Crypto AMA with Binance (1.7.20)

Guest:

  • Changpeng Zhao (CZ)

Moderator: 


Moderator:

Hi everyone, please join me in welcoming CZ to Crypto AMA!

We are thrilled to be hosting CZ today who will be fielding questions for one hour. As a reminder to everyone in the audience, please follow our group rules: (1) be respectful at all time and (2) stay on topic — we're here to talk about Binance and BNB.

CZ, we ask all of our guests the same intro questions: can you please share a brief bio touching on your background and then a short overview of your company/project and how it's going so far?

After that, we'll open it up to the audience and dive into questions!

CZ:

Sure, I am the founder of Binance.com.  Binance.com is one of the largest exchanges in the world.  And we are adding fiat-to-crypto in addition to crypto-to-crypto trading.  We have spot, margin, futures, and p2p trading.  BNB is one of the first "exchange tokens", and has grown to be a native coin on Binance Chain, and supporting an ecosystem.

Moderator:

Excellent. Thanks!

CZ:

I myself was born in China, went to highschool and uni in Canada, worked in Tokyo, New York, Shanghai, Hong Kong, Singapore.  Mostly on trading systems.  Joined crypto industry in 2013, and started Binance in 2017.

Guest:

Recent BaFin regulation spurred Bitstamp to comment that exchanges might have to outsource custodianship to white-label providers.

If other countries adopt such regulation, do we see the end of exchange custodianship en masse?

CZ:

I think this will vary country by country. A few developed nations have this structure in traditional finance, but many countries don't have this requirement. Most custodian services used by exchanges are provided by the same same exchange today. There are significant differences in custody of cryptocurrency versus fiat currency. so will have two wait and see how the industry shapes up. Binance also plan to offer our custodian tools and we actually own even open sourcde our TSS (threshold signature libraries), similar to multi-sig, but should be a lot better.

Guest:

Can you tell us about IEO plans in 2020? (Will Binance continues these?)

CZ:

yes, we will continue.

It is our fundamental belief that fundraising on the blockchain is a killer app. This is the first time in human history that people are able to raise money globally, and people across the world can invest in projects they like, a tiny amount if they wish. This draws many scammers as well, but we shall not let a few bad actors destroy a tool that could help so many upcoming entrepreneurs.

snippet taken from https://www.binance.com/en/blog/419417682154909696/Binance-2020-New-Year-Message-Building-Foundations--

Guest:

Really happy to hear this. I know the process companies need to go through just to try and get approved. I believe your process removes 95% (100%) ?? of scams. Only request/suggestion (from the peanut gallery) is to make them more realistic priced to lower the 7x or 8x “bump” which inevitably leads to big price drops. Your IEO process is the best in the business, thanks for the update.

Guest:

What did you change your mind about in 2019?

CZ:

not too sure, haha.

Guest:

Where does Binance and him think the next 50mm users will come for in crypto and is Binance doing anything to engage specifically with the gaming community?

CZ:

that's the billion dollar question. I think just more adoption of cryptocurrency will bring more people. I think gaming is definitely one of the higher potential areas. The demographic overlap is very high, young males with disposable income and  technological savvy. games require international distribution and usually very costly for them to integrate with multiple payment partners, whereas if they can accept cryptocurrency then you solve the problem.  also most games already have some kind of token in themselves, just not blockchainized so that's a no-brainer. But who knows I think many people/nations in the world are forced to use Crypto, maybe that's a driver, you never know.

Guest:

Hey CZ, thanks for doing this, and staying in the crypto fight 🤙

What is your macro view on the recent shakeup in China mainland crypto exchange sector? Would you agree that the government is anointing winners? Overall, how significantly does mainland China drive the BNB ecosystem and value?

CZ:

Hey Peter, China is tricky. they are obviously pro-blockchain (education/technology), but not so hot on bitcoin. Feels like the aim is to do something similar as the internet, some controls and walled garden approach. It's not clear how that will work for crypto. Maybe one of the local exchanges will get a license, but I don't think it will happen any time soon. Meanwhile, OTC trading volume is very high in China. Some say mover $1b USD equivalent a day by some of the local exchanges. Demand is high.

Guest:

Hey CZ, great to have you here and thanks for all the hard work and impact you've had in the space.

Would love to know what are the regions of the world you're currently more interested in developing crypto ecosystems? What have you learned from Binance Uganda that you're applying elsewhere?

CZ:

We are working on so many places at once that's kind of hard to list. And I also cannot predict with accuracy which regions are going to become fruitful. Naturally we will work on regions where crypto currencies are active or the regulations are positive. We will have many updates this year, will keep you posted.

Guest:

Hey CZ, what are your thoughts on DAOs in general? And do they have a place in the future of Binance?

CZ:

definitely, but I think they are the longer futures. There are still many issues to be resolved in terms of governance, communication, collaboration, etc. we are seeing many of the issues in the sort of decentralized Binance is already. But eventually that will be the goal.

Guest:

Coinbase and other exchanges/custodians are charging above market rates for staking while Binance charges zero or very low. Why did you make that decision and what do you think that means for the future of PoS systems (i.e., centralizing stake)?

CZ:

very simple, we want users to moves to Binance, haha.  More seriously we view it as a service that does not require super high amount of effort. There is some effort involved but it’s a fixed expense, and quite manageable. We already host many wallets, so we want to provide this as a value-added service to our users and we will do it for free.

Guest:

CZ, what are you most passionate about that is tangentially nothing to do with crypto?

CZ:

I usually only focus on one time at a time.  Now, I am passionate about increasing freedom of money, so that is related to crypto.

Guest:

Hi CZ - thanks for your time today! Regarding Binance's 2020  goal to grow fiat-crypto onramps, a few questions come to mind. What do you think is the biggest hurdle here? How do you view your relationship with traditional banks and do you imagine a future where the lines between banks and crypto exchanges are increasingly blurred?  Understand a lot of this is a work in progress so generalizations where things are still confidential will also be helpful to understand the vision.

CZ:

We generally would work with anybody who wants to work with us. I believe for this space to grow everyone have to work together. That’s the fastest path to growth. We are not against anybody, we are not against traditional banks, in fact, we have/will invest or even acquire a few of them in the short future. I do believe fiat and crypto will coexist for a while to come.

Guest:

Hey CZ, thanks for doing this! Do you have a view on DeFi and what role exchanges play in it?

CZ:

Binance Centralized exchange already provides "CeFi".  Binance Chain team is also working on DeFi.  I think it will be a big field. We are just at the starting point.

Guest:

Hey CZ, what is Binance doing to counteract the decrease in interest outside crypto echo chambers? (Source: google trends)

(It seems correlated with the bear market)

CZ:

We don't have any magic bullets there. We try our best to help projects in our space and we try to build as quickly as we possibly can, products  people actually use. We also have educational portals (Binance Academy), Charity program (will announced something for Australia today).

Guest:

What’s your view on the importance of institutional vs. retail as a market/client segment in terms of where to prioritize Binance’s efforts, products etc. (Where is there a bigger opportunity for Binance and others?)

CZ:

I think institutional support is important in established markets, in less developed markets, I think a more retail geared approach works better today.

Guest:

What does your day-to-day look like? I'm super curious (as I'm sure everyone else is) about how you spend your time given all that Binance has going on.

CZ:

I do many many 5-10 minute meeting a day. and in between, I am often redirected to twitter by a few of our colleagues. It changes over time, now, I just do all the talking, conflict resolution, hiring, etc. I am no longer hands on, the team takes care of everything.

so, my schedule is very reactive. lol

CZ:

https://www.binance.com/en/blog/335263596032278528/A-Typical-Day-for-a-Binance-CEO

this is 18 months ago, but still pretty much the same.  But I do spend quite a bit more time on twitter than I try to plan.

Guest:

What is your single biggest concern in regard to Binance’s future health?

CZ:

Just need to continue to recruit the best talent that also shares our values.

Guest:

What is Binance’s core system built using?

CZ:

Core matching engine is in C++, a new version that's already deployed is in Rust. Most of the Web services are in Java. Very simple tech choices.

Guest:

Curious about Binance's go to market strategy when approaching retail investors. What region has the most retail activity and when Binance enters a new market/region, how do yall go about acquiring these users? Thanks!

CZ:

we don't have a fixed strategy, different markets are different. We rely on centralized marketing campaigns, airdrops, trading competitions; local offline events, meetups, etc. We rely heavily on our Binance Angels (volunteers). We also have an attractive Referral program. We have a number of local partners too. Different methods tends to work in different locations, and we often only find out afterwards too.

Guest:

What are you most passionate about that is tangentially nothing to do with crypto?

CZ:

I am curious into biotech and AI, but really haven't spent much time on either, just not enough time.

Guest:

How big is Binance headcount now, and what challenges have you had in getting organised while managing rapid growth?

CZ:

we are 697 today. Oh man, so many challenges as we have grown very fast. Mostly dealing with internal communication and collaboration. I'd imagine they are the same problem for any fast growing company, but we make it a lot worse being a team distribute over 40+ countries and in every timezone possible.

if there are any good suggestions on organization management methodogies, or tools, I am all ears. We tried a lot of different things. still exploring.

Guest:

What do you think made the Binance Angels program so successful? And tangentially, how do you think about engaging devlopers whether it's for getting people to build on Binance chain or to build on projects listed on Binance?

CZ:

I think is the mission and values. Many exchanges tried to copy our program, but they don't work well if the values are not front and center.  For developers, we have Binance X, which give out grants to developers, internally, we have always been able to get strong tech talent. I have a tech background, and our CTO is superb, and we know how to give them interesting work and help them grow. I think all crypto projects should have a community developer fund.

Guest:

Binance's success is very inspiring. Yet, there's always room for improvement. If you had a time machine and could change one business decision from the past, what would it be?

CZ:

start 3 months early, in Mar 2107.  In general, do everything we do a couple month earlier, lol. There are of course a few things to avoid too, hindsight removes all need for trial and error, but don't have that ability in real life.

Guest:

Thanks for your valuable time. 

Who are the three main shareholders at Binance - holding company and where is the holding company incorporated?

CZ:

The overwhelming majority of Binance is held by the team. We have a couple very small external shareholders from the early days. But they don't interfere much with our operations. We are very autonomous.

Guest:

Hey CZ, good to see you here! You mentioned DeFi is a focus.  How do you think about your product growth strategy and integrations in relation DeFi offerings now and in the future?

CZ:

For DeFi, we are not the pioneers, we want pioneers like you guys to push the path. We will want to provide a more integrated product offerings where we can.

Guest:

How do you see the trading fee structures amongst exchanges evolving over time?  Is it purely a race to the bottom and a volume game - or are there other opportunities to win you think are interesting.

CZ:

it's a race to the bottom. Anyone clinging onto exchange fees will get destroyed in the process.

Guest:

What’s the worst thing that ever went wrong technologically at Binance (other than the hack)

CZ:

in Feb 2018, we said we were going to do an upgrade that should take 1 hr. It ended up taking 33hrs of down time... So, that's pretty "wrong". But we learned a lot in that process, especially the fact that if you communicate transparently, people trust you.

Guest:

after the BTC theft in May 2019, has Binance installed any new automated response systems? what have been considerations around this?

CZ:

yeah, we revamped every part of our system for security and monitoring.

Guest:

Hi cz - thanks for joining and being so open to the community. Can you describe how you view the role of Binance Labs v Binance X?

CZ:

any organization with spare cash (or even tight cash) should invest in the future, for themselves and for the industry growth.

Guest:

Related to the hack question- how do you balance engineering progress with security of production systems access?

CZ:

No one has access now. It takes multiple people to access now. to finish on this note, I also removed my own access to even our backend admin panel. I don't use it much.

Guest:

Does Binance run its own node infrastructure in house or outsource it to external parties? If you run it in house, how big is your team that builds and manages it?

CZ:

alright, I do have a 9AM call.  great talking to you guys. and thanks Spencer for organizing! 🙏🙏🙏

Moderator:

Nicely done everyone -- thanks for tuning in and asking excellent questions as always!