely, we should not limit our attention to price fluctuations. We need to look at the number of people involved in this industry. Firstly, the number of people working in the industry could have now increased by at least three or four times since last year. You rarely hear about the blockchain companies or projects laying off workers. If any, it is hardly due to lack of funds. The personnel of the whole industry is growing fast. Secondly, the number of people receiving services and buy products from the industry is also increasing. Conferences held in 2015, only a few hundred people showed up and there were only three or four conferences a year. But now there are three or four every Week, each one with 5,000 to 6,000 people attending. There is an obvious growth going on. Of course, there’s something central and core behind all this. You have to understand that digital currency or blockchain is an innovative and really useful technology. It has got its true core value and won’t be a flash in the pan. That’s why the number of people involved in the industry is increasing and the prices increase in the long run.
I don’t think we have to worry about the market. No bear or bull markets last long while the industry will continue to thrive long-term. We have great confidence in the industry and we will surely fare well if we are down to earth and just try our best to do our core businesses well. It is the same logic with other industries, I believe. Investors should invest in long-term value.