February 25, 2020
China has announced plans to test its first digital currency, a move that has the potential to challenge the growing market for cryptocurrencies now upheld by private companies. But Binance, the world's largest cryptocurrency exchange, is optimistic the shift toward digital currency will only bolster the adoption and acceptance of encrypted currencies.
"If China issues a national digital currency, I think it should be a net positive," CEO Changpeng Zhao told Cheddar.
It's just a matter of then making the leap from a government-backed currency to something "blockchain-ized," according to Zhao. That means using the distributed ledger technology that makes a cryptocurrency a cryptocurrency, rather than money controlled by a central bank.
He added that China, in particular, is primed to put aside their wallets and paper money.
"Nobody uses fiat currency. Nobody uses paper in China," Zhao said. "Everybody uses one of two choices: WeChat or Alipay. They both have 100 percent penetration today."
He noted that much is still unknown about what it would mean for the world's largest country to adopt a digital currency, but stressed that the impact will hinge largely on convenience.
"I don't know how big or small it will be," he said. "That depends on the details of how easy it is to use and how much freedom it has. But having one more choice is definitely better than none."
Whether cryptocurrencies achieve mass adoption is a make-or-break-it business proposition for Binance, which continues to push into the cloud services business. The company is offering a suite of services designed to allow anyone in the world to set up a cryptocurrency exchange.
"The Binance Cloud is really just a way for people to run cryptocurrency exchanges very easily," Zhao said.
This places Binance in competition with the likes of Amazon and Google, but Zhao maintains the service is more specialized.
"It's going to be a little bit different than [Amazon Web Services] or Google Cloud in the sense that I don't foresee there will be millions of exchanges. I think there could be a few hundred or even a couple of thousand," he said.