binance ceo

The CEO of Binance, the world’s largest cryptocurrency exchange, doesn’t try to explain why some cryptocurrencies that started purely as a joke have surged so much in price.

He also doesn’t want to say if the exuberance for meme coins like Dogecoin is an indication of a dangerous bubble. But Changpeng Zhao, who goes by “CZ,” does say that it shows the power of decentralization, which has underpinned the huge growth of crypto.

Led by Bitcoin, cryptocurrencies have swelled in value to more than $2.6 trillion, putting them on par with the world’s most valuable stock, Microsoft. Such fast growth is drawing in more investors, as well as gaining the attention of regulators around the world.

Zhao spoke with The Associated Press after his company issued a call for more regulation of crypto markets around the world. Besides bubbles and meme coins, he talked about which cryptocurrencies he owns and his promise to donate most of his wealth. This conversation has been edited for clarity and length.

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What’s your takeaway when cryptos that started as a joke are soaring in value? To be honest, I don’t get Dogecoin. But this shows the power of decentralization. What I think may or may not matter. If a large enough number of people in the community values it because it’s cute, because they like the meme, then it has value.

And Dogecoin has lasted so many years. It’s gone up and down, up and down, but it’s lasted. And now we have Shiba, which is also a meme coin. We have a lot more meme coins. But guess what? For something to be valuable, you only need one other person to want to buy it.

For something to have liquidity, you need a large number of people to want to buy it or sell it. Once you have liquidity, a thing has value, according to the neutral market. So it’s not up to me to judge it. As a platform, we want to provide a marketplace for all the relatively valuable cryptocurrencies in the world.

When people buy things only because the next person will buy them, isn’t that a sign of a bubble?

To some extent, yes. But it’s not a black and white thing.

There’s no clear definition of what a bubble is. If an asset’s price drops more than 80%? Bitcoin dropped more than that and then recovered. Amazon dropped (more than 90% from the start of 2000 into September 2001), and now they are one of the most valuable companies in the world. Did it go through a bubble? According to most laymen’s definition, it probably did. For Jeff Bezos, he would probably disagree.

What’s important is there are high fluctuations. As long as people understand what they’re holding, what the risks are, then that’s OK.

Is that volatility the biggest barrier keeping people out of cryptos today?

Today, in the crypto space, there are a lot of active traders. There’s a large number of people who are in this industry for investment gains or speculative trading, and those guys actually prefer volatility.

There aren’t very good tools to handle all of those aspects. Centralized exchanges offer one solution: We hold custody of people’s coins. (But) how to securely hold your tokens is a fundamental limitation factor. We have not provided easy-enough-to-use tools that are also secure enough today. But I think as the industry evolves, things will get better.

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