It’s a common trend now to see many making millions buying cryptocurrencies, but the story of Dubai’s new resident and self-made crypto billionaire Changpeng Zhao is one that’s hard to come by.
There’s evidently no shortage of money to be made in the $2 trillion (Dh7.35 trillion) crypto economy, with proof being the number of billionaires who got rich buying and selling cryptocurrencies – which is at 19 currently, seven more than 2021.
Zhao, who turns 45 next month and goes by the name ‘CZ’, like others, made his billions buying cryptocurrencies. But long before he came into such wealth, the China-born coder kept moving and exploring, across continents, rarely staying anywhere for more than a few years for most of his adult life.
The nomadic lifestyle all started when he first immigrated to Canada with his parents at the young age of 12. “Growing up in Vancouver, I had friends from different backgrounds and cultures,” said Zhao, in an exclusive interview with Gulf News. “I have always liked places with diverse cultures.”
This was also what prompted Zhao to make Dubai his new home since late last year. “The crypto space is very international and diverse and Dubai is a true innovation hub which welcomes a very diverse and innovative group as well,” he added.
Growing up in Vancouver, I had friends from different backgrounds and cultures. I have always liked places with diverse cultures.
What inspired you to get into cryptocurrencies?
Zhao is now the founder and CEO of Binance, the world's biggest crypto exchange by trading volume. But the Chinese-Canadian’s journey to becoming the wealthiest in the world of cryptocurrencies was inspired by the rudimentary workings of Bitcoin, the world’s largest digital currency.
“Coming from and building a platform for the traditional financial space, I was inspired by Bitcoin and how it was borderless and not limited by any intermediaries,” Zhao explained. “Bitcoin also addresses many other issues with the money we have today, like unlimited supply, freedom to transact, low fees.”
Zhao built Binance into the world's largest crypto exchange in less than eight months after launching it in July 2017, the same year its cryptocurrency Binance Coin was launched. Later in 2019, Zhao expanded Binance to the US, which also soared in value, to $4.5 billion (Dh16.53 billion) as at April this year.
“Binance aims to provide tools for people to access crypto. We got lucky with Binance by working really, really hard,” added Zhao. The crypto exchange also took the first step towards expanding in Abu Dhabi after it got an ‘in-principle’ green light in April, which deepened its expansion plans for the Middle East.
Binance has about 120 million users, and each day more than $50 billion (Dh183 billion) changes hands on the platform, which generally takes a 0.1 per cent fee. In practice, that means Zhao, who is by far the company’s largest shareholder, makes money whether its customers are buying or selling.
Billionaire’s journey to wealth from coding
Zhao is currently ranked the 35th richest in the world with a net worth estimated at $34.5 billion (Dh126.7 billion) as of August 2022, according to Bloomberg Billionaires Index, with nearly all of his liquid net worth in the form of cryptocurrencies.
Having majored in computer science in Canada, Zhao was primarily involved in developing market-focused trading software. Zhao’s professional career included an internship at the Tokyo Stock Exchange, and a full-time job of four years at global financial data giant Bloomberg.
While at Bloomberg, Zhao developed futures trading software for Wall Street, helping investors buy and sell contracts used to trade an asset at a predetermined price. Zhao then founded his first firm ‘Fusion Systems’, which built high-frequency trading systems for brokers.
Before launching Binance, he was involved in various cryptocurrency companies, including serving as head of technology for Blockchain.info (now known as Blockchain.com), the first Bitcoin blockchain explorer, and launching his second firm BijieTech, an exchange systems provider.
An engineer who vouches for a crypto future
Being an engineer who professionally developed trading software for traditional financial platforms, Zhao later grew to be increasingly passionate and focused in cryptocurrencies and the digital asset’s transparency and efficiency - both globally, and in the UAE.
“I remain an ardent believer that crypto and its underpinning technology has the power to accelerate global prosperity,” said Zhao, while expressing confidence in how UAE is set to benefit from this trend.
“UAE is uniquely positioned to become a global leader for this new financial tech industry. There are many opportunities in the space.”
However, the serial entrepreneur flagged that there is still scope for improvement when it comes to crypto-related accessibility, as many more are yet to get on board in acceptance of this technology.
“Today, many banks don't work with crypto exchanges yet, which poses a limitation on the adoption of this new technology. By working with regulators, we believe we are changing this for the better,” Zhao added.
I remain an ardent believer that crypto and its underpinning technology has the power to accelerate global prosperity
Thoughts on the current crypto market crash?
With costs rising worldwide, investors began pulling their money out of investments they deemed risky, including cryptocurrencies. As investors sold off their digital assets, the price of crypto fell further. When asked about Zhao’s thoughts on this sell-off, he was optimistic on the prospects of the e-currency.
“Crypto as an asset class has weathered periods of uncertainty before and every time has come back to grow its user base, improve its technology, and increase its institutional acceptance,” Zhao evaluated.
“For investors, it is important to note that all investments are equally susceptible to volatility, in crypto or in stocks. User education is extremely important when it comes to risk management.”
Zhao’s two main takeaways when building a top crypto exchange
Lesson #1: Always put users first
“When you put users first, they stick with you,” Zhao said. “And then you have a platform that people use. Anything people use has value.”
Multiple research indicates how prioritising customers ultimately leads to higher profitability per customer and a higher return on sales because it reduces marketing and sales costs.
Lesson #2: Ensure product’s market fitness
“Don’t scale until you have ‘product market fit’,” added Zhao. “I see too many start-ups try to scale before they have ‘product market fit’. That’s a big mistake.”
‘Product-market fit’ describes when a company’s target customers are buying, using, and telling others about the product in numbers large enough to sustain that product’s growth and profitability. So it simply means finding a good market with a product capable of satisfying that market.
A tip for investors looking to buy crypto for the first time?
When it comes to buying crypto, users can lose cryptocurrency tokens as a result of theft, computer failure, loss of access keys, and more.
“I can’t stress the importance of investor education enough,” said Zhao. “It is critical that users understand what they are investing in and how it is being held and stored.”
‘Cold storage’ (or offline crypto wallets) is widely recommended as one of the safest methods for holding cryptocurrencies, as these wallets are not accessible via the Internet, but ‘hot wallets’, which is connected to the internet, are still convenient for some users.
What are your future plans being at the helm of Binance?
“At Binance, we are preparing for the era of Web3 in many ways,” revealed Zhao, referring to the conceptualised idea of the World Wide Web which incorporates concepts such as decentralisation, blockchain technologies, and token-based economics.
“While Binance’s mission is to be the infrastructure provider to the blockchain ecosystem, we see tremendous opportunity to help develop Web3 platforms and products and services for the news, publishing and content industry - both in the physical and virtual worlds,” added Zhao.
Zhao evaluated how cryptocurrencies and Web3 currently have an issue with user-experience that is “creating a barrier to adoption”.
For investors, it is important to note that all investments are equally susceptible to volatility, in crypto or in stocks
Aim to improve crypto, Web3 experience for users
Despite Web3’s growing awareness and investment, most experts agree that it remains an enigma to the vast majority of consumers, while adding that unless the Web3 community can get all consumers to understand what they’re doing and value it, Web3 is expected to remain an insider’s game.
“Web3 development must focus on user-experience in order to drive adoption. Web3 developers cannot assume users will have technical experience or understanding. Currently, most people are interacting with crypto for the first time though token trading,” added Zhao.
“Token trading is likely to remain the method through which most people interact with crypto and blockchain. The goal for the future is to develop Dapps (decentralised apps) that are so user friendly, the transition from Web2 to Web3 application is seamless to the user.”
An advice you give entrepreneurs looking to enter the industry?
Zhao believes there are more opportunities in this industry than in any other industry, while adding this is going to be the “fastest growth industry for the next few decades to come."
“At the same time, the crypto ecosystem is still nascent, and there is plenty of room to grow. Evolution is necessary for adoption, and adoption is necessary for the industry to survive. Ultimately, scalability and simplified user-experience are the areas that the industry needs to evolve rapidly.”
Zhao further added that this bear market (a market with prices consistently dropping) is the “perfect opportunity” to put resources towards these efforts, like investing in and developing user friendly Dapps.