“99% crypto exchanges lose money”, Why Binance is the Exception?
I attended the Asia Blockchain Summit 2019 in early July, and saw a number of important crypto/blockchain players: the founders of TRON, Binance, BitMEX, etc. have all come, and there was the highly anticipated debate between Nouriel Roubini “Dr. Doom”and BitMEX CEO Arthur Hayes.
Among the most impressive was of course the presence of Binance and its founder CZ. In his keynote, CZ talked about how Binance has come to become the #1 crypto exchange in just a few months. Their journey and the many obstacles they faced but have overcome along the way.
CZ was outside of the main conference hall both days of the event, after his talk on the first day, and next day morning. So I tried to chat with him a little to get his feedback on JCF, our crypto index fund to make basic income universal.
I wanted his feedback because Binance Charity has done great works in Africa, by enabling direct crypto donations from donors to recipients. Many children do not go to school there, and Binance Charity works with local organizations to provide lunch for children, as incentives to go to schools.
Given Binance’s crypto BNB’s rising price, one BNB can now afford over 100 days of lunch for a child.
That’s really impressive, and also in match with our current goal to get social organizations on board to receive “crypto donations”, as our fund JCF is designed to allow people to do social good while making long-term investments in the crypto space.
So there I was, naturally interested in his opinions and feedback, and also on whether we could work with Binance Charity.
CZ was fairly straightforward in expressing his willingness to help us to connect, as well as in whichever other ways that may be suitable. However, when I asked about his feedback to our project / goals, he simply remarked that all ideas are good, but it’s the execution that matters.
He went on to explain from Binance’s own example: “99% of all crypto exchanges lose money”, but obviously Binance isn’t one of them.
At this writing, there are currently over 2,300 cryptos and over 19,000 exchanges around the world, with a market cap of over 250 billions USD. Yet, if CZ is right that 99% of the exchanges are losing money, it means that less than 190 exchanges are profitable.
The actual number of profitable exchanges could be even smaller than that, and it isn’t something illogical, as the 80/20 rule and “winner-takes-all” effect is prevalent all over tech industry. Just look at the Apple/Google/Amazon/Facebook examples.
So why is Binance among the profitable? And in fact, currently sitting as the #1 exchange in the world?
I saw at least two important, yet not so obvious reasons, from my interaction and observations with CZ.
CZ listens to people and is keen to know what they think or feel. Unlike other founders at the event, he made himself very obviously and publicly available for anyone to approach him, both days in the morning, and didn’t leave until he made sure that every who wants to talk to him had a chance.
Besides being very people-centric, CZ is also a great delegater, who has a team of capable people around whom he trusts completely. Of course with Binance’s size, he definitely needs hands, but more importantly was how he’s both delegating, but also down to earth, and wants to listen to every opinion that wants his ears.
It’s a trait I observed on Tim Draper, the VC behind Tesla, SpaceX, Hotmail, and Skype, back in Collision’19 as well.
If we can learn to build and work with a great team, as well as being listening. Perhaps one day we might also achieve something similar in our respective fields or chosen endeavors.
