Binance chief: Blockchain Industry showed ‘enormous resilience’
Changpeng “CZ” Zhao still sees opportunities in the middle of the ruins.
The founder and CEO of Binance, the world’s largest cryptocurrency exchange by volume, shared his thoughts on the current plight of the sector in a statement posted on Twitter June 23rd.
‘Enormous resilience’
“So far, I think the blockchain industry has shown tremendous resilience,” Zhao said. “If two years ago, on March 12, 2020, you told me that the price of bitcoin would be $ 20,000 by June 2022, I would be quite happy. So why not zoom out for a more balanced perspective?”
“With this in mind, let’s take the situation as a chance to repeat proper risk management and educate the masses,” Zhao said.
The closing price of bitcoin on March 12, 2020 was $ 4,858.38.
When Zhao made his comments, bitcoin fell almost 1% as the world’s most popular cryptocurrency struggled to stay above the critical level of $ 20,000.
“As you all know, current market conditions are tough. With our position as one of the largest players in the industry with healthy cash reserves, we have a duty to protect users,” Zhao wrote. “We also have a responsibility to help industry players survive and hopefully thrive. This is the case even if there are no direct benefits for us or we experience negative returns.”
E-commerce companies specializing in crypto were hit hard on Wednesday after BinanceUS, the company’s US affiliate, eliminated its bitcoin spot trading fees.
He noted that not all rescue packages are the same, citing some companies, products or projects that are “poorly designed, poorly managed and poorly run.”
“In short, they are just ‘bad’ projects,” Zhao said. “These should not be saved. Unfortunately, some of these ‘bad’ projects have a large number of users, often acquired through inflated incentives, ‘creative’ marketing or pure Ponzi schemes.”
‘Let them fail’
Bailouts do not make sense for these companies, he added, since in any industry there are always more failed projects than successful ones.
“Do not perpetuate bad companies,” he said. “Let them fail. Let other better projects take their place, and they will.” Industry players. Schools and governments “need to educate people about financial literacy, risk management, diversification and, most importantly, how to evaluate the basics,” Zhao said.
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Other companies have good qualities, but made some mistakes, he said, and “these can be salvaged and then secure changes to fix the problems that led them to this situation in the first place.”
“The third category includes projects that will survive, but hardly,” Zhao said. “They are in need of cash. They do not have a sufficient budget to grow healthy anymore. They can either wait out, get a cash injection or explore the possibilities of mergers and acquisitions. It is clear that all of these make sense from a potential investor or buyer. point of view. “
Zhao noted that he believes that a key difference between the current situation “and the 2018 bear market is that there is now more influence in our industry.”
“You will find rapid influence on centralized exchanges, often with futures products,” he said. “These work, as you might guess, very ‘fast’.”
Zhao said that slow influence occurs when funds lend to other funds or DeFi protocols to invest.
“Survival of the Fittest”
“When one of these is liquidated, the lenders concerned usually take a few days or weeks to realize or admit the pain,” he said. “These can also have a cascade effect, but the reproduction rate is much lower. I don’t think we have seen the end of these yet.”
“Fortunately,” he added, “the more these pervasive events occur, the smaller and more scattered the number becomes.”
His comments were generally well received on social media.
“Agree, survival of the fittest as with everything in today’s world,” one person twitret.
“Well said,” another person so. “So many people hear rescue operations and automatically think of the negative implications. But as a community, anyone who is able to provide assistance to solid projects to sustain their development through the bear market has a responsibility to help.”
Earlier this month, Binance halted temporary bitcoin withdrawals “due to a chain-locked transaction.”
The company also had to contend with reports that it had processed $ 2.35 billion in transactions stemming from investment fraud, hacks and illegal drug trafficking.
Zhao is the 80th richest person in the world, according to the Bloomberg Billionaire Index, which puts his net worth at $ 18.5 billion.
