We were making the rounds at Consensus Singapore 2018 when we met up with Binance’s CEO Changpeng Zhao, known in crypto circles simply as CZ. Friendly as ever, he agreed to chat with us about the future of token economies, Binance’s upcoming security token exchange and Binance’s goal to spearhead the development of a crypto ecosystem around their current exchange operations.
Check out the video interview and an excerpt of CZ’s comments.
Q: What is the most critical bottleneck for creating a token economy ecosystem where tokens penetrate our daily lives?
CZ: The main thing is just application and adoption. We need to have good every day applications. That, above all, would drive adoption. Right now, the industry is still very young. There are not enough ‘killer’ apps out there that have 10 million or 100 million, or 1 billion users. We must create those kinds of apps on the blockchain.
Q: What is preventing us from developing these apps that can reach so many users?
CZ: Blockchains today are not fast enough to handle a billion users right now. Nowhere close, in fact. The two most popular blockchains right now (Bitcoin and Ethereum) are congested. We need faster blockchains. But those are being made now. There are faster blockchains being developed, which hopefully will solve the speed problem.
Q: We heard that Binance is launching a security token exchange in Malta. What kind of convergence do you see between utility tokens and security tokens? Will they co-exist?
CZ: The definition of security and definition of utility token still has to be decided. The definition of security tokens varies around the world. There are different ways you can test whether a token qualifies as a ‘security’. The problem with crypto tokens is they don’t fit as either a security or a utility. They can be both. I think it’s very hard to classify them. Some regulatory body will classify tokens as securities, and that will have an impact. Overall, I think there will be a lot more tokens coming out. Both security and utility. There will be a lot more tokens in the future.
Q: How will Binance develop the Malta ecosystem in the coming future?
CZ: Right now, Binance only has a crypto-to-crypto exchange. We have two partnerships with the Malta Stock Exchange. We have one direct partnership to build a centralized security token exchange. That’s probably closer to today’s model of what a security token is. We also have a second partnership, a three-way partnership with the Malta stock exchange and Neufund for a decentralized exchange. We are still discussing or discovering what exactly we can really do and not do. We are still in a very early stage. But given those two licenses I think we can do a lot of creative things. We will see.
Q: Binance recently launched Binance labs. What is the aim of it? And how will it integrate with Binance platform?
CZ: Right now, we want to grow the ecosystem. We only know how to do exchanges, really. Therefore, Binance labs will invest in other businesses – businesses that are important to the ecosystem that we currently don’t know how to implement. Wallets, payment services, more creative blockchains, for example. We want to be able to contribute capital, our experience in terms of token economics, our listing ability to give them liquidity. We want to help the industry grow. The companies we invest in will in turn invest in infrastructure providers and services in the space. That is their mission.
Q: What is your vision for Binance in the next 5 years?
CZ: For us it is very simple. We want to continue to focus on our core business, which is the exchange. We want to continue to be the most proper, the most ethical, most fair and most secure exchange. We want to remain as a key player in the space. Ideally, we want to try our hand in a few related spaces like wallets and payment services. Hopefully some of our efforts will stick and we will end up providing a few key infrastructure services in this space. That’s what we want to do.