“Our mission is really just to increase the freedom of money.”
Changpeng Zhao, known as CZ, is a serial entrepreneur with an impressive track record of successful startups. He launched Binance in July 2017 and within 180 days grew Binance into the largest cryptocurrency exchange in the world. An expert in blockchain and trading systems, CZ has built Binance into the leading blockchain ecosystem, comprised of Binance Exchange, Labs, Launchpad, Info, Academy, Research, Trust Wallet and Charity Foundation.
Moving all around the world, living in different major cities prevented a lack of connection or reliance on any one government-backed currency. This set the stage for a life dedicated to cryptocurrency and Bitcoin, and ultimately led to the creation of Binance, one of the largest cryptocurrency exchanges in the world. Bitcoin has taken on only greater importance as governments issue more currency. “We're witnessing probably the largest amount of quantitative easing by governments all around the world. And when governments do that, everybody becomes poor because there's more currencies being printed, and you're not given much of that directly. Bitcoin is limited supply, 21 million of them ever [get made]… You know that's mathematically guaranteed. No one can change it.”
Binance aims to use its company to further build the foundation of crypto and grow its adoption. The goal is to use cryptocurrency to deliver freedom of money in the same way we view freedom of speech.
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SPEAKER
Changpeng Zhao “CZ”
Founder & Chief Executive Officer
Binance
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
Rachel Pether: (00:07)
Hi everyone, and welcome back to SALT Talks. My name is Rachel Pether and I'm a senior advisor to SkyBridge Capital based in Abu Dhabi, as well as being the emcee for SALT, a thought leadership forum and networking platform that encompasses business, technology and politics.
Rachel Pether: (00:24)
Now, as many of you know, SALT Talks is a series of digital interviews with some of the world's foremost investors, creators and thinkers. And just as we do at our global SALT conference series, we aim to provide our audience a window into the minds of subject matter experts.
Rachel Pether: (00:42)
Today's focus will be on digital assets. And I can't think of anyone better to speak to on this topic than CZ, the founder of Binance, the largest cryptocurrency exchange in the world. CZ is a serial entrepreneur who launched Binance in July, 2017 and within six months grew Binance into the world's largest cryptocurrency exchange.
Rachel Pether: (01:07)
CZ has a really great story. He's a Chinese-Canadian coder who spent his youth flipping burgers, before studying at McGill University in Montreal. He then spent time in Tokyo and New York, first building systems for matching trade orders, then developing software for Bloomberg's futures trading on Wall Street. In 2005 CZ quit his role as head at the Bloomberg Tradebook Futures Research and Development team, and moved to Shanghai to start his first company.
Rachel Pether: (01:36)
Hosting today's talk will be our very own Anthony Scaramucci, the founder and managing partner of SkyBridge capital, and also the chairman of SALT. And with that, I'll turn it over to you Anthony, for the interview.
Anthony Scaramucci: (01:49)
Rachel, thank you so much. CZ, thank you so much for joining us. We were talking just before we went live here about your background. I was hoping that you could share that with our delegation. Tell us where you grew up. Tell us what got you into cryptocurrency, and tell us a little bit about that story.
Changpeng Zhao: (02:09)
Sure. Yeah. Anthony, Rachel, thanks for having me here. It's a pleasure.
Changpeng Zhao: (02:14)
And yeah, so I grew up in China before I was 12. So I moved in between a few different cities in China. When I was 12, I moved to Canada with my parents. And in Canada, I studied in Vancouver for six years for high school, and then moved to Montreal for college. And before I graduated, I took an internship job in Tokyo for a software outsource company that's working for Tokyo Stock Exchange. So we're writing order matching software for the Tokyo Stock Exchange. So I got exposed to financial software at a relatively early stage. Yeah, before that, as Rachel mentioned, when I was 15, I was flipping burgers in McDonald's in Vancouver. So that was also a pretty interesting experience. I also worked at a gas station after that. The gas station paid a lot better because I was working the night shift.
Changpeng Zhao: (03:06)
But anyway, so after graduation, I worked in Tokyo, New York, Singapore, Shanghai, a bit of Hong Kong. So kind of back and forth between North America and Asia. So given the fact that I was living different places, so I never really got married to one currency, one country, et cetera.
Changpeng Zhao: (03:28)
So in 2013, when I was in Shanghai, I was playing poker with Bobby Lee, who's the ex CEO of BTCChina, at the time one of the earliest cryptocurrency exchanges. And he introduced me to Bitcoin. He says, "CZ, you should think about converting 10% of your net worth into Bitcoin. And there's a small chance it will go to zero, then you lose 10%. There's a higher chance it will go 10X, then you double." So given that, I seriously looked into Bitcoin. I read the white paper, met a bunch of people in the crypto industry. And then by end of 2013, I decided to leave my previous startup and to jump into cryptocurrency, and back then it was really called the Bitcoin industry, full time. So that's kind of how I got started into crypto.
Anthony Scaramucci: (04:20)
Fantastic. So I am embarrassingly getting old, okay. And I don't like admitting that to anybody, but I know I'm old when my 28 year old son tells me, "Dad, you got to start buying Bitcoin." And he's explaining it to me, and I feel like I'm explaining to my great grandfather how to use a typewriter. So I need help, okay. Let's start at the beginning. Tell me why I should own cryptocurrency, and which cryptocurrencies do you like? And where is the future of crypto?
Changpeng Zhao: (04:52)
Sure. I think there's a couple of different things. I think the first thing is really... Let's just talk about Bitcoin. I believe Bitcoin is just a better form of money. Our current money currency systems have a lot of flaws. Right now we're witnessing probably the largest amount of quantitative easing by governments all around the world. And when governments do that, everybody becomes poor because there's more currencies being printed, and you're not given much of that directly. The majority, the bulk of it is going to be given to like Wall Street banks, and to bail out other companies, et cetera. And we don't know where it goes. But we do know that whatever bank account numbers you have, or whatever salary you're getting is getting diluted. Even though the numbers don't change, but the purchasing power would decrease. So that's one aspect of it. Bitcoin is limited supply, 21 million of them ever. And you can't cheat that. You know that's mathematically guaranteed. No one can change it.
Anthony Scaramucci: (05:52)
Okay. So I want to stop you there. So I just want to emphasize that for everybody that knows as much about cryptocurrency as I do. There's no disruption in the supply table of Bitcoin, is that correct?
Changpeng Zhao: (06:07)
Yes. Absolutely.
Anthony Scaramucci: (06:08)
There's a finite amount. Now how do we know that? How do we know that Mr. Satoshi or Mrs. Satoshi, can't figure out a way to create more Bitcoin once everybody's sucked into Bitcoin?
Changpeng Zhao: (06:21)
Sure. So Bitcoin is not centrally issued. It's issued by network computers, which follows the Bitcoin protocol. And if one computer does not follow it, it will be rejected from the network. So it's mathematically guaranteed that every four years, the new coins being issued decreases by half. And by 2040-ish, all 21 million of Bitcoins will be minted.
Changpeng Zhao: (06:46)
So right now I think around 18 to 19 million Bitcoins already minted. So the new supplies coming up is quite decreased. So this is guaranteed by software. And this is guaranteed by thousands, or probably tens of thousands of nodes running a Bitcoin mining software. So this is something that even the founder, the creator of Bitcoin, Satoshi Nakamoto, or his wife, or his friends, they can't change it. So this is mathematically guaranteed. So this is the first time humans are able to guarantee this type of issuance of currencies using the blockchain technology, which is a core invention, of course, by Satoshi Nakamoto.
Anthony Scaramucci: (07:30)
Okay. Now I've got to ask you another big question. Everybody must ask you this. But no government is backing it. There's no army backing it. There's no balance sheet at the government. The US government, as an example, owns 28% of the land in the United States. So there's probably $60 to $100 trillion of assets under that land. So when we're sitting on a $30 trillion deficit, we probably have a good asset mix. What is the backing of Bitcoin, other than that computer code?
Changpeng Zhao: (08:00)
Sure. So Bitcoin is backed by utility. So the more people who use it, the more value it will have. So you could say, for example, Facebook is not backed by anything per se, just have a large number of users who use it. And if something's used by a large number of users, then you have value. So Bitcoin has utility. It has many use cases where the current currency system does not work well. So the quantitative easing is one aspect of it.
Changpeng Zhao: (08:31)
If you think about transferring value from one country to another, let's say from US to China or vice versa, there's usually a lot of difficulties in doing that. So Bitcoin is a way for people to potentially transfer a wealth or value across the globe from anywhere to anywhere on their own, following the protocol. So it has a lot of other use cases where today's currencies are not able to do. So, given the high amount of utility, it has value. So the value is generated that way.
Anthony Scaramucci: (09:09)
Okay, but the federal government of the United States, the treasury department and the federal reserve, what is to stop them from digitizing a currency and making it a massive competitor of something like Bitcoin and bigfooting it. Or China's digitizing the renminbi. Tell us why we should still like Bitcoin.
Changpeng Zhao: (09:28)
Sure. So any government, or the feds or any authority can issue a digital currency, even using the blockchain technology. But there's a few other properties that are quite important here. You can use the blockchain technology to issue a currency that's still on limited supply, so is the supply of the currency limited, guaranteed by the protocol? Most central bank issued currencies will have unlimited supply. So we have the old problem of more and more quantitative easing and more and more of those currency will be minted. And the previous holders of those currencies will get diluted in value. So if governments are willing to issue a fixed supply currency, that they will no longer dilute that with no future quantitative easing, then you will match up on that advantage of Bitcoin.
Changpeng Zhao: (10:24)
The second thing is would governments still block you from doing certain transfers? For example, if you want to send your cousin or your friend, I don't know, in the Philippines... Say, I don't know, you want to buy a house in the Philippines. It costs, I don't know, a million dollars or something. Can you send that with ease very quickly without too many middlemen intervention, without a lot of approval processes? So how easy that currency is to use. With Bitcoin, there's no intermediary, no one is going to block you. It's guaranteed to work.
Changpeng Zhao: (11:00)
So basically fundamentally still comes down to is it limited supply? Does it have a high degree of freedom of transfer or usage? And is it cheap to do? Is it cheap to use? So for example, if you use banks to send a large amounts of money, the fees are probably going to be pretty high. So it still comes down to those basic properties.
Changpeng Zhao: (11:19)
So governments can issue a digital currency, but if the governments can issue a currency that's limited supply, cheaper to transfer and not so many restrictions on that, then I think you will be able to compete with Bitcoin. But if that's not the case, then Bitcoin, people will evaluate the advantages and disadvantages. So we have to see.
Anthony Scaramucci: (11:42)
Facebook was trying to put out something called Libra, a digital currency. And for some reason they didn't do it. What happened there? The government got in their face, or something, and threatened them? What happened there.
Changpeng Zhao: (11:54)
I think what you described is probably the most common way to describe it. But I think it's still happening. It hasn't happened yet, but it's also not... As far as I understand they didn't cancel the project. It just takes time to roll out a new digital currency. So that's my understanding of it. I don't really know a lot of details, but that's my understanding.
Anthony Scaramucci: (12:18)
Okay. Let me ask you, I mean, obviously I'm very fascinated by this. I hope you don't mind. These are probably basic questions for you, but I think it's important for-
Changpeng Zhao: (12:27)
No worries.
Anthony Scaramucci: (12:27)
... We have so many people that are going to listen to this that don't know a lot about this. So Bitcoin is the Google of digital currency? Or is it the Yahoo of digital currency? Is there going to be another currency that comes up over the top of Bitcoin?
Changpeng Zhao: (12:48)
So, I think today Bitcoin is definitely the most dominant by far cryptocurrency that's available. And it's also the most decentralized. So in the industry, we say Bitcoin is king.
Changpeng Zhao: (13:02)
But to your point, though, anyone can issue any digital currency and there's many innovative people in the industry that's creating new digital currencies. I believe Bitcoin will be leading the way for a very, very long time to come, for the foreseeable future. But in the longer future the possibility of something overtakes Bitcoin, something better that comes along is totally possible. So anything is possible. But I think whatever is going to overtake Bitcoin will have to be better. So in the longer future, I think that's definitely possible.
Anthony Scaramucci: (13:39)
But would that still mean that Bitcoin would still be used? Or that would cause Bitcoin to start devaluing?
Changpeng Zhao: (13:47)
So we don't know. Both scenarios are possible. So for example, if there's Bitcoin 2.0 that's better than Bitcoin 1.0, people may slowly shift from 1.0 to 2.0. And then if there are two different coins, then when one coin would devalue over time, the other coin will increase in value in time. Or it could be something that's, I don't know, some other coin that's like... There's literally millions of other coins on the market. One of them might get really wide adoption and people will shift towards that.
Changpeng Zhao: (14:18)
So the thing with decentralized currencies is that there's a very large community of people around that already. So the shift, you would not go from like, I don't know, $1,500 to $15,000 to zero in one day. The shift will be somewhat gradual. But right now we are still at the very beginning of the Bitcoin journey, I believe. So we're still seeing rapid growth of Bitcoin.
Anthony Scaramucci: (14:42)
What do you think Bitcoin will be worth in US dollars in five years?
Changpeng Zhao: (14:48)
That's a really, really tough... So, I'm not able to make those kinds of predictions. And even if I try, I will be wrong.
Anthony Scaramucci: (14:56)
This is why-
Changpeng Zhao: (14:56)
But I'm very bullish on Bitcoin.
Anthony Scaramucci: (14:57)
... I'm making the big bucks though, CZ, right? I'm paid the big bucks to ask you this. So go ahead. What is it worth in a year? What about a year from now?
Changpeng Zhao: (15:05)
Well, I think right now it's... Right now, it's about $15,000 per Bitcoin. And that's like already five-X compared to like March where it was $3,000. So just in the last, I don't know, eight months it probably quadrupled, close to five-X. So, year time, it's very hard to guess. But when you say a specific time and then predict at that time what the price will be, it's really, really difficult. But over the long run, I'm very bullish on Bitcoin. I think it still has a lot of room to grow.
Changpeng Zhao: (15:42)
Just some small data point. The industry today probably has 50 to a hundred million users. That's probably less than 0.1% of the population. So still probably got a thousand-X to grow, just on that metric. And also a new technology, a new form of currency that's better than the Fiat currencies we have, will have a wider audience. It will have more use cases. It's like Uber has more use cases than taxis. So Uber's market cap is not limited by the taxi market cap. So Bitcoin, in that sense, I believe will be bigger than the currencies combined in the world today. So I'm very, very bullish on it.
Anthony Scaramucci: (16:18)
Okay. So you founded Binance three and a half years ago, June of 2017. And within six months it becomes the largest cryptocurrency exchange in the world. And this is a title that you still hold today. So what is the mission of Binance? Tell us about your experience there, and what is your vision?
Changpeng Zhao: (16:37)
Sure. So Binance's mission has never been to run a largest centralized exchange. So that was, yes, one of our goals to try to achieve, but actually it surprised us that we achieved that so quickly. But our mission is really just to increase the freedom of money.
Changpeng Zhao: (16:53)
So today I think we have freedom of speech in certain countries to some extent. We have freedom of data or information, to some extent with the internet in most countries. And we have freedom of press, freedom from slavery. So anytime when our society, when humans are able to increase that freedom without sacrificing other things, our civilization advances. Today, our money is not that free.
Changpeng Zhao: (17:18)
So as I mentioned before, if you want to transfer a large amount of money from here to there, there's a lot of questions to ask and you have to pay a lot of taxes, et cetera. So there's a lot of intermediaries that want to intervene. So I think we can increase the freedom of money today without sacrificing security, safety, ease of use. And in fact, we can increase ease of use. So that's kind of our sort of a grand mission. So anything we can do in this space, we will try to do.
Changpeng Zhao: (17:50)
So with this mission, we kind of just went with a centralized exchange first and somehow users really like our products and the demand was high and it just grow. It just grown really quickly. So, but in the sort of longer term, we do want to build multiple other products that we think will help increase the freedom of money for people all around the world. And I personally think this is the best way that we can help society and help other people
Anthony Scaramucci: (18:23)
You're on to something. Peter Thiel, who I got to know in 2016, said something to me about crypto. He said, "Anthony, crypto is libertarian. Crypto is about freedom. AI, artificial intelligence is about centralization." And he said that governments will use AI to check up on their citizens, and to evaluate them, and to offer them social scores and so forth. But crypto is the diffusion of that sort of power. What do you say to that thought from Peter Thiel?
Changpeng Zhao: (18:57)
Well, I respect Peter Thiel quite a lot, and I would have to agree with that statement probably. I'm not an expert on AI. I don't really have a lot of view. But yes, with AI there's only a few players with lots of data that will win. So some of the bigger players in the internet space will already have those advantages.
Changpeng Zhao: (19:17)
Blockchain technology and cryptocurrencies is really the other... yes, is coming from the grassroot angle where it is much more decentralized and much better for the decentralization of power, decentralization of control. I personally think that that will give us much better future for us to move into. So yeah, I'm not an expert on AI to be very frank. But I would go with Peter Thiel on that one, for sure.
Anthony Scaramucci: (19:50)
You have a venture capital part of your ecosystem. What sort of investments are you looking to make?
Changpeng Zhao: (19:56)
So most of the investments we make are going to be in the crypto space. So 80% of them are going to be in the crypto space, probably today closer to anything that's infrastructure-related for crypto. So anything that helps exchanges, faster blockchains, better wallets, better security infrastructure. So sort of building the foundations of the crypto industry.
Changpeng Zhao: (20:18)
And 20% of them are just out there. We invest in all kinds of random projects as well, kind of moonshots, crazy stuff. Also sometimes even in traditional industries. For example, we even look at banks to see, hey, can we get a bank to work more closely with the crypto industry? Yeah, so we invest mostly in the crypto industry, but still a little bit outside as well.
Anthony Scaramucci: (20:43)
Do you have a feeling about the central banking system and its concern about something like this circumventing their ability to create monetary easing, and their ability to do quantitative easing? And do you think there'll be a backlash, a coordinated central government backlash?
Changpeng Zhao: (21:12)
I think the possibility is definitely there. I don't really know how central banks think, and I'm not really them. But I think the possibility is definitely there. But at the same time, I think cryptocurrency is already relatively widely adopted. Bitcoin, cryptocurrency, is a concept. You can't erase that concept from people's mind.
Changpeng Zhao: (21:36)
So today, if governments don't like the internet, they can try to shut it down together, but there will be internet 2.0, or the next version of it. So once a concept is out, now the collective human population... there's enough people in the human population who understands this now. So it can't be deleted or erased. So there's always going to be some... There may be some pressure, or conflicts, or race between the two.
Changpeng Zhao: (22:04)
But I think instead, I actually think the reverse. The best way for central banks or government to push to sort of slow down this adoption of Bitcoin or cryptocurrencies is to make the current Fiat currencies to do less quantitative easing and to make it cheaper to use, easier to use, less restrictions. So I think that's a better way to compete, rather than say, "Hey, look, if you're a bookstore, you just want to compete with Amazon by holding your fort." That's not going to work. It's much better to adopt the new technology innovations.
Anthony Scaramucci: (22:38)
Okay, I'm going to turn it over to Rachel. I know Rachel has some questions for you.
Rachel Pether: (22:42)
I have so many questions. And that was such a great chat. So thanks so much for that. And I think, CZ your mission to increase the freedom of money is really admirable. You mentioned you've obviously been in the crypto market for quite some time. You mentioned at the end of 2013, you invested 10% into digital currency. I guess back then it wasn't as highly traded as it is now. Did that volatility scare you? Or how did you feel when you made that first investment?
Changpeng Zhao: (23:14)
Yeah, so I do have a pretty interesting story there. So instead of just going in 10%, at the end of 2013, actually at the beginning of 2014, I sold my house, quit my job, put all the proceeds from the house into... well my apartment... so put all of that money into crypto, into Bitcoin. So I went all in. Instead of 10%, I went like basically a hundred percent. And I started looking for a new job as well in the crypto industry.
Changpeng Zhao: (23:42)
And so I found a job pretty quickly, luckily, but then the Bitcoin price, when I got in, it was around $600 US, within about three or four months or so it dropped to about $200 and stayed there for about two years. So I experienced that. So basically I lost two third of a house right away, unrealized loss. I still hold those Bitcoins today.
Changpeng Zhao: (24:05)
So yeah, well, that was my experience with Bitcoin, took a couple of years for it to recover. So yeah, it's definitely not easy and definitely not without thrill.
Rachel Pether: (24:16)
Not many people would have the capacity to stomach that kind of loss, especially given it was so much of your personal wealth at that time. Was it just this kind of belief in the, I guess, what Bitcoin stood for that kept you holding on? I mean, most people would have packed up their bags and left at that point.
Changpeng Zhao: (24:39)
Yeah. So, I mean, I understood Bitcoin pretty well at that point. I knew it's going to be the future. So I had a very strong belief and I was working in the industry already. So I'm fully immersed.
Changpeng Zhao: (24:55)
I also know my risk tolerance. Even though that's my hundred percent of my net worth at the time pretty much. But I had a job and that was paying relatively okay. So my living standard didn't decrease that much. It's just mentally, it is a very pressured moment. My relatives were all like... Oh, my mom wants to smack me on the head saying like, "You stupid kid." So, there's a lot of social pressure from that perspective. But I had the confidence that crypto will be the future. And once it dropped below 50%, to me, it was like, if I sell now, it's not even worth it. I might as well just hold onto it. And I don't have additional money to buy into, like to average down. So I just held onto it.
Changpeng Zhao: (25:45)
But luckily, about a year and a... almost two years, I think by the beginning of 2016, things really started coming back. So end of 2015, started to recover. So, for a year and a half, it was just really dropping. So I did have to go through that period. And so I do understand when people get stressed out on Twitter and being very impolite, et cetera. So I understand that very, very clearly now.
Rachel Pether: (26:12)
Yeah. And now I guess the beauty of hindsight, right? You must be very happy that you held onto those purchased Bitcoins at $600. You also mentioned in your discussion with Anthony, that the supply limit of 21 million was guaranteed almost by the software. But what would happen, I think you said 2040 is when they'll all be mined, is there a risk that computing power could substantially increase in that time and actually more can be mined? Or do you see this as a very firm ceiling for the supply?
Changpeng Zhao: (26:45)
Sure. It's a very, very firm ceiling. So it's not impacted by computing power. When the computing power increases, the difficulty also increases. So the supply is fixed, is mathematically fixed. It may take a little while to explain, but you can take my word for it. This is something that I'm more than willing to pledge for sure. There's only going to be 21 million Bitcoin, no more, no matter what happens. It does not get affected by computing power at all.
Changpeng Zhao: (27:15)
So the computing power has increased quite a lot. The difficulty for mining Bitcoin has also increased proportionately. The difficulty adjusts to the mining power. So it's automatically adjusted or relatively automatically adjusted by the network protocols. And that's the hard cap is very hard. There's never going to be more.
Rachel Pether: (27:34)
Okay. That's interesting. I also want to go back to another point that you were discussing with Anthony and you were talking about Bitcoin being a better form of money, and then also the role that governments can play. And China's obviously pioneering the creation of a central bank digital currency. And I guess this also kind of ties back to what you're saying about Peter Thiel and centralization versus decentralization. How do you think that the central bank digital currency would advance China's interest? And do you see this happening in the short term?
Changpeng Zhao: (28:08)
Yeah, I think in the short term, they definitely will be. I think we're already witnessing the central bank digital race between different countries, and China already have a version of it running. It's already out, they're piloting testing it. But the daily trading volume is 300 million US dollars equivalent, like a couple of days ago. So it's still pretty small for a country. That's a pilot test. But it's not super small from a scale perspective.
Changpeng Zhao: (28:37)
I do believe the first iterations of central bank digital currencies are all going to be relatively centralized. So they're going to be issued by a central party. They probably do have unlimited supply. They probably do have a lot of restrictions on how you can transfer, who you can transfer it to. If you transfer a large amount, there may be a source of wealth, source of funds. There may be like questions being asked. So all the traditional KYC, AML procedures may be applied to the first iterations of central bank digital currencies. I think that would be the most logical thing to expect.
Changpeng Zhao: (29:14)
So in that sense, even though most of them are going to be using blockchain encryption technologies that's very similar to Bitcoin or other cryptocurrencies, but the fundamental properties of those currencies are going to be very different. So I don't see any government coming out with Bitcoin 2.0 just yet. But I think over time, we'll see... Look, today, given the small penetration of cryptocurrencies, most people still may be more comfortable with a government issued currency, which they grew up using. So that may get some adoption. But over time, I personally really think that the true digital currencies, the true limited supply, decentralized, fewer restriction type of currencies will get the highest adoptions.
Rachel Pether: (30:09)
So if a central bank digital currency is centralized, wouldn't that give the governments more power over data and looking at flows of money? Wouldn't this almost do the opposite to what a true cryptocurrency should be trying to achieve, that decentralization aspect?
Changpeng Zhao: (30:29)
Yes. I agree with that. So with a digital currency, the government actually have much more control, especially like if they forced KYC on every address that you generate, they know exactly who you are, which transactions you have received. Everything's in one place. Whereas today going through different banks, trying to get the record, I mean the government have their ways to get it, but that build a lot of system to do that. But it's actually quite expensive and quite labor intensive to do. Whereas with a digital currency it's actually much easier to do. So that is actually a huge risk for that.
Changpeng Zhao: (31:07)
But at the same time, most people, depending on which country you're in, in a lot of countries, people are able to choose which currencies they wish to use. And so it depends on how much the [inaudible 00:31:23], how much less privacy you get. If those things become bigger problems, people are less likely to use it. So there's the balancing effect of that. So we'll have to see how that works.
Rachel Pether: (31:38)
No, that's really interesting. And I guess if you're looking at sort of countries and digital currency, and then you look at institutional investors, I guess you must have quite a lot of oversight as to trading activity with finance. To what extent are you seeing the institutional investors being involved in the cryptocurrency space? And how have you seen that evolve in the past few years that you've been with Binance?
Changpeng Zhao: (32:03)
Yeah. I think over the last three years at Binance, we've seen a lot of institutional participation now. So initially, in the early days it was more retail driven, but in the last couple of years, we've seen a lot of institutional investors come in. We have not seen a lot of the big names come in, like the top tier investment banks, like the, I don't know, Morgan Stanleys, et cetera. So we have not seen those guys come in. But we have seen a lot of other institutional traders in our space.
Changpeng Zhao: (32:33)
And the Binance users only represent a small portion of the sort of the crypto users, guys who actively trade and guys who want to use a centralized exchange. And there's a very large number of people who don't use centralized exchanges, and we don't really know what they do. But I do think the institutional participation is definitely there already.
Rachel Pether: (32:52)
Hmm. And if you were an institutional investor, how do you think you would view cryptocurrency? If you're looking in asset allocation, would you see it as a currency? Or would you see it as like a venture investment? How do you sort of see that fitting? I guess in your view, it seems to be a currency replacement.
Changpeng Zhao: (33:12)
Yeah. This is one of the difficult parts of classifying what Bitcoin is or what cryptocurrency is into either if it's an asset, if it's a currency, if it's a commodity. So I think my recommendation is we got to classify cryptocurrency into its own asset type, or asset category. It can act as a currency. It can act as a... Sometimes they have... Bitcoin product does not have this, but other cryptocurrencies may have properties that can be associated with securities. Others can be associated with commodities. So Bitcoin could be, or cryptocurrency could be any of those. But it's much better to classify them into a different thing, a brand new category.
Changpeng Zhao: (33:56)
But I think instead of what we call this category is less important than what properties does it have. It does hold value. It can be used as a medium of exchange. And it can be used as a investment asset type that appreciates or actually fluctuates in value. Sometimes it appreciates, sometimes it depreciates. So it does have a combination of those properties. So the smarter sort of investors, they understand this. They don't try to classify Ford into a type of horse. They just say, "Look, it's a transportation system. We can use it. And let's invest in it." So that's kind of what they're doing.
Rachel Pether: (34:39)
That's a great quote. I'm going to use that in future. Ford is not a type of horse.
Rachel Pether: (34:44)
Thank you so much for answering all these questions, and giving Anthony and I a real cryptocurrency 101 training session. Just one final question from my side, I know you mentioned you've lived in all these different places. You seem to be a complete workaholic. It's obviously a 24 hour business. What really motivates you to keep going, day in, day out, for 24 hours?
Changpeng Zhao: (35:08)
Yeah. So like, for me, I think it goes back to our mission. I mean, I could retire. I've reached financial freedom. I could relax on the beach and sip martinis all day, or I could go play golf or do whatever. But I think all of those things will be boring pretty quickly.
Changpeng Zhao: (35:25)
I think I'm actually very fortunate to be in a place where I can actually contribute to increasing the freedom of money for people all around the world. I don't know how much I can contribute to that, but I can contribute as much as I can. And that's the opportunity that's really, really hard to come by. So I really value that opportunity. And I think this is really the most meaningful thing I can do with my life. So I wake up, I'm working, I don't really call it a work, it's just part of life now. So yeah, I'm really lucky that I have this opportunity, and yeah, so I just do what I should do.
Rachel Pether: (36:00)
That's amazing. Well, if you ever do just want to give it all up and sip martinis and play golf, Anthony and I will be more than happy to join in.
Changpeng Zhao: (36:08)
Could do that once in a while.
Rachel Pether: (36:10)
From my [crosstalk 00:36:12]-
Anthony Scaramucci: (36:11)
I was just thinking, maybe the reason why I'm not as successful as you CZ, I was just thinking about how great those martinis taste and how nice that would be on the beach.
Anthony Scaramucci: (36:22)
But in all seriousness, thank you. Thank you so much for explaining your vision and giving people around the world confidence in crypto. And your proselytizing of this currency, I think is very valuable to our global society. So I just want to give you a very big thank you for all that.
Changpeng Zhao: (36:44)
Thank you, Anthony, and thank you, Rachel. Thanks so much for having me and thanks everybody for watching or listening to this show. Yeah. Thanks.