Binance's CEO Defends ICOs

Binance’s CEO Changpeng Zhao sees ICOs as the future of investment.

In a blog post, Zhao, CEO of the world’s largest cryptocurrency exchange laid out a strong defence of Initial Coin Offerings. The post, “ICOs — Not Just ‘Good-to-Have,’ But Necessary” outlined the funding mechanism as 100 times easier and more effective than traditional venture capital systems.

Alongside the benefits for start-ups, Zhao provided an insight into the huge potential ICOs have for countries that open their doors to innovation.

“Now, imagine two otherwise identical locations, but one has 100 times more well-funded startups; what would their relative speed of technological advancement and economic development be? Which country will become wealthier over time? Which country will be able to collect 100 times more taxes over time? Which government will have more influence (more power) over time? For me, it is crystal clear, but draw your own conclusions.”

According to Zhao, ICOs lower the barriers blocking innovation, helping to accelerate development and growth. In comparison to VC funds who strip start-ups of their autonomy and offer a small amount of investment, ICOs allow a project to be kick-started with upwards of millions of dollars, without handing over any control.

Whilst the tone of the article was positive for the innovative funding mechanism, Zhao did address the problems the model is facing, from fraud to scams. However, his response was that early developments of any new system will always face teething problems.

“That’s all good and rosy, but ICOs are not without its problems. We are still in early days of the industry. You can’t make advancements without encountering problems. Properly dealing with issues is how progress is made. If we had given up e-commerce/internet because there was identity theft or credit card fraud, where would the world be today? Whoever deals with the issues best will be the winners, that’s where the competition is.”

Zhao’s analysis is much needed as nation states begin to act in response to the ICO economy. Whether they will support his viewpoint is another matter entirely.