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.

Zuckerberg Says Libra Can Boost Facebook's Ad Revenue, China Sees It as a Much Bigger Deal

Facebook CEO Mark Zuckerberg has, during a shareholder meeting, explained how the Libra cryptocurrency project will help the social media giant make money. China, on the other hand, published a book addressing the challenges Libra poses, arguing it could become the future of world currency.

In a transcript posted by Thomson Reuters, we can read Zuckerberg replied to a question asked by a shareholder on how Facebook will be making money off of the Libra cryptocurrency project. Zuckerberg responded by going into Libra’s potential impact on e-commerce on Facebook, and its potential impact on advertising revenue.

According to the social media giant’s CEO, Facebook does not charge a set price for ads and instead works with a bidding system, where every business trying to advertise will bid to compete for ad space. The system, Zuckerberg said, allows them to get the “lowest possible price.”

He added that combining ads with an effective payment tool such as Libra can benefit businesses further as it could make commerce more efficient:

If we can make commerce be more effective for businesses if when they run an ad, somebody who clicks on that ad is now going to be more likely to buy something because they actually have a form of payment that works that’s on file.

Advertising on Facebook, as such, becomes more worthwhile for businesses, which could in turn see them bid higher on ads and increase overall ad prices. This would effectively boost Facebook’s 0s advertising revenue.

Zuckerberg also reiterated other advantages of Libra, pointing out the payments infrastructure “hasn’t been updated in a very long time.” China, which has plans to launch its own digital currency called DCEP, sees Libra as more than a way for Facebook to make money.

Libra Could Hit China’s Efforts to Increase Yuan Influence

In a book published by the Central Party School of China to educate government officials on digital currency and propose policy measures to deal with emerging challenges like the Libra project, experts argue the latter is an excellent example of a public-private partnership and has the potential to become the future of world currency.

This would mean, according to the book titled “Discussing Digital Currency with Leading Officials,” that Libra could get in the way of the Chinese government’s attempt to increase the influence of the yuan.

Hongzhang Wang, former chairman of the China Construction Bank and one of the authors on the book’s preface, said in a recent article:

China originally relied on mobile payment to get ahead, but now Libra has the potential to change the game again.

Wang added that this would allow companies in the U.S. to build a digital currency system that could “threaten or even surpass” Alipay and WeChat Pay using blockchain technology.

Featured image via Unsplash.