INTRO: Since the creation of Bitcoin,
the world’s richest crypto holder who got the majority of their wealth from crypto was
always Satoshi Nakamoto. This isn’t really that surprising given that Satoshi created Bitcoin
and owns a total of 1 million bitcoins which was equivalent to nearly $70 billion
at the peak. Over the past year though, there have been rumors in the community that Satoshi
may have been displaced by Changpeng Zhao or CZ. But there was never any confirmation from
sources like Forbes and Bloomberg. In fact, as recently as November 2021, Yahoo reported CZ’s
net worth to be just $2 billion which is a far cry from Satoshi’s tens of billions.
But more recently, Bloomberg added CZ to their billionaire’s list, and he comes in around the
$90 to $100 billion mark. And that doesn’t even include his personal crypto holdings.
Just 5 years ago though, CZ’s net worth likely didn’t even cross the $100 million mark,
so here’s how CZ made $100 billion in 5 years and became the world’s richest crypto billionaire.
EARLY LIFE:
Taking a look back, CZ was born on September 10th, 1977 in the Jiangsu province of
China. Both of his parents were teachers by trade, but this didn’t last very long after CZ’s birth.
You see, CZ’s father worked at a university and was known for having pro-bourgeois beliefs.
Bourgeois simply refers to middle and upper-class people, so that would mean that CZ’s father had
pro-middle-class beliefs. But, such beliefs were frowned upon in China, and over time
pressure mounted for CZ’s father to leave the university. So, shortly after CZ’s birth,
the family exiled to a rural area. This is where CZ spent the majority of his early childhood,
but when he was 12 years old, his family decided to move to Vancouver, Canada. It’s not clear what
his parents did for a living in Canada, but it definitely wasn’t that lucrative. CZ had
to pick up a number of minimum wage service jobs throughout his teenage years including working
at a few gas stations and McDonald’s. Moving into his college years, CZ attended McGill
University in Montreal, Quebec where he majored in computer science. Considering this training in CS,
I don’t think you’d be surprised to hear that CZ found an internship as a software developer out of
college. But, it wasn’t at a tech company, it was actually at the Tokyo Stock Exchange. CZ worked
for a subcontractor of the Tokyo Stock Exchange who was responsible for developing software for
matching buy and sell orders. After his time in Tokyo, CZ secured a full-time job at Bloomberg
Tradebook in 2001. Here, CZ worked as a developer for futures trading software which lasted for
about 4 years until he left in 2005. While CZ was technically a software developer, his entire
career was based on the financial sector. Many software engineers would probably find this quite
boring and would rather work at an innovative tech company, but CZ didn’t mind. In fact,
he spotted great opportunity within the trading world and this led him to found his first company.
FUSION SYSTEMS:
One of the biggest shortfalls of the financial industry is that they’re usually one of the
last industries to adopt new technologies. Take bank transfers for example. Most banks
still use ACH transfers to move around money despite the technology being created in 1972.
Usually, this is because with the financial industry, large amounts of money are involved,
and people are reluctant to trust newer systems. But, when a technological advantage
is undebatably better, people do usually come around, and this is what CZ was betting on.
In 2005, CZ founded Fusion Systems in Shanghai, China. The company specialized in developing
high-frequency trading systems for stockbrokers that could replace their old clunky systems.
The company also provided IT consulting services as well. Fusion Systems never turned into a
billion company or anything, but it looks like it was enough to provide CZ with a well-off life.
He ran the company up until 2013 when he heard about something called Bitcoin.
CZ’s introduction to bitcoin dates back to a poker game with his friends in the early 2010s.
One of his friends mentioned bitcoin and described what it was trying to accomplish.
CZ wasn’t instantly sold, but he was intrigued and it didn’t take him long to go down the
Bitcoin rabbit hole. He started off by just buying some bitcoin, and then he sold his house and put
it all into Bitcoin. Yes, that escalated fast. Also, let’s not forget, this was way back in the
2013/2014 bitcoin bull run. Selling your house and going all-in on bitcoin is not smart even today,
and that’s with significant institutional support and a market cap of around $1 trillion. Back in
2013, Bitcoin’s market cap was just $1 billion for most of the year, and the overwhelming sentiment
was that Bitcoin was a scam that was going to zero. So, I have no clue how CZ was so confident.
On top of gambling his entire net worth on Bitcoin, CZ decided to leave Fusion
Systems and get a job within the cryptocurrency space. So, CZ was literally all in on Bitcoin.
ALL IN:
CZ’s first job within the crypto-verse was at Blockchain.com. Blockchain.com was the original
provider of cryptocurrency wallets and exchange services. Between 2012 and 2020, they accounted
for 28% of all bitcoin transactions. Over the past few years, Blockchain.com has lost a lot
of its appeal as many consumers have switched over to more convenient brokerages like Coinbase,
Gemini, and of course Binance. But back in the day, Blockchain.com was the go-to place
for Bitcoin, and CZ joined as the third member of the company’s cryptocurrency wallet team.
CZ helped with the software development for the wallet for one year before he switched
over to OKCoin as CTO. At the time, OKCoin was a rather new platform being founded in 2013.
Unlike Blockchain.com which was mainly designed as a place to hold crypto, OKCoin was more focused on
enabling customers to invest and trade with ease. Today, OKCoin has grown into being one of the
largest crypto brokerages in the world with over 100,000 investors and traders. So, it wouldn’t
have been a bad bet to stay with OKCoin, but CZ felt that he could create a much better brokerage.
He already had a decade worth of experience developing high-frequency stock trading systems,
and now he had a pretty solid understanding of the blockchain. So, in 2015, CZ decided to combine his
knowledge and found Bijie Tech. The company was based in Shanghai and focused on providing crypto
exchange services to local residents. Bijie Tech chugged along for 2 years until suddenly in 2017,
all of Bijie’s platforms and websites went dead. There was never any explanation as to why Bijie
was shut down or if it was intentional. We all know that China is not a big fan of crypto,
so maybe the shutdown can be explained by political pressure. Or maybe, CZ shut down Bijie
on purpose in order to launch a more refined and stable exchange. We may never find out why Bijie
was shut down, but what we do know is that this was just the beginning of CZ’s crypto journey.
BINANCE:
CZ was determined to launch another crypto brokerage, but he had very little cash left,
and he was by no means willing to sell his bitcoin. So, he went to the public markets for
help. In 2017, CZ launched a new cryptocurrency called Binance Coin which was built on the
Ethereum network. The initial coin offering raised a total of $15 million which he used to launch the
Binance exchange in July of 2017. To this day, CZ claims that he only holds two cryptos which
are of course Bitcoin and Binance Coin. He says that the majority of his personal crypto holdings
is Binance Coin, and he has no plans of changing this. CZ believes that keeping the majority of
his personal wealth in Binance keeps him loyal and committed to the company long-term. Anyway,
despite the young nature of Binance, traders flooded in almost immediately as Binance was
specifically designed for high-frequency trading. Within just 8 months, Binance became the world’s
largest cryptocurrency exchange in terms of trading volume. And CZ leveraged this popularity
to launch a blockchain network called Binance Smart Chain. As the name suggests,
this was a new crypto blockchain. But, this chain was more similar to Ethereum’s blockchain than
it was to Bitcoin’s blockchain given that it was focused on defi applications. This
includes applications such as smart contracts, cross-chain transfers, and reduced block times.
Aside from launching a cryptocurrency, CZ also launched a stable coin in 2018. The goal with
the stable coin was to allow people to enjoy the benefits of cryptocurrency and blockchain
technology without all the volatility. CZ started off by partnering with 3 other exchanges and
raising a total of $32 million which they used to launch BUSD which is apparently backed 1 to
1 with US dollars. Moving into 2019, Binance partnered with an Israeli payment processor
called Simplex which allowed for cryptocurrency purchases to be made with debit and credit cards.
Despite all these great expansion efforts though, it wasn’t all smooth sailing for Binance.
ROUGH WATERS:
From the very beginning, one of the biggest challenges Binance faced was regulatory issues.
In September of 2017, China announced that they were going to ban cryptocurrency trading
within the country. So, CZ had to move all of Binance’s operations to Japan.
This worked for a couple of months, but it didn’t take long for Japan to start cracking down on
cryptocurrency trading as well. So, in March of 2018, Binance expanded their operations to
the island of Malta and they formed a Memorandum of Understanding with the Government of Bermuda.
This finally allowed them to continue operations without the fear of being shut down,
but they were still missing out on the largest market in the world because the US banned
Binance in 2019. As a result, Binance had to launch a US-specific version called Binance.us
which complies with US brokerage rules. This wasn’t the end of their regulation nightmare
either. Even today, Binance is under investigation by the US for tax evasion and money laundering.
But these regulatory issues would pale in comparison to what would unfold in 2019. On May 7,
2019, a group of hackers used phishing and viruses to steal 7000 bitcoins or $40 million worth of
Bitcoins from Binance. Fortunately, this was only 2% of Binance’s total holdings and they were able
to cover the losses out of pocket. But, this has become a permanent black mark on their reputation.
Aside from having to deal with hackers, Binance has also had to deal with quite a bit of angry
customers. You see, crypto is still a pretty young technology, and exchanges aren’t always perfect.
Outages still happen from time to time, and though Binance likely has a clause that says that they’re
not responsible for losses caused by outages, some traders are trying to pursue charges and reclaim
losses nonetheless. Honestly, I don’t think this case will go anywhere, but it’s just another
hassle that Binance has to deal with as well. BINANCE TODAY:
Despite all these challenges, Binance is still the largest crypto brokerage in the world in terms
of volume. Since they’re a private company, they don’t release their revenue and earnings number,
but we do know that Binance processes up to $170 billion worth of crypto trades every
day. To put that in perspective, Coinbase has a daily trade volume of just $2 billion per day.
Now, of course, Coinbase is not a trading platform, but given that the majority of
these brokerages make their money on transactional fees, volume is extremely important for profit.
Even with just $2 billion in volume every day, Coinbase is valued at $50 billion. So, I don’t
think you’d be surprised to hear that Binance is worth well above $100 billion. Looking forward,
CZ aims to donate the vast majority of his wealth as in 90+% to charity. So, it looks like the
wealth has found its way to good hands. And that’s how CZ went from $100 million to $100 billion in
5 years. Would you guys have gone all-in on Bitcoin in 2013? Comment that down below.
Also, drop a like if you hope that CZ follows through with his charitable promise. And of
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