Changpeng Zhao – The person who withstood all his troubles and has become the wealthiest person in the domain of digital currencies
What did he think before launching Binance into the market? What were the different reforms adopted by him which have made Binance the successful digital currency exchange platform it is today? Answers to all these lie in the below article.
1. Who is Changpeng Zhao?
Changpeng Zhao is a business executive who hails of Chinese-Canadian origin. He is the creator and CEO of Binance, one of the largest digital currency exchanges in the market of cryptocurrencies. He was previously a candidate for the developer team of Blockchain.info and has also served as the CEO of OKCoin.
Changpeng Zhao was born in the late 1980s in Jiangsu province in China. His family later moved to Canada and started to reside in Vancouver in British Columbia. Soon after Zhao was born, his father was exiled from China and labeled as a ‘pro-bourgeois intellect.’ Before his exile, his father worked as a professor in China.
To serve his family’s financial needs, Zhao started to work in numerous self-industry jobs. It was during this period he worked as a McDonald’s employee.
Zhao holds a master’s degree in Computer Science from McGill University in Montreal, Canada. After finishing college, Zhao started to work at the Tokyo Stock Exchange, where his work was to develop software that assisted in matching trade orders. He was also a futures trading software developer while working in the company Bloomberg Tradebook.
In the year 2005, he moved to Shanghai. This year, Zhao founded Fusion Systems, a company known for its implication of the fastest high-frequency trading systems for assisting brokers. In 2013, Zhao worked on numerous cryptocurrency projects, including Blockchain.info, and served as the CEO of OKCoin.
It was in the year 2017 Zhao launched Binance, a prominent cryptocurrency exchange in the domain of digital currencies. He started Binance soon after he left his position at OKCoin in July 2017. His idea of launching Binance was well justified sooner as it raised around 15 million U.S. dollars during an initial coin offering.
Within eight months, Binance grew enormously to become the world's largest cryptocurrency exchange by trading volume as of April 2018. Currently, it stands in third place, preceded by BitForex and BKEX. In February 2018, Zhao got placed third on Forbes Magazine’s list of ‘The Richest People In Cryptocurrency.’ His net worth is around 2 million U.S. dollars as of 2019.
2. How was Zhao introduced to cryptocurrency?
As already stated in the above passage, Zhao had previously worked in the Tokyo Stock Exchange and at Fusion Systems. So the word coding was not new to him. He had a vague idea of how this system worked, and venturing into something similar to the same market would have been easy for him.
Zhao learned about Bitcoin, the prominent digital currency, from a venture capitalist with whom he used to play poker. This incident happened in the year 2013. The functionality and work process of this domain, i.e., the field of digital currencies, infatuated Zhao to the core.
He got so attracted to this domain that he started bouncing around prominent crypto projects which were Blockchain related. He joined Blockchain.info to fulfill his idea of starting a purely digital currency exchange.
Bitcoin has engrossed Zhao so much that he sold his only house in Shanghai in 2014 to go all-in on Bitcoin. This attribute shows how much the functionality of Bitcoin had impressed Zhao.
He was a part of the cryptocurrency wallet team at Bitcoin. The next eight months saw him work as the head of the development of Bitcoin, where he closely worked with prominent Bitcoin evangelists such as Ben Reeves and Roger Ver. His interest and knowledge in this sector grew more and more because of his close working with such eminent personalities.
He thoroughly understood Bitcoin's functionality and work process by working in the developer’s team of Blockchain.info. When he had obtained enough knowledge to carry on with his idea, he started to lay blueprints on his plan.
He also worked as the CEO of OKCoin for less than a year to get further information on his creative idea. OKCoin was a digital currency platform that assisted in spot trading between fiat and currency assets.
His idea was not just limited to creating a new digital currency exchange. It also included a thought process through which this exchange would not touch the conventional fiat currencies. Why did he think about such a plan?
It would be more efficient if the exchange did not connect with financial institutions or fiat currencies. Now you may ask how. The risks and regulatory complications would significantly become lower by using this feature.
But Zhao was waiting for something before he could start with his plan of creating a digital currency exchange. What was that? He was waiting for the Initial Coin Offering boom to gain some steam, because of which the trading volumes could soar to higher levels. He decided that once this attribute gets fulfilled, he would make his move of creating a digital currency exchange.
3. How did Zhao launch Binance, and what led to the platform's success?
It was the year 2017 when Zhao witnessed the first boom of the initial coin offering steam. This boom expanded the trade volumes to a new high. Zhao predicted that this was the right time to implement his plan.
So, he resigned from his job at OKCoin, and in July 2017, created Binance, an exchange platform that deals with cryptocurrencies. His move was justified as Binance raised an incredible amount of 15 million U.S. dollars from its initial coin offering, which caught Bitcoin’s ascent perfectly.
During its starting period, Binance did not have proper working space, and most of its employees sat beside each other owing to less working space. Most of the employees had their desks right outside the toilet. But today, Binance is the third-largest cryptocurrency exchange by trading volume and has customers in the U.S., Japan, Taiwan, South Korea, and many more.
The employee strength of Binance has phenomenally increased over the years, which shows how successful it has been. Binance today is a cryptocurrency exchange that supports more than 120 coins, works with around 100 digital currency wallets, and has more than 240 trading pairs.
The main motto of Binance is that it welcomes Blockchain-related projects with strong credibility, liquidity, and an enhanced user base.
Zhao also plans to use 20% of the profits accumulated every quarter year to shrink the token capitalization of Binance by 50%. This attribute will help him move higher and higher in the crypto-rich list.
Now, let us look into the factors which made Binance the successful platform it is today:
3.1 The perfect stage was set up during its launch: Binance was the first digital currency exchange, which released a white paper during its launch. White paper always underlines your project's goals and how you have taken steps to reach them.
This whitepaper feature helped Binance inculcate the trust of the investors, as, unlike many other papers, the white paper of Binance was straight to the point. This attribute helped Binance in raising lots of money for its investment.
3.2 Opening the floodgates: The first version of Binance was live within two weeks of the Initial Coin Offering closure. This attribute was, in fact, one of the first examples of a working exchange token. This feature helped the users to receive immediate discounts on their trading, withdraw their money, and the listing fees for using Binance Coin.
3.3 Binance is a unique trading exchange platform: The unique methods employed by the platform in its initial days resulted in the success that it is tasting today. Even though there were thousands of competitors for Binance in the trading platform, this uniqueness helped it surpass all of them.
3.4 Quarterly burns strategy: The employment of the quarterly burns strategy is by far the unique strategy employed by any platform. Binance burns its Binance Coin from its reserve allocation equivalent to the amount of the trading volume on its exchange every quarter.
But this plan will continue until 100 million Binance Coins remain, which is 50% of the initial supply.
3.5 The mammoth launchpad of Binance: Binance was one of the first exchanges to offer the ability to purchase tokens directly from their platform. This feature got initially highlighted by the ‘Gifto’ and ‘Bread’ token sales. Binance Coin also allowed its user to participate directly in a vetted initial coin offering with the help of an intuitive user experience. This feature drastically improved the tech-heavy nature of the conduction of many initial coin offerings.
3.6 Other services of Binance: Binance, apart from its exchange platform, also post regular announcements for the benefit of its users. Some of their other services include:
3.6.1 Binance has an academy that deals with blockchain and crypto education
3.6.2 It has a foundation by the name Binance Charity Foundation
3.6.3 Information regarding all types of digital currencies gets listed on the platform
3.6.4 They provide incubation through the help of Binance Labs
3.6.5 They give access to institutional-grade research reports and various analytics
3.6.6 It provides access to a trustworthy and recommended wallet for cold storage
4. What are the extravagant promotions undertaken by Binance?
Following are the extravagant promotional techniques undertaken by Binance to give fierce competition to its competitors. They are:
4.1 Unlike other competitors, Binance opted for a tried and tested technology for the functioning of its platform. The tried and tested technology housed working crypto-to-crypto exchange. This technology offered all buying and selling services. They started to provide these services only in around 15 countries, where the market conditions were favorable for this digital currency.
4.2 While other exchange platforms lost their sheen due to the market downturn, Binance shifted its attention to incentivizing its users into adopting value-added services such as the Binance Launchpad. This feature proved to be very successful, as the sales of new currencies through its exchange platform propelled onto a new level.
4.3 It started to invest in the forthcoming decentralized exchange. This attribute of Binance may well poise to disrupt itself in ways that can further legitimize or legalize the digital currency industry.
5. Explain the hacks Binance might have suffered and how it coped with it?
The recent hack Binance experienced was stealing around 40 million U.S. dollars worth of Bitcoin from its exchange platform. Many hackers were responsible for this crime. It was stated that the hackers carried out various methods to carry large-scale security breaches into the exchange platform.
It was estimated that around 7000 Bitcoins were stolen from the digital currency exchange platform. The hackers also managed to get additional details, such as user information, which included the two-factor authentication codes. These two-factor authentication codes were necessary for any user to log in to his Binance account.
Binance officials stated that the hackers were patient enough to wait for a longer time and then set up the stealing process through well-orchestrated actions. The stealing process was done through multiple independent accounts at an accurate and convenient time.
But Binance coped up with this hack in no time. The cryptocurrency exchange traced every stolen account to a single wallet. Though it was unfortunate that the hack happened, Binance was capable of stopping all withdrawals once it got executed. This step occurred because security systems could not trigger the alarms before execution.
The stealing was done through a hot wallet, not an independent account. After this hack, to avoid such incidents from occurring in the future, Binance has canceled all deposits and withdrawals until further notice, but trading will be allowed on the platform.
Binance has also assured its users that it will recover from the incident and that these hacks will affect no user's funds.
So, the final point to note from this article is that,
Binance is one of the world's most convoluted and most prominent digital currency exchanges by trading volumes. This phenomenal feat happened because of one person’s thirst for success, Mr. Changpeng Zhao.
Though his early life had numerous problems, such as his family getting exiled from his country, him looking after their financial needs, it is his hard work and dedication which has brought him till here. He has modeled Binance most innovatively, and it is still a dream for many competitors to race ahead of Binance.