While some have labeled NFTs as a momentary craze for ultra-wealthy crypto enthusiasts, Chinese crypto exchange Binance has gone all in on the non-fungible tokens. In late April, the company announced it would launch its own NFT platform, which it says will have both a trading market and premium events.
Binance NFT, which is set to launch June 24, will only allow a select group of 100 creators to sell NFTs in the first week, though their creations will be open to anyone who creates a Binance account. The company plans to take 10% of the profits while giving the rest directly to creators. There will also be a 1% processing fee for sales, which will go back to creators as a royalty payment for later trades. But art isn’t the only thing Binance hopes to use NFTs for, says Helen Hai, head of Binance NFT.
Hai sees NFTs as part of a larger migration of finance into the crypto world. In addition to leading the new platform, Hai has been head of Binance Charity since 2018, where she raises Bitcoin for various charity projects, from feeding children to aiding disaster victims.
Hai discussed how Binance built the platform, its connection with Binance Charity, and what she sees as the future of NFTs.
This interview has been edited for length and clarity.
The Business of Business: I would love to hear why Binance wanted to create this NFT marketplace.
Helen Hai: I think there are two things. Let's go to the vision first: what is Binance’s vision? I think, whether Binance does it or not, I think human beings are at a stage [where they’re] trying to migrate from the real world into a more digital world. And Binance is playing an important role in the digital world, the blockchain world.
If we look at the final vision — I would say the purpose of blockchain compared with the internet — the internet allows human beings the free transfer of information. Then the purpose of blockchain is to offer human beings the free transfer of value. And in this whole process, the migration process, Binance has been creating a big trading place and also building the whole ecosystem for the blockchain world. And I think with NFTs, he didn’t just say, “Hey, we should do NFTs.” We actually got a lot of our users coming to us saying, “Why don't you do NFTs?” And we did NFTs as a request from our users.
What do you think about the popularity of NFTs?
I think if I understand the bigger picture for human VR, we're in a stage of migrating into this new world. And then the question is, where are your assets going to be based? Your assets traditionally may be in fiat. Going forward, do you want your assets to still be in one-to-one or transition into the crypto world? Or maybe you expected some appreciation? That is why cryptocurrency exists, there's so many companies leasing their coins, which are equivalent to stocks. and the same thing when we look at human assets, like having art and other valuables.
I think creative ideas are something that exist in the real world. How are those things going to be translated into the crypto world, and also the digital blockchain world? I think it is going to play a very important role in this whole process. That is why very frankly, if you ask me what I think about it long term, I truly believe it has a huge future — short term, whether there's bubbles, maybe yes, maybe not. But that doesn't matter. The most important thing is actually how human migration into the crypto world [will work].
How is Binance’s NFT marketplace different from other ones like Nifty Gateway?
Number one, as I said, we did actually have a request from the Binance users. So in return, we definitely want to offer the best service to our users. And if you look at who will be our users, number one, maybe it’ll be all the people who will purchase NFTs. So we want to offer them the best platform, which actually has the most variety of NFTs, and at the same time is going to be very secure, very safe. That’s why people come to Binanace: Your assets, your wallet, everything is going to be safe, the service is best.
And the other set of the users will actually be the content creators. And we also want to give them the best value, [by] bringing back the value to them and also the purchasers. That is why we're offering the lowest fee, but the best service in the market to give all the benefits to our users. And this is always a top priority for Binance.
I would love it if you could walk me through how you built this marketplace. How many people did it take, and how long did it take?
It’s been roughly about two months since we decided to have the idea to do an NFT platform until our official launch. So internally, we gave ourselves a maximum timeline of eight weeks. And then in terms of people, because we have the whole bigger Binance infrastructure, very frankly, it's difficult to calculate. But the most important thing [was that] we needed to know what the user wanted most.
The platform we're going to offer to the users, there's going to be various updates of the versions. We're going to give a basic version at the beginning, and then once we have more feedback, while we keep upgrading, our marketplace will evolve.
What were some of the challenges in putting this together? I imagine it's a big project.
The challenge is not new to Binance. Why is that? Because the way we position ourselves is as an industry shaper. Being an industry shaper, you're always doing things other people have never done before. So it's not copying others if you have to invent a way other people never invented. So in this whole process, there were a lot of thoughts, and we had to figure out what the best way was.
So this actually is the most challenging [thing], being the first one to be there and trying to shape the industry. And I'm pretty sure there will be mistakes we will make. I also want to assure our users that we are definitely going to adjust ourselves very quickly, learn from it, and also keep improving ourselves.
I saw that there were collaborations with some celebrities and athletes.
Definitely, I think we'll need to talk a little bit about why I believe there is a long term future. I think there are two fundamental things. Number one, I think business model-wise, it’s innovative. Why is that? If we were looking at the art, let's say we are giving an example of a music creator. If you are a music creator, do you know how much you actually earned from that music? Have a wild guess. How much are you actually getting from the total sale?
Oh, it’s a very small percentage, probably.
15%. So this is the issue: For the actual producer, and to the people who are paying the price, 85% of that will be lost in a way to the middleman. If I look at a lot of the current business models, there's a lot of inefficiencies, because without technology, there has to be so much inefficiency. And that is why this, the fourth industrial revolution — blockchain itself — can improve the efficiency, reduce the middlemen, and bring more value to the actual creator and the purchaser. This is also part of human technological [evolution].
On the business side, I just gave you an example of music. The same thing applies to art, and also creative ideas. And this is why the marketplace is bringing the content creator directly to the purchaser, which brings more value to them. This is important because the current business model, whether it's for music or for art — the way the art gallery existed, it was because people wanted to access inspiration and all those brilliant ideas. But that's the form. But since the Second World War, that business form hasn’t changed. With today's technology, there has to be a new way.
There's certain innovations, like today, we all use mobile phones. Very few people use the landline, but I'm not saying mobile phones are going to replace all the landlines. I think the mobile phone is a great complementary form of communication in addition to landlines, and the same thing [goes] for NFTs.
NFTs are going to be a great complement to the current business model, applying to art, happiness, inspirational ideas, and music, all of those things. The technology itself is going to cut out all the middlemen, bring value to the creator and purchaser. That is one thing. And the other thing is, with the new generation, what kind of form do they want to receive in terms of happiness and inspiration? In the past, maybe we preferred a piece of art that's totally brilliant, but maybe there's a new generation, they want an alternative, instead of collecting paintings offline, you need to find a place to store [them] and to make sure they are authentic. But with this blockchain, there's a new form for the creator to bring their creative ideas.
Speaking of the business model and the money, you’re going straight to the creator. I don't know if you heard about this charity NFT from Noora Health, which is designed to save thousands of lives. You’ve been running Binance Charity before this, so are you looking to combine these things and work on any charity of NFTs?
I think we definitely want to give people the choice of how they want to give value and where they want their value to go. Because NFTs are an innovative and fun way to engage people in the charity movement. Just like other businesses, the charity industry is very challenging. In the past, most people donated money and it was for their own benefit. And maybe that’s for their own feeling of good. But now there are different forms of donation. Young people run a race, and as their registration fees are donated, they get something in return for the donation. It can be reusable, like a hoodie. But I think the most important thing going [through] this whole bottleneck for the current donation system is — if you donate $100 to a poor girl in Africa, thousands of miles away, have a wild guess — how much will that girl actually receive?
That's a good question. Maybe half of it.
Actually, it’s less than 25%.
I'm sure a lot of it is going towards paying people working in charities and whatnot.
Exactly. People sometimes have to audit their books. I'm not saying people are just taking the money away. But maybe they need to hire the PwC to audit their account. That's actually sometimes why the cost is higher than what you actually give to that poor girl. And then people need to travel — sometimes they might need to travel 10 hours in business class, that money is paid from your $100. So that is the inefficiency in the current work, but with blockchain, we’re having a remedy to solve that problem. For Binance Charity, what we did with the peer-to-peer donation, we were able to achieve 93% of your donation will go to the beneficiary, and 7% will go to the local administration costs for implementation.
So actually, in this whole process, Binance received zero money, we don't receive anything, and then our staff doesn’t receive anything. So everything's transparent, it's not just Binance that says it. Everything's tracked on the blockchain, you can verify it yourself. We don't need to hire PwC to audit, because everything is verified by the technology itself. This is number one in charity innovation.
If you are an art creator, and you sell $100,000, you can’t handle 1000 [copies] of your art and sell them for $100,000. In the past, probably 85% went to the middleman somewhere. You only received maybe 15%, or maybe 30%. But if you sell your piece on Binance, Binance only charges 1% for the technology costs. You get 99% of the $100,000. And then with those earnings, you can also [make] a decision. Instead of saying, “I don't want to give the other 85% to the middleman. Maybe I want to give 10% to charity for something I'm passionate about. For example, I want to plant trees.” So you can actually visit our charity platform, you can select the donation you want. And in there, you can also see the money you donate transparently, see how many trees it is in reality. Everything's peer-to-peer.
That makes sense that blockchain would keep things all out in the open.
Yeah, so with blockchain, I think we are entering this connected world, and everything becomes a whole bigger ecosystem. And everything is trackable and transparent and verifiable yourself.
It's interesting how there's this overlap with charity and NFTs. How did you go from the head of Binance Charity to the head of this project? And are you still working with Binance Charity on the side?
Yes, I'm still leading Binance Charity.
So how did that happen, that you ended up doing this other project?
I'm a strong believer in the purpose of blockchain. I think charities really create value outside the financial world, in real life. And NFTs are doing similar things. I think it’s going to be a great bridge, connecting the crypto world with the real world. That's something I'm so passionate about.
You mentioned how excited you are for the future of NFTs. What does that next five years look like to you? In five years’ time, what will NFTs be?
I think before we answer that question — I have a three-year-old son, I'm actually thinking more about when my son is a teenager, what's the world he's going to face? I think number one, there will be self-driving cars. He will never need [to drive] if everything's going to be self-driving. And then in terms of currency, I truly believe when he’s a teenager, cryptocurrency is going to be so native to him.
And then how about the world around him? He will be able to do everything through the screen, he doesn't need to actually go [anywhere]. Technology will offer his generation choices in front of some screen. He can do everything from shopping, he can go into art galleries, and get new inspiration and transfer values with people thousands of miles away. It is exactly like today, [we’re] several thousand miles away, but we were able to freely communicate, which our parents' generation would never imagine. But today, we are able to do that. I think the same thing [goes] for our next generations’ future, they are able to have a free transfer of value. So if that is his future, I think it is going to play a very important role.
I don't think currently today selling NFTs online is the ultimate future. But there’s definitely going to be further engagement or movement around it. I really think people [will use NFTs] as a complimentary choice. They don't have to be physically flying to Paris, they’re not visiting the Louvre, there is a screen in front of them, they are able to access all the brilliant ideas. So that is what I imagine.
It sounds like we're only just at the beginning.
Absolutely. As I said, I think Binance was always very proud of being the industry shaper. And we think the way we became Binance is because of our loyal users, we really appreciate their contribution. It's always our duty to serve the users, and with this new platform, we’d definitely love to hear more feedback, and also how our users want the NFT world to be shaped. We will be dedicated to working together with them to shape the future together.