Founder of Binance Changpeng Zhao – better known in the crypto world as CZ – recently offered a simple framework for thinking about risk, an especially important topic in crypto.
The basis of his approach is three straightforward questions: first, what is the worst-case scenario? Would you be able to maintain your lifestyle and cover the basics if the asset you are investing in drops to zero?
Next, how many attempts can you realistically afford if things do not go as planned? Finally, do you understand what you are getting into? If not, CZ says it is a better idea to learn first before taking a chance with your money.
CZ’s message emerged amid the crypto markets’ newfound optimism, thanks to the influx of traditionally conservative institutions, as well as the launch of U.S.-approved Bitcoin ETFs, both of which are opening new access points for investors.
Despite no longer being CEO of Binance, Zhao continues to play a key role in the industry. Since stepping down as chief executive officer, his focus has shifted toward mentoring startup founders, investing in decentralized technologies and helping build educational resources for the industry.
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A few months ago, he predicted that Bitcoin might hit between $500,000 and $1 million during the present market cycle, though he has not offered a specific timeline.
Beyond Bitcoin, CZ acknowledged that many speculative assets, especially meme coins, seem unlikely to hold long-term value. On the other hand, there is potential in areas such as artificial intelligence, decentralized finance and real-world asset tokenization.