“Some cryptocurrencies may drop in prices, and some projects may fail, but the industry will stay,” said Changpeng Zhao, the founder and CEO of Binance, the world’s largest cryptocurrency exchange, during the DIFC Fintech Week event at Dubai on Tuesday.
In a pre-recorded video speech, Zhao, better known by his initials CZ, said, “In 2000, the dot com bubble saw many companies going bust, but the dot com technology (Internet) went on to survive.”
Zhao’s comments came just a few days after he announced that Binance has 2,000 positions for hiring, a sharp contrast to a slew of job cuts by companies operating in the digital currency space. The move by Binance came amid extreme volatility in the cryptocurrency market.
Recently, Bitcoin tumbled to a new 18-month low, dragging smaller tokens down with it and spurring a sharp fall in the digital currency market sparked by crypto lender Celsius freezing customer withdrawals.
Prices of Bitcoin and other cryptocurrencies were lower on Tuesday as the digital asset market remained under pressure. On Wednesday, the largest cryptocurrency was little changed bound in a range between about $20,130 and $20,429.
Far from a bubble
Zhao went on to say in his speech that blockchain is a proven technology and it is not a bubble that will pop.
“Many different innovations are coming into the crypto space. There are also failures in this industry, but failures are important in this industry. Failures allow us to learn from them and improve,” he said.
Zhao said that decentralised finance (DeFi), which includes now cryptocurrencies and non-fungible tokens (NFTs) enabled by blockchain technology, has been around for years, and it is going to stay.
“In the next 5 to 10 years, decentralised finance (DeFi) could be bigger than centralized finance (CeFi). That’s why we are making heavy investments in this area,” he said.
He added that global fundraising by new age entrepreneurs has become much easier through DeFi.
“New entrepreneurs can raise millions of dollars as funding for their businesses in a matter of weeks, even days, from anywhere in the world, if not months, which is not possible through traditional finance. This faster way to raise funds is a new tool that is available to new age entrepreneurs through DeFi,” he said. “If you are not a new entrepreneur and want to raise funds, it would take months to approach and finalise the deal with VCs”.
Another difference, he said, is that artists can now monetise their works globally through NFTs.
“I met an artist recently who used to sell her art pieces for $10,000 earlier through traditional art galleries. Now, by using NFTs, she is selling [them] for $100,000 a piece. We are seeing more and more artists choosing NFTs to monetise their works,” Zhao said.
However, he cautioned that there are a lot of risks in the industry. “Don’t chase high returns. Think about diversification and just manage your risks properly,” he said.
(Reporting by Sunil S; editing by Seban Scaria)