Binance chief Changpeng Zhao says people must manage risks carefully, diversify and not chase high returns. Bloomberg
Binance chief Changpeng Zhao says people must manage risks carefully, diversify and not chase high returns. Bloomberg
Binance chief Changpeng Zhao says people must manage risks carefully, diversify and not chase high returns. Bloomberg
Binance chief Changpeng Zhao says people must manage risks carefully, diversify and not chase high returns. Bloomberg

Crypto crash is similar to 2000's dotcom bubble, Binance chief says


Deepthi Nair
  • English
  • Arabic

Today’s cryptocurrency market meltdown is similar to when the dotcom bubble burst in 2000, according to Changpeng Zhao, chief executive of Binance, the world’s largest cryptocurrency exchange.

While some companies won’t survive the current “crypto winter", the underlying blockchain technology will endure, the cryptocurrency billionaire said during a pre-recorded video at DIFC FinTech Week, a two-day event for key FinTech players to discuss the future drivers of growth in financial services.

“Blockchain is a proven technology. Some cryptos may drop in price, some projects may fail but the technology will stay,” Mr Zhao said on Tuesday.

“This is similar to the dotcom bubble. Many companies failed but the technology stayed.”

Mr Zhao made his debut on the Bloomberg Billionaires Index in January with a net worth of $96 billion. However, his fortune has plummeted to $20bn after a massive sell-off in digital currencies across the board — from Bitcoin to Ether to Solana, Cardano and Shiba Inu, among others — and causing the sector’s total market capitalisation to fall below $1 trillion.

Bitcoin, the world's first and largest cryptocurrency, crashed below the key $20,000 psychological level last week as investors continued to steer clear of riskier assets amid concerns of rising interest rates as central banks try to rein in inflation.

The digital token has since pared back its losses and was trading at $21,018 as of 2.51pm UAE time on Tuesday, according to CoinMarketCap. However, it is down more than two thirds from its peak of about $68,000 last November.

Binance has been strengthening its ties in the Middle East and Europe after receiving in-principle approval from the Abu Dhabi Global Market in April to operate as a broker-dealer in virtual assets in the capital.

Founded in China in 2017, the company also secured a virtual asset licence to operate in Dubai and regulatory approval from the Central Bank of Bahrain in March to operate as a crypto-asset service provider in the kingdom.

“This is an industry with a lot of risks, so manage risks carefully, diversify and don’t chase high returns,” Mr Zhao said.

Blockchain is fundamentally a way to transfer value, similar to how the internet is used to transfer information, he said.

“The internet has revolutionised how we live, do business and blockchain will do that further. It will change the way we think about investments, fund-raising and financial transactions that is not possible using traditional financial methods,” Mr Zhao added.

Some solutions provided by decentralised finance (DeFi) today are not offered by traditional finance, such as global fund raising.

Entrepreneurs can raise between $10 million and $40m in a matter of a weeks or days using DeFi, Mr Zhao said.

“This is not possible in the traditional financial industry. It could take you several months to years to raise a similar amount from venture capital companies.”

Artists and content creators can now also monetise their work globally using non-fungible tokens, which could not be done so easily through traditional art galleries, Mr Zhao said.

DeFi can help to provide financial services to the unbanked population, he added.

“In five to 10 years, DeFi could become bigger than CeFi [centralised finance]. That is why we are making heavy investments in this area,” he said.

There are many innovations occurring in the DeFi and cryptocurrency space that will push the industry forward, he added.

“Failures are important in this industry because they allow you to learn and improve.”

Progressive and innovation-driven banks will adopt blockchain technology in a big way, while those that do not adapt will have a “very hard time” in the future and those late in adoption will be at a significant disadvantage, Mr Zhao said.

Forbes' list of world's 10 richest crypto billionaires — in pictures

  • Changpeng Zhao, founder and chief executive of Binance, is the world’s richest crypto billionaire with a net worth of $65 billion. Bloomberg
    Changpeng Zhao, founder and chief executive of Binance, is the world’s richest crypto billionaire with a net worth of $65 billion. Bloomberg
  • Sam Bankman-Fried, founder and chief executive of FTX cryptocurrency exchange, ranked as the second-wealthiest crypto billionaire with a personal fortune of $24bn. Bloomberg
    Sam Bankman-Fried, founder and chief executive of FTX cryptocurrency exchange, ranked as the second-wealthiest crypto billionaire with a personal fortune of $24bn. Bloomberg
  • Brian Armstrong, co-founder of Coinbase, is the third-wealthiest crypto billionaire with a net worth of $6.6bn. Bloomberg
    Brian Armstrong, co-founder of Coinbase, is the third-wealthiest crypto billionaire with a net worth of $6.6bn. Bloomberg
  • Gary Wang, co-founder of FTX cryptocurrency exchange, ranked fourth with a net worth of $5.9bn. FTX
    Gary Wang, co-founder of FTX cryptocurrency exchange, ranked fourth with a net worth of $5.9bn. FTX
  • Chris Larsen, executive chairman of Ripple’s board of directors and former chief executive and co-founder of Ripple, rounded out the list of top five wealthiest crypto billionaires with a fortune of $4.3bn. Ripple
    Chris Larsen, executive chairman of Ripple’s board of directors and former chief executive and co-founder of Ripple, rounded out the list of top five wealthiest crypto billionaires with a fortune of $4.3bn. Ripple
  • Song Chi-hyung, founder of Upbit, the largest cryptocurrency exchange in South Korea, has a net worth of $3.7bn. Courtesy: Dunamu
    Song Chi-hyung, founder of Upbit, the largest cryptocurrency exchange in South Korea, has a net worth of $3.7bn. Courtesy: Dunamu
  • Tyler Winklevoss, chief executive and co-founder of Gemini Trust, left, and Cameron Winklevoss, president and co-founder of Gemini Trust, have a net worth of $4bn each. Bloomberg
    Tyler Winklevoss, chief executive and co-founder of Gemini Trust, left, and Cameron Winklevoss, president and co-founder of Gemini Trust, have a net worth of $4bn each. Bloomberg
  • Barry Silbert, founder and chief executive of Digital Currency Group, has a net worth of $3.2bn. Bloomberg
    Barry Silbert, founder and chief executive of Digital Currency Group, has a net worth of $3.2bn. Bloomberg
  • Jed McCaleb, founder and chief architect of the Stellar Development Foundation and co-founder of Ripple, has a net worth of $2.5bn. Courtesy: Stellar Development Foundation
    Jed McCaleb, founder and chief architect of the Stellar Development Foundation and co-founder of Ripple, has a net worth of $2.5bn. Courtesy: Stellar Development Foundation
Electric scooters: some rules to remember
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GYAN’S ASIAN OUTPUT

2011-2015: Al Ain – 123 apps, 128 goals

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2016-2017: Al Ahli (loan) – 25 apps, 11 goals

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Labour dispute

The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.


- Abdullah Ishnaneh, Partner, BSA Law 

COMPANY PROFILE
Company name: BorrowMe (BorrowMe.com)

Date started: August 2021

Founder: Nour Sabri

Based: Dubai, UAE

Sector: E-commerce / Marketplace

Size: Two employees

Funding stage: Seed investment

Initial investment: $200,000

Investors: Amr Manaa (director, PwC Middle East) 

'Spies in Disguise'

Director: Nick Bruno and Troy Quane

Stars: Will Smith, Tom Holland, Karen Gillan and Roshida Jones 

Rating: 4 out of 5 stars

Dunbar
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PRO BASH

Thursday’s fixtures

6pm: Hyderabad Nawabs v Pakhtoon Warriors

10pm: Lahore Sikandars v Pakhtoon Blasters

Teams

Chennai Knights, Lahore Sikandars, Pakhtoon Blasters, Abu Dhabi Stars, Abu Dhabi Dragons, Pakhtoon Warriors and Hyderabad Nawabs.

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All teams consist of 15-player squads that include those contracted in the diamond (3), platinum (2) and gold (2) categories, plus eight free to sign team members.

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The matches are of 25 over-a-side with an 8-over power play in which only two fielders allowed outside the 30-yard circle. Teams play in a single round robin league followed by the semi-finals and final. The league toppers will feature in the semi-final eliminator.

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Document everything immediately; including dates, times, locations and witnesses

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In criminal cases, you can contact the police for additional support

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Avatar: Fire and Ash

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Rating: 4.5/5

Tamkeen's offering
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THE BIO

Mr Al Qassimi is 37 and lives in Dubai
He is a keen drummer and loves gardening
His favourite way to unwind is spending time with his two children and cooking

RESULTS FOR STAGE 4

Stage 4 Dubai to Hatta, 197 km, Road race.

Overall leader Primoz Roglic SLO (Team Jumbo - Visma)

Stage winners: 1. Caleb Ewan AUS (Lotto - Soudal) 2. Matteo Moschetti ITA (Trek - Segafredo) 3. Primoz Roglic SLO (Team Jumbo - Visma)

Updated: June 28, 2022, 1:09 PM