There are many famous aphorisms attributed to Binance founder and CEO Changpeng Zhao aka CZ. Some, such as the immortal “Funds are safu” typo, have assumed a life of their own, becoming part of crypto culture. But there’s another CZ line, which he has frequently repeated, that resonates truer today than at any point in the exchange’s five-year history.
“Don’t bet against Bitcoin. And don’t bet against B–.”
CZ doesn’t finish the line because he doesn’t have to, but for the avoidance of doubt, the second B is BNB, the token whose meteoric rise is inexorably intertwined with that of Binance and its larger-than-life boss.
Today, however, Binance, BNB, and that other B – Bitcoin – are facing their toughest year yet. With the SEC circling, rumors of sealed indictments, and the knives out for the industry’s heavyweights, CZ and his beloved B’s are gearing up for the fight of their lives. But as history shows, you should dismiss the Binance empire at your peril. Reports of its demise haven’t just been exaggerated but are wildly off the mark.
In the Beginning There Was Binance
Binance has been the top dog for so long that it’s easy to assume it was always that way. But in the beginning, the exchange’s ascent, together with that of founder CZ, was anything but inevitable. Crypto exchanges circa 2016 were austere, opaque, and often illiquid entities whose top-down governance meant that traders had to take whatever altcoin crumbs were thrown their way.
When Binance emerged kicking and screaming into the world via a 2017 ICO, not only did it usher in an entirely new era for exchange tokens, complete with the value- and customer-capture opportunities these present, but it rewrote the rulebook on what constitutes a crypto exchange.
The idea for the game-changing exchange came about when CZ recognized the growing demand for a user-friendly and reliable CEX. He saw an opportunity to create a platform that addressed the limitations and challenges faced by existing exchanges at the time such as scalability, speed, and customer support. To fund development, Binance Coin (BNB) was created as the native cryptocurrency of the Binance platform, which users could use to pay for trading fees and participate in token sales on Binance Launchpad.
Onwards and Upwards
The exchange quickly gained traction due to its robust infrastructure, a wide selection of cryptocurrencies, low trading fees, and emphasis on security. Binance attracted a large user base and became one of the dominant players in the industry before eventually morphing into the world’s largest exchange. Under CZ’s adroit stewardship, Binance has expanded its services, offering additional features such as margin trading, futures trading, and staking.
Binance has also diversified, venturing into other areas of the cryptocurrency ecosystem. Its own blockchain, BNB Chain, serves as the foundation for various projects and decentralized applications, and will soon be complemented by a separate L2 on Optimism. Binance has also established Binance Labs, an incubator and investment arm, to fund promising blockchain startups.
CZ, meanwhile, has grown into the industry’s de facto figurehead, outlasting other exchange CEOs who flew too close to the sun such as Hayes (BitMEX) and SBF (FTX). In the process, Binance has become the benchmark that launched 1,000 CEXs and inspired dozens of copycat exchange tokens. It’s no exaggeration to say that the Binance playbook has been repeated, rote, by the majority of exchanges to have emerged in the last three years.
Crypto’s Year of Reckoning
The cryptocurrency industry is no stranger to attacks, be they self-inflicted or external. It’s weathered multi-year bear markets, CEX implosions, exit scams, hacks, and enforcement actions from day one. 2023 has been different, however, not just for Binance but the industry as a whole. As a result of a concerted pincer movement led by US politicians and three-letter agencies, the industry has been squeezed out of banking services under “Operation Chokepoint 2.0.”
Meanwhile, the SEC, led by the polarizing Gary Gensler, has been on a mission to declare every crypto asset bar BTC a security while smothering US-based exchanges under a mountain of paperwork and a blizzard of un-compliable compliance rules. Binance has found itself caught in the storm, with its US exchange forced to rein in its operations while rumors of DOJ and CFTC involvement swirl.
Make no mistake, the good ship Binance has been battered and the reputation of senior figures, including CZ, is on the line. But it would take a brave soul to bet against Binance, whose totemic CEO has proven adept at navigating stormy waters. It shouldn’t need stating, but crypto without Binance would be in very bad shape. The whole industry should be backing CZ to buck off the company’s current problems because it needs a strong Binance just as Binance needs a strong industry in order to flourish.
Hail the Holy Trinity
The most obvious answer as to why crypto needs Binance is liquidity. Without it, available market liquidity significantly diminishes, particularly so for altcoins that are reliant on Binance for creating the conditions for efficient order execution. But to focus on liquidity is to miss the bigger picture of what Binance has brought to the party.
For the past five years, the company has incubated, accelerated, and launched transformative projects that have made crypto a better place. Take Polygon, for example, which came to life on Binance Launchpad under the name of Matic Network, and which has since evolved into an Ethereum scaling solution that routes millions of transactions per week through its mainchain and new zk network.
Axie Infinity, The Sandbox, and MultiversX (formerly Elrond) are just a handful of the projects Binance Launchpad has thrust into the spotlight and which have assumed multi-billion dollar valuations. Binance is much more than merely the on- and off-ramp for crypto: it’s the fulcrum around which much of the industry’s innovation revolves.
Like any company operating at the intersection of crypto and TradFi, Binance has clearly made mistakes in the past, particularly in the early days, when glib text messages from senior figures have been hauled up that paint the company in a poor light. It has since gotten its house in order, however, enforcing KYC and maintaining strict compliance in all of the regions in which it operates. While US three-letter agencies circle in the hopes of mortally wounding the latest crypto adversary to enter their crosshairs, the industry would do well to get behind Binance.
No company is too big to fail and no CEO is too charismatic to be toppled. But for the sake of the entire industry – not just its own customers – a healthy Binance ecosystem makes for a healthy crypto ecosystem. You wouldn’t wager against Changpeng Zhao remaining in his post long after Gary Gensler has vacated his. After all, it doesn’t pay to bet against B.