Binance Won’t Compete With Coinbase and Gemini, Says CEO Changpeng Zhao

Omar Faridi
  • Binance CEO Changpeng Zhao believes decentralized applications (DApps) will play a key role in the future digital economy.
  • Zhao stated Binance is looking to build better decentralized digital asset platforms, and isn’t trying to challenge Coinbase’s dominance in the US.

Changpeng Zhao, the CEO of Binance, recently acknowledged in an interview that very few people are actually using decentralized application (DApps). According to Zhao, the main reason for this is that most DApps don’t have user-friendly interfaces.

Despite their present challenges, the Binance founder believes there will be a high demand for decentralized services because centralized applications don’t offer users the same potential level of privacy.

Focusing On Decentralized Platforms

It appears Binance, the world’s largest cryptocurrency exchange, has started investing in decentralized systems. The exchange recently acquired Trust Wallet, a decentralized cryptocurrency wallet that can also be used as a browser for DApps. Notably, Binance is working on creating its own blockchain as well, in order to reportedly launch a fully-decentralized exchange (DEX).

Currently, however, “It’s still the very early stage in dApps. Most are just proof of concept or simple games,” Zhao noted. This, the Chinese-Canadian businessman said, will soon change as we may see more sophisticated and useful DApps in the market soon, thanks to a large number of developers and tech companies focusing on their development.

Blockchain Technology's Developments

Additionally, there will likely be significant advancements in blockchain technology by 2020, which will lead to its increased use in messaging apps, social media platforms, and online rating systems, Zhao predicted.

Commenting on Binance’s plans to create a decentralized financial network, the former team member said it was, and still is to many, the true vision of Bitcoin (BTC). He added that Binance’s ongoing expansion efforts, which include establishing an office in Malta and investing in a crypto-friendly bank, aim to make decentralized financial services a reality.

When questioned about the current state of DApps, the CEO stated blockchain networks that offer smart contracts on their platforms may be too slow for businesses to adopt. He believes heavily funded smart contracts projects like EOS, Tezos, and Dfinity will be outperformed by future competitors due to the rapid advancements in computing hardware and software solutions.

Zhao also mentioned there are more innovative projects in the market right now, including Komodo, which aim to provide companies with their own blockchain so they don’t have to share their network with other individuals or organizations. This, he suggested, is a better option with a potentially more efficient service, as blockchains like that of ETH have become heavily congested because of their public nature.

Not Looking To Compete With Coinbase, Gemini

Curiously, when asked about Binance’s leading competitor Coinbase, a large San-Francisco based cryptocurrency exchange that’s about to add Ethereum Classic (ETC), Zhao said his company was not looking to challenge its dominance in the US.

He explained:

In developed markets, there’s more money to be made but more regulation and it’s saturated with competition. We don’t want to compete with Coinbase and Gemini. The strategy there requires lots of lawyers and lobbying.

Changpeng Zhao

Zhao went on to reveal his company’s business strategy, which is to work closely and directly with the heads-of-state of smaller jurisdictions with crypto-friendly regulations, like Malta. He added that “[Binance has] a very good relationship with Coinbase” and that it appreciates what the US-based exchange is doing in trying to help regulators develop a better understanding of cryptocurrencies.

Coinbase Commerce Now Lets Merchants Accept USD Coin (USDC)

On Monday (May 20), Coinbase announced that "Coinbase Commerce", which provides non-custodial cryptocurrency payment solutions, now allows businesses to accept fully dollar-collateralized stablecoin USDC.

History of USDC

As CryptoGlobe reported on 26 September 2018, "USDC Coin" (USDC for short) was launched on that day by Goldman-funded FinTech startup Circle Internet Financial (better known as "Circle"). This is a regulated fully-collateralized dollar-backed stablecoin that was originally announced on 16 May 2018. USDC is based on an open source fiat stablecoin framework developed and governed by the CENTRE project.

Circle said at the time that the problems with existing fiat-backed solutions (such as Tether's USDT) were that they "have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies."

In contrast, Circle's USDC stablecoin deals with these issues by "providing detailed financial and operational transparency" and "operating within the regulated framework of US money transmission laws, reinforced by established banking partners and auditors." USDC tokens are ERC-20 compatible (meaning that they run on the Ethereum blockchain); they are minted, issued, and burnt/redeemed based on network rules defined by CENTRE. 

Coinbase's Previous Involvement With USDC

On 23 October 2018, Circle announced that Coinbase (another member of the CENTRE consortium) was making USDC available to its customers on Coinbase Consumer and Coinbase Pro, and that customers could "tokenize dollars into USDC and redeem USDC into dollars through both Circle and Coinbase."

Then, on May 14, Coinbase said via a blog post titled "Expanding USDC crypto trading globally" that:

  • It was making USDC trading available on Coinbase Consumer and Coinbase Pro in 85 countries.

  • It was doing this to help "accelerate the global adoption of crypto trading" and to provide wider access to "a stable store of value."

  • There are more than 300 million USDC tokens currently in circulation today, and that USDC is supported by 100+ ecosystem partners.

  • Stablecoins "have the potential to materially improve the lives of people in countries where inflation is eroding wealth." 

  • Coinbase serves customers in 103 jurisdictions.

Coinbase Commerce and USDC

Coinbase Commerce was launched on 14 February 2018. Coinbase described Coinbase Commerce as a new service that "enables merchants to accept multiple cryptocurrencies directly into a user-controlled wallet," and that in contrast to its previous merchant products, it was "not a hosted service, so merchants have full control of their own digital currency." Four cryptocurrencies were supported back then: Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).

Coinbase Commerce can be "directly integrated into a merchant’s checkout flow or added as a payment option on an e-commerce platform." Initially, the only e-commerce platform supported was Shopify, but on 6 August 2018, support for WooCommerce was added.

Yesterday's blog post said that now Coinbase Commerce has added support for stablecoin USDC, thereby allowing "businesses to accept payments online in the same way they’re able to accept cash in-store." 

Here are a few things to note about Coinbase Commerce:

  • "Coinbase Commerce doesn’t charge any fees to process payments."
  • "Coinbase Commerce accounts are completely separate from Coinbase accounts."
  • "You can use the withdraw functionality to send cryptocurrency to an address associated with your Coinbase account."

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