Ahead of the Present. History of the CZ

Preface

Greetings, dear reader!

Is there any easier way to understand the crypto-sphere by adopting the experience and way of thinking of outstanding personalities who literally built its foundation?

As for #making_on_crypto, why not learn it at the same time also from the richest representatives?

It's not uncommon for these motives to overlap and complement each other - to understand and make money.

The hero of last week's article was Sam from FTX and Alameda Research. As for our guest today... He could very well compete with Sam for any championship.

A simple guy who went through McDonald's, whose capital was once valued at $90 billion.

Sold his apartment to buy bitcoin at $600.

Once told his team, "We're going to do an ICO. Google it if you don't know the meaning of the word." Two weeks later, the guys had raised $15 million.

And just six months later, this project was the best in its field.

That project is the Binance exchange, and today's article is about its creator and CEO Changmen Zhao, also known as CZ (Changpeng Zhao).

He is one of the most famous builders, he managed to contribute to the sphere even before he founded his own company, and now he is a pioneer for the whole crypto-space.

This man lives his business, it's enough to know that 95% of Binance employees are paid in crypto. And the only assets he really holds are $BTC, $BNB, to understand his intentions.

Can you imagine how uncomfortable such a life can be? But this very thesis is what makes it possible to create innovative and breakthrough products.

Well, why not get to know each other better?

Early Biography

First Check Point: 1977. China during the time of Mao Tse-tung.

Our hero was born in the Chinese province of Jiangsu into a family of teachers. When CZ was six years old, amid the Cultural Revolution in China, his father was forced to emigrate to Canada. As all universities were closed because of the unrest, Zhao's father could not teach or even study.
As soon as the riots subsided, many students hurriedly applied to study abroad.

Fortunately, Zhao's father was accepted to the University of British Columbia.

So Zhao and his mother lived apart from his father for the next six years until they were approved for a visa. After that, the whole family moved to Vancouver.

To celebrate the reunion, the father bought his son an IBM-286 computer. By the head of the family's confession, it was the biggest purchase of his life.

That's where it all begins...

At first, Zhao played simple computer games. But thanks to his father, who is good at math and programming, and the teaching experience of both parents, the focus of his son's interests was skillfully shifted. The possibilities of IBM were revealed in a new way.

In high school, Zhao studied more and more math and IT, taking many courses. He sometimes had to combine his studies with a part-time job to help his family pay the bills. At one time he worked at McDonald's, a true cryptan.

Student life and the first serious job

Student life was full of internships and in his third year Zhao went to Japan. There he got his first real work experience: programming in the field of trading.

At that time Zhao had little idea about the structure of financial systems, but even for an amateur it was obvious that this field was a new "gold mine".

And this field would not let him go. Or rather, it would not let him go.

After graduation CZ travelled a lot, and during this time he gained valuable experience in the stock markets of Japan.

In 2001 I started working on the system of trade order installation, but already on the New York Stock Exchange.

In the same year I was offered a job at Bloomberg. He joined the team of Tradebook service, which specializes in futures contracts trading.

Zhao was promoted 3 times during his 4-year career at Bloomberg. In his last position at the company, he regulated interactions between the New Jersey, Tokyo and London teams.

Let's skip ahead a bit - CZ's example is also interesting because the philosophy of the cryptocurrency sphere applies not only to his work, but also to his life:

"I changed cities every five years on average. I lived in China, Canada, Japan, Hong Kong and Singapore. I think I'm a typical global citizen. It's influenced my outlook, the way I think and the way I do business."

That's what we see in the idea of decentralization-an attempt to prioritize the whole world over a particular centralized unit, expanding one's freedoms and experience.

Founding your own company

Zhao's career achievement at Bloomberg was just the beginning for CZ. After moving to Shanghai in the fall of 2005, Zhao became one of the first partners at Fusion Systems Group, a consulting company for trading and banking software applications. At Fusion Systems, he successfully negotiated trading systems deals with Credit Suisse, Goldman Sachs and Deutsche Bank.

Along with his main job at Fusion Systems, Zhao also tried himself in various startups, here is a little-known example:

In the end, CZ and its partner got into debt, which they were not able to cover until four years later.

Supplementing this thought we see that CZ almost created Tinder 6 years before the original.
Genius ideas may come often, but they will also require a corresponding return. In other words, don't spray every opportunity if you've got the confidence in your business.

In 2013, after becoming interested in cryptocurrencies, CZ left Fusion Systems (what's it like to leave your own company?). He had worked there for eight years.

Going into crypto from your own company - I think a lot of people are familiar ;)

The seductive world of cryptocurrencies

In 2013, Bobby Li, who was the CEO of BTC China, and his investor friend Ron Cao, then at Lightspeed China Partners, pitched the idea at a poker game:

Champen was inspired by the gamble.

CZ soon became familiar with Bitcoin's whitepaper and thanks to technical expertise figured it out in 6 months. At that time there was not much educational content on the Internet, only the local bitcointalk.org forum.

And that's the perfect example I'm trying to convey - once you could only read about bitcoin in one forum, but now, regardless of the price, they're ready to queue up for it.

In December 2013, at a small conference in Las Vegas, he met with some of today's industry giants: Charlie Lee, Matthew Roszak, Vitalik Buterin. There was also a representative from Ripple. He taught Champen how to use the token.

In the process he transferred some XRP (about $500) to CZ. When they were finished, CZ wanted to give the coins back, but the reply he heard was, "You can keep them and use them to train the next person.

Encouraged by the technology, CZ moved on to active investment.

He purchased a small amount of $BTC to estimate the potential. Having realized it in full, he was already in a hurry to sell his most illiquid asset - his own apartment.

At the same time, Champen regularly attended topical conferences and actively participated in discussions on cryptocurrency forums.

There he met the Blockchain.info startup team, which he soon joined as CTO.

CZ worked in this company for about a year, as he decided that his strength was, after all, in the exchange business. Champen still speaks warmly of that period in his life.

He contributed significantly in popularizing Blockchain.info from a startup to a widely recognized service.

After Blockchain.info CZ joined OKCoin (a subsidiary of OKEx), at the time the largest cryptocurrency to fiat money exchanger in China, as CTO, to which he was poached by He Yi (Current CMO of Binance).

The move came as a surprise to many, seemingly coming out of nowhere. Under CZ's leadership, OKCoin became the leading exchange in China and added advanced features such as futures.

After leaving OKCoin, CZ thought about creating his own exchange that focused only on cryptocurrency trading. He worked carefully on the concept, waiting patiently for the right moment to start.

From 2015 to 2017, CZ worked at BijieTech, the company he founded. The company provided cloud-based digital currency exchange networks for operators in Shanghai. Zhao mentions this period quite rarely in his interviews, and in general the whole time is covered by a veil of secrets and scandals. But if you omit those details, CZ acquired a significant number of useful contacts during this period, which will later become the backbone of the future Binance.

The birth of Binance

In the crypto industry, exchanges manage almost the entire infrastructure. Every single part of the transaction except for the buyer and seller, while in traditional finance there are about 12 different firms doing it all. The other important part was the need for a non-American transaction base.

The name of the exchange came about by combining two words:

Today, Binance is not just an exchange where you can exchange one cryptocurrency for another. It is a whole ecosystem offering a huge range of services and opportunities to its end user. Specifically, the exchange offers cryptocurrency to cryptocurrency exchange including more than 500 pairs. But there are even more significant products, which we will talk about a little later, because this is an article about CZ, not its project.

Having summarized all the experience gained, CZ went very long and carefully to its future project, waiting for the right moment, which came in 2017.

This year was marked in the crypto industry by the ICO boom period.

At that time, if you were a user of a crypto exchange, in most cases you had to deal with clunky interfaces.

The underlying systems were unstable and slow. In 2017, after another halving, the price of the major cryptocurrency was rising, while at the same time all crypto exchanges were falling into the abyss. And the worst part was that none of the exchanges had customer support services.

It is not known exactly when the concept of Binance was born and began to develop. From Zhao's biography we can conclude that back in 2013 he was imbued with a huge interest in the cryptocurrency industry. And after Zhao's not the best, according to himself, experience in the OKCoin cryptocurrency to fiat exchange, he began to conceive the image of his own cryptocurrency exchange.

The concept was actively developed presumably from 2015 to 2017, in parallel with the work in BijieTech, the staff of which subsequently formed the main working team of the future Binance.

The year 2017, due to the enormous hype in the field, as well as the ICO boom, was the most opportune moment to turn all the accumulated experience, innovative ideas and developments into results.

The exchange was established in China, but after the local law regarding cryptocurrencies became stricter, the company was forced to move to Japan.

CZ's reputation reached such a level at one point that he was invited to Malta as an advisor to write laws regulating the cryptocurrency industry. Binance's headquarters was then moved there. And Malta became the new cryptocurrency capital.

Opening Utility

Continuing to talk about discoveries - BNB has set a new trend for tokens and their use.

Many people are convinced that a coin can only have one use case, in fact there are more variations. Look at Ethereum-it can be a means of payment or capital preservation, but it also powers DeFi and NFT. The asset can have many uses.

At the time of its release BNB was a real breakthrough as it was the first token in combination with an exchange token, it first "ran" on ERC-20 and later its own blockchain was created.

BNB is a native currency of Binance Smart Chain, initially it was planned for internal use - discounts on commissions for traders, VIP-statuses and allocations on Launchpad. After the introduction of the blockchain, the possibilities of the token expanded beyond the use on the exchange, and today you can even book a trip or a hotel room for BNB. It is utilitarianism (utilitarianism again, no, just practicality) that creates value, and BNB has it in abundance.

The flow of new users was so enormous that the team had to hire people just to buy servers from Amazon every day.

The question of centralization: CZ VS Vitaly Buterin

This conflict was born almost immediately after the emergence of the Binance exchange and continues to this day. CZ suggests that Binance may well become a DAO in the near future, but Binance to this day is to some extent a centralized exchange. Vitalik Buterin, for his part, is an unquestioning supporter of complete decentralization (hahahaha, and this after he transferred ETH to PoS)

During the TechCrunch Sessions: Blockchain event, Vitalik Buterin expressed concern about the trend toward centralization of the crypto industry:

According to him, centralized exchanges exist only because they serve as a kind of bridge between the world of fiat currencies and the sphere of crypto assets.

CZ, on the other hand, expressed an alternative opinion:

This question is very relevant to this day, although this dialogue took place several years ago. It is difficult to take an unambiguous position, but CZ and vitalik.eth have raised a very important issue, in our future articles I will try to reveal it.

CZ's attitude toward competition

Sam and Zhao grew up in North America, worked on Wall Street, and started their business in Asia, where they are somewhat out of the reach of U.S. regulators.

As Coinbase, the largest U.S. exchange, has grown and gone public, Binance and FTX have created platforms that cater to American traders, offering far fewer advantages over the main company.

Following a similar path laid out by Changpeng Zhao, the three Bankman-Fried companies form the basis of a nearly independent financial ecosystem in which his firms can better leverage the value they create.

Binance was one of the first investors in FTX. Isn't that a competitor?

For all the friendliness of CZ, you can see that the era of Binance vs FTX is starting: exchanges began to race to buy bankrupt projects at cheap prices in order to sell them at a "fair" price during the next bull cycle.

Comparing Binance to Coinbase, Liu (Zhao's former OKCoin colleague) says the latter still takes a rather traditional Internet company approach to regulation.

They prefer to step-by-step offer high-quality services that target the American and European markets, while completely forgetting about the rest of the world. This approach has its risks:

Zhao seems like one of those people who likes to find short (and sometimes simple) ways to be effective. If you need to scale the world = he'll find a way to do it.

The ultimate demonstration of loyalty and charm

A key component of Zhao's charm is his ability to connect with people. 
Finding common topics of conversation and actively contributing to the cryptocommunity is the best way to build strong bonds.
Nevertheless, CZ is often criticized for his aggressive introduction into the legal spheres of various countries, and here is his response to that:

As impressive as the list of merits of the exchange is, it gets even more impressive, some of them - Binance Coin, and the Binance Exchange's cryptocurrency-only trading policy - were radical at the time of their launch. Add up the number of businesses that have since followed Zhao's lead, and it's easy to see why he is lauded as a visionary.

At the Forbes Asia Forum in Singapore, Zhao prepared a surprise for the audience. By the time he took the stage, the crowd of businessmen had turned into an excited mass.

It's a testament to Zhao's cross-over appeal - many in the audience are members of a financial institution who (at least publicly) are still somewhat skeptical, if not derisive, of the technology. On that very stage entrance, however, those differences disappeared when Zhao raised his hand to reveal his first tattoo, the new logo of his exchange, Binance. Since then, he has received no less than a dozen requests for selfies, all provided his right hand is raised high.

This move shows the root of CZ's appeal; if he sometimes seems to shun rebel status by abandoning passive real estate and fiat, what makes him such an effective ambassador for the crypto movement is that he so easily radiates his core beliefs.

Jehan Chu, co-founder and managing partner of Kenetic Capital, whose firm declined to invest in Binance, now believes it was a mistake, and much of it has to do with Zhao's talent for spotting market needs.

It is easy to forget that Zhao's rapid ascent came after nearly two years of exile of sorts, a period during which emails from CoinDesk often went unanswered.

Binance is neither the first cryptocurrency exchange nor the first decentralized exchange. "But he is able to synthesize his experience, his team and initiatives that he has not been able to implement in OKCoin.

And part of the reason for his abilities, they say, is that CZ is a very outgoing person. He has a great sense of humor and always seems to be a bit of a smart guy, a bit ahead of the mainstream.

Actions in the bear market 2022

In late November, CZ released an article with 10 postulates on the need for regulation in cryptocurrency.

On March 26, CZ met with San Salvador President Nayib Buquel. To discuss the implementation of crypto in Central America.

Zhao is pretty positive about what's happening with the crypto market in the summer of 2022. Here's a snippet from the interview:

According to CZ, the key difference between today's market and the bear market of 2018 is that our industry now has more leverage. There are two types of leverage: fast and slow.

Fast leverage is found on centralized exchanges, often with futures. They work, as you can easily guess, very "fast.

Slow leverage is when funds are lent by other funds or DeFi protocols for investment. When one goes into liquidation, it usually takes days or weeks for the affected lenders to realize or accept the pain. They can also have a cascading effect, but the rate of spread is much slower. Fortunately, the more such cascading events occur, the fewer they become and the more they are distributed.

With all this, the red candles did not escape Zhao.
CZ equity fell from $96 billion to $11 billion.
Of which 1.6 billion losses are Terra coins.

Right now, Binance remains the largest cryptocurrency company in the world, processing an unimaginable number of transactions. Every day, more than $50 billion changes hands on the platform, which typically takes a 0.1% fee. In practice, this means that Zhao, who is by far the company's largest shareholder, makes money regardless of whether its customers buy or sell.

CZ in ordinary life

Despite his wealth, Champen doesn't think life has changed much. He works hard every day because he likes it and it feels good.

Now he travels more and still takes advantage of some perks, such as attending the premiere of "Top Gun" in Cannes. Nevertheless, the Binance team helps him stay humble as he served and delivered pizzas later that week.

Champen was once asked, "What's the most luxurious thing you've bought for yourself because of your success?" To which he replied:

As a follow-up, the question came in, "At this point, how much of your own capital do you think is invested in cryptocurrencies?" The answer was as follows:

His personal assets are also simple Zhao is all in crypto, BNB and BTC.

What is the reason for breakthrough entrepreneurs to create a business based on? Pain. In Zhao's case, it's a personal pain-he hates fiat in all its forms-and what's a great way to get rid of intermediary banks? That's right, to create his own Binance Card. Naturally good intentions for others have a place too, that's why the product works. And what other examples of products/platforms in crypto from "personal pain" do you know?

Iron Man. Who does CZ see himself as?

It turns out that Zhao prefers comparisons to Tony Stark, the billionaire superhero known from the Marvel Comics.

In his eyes, he's just trying to do as much good as he can, and if that means challenging the establishment in the process, it's just a byproduct of his mission.

Nonetheless, Zhao does his best to develop the cryptoecosystem and avoids banks whenever possible.  Thanks in part to a team that handles his expenses. Whenever possible, he pays for hotels and airfare with cryptocurrency - even if with a surcharge.

It's a personal mission that has also reached his staff, where he estimates that 95% of the Binance team receives at least part of their salary in cryptocurrency. (Since he doesn't work with cash, he says the company works with a network of over-the-counter traders to pay fiat).

CZ is convinced that we live in a simulation:
"When I was a child 40 years ago, I lived in a small village without running water or electricity. We had to carry water from a well 200 meters away and use kerosene lamps when I did my homework in the evening. A few years later we had a water pump installed in our own yard, which was a huge improvement. Another year later we had tap water. When electricity became available, it was only available for a few hours a day. That also improved very quickly. Now we have cell phones, the Internet and blockchain. Given the exponential growth of technology, imagine in 20 years we have the technology to stick a rod in our head like in the movie "The Matrix" and everything will be modeled for us?"

Zhao thus identifies himself as a HODLer, a cryptocurrency enthusiast who believes that whether the market is rising or falling, the best investment strategy is simply to buy, hold and wait for the world to wake up to the asset class.

His other qualities have infiltrated the Binance team, he says. He describes his core mantra as "be fair, be ethical, don't do anything stupid." Nevertheless, there are differences between the superhero and his team of cryptomystics.

The final and best way to summarize CZ's ideal is his conviction-those who believe in cryptography and help push the technology toward the mainstream will be rewarded.

Afterword

Friends, with this article I wanted to show you that the way to success is often through years of experience, coupled with the idea of changing the world.
Wealth rarely comes to us by itself; it is important to remain optimistic in any situation. Especially in a bear market, when the market presents opportunities to enter at the most delicious prices.

One of the ideas behind the CZ article was to show that even when thrown into an unknown country as a stranger among strangers, you can with hard work and ingenuity get what you really deserve. Hard work is important, and working smart is even more important.