Binance Changpeng Zhao 'CZ' urges crypto community to 'go back to building real products that people use’

May 12, 2022, 6:49 AM

A renewed focus on real value and a sense of humility was called for by the founder of the Binance exchange, who became a billionaire at a rapid pace.

He warned his followers that the space was still a new market and that new innovations were being tested to see if they succeed or fail.

Many may be all the rage at one point only to end up in a vicious circle.

At the end of the day, we need to go back to basics. He said that he wanted to build real products, not reliant on short term incentives or promotions, but with intrinsic value that people use.

Terra, the stable coin, saw its value collapse on Wednesday after investors lost confidence in its peg to the dollar.

Some thought the sustained pressure may have come from an external attack on the rival world of centralized finance.

Terra was designed to trade at a one-to-one ratio to the dollar, not with some form of actual collateral that should underpin its value, but through an algorithmic process of creating and then destroying its own supply of coin.

Despite the stable peg, it had marketed itself with the promise of a 20% annual return thanks to its controversial Anchor protocol that led some critics to compare it to a Ponzi scheme, while backers said it was merely an advertising tool to drive acceptance.

The two-year bull run in cryptocurrencies has seen the rise of not one but two canine-based meme coins, Shiba Inu and Dogecoin, thanks largely to coordinated buying via social media communities.

The fact that these digital currencies are backed by nothing but the support of their fans and none serve as legal tender has often bewildered traditional market investors.

'Cryptocurrencies don’t need more value than an empty box'

Sam Bankman-Fried, the founder of FTX, has raised controversy in the market.

Late last month the 30-year-old stunned interviewers after candidly admitting cryptocurrencies don't need any more value than an empty box so long as people keep putting more money into them.

He entertained celebrities like Bill Clinton, Tony Blair and Tom Brady at his own conference in the Bahamas.

Molly White, creator of a website that tracks scam artists and other scandals, told the Harvard Business Review on Wednesday that she started to worry about the economy after the community tried to convince people to use a digital wallet.

It used to be a niche technology for software engineers, and it seemed like the majority of people who engaged with it financially were aware of the volatility risks. She said that those who didn't want to use it could not put money in it.

Once projects began trying to bring in broader, more mainstream audiences, people who didn't seem to understand the technology or the financial risks, would need to engage with it.

The moment that digital currency broke through into the mainstream was during the Super Bowl, when stars like Matt Damon and Larry David tried to sell Americans on the idea of buying it.

After the debacle in Terra and its related Luna coin, the leader of the community told his followers to be more modest.

We need to respect the market and not be arrogant. He wrote that he would build step by step.