Kazakhstan has been building a solid reputation as a serious player in the crypto world, with the Kazakh bitcoin mining industry comprising 13.22% of the total global hash rate in January 2022. The recent in-principal approval for the world's largest cryptocurrency exchange, Binance, to operate a digital asset trading facility and provide custody services in Kazakhstan seems to seal the deal.
The founder and CEO of Binance, Changpeng Zhao, sat down for an interview with Tengrinews, where he talked about whether cryptocurrencies will replace conventional money, the future of NFTs, and the company's plans for the development of the Kazakh crypto industry.
Bitcoin vs. Fiat Money
Binance has been rated the top choice for active traders, with its platform offering access to 500 cryptocurrencies. With Bitcoin still being the most popular cryptocurrency, there is a growing notion that the digital token could replace conventional bills and bank cards.
“I don't think [cryptocurrencies replacing fiat money] will happen in the short term. Frankly, when something new is created, it doesn't necessarily mean that the value of any existing things will be lost."
He continued: “Take Internet search engines as an example. They didn't need to compete with email services to grow. Social networks didn't need to compete with search engines to grow, either. You can create new value by creating cases that are useful to people”.
The CEO does not think cryptocurrencies act as a total replacement for fiat money, which is “great for paying for coffee, ordering food and many other things”. When it comes to transactions on a global scale, such as international trade, and purchasing and selling art, Zhao says cryptocurrencies are much more convenient.
For now, there is some overlap between cryptocurrencies and traditional currencies in areas, such as payments. “This has even been described in bitcoin's white paper, 'The Digital Peer-to-Peer Cash System'. Payments in fiat currency work quite well. Will cryptocurrencies affect the payments system in the long term? Probably, yes.”
What will happen to the blockchain and cryptocurrency industry?
Zhao predicts in 10-20 years the cryptocurrency industry will continue to grow, along with the Internet and blockchain. He also believes that bitcoin will not get replaced any time soon, though it might inevitably evolve in the long run. Bitcoin, so far, has the largest market capitalization and is decentralized, making it the most secure cryptocurrency in comparison to other coins.
“Whether bitcoin itself will evolve or be replaced by another coin, I don't know. Both are possible. Nothing stays forever, our civilization strives forward. I don't think bitcoin or cryptocurrencies will disappear,” he added.
NFTs are here to stay
A hot topic in the blockchain industry is currently the NFT (Non-Fungible Token), which is a crypto-asset, in the form of JPEG images, audio tracks, or video clips. At the end of 2021, the NFT market was valued at $22 billion.
When asked about the NFT market, Zhao noted that it is unlikely to fade away.
“NFT is here to stay. It has many uses, and right now we are only seeing the tip of the iceberg. NFT has brought a lot of people into the field who weren't even interested in cryptocurrencies before. I've talked to people who tell me they are doing NFT and have never used cryptocurrencies before. NFT now is one way for content creators to sell their art to fans around the world. It's exactly the kind of opportunity that wasn't available to us before.”
In real-time, the ones benefitting from NFT the most are content creators. Artists in Paris, Dubai, and the Philippines who have works selling $10,000 apiece in galleries, are claiming to make $100,000 or more for NFT versions of their works.
“The market is inherently volatile, which is normal. Does that mean that the technology itself is bad? I don't think so. But my point is that most of the NFTs in existence today probably won't hold their value in 5 or 10 years, that's the way the world works. Only a small number of them will retain value over time. Those NFTs that do may grow exponentially in value. I don't know which NFTs might turn out to be that. The same thing happens with Internet and crypto startups.”
Applications for NFTs in the future
The first example Zhao gave was NFT ticketing, which is valued at $7 trillion. “All tickets should use NFT, whether it's for sporting events or any other shows. You would simply be able to buy NFT and add it to your digital wallet. A staff member with a special app will simply scan your ticket with a QR code,” he said.
According to the Binance CEO, some artists and musicians would have concert tickets resell for up to ten times the original value. The artists complain that they do not earn anything from the high market price. Zhao says NFT can solve this problem.
“For every time a ticket is resold, the artist can get 80% of the difference, and the resellers will be able to get a maximum of 20%. That would give a lot more to the artist. It may be too much or too little, I'm not sure, but we have the technology now to track it.”
Another example he gave is the verification of the authenticity of the goods. International fans of popular sports teams from Great Britain and the US face the problem of getting tricked into buying fake merchandise. By purchasing an NFT, a fan can go to any store and pick up the item with a guarantee of authenticity, Zhao explained.
Kazakhstan as a crypto hub
Zhao recently met with President Kassym-Jomart Tokayev as well as the minister of digital development. He described the overall experience to be positive and said he chose Kazakhstan as a partner country because of its progressive thinkers and leaders. According to him, Kazakhstan’s level of digitalization and digital infrastructure made the biggest impression on the CEO.
“I think that Kazakhstan is well advanced digitally... The national identification system, other digital projects, the digital economy, and the IT sector are all pretty good things. We are involved in developing projects and want to do more to make Kazakhstan a crypto hub.”
Binance is involved in projects that establish incubation centers among other initiatives. Zhao complimented Kazakhstan for having its own ecosystem, noting several projects in the gaming and virtual reality that are significant to the development of a crypto hub.