Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Yoni Assia: eToro – The Social Trading Platform

Episode Date: October 15, 2019

We’re joined by Yoni Assia, Founder and CEO of eToro. The concept behind this world-leading social trading platform is users invest smarter by automatically copying the top traders in the community. With over 10 million users, over a trillion dollars traded on the platform just last year alone, this fascinating approach to trading is making huge waves. A decade after its original launch, eToro entered the crypto space with eToroX, their crypto exchange. More recently, they added cryptocurrencies to the growing list of assets that users can add to “Copy Trades.” Yoni shares his long-term vision in which he sees the tokenization of all traditional asset classes eventually taking place.Topics covered in this episode:Yoni's background and how he first became interested in financial tradingHow Yoni and his brother came up with the idea for eToroThe background of the Bitcoin community in IsraelYoni's predictions for the finance industryHow the power of tokenization paved the path for eToroWhat makes eToro unique compared to other crypto trading platformseToro's blockchain walletThe launch of the eToroX crypto currency exchangeeToro's views on custody of assets and DeFiEpisode links: eToroeToro on GitHubThe eToro Crypto WalleteToroXeToro TwitterYoni Assia TwitterSponsors: Cosmos: Join the most interoperable ecosystem of connected blockchains - http://cosmos.network/epicenterVaultoro: Trade gold to Bitcoin instantly and securely starting at just 1mg - http://vaultoro.comThis episode is hosted by Sebastien Couture & Brian Fabian Crain. Show notes and listening options: epicenter.tv/309

This is Epicenter, Episode 309 with guest Yoni Asia. Hi, welcome to Epicenter. My name is Sebassan Kutu. And my name is Brianne Phaveni Krain. Today our guest is Yoni Asia. Yoni is the CEO and founder of Yonai Toro. If you haven't heard of Yorro, it's a social trading platform that allows users to invest in all sorts of assets, stocks, bonds, commodities, and cryptocurrencies. So they've been around since 2006.

They're a pretty big company, over 700 people, and they have offices all over the world. And what's most interesting about Itoro is the social trading aspect that they've pioneered. When you're using Itoro, you can choose to make your trading profile public to others, and people will see your performances over time. And then they can simply choose to copy whatever trades you make, effectively benefiting from your experience and all the research that you put into your own trades. So it's created this very interesting dynamic where effectively you're kind of creating like your own mini ETF and allowing others to invest in it.

So it's really cool. Yoni and Yorra have been active in the crypto space for many, many years. And we went into this into the interview with Yoni. He came into the Israeli crypto scene around 2010 and he was closely involved in the Colored Corns project. As a story goes, Vitalik Boudarin was traveling in the end of 2013. And he came into their office in Tel Aviv. and he helped them build the colloquine's implementation.

Of course, this was just before the Ethereum white paper was released to the world. So there's a lot of interesting crypto history, and we went into that with Yoni during the interview. Ituro is really interesting because it's a product that lowers barrier to entry to trading and investing. They've made onboarding super easy. It's a very slick, mobile-friendly experience. And the social aspect of Ituro, I think, is what attracts people who may normally be intimidated by trading. and makes it more much more fun and exciting. Of course, any sort of investment involves risks,

and this is something that we discussed with Yoni as well. Yeah, I mean, I remember hearing about E-Toror, I guess in late 2013, you know, maybe it was at the start of 2014. Back then, it was like big news. Oh, some new platform supports like Bitcoin and, you know, like looked at it a little bit back then. I didn't really realize that, you know, there was such a backstory, Yoni as the founder had with Bitcoin and crypto and such deep thoughts

into it. It seemed like a little bit to me at the time, as in, you know, you had this 2013 crypto bubble and the first bubble or one of the early bubbles and that's companies coming on top of that. But it's really interesting to talk with Yoni, just how long and how deeply they've been grappling with the topic of Bitcoin and cryptocurrencies. And yeah, I think that done some really, awesome stuff. I'm just the product itself is really cool. And yeah, I'm excited. The conversation was really fun. I see him as a great advocate for crypto. His company is very much embedded in the traditional finance world. And Itoro's being as big and successful as it is, it enables users to trade cryptocurrency just as easily as they would trade any type of financial asset. And that

opens the door to just so many more people being exposed to crypto. So before we go to the interview, I want to talk about SF Blockchain Week. There's a lot going on. And so I want to break it all down for you. So Sunny and I will be there attending both CESC and the Epicenter conference. Of course, Epicenter is a conference that's organized by other people than this podcast. But we're partnering with them. So I'm super excited to be emceeing the entire conference. I'll be emceeing both on the 31st and the first, so I'll be really excited to see all of you there. I got to say, it's a little intimidating.

It's been a long time since I took the stage in front of that many people, but it's definitely going to be a lot of fun, and I'm really, really looking forward to it. It's going to be a fantastic event. Tickets are still available, and we have a 20% discount code for listeners of the podcast. You can get your tickets at epicenter. dot rocks slash sfbw tickets. That's epicenter.com.com slash sfbw tickets and use the code epicenter 2x to get your discount, your 20% discount. I also mentioned last week that we're going to be doing casual drinks meetup. Well, we've locked down the date. It'll be on October 29th. And since it's right

after day one of CESC, it'll probably be in Berkeley. We're still looking for the venue. But if you're going to CESC, you know, come hang out and have a drink with us. It would be so much fun. You know, every time we do one of these meetups, it's always great to meet, you know, listeners and former guests of the podcast. So register at epicenter.rox slash sF meetup. And we'll have the location up as soon as we've locked it down. We're also attending the hackathon that's happening over the weekend.

And it is co-organized by our sponsor, Cosmos. It's from November 1st to November 3rd. third. The theme is Defy, and there's a $50,000 price pool in Adam for winning teams. So if you've got a cool defy idea, like staking derivatives or a lending platform, or, you know, if you want to build the next make or die for Cosmos, you should definitely register. What's really exciting is that the inter-block chain communications protocol, IBC, is nearing completion, and it will be ready by the time this hackathon happens. So that means that you can use IBC to interoperable.

your DAP with other DAPs in the Cosmos ecosystem. And that just opens up a whole bunch of other possibilities that weren't possible before. You don't need to be a developer to apply. Anyone's welcome designers, project managers, legal experts, you name it. If you're interested in building a cool DFI project and you want to join a team, register at epicenter.rocks slash SFcosmos and be sure to let them know you heard about it on epicenter. I also want to tell you about Voltauro's brand new V2 platform. It's been a long time in the making, but it's finally here and it's pretty awesome. The new trading dashboard looks and feels great.

They put a lot of effort in making the onboarding process simple. It only takes about two minutes to get verified. One of the major improvements is the addition of new trading pairs. In addition to Bitcoin, they've also added dash and new trading pairs will be added soon. So recently, I've taken a lot of interest in diversifying my financial portfolio. A lot of experts are predicting a global recession in the next coming years. I don't know if that's coming, but if it does, I want to make sure that my eggs are not all in the same basket. And that's why I'm using Voltauro to buy gold. Gold is a great hedge against the volatility in crypto, but also against the financial system. And at Epicenter, we've been using Voltauro for years to protect ourselves against the volatility

in crypto, and we've always been happy to have that security when the markets were really all the time. So to create your account, go to vultor.com. That's V-A-U-L-T-O-R-O, and make sure you let them know. Epicenter sent you. We'd like to thank Voltero for their support. So you've probably noticed this is a little different from how we normally do ads, which are usually in the middle of the podcast.

I wanted to experiment with talking about our sponsors at the beginning of the show because I think it gives us a little bit more flexibility. I'm curious to know what you think. Reach out to me on Twitter if you have any feedback. So with that, here's our interview with Yoni Asia. Hi, so we're here with Yoni Asia. Yoni is the CEO of Yatoro. Yoni, why don't you tell us a bit about yourself and your background

and how you became interested in financial trading? Sure. So thank you for having me. So I'm Yoni Asi. I'm the CEO and founder of Yatoro. I've been passionate about capital markets since I was very young. I started trading the markets when I was about 13 or 14. I got some shares to buy a Mitzvah from my father and started trading through my bank

and really fell in love with the concept of capital markets and how the entire world is connected. and I sit in my room in Israel and click a trade and then see that trade happening in the NASDAQ blotter. So I really fell in love during the dot-com bubble in the markets. I traded through. I made a lot of money. I lost a lot of money. And I fell through that in love in capital markets

and wanted to have more people participate in the markets and have that same feeling of, of ownership and collectivism together. I think you're the first person I've ever heard to say the words, I fell in love with capital markets. But what led you to found Itoro after discovering this love and passion for financial markets? So I've been trading for a while. I'm also a computer scientist.

So I'm a finance geek in my background. and I did my master's in computer sciences, and at the same time, my older brother, Ren, who's my co-founder, always looked at what I do and said I have somewhat of an accountant hobby, that I sit in front of multiple screens, lots of charts, spreadsheets, and that the user experience is horrible. And then we started brainstorming about how can we make the user experience of trading and investing, something that's more accessible and more open for everyone to trade and invest. And that's really how we started Itoro.

We started Itoro with a concept of simplifying financial trading for everyone to trade and invest in a simple and transparent way. And throughout basically building Itoro, we found out that it's not only about creating a great user experience to access the markets, but it's also to find the user. experience for people to learn and get educated from one another. And that's where we came with the concept of social trading. Because the best way to learn is to observe what other talented people are doing and potentially, if possible, copy them. That's how you succeed in high school. So that's how basically we started forming the concept of the social trading network where every

single person on Itoro when they open the account automatically publishes all of their trading activity so everyone can see what everyone is trading and then follow or automatically copy the top traders on the platform. Yes, this is such a fascinating approach. When you guys started Itoro, did that exist before or how did you originally come up with this idea? When we started Itoro, we launched Itoro with a social layer around it that enabled people to create profiles and to talk like in what people call today in exchange as trollboxes. And when we looked at the engagement of users, what we saw is that the feature that they used the most was chat and then specifically to talk to one another about what they're trading. So we launched in 2007, our first year of operation was 2008, and then we launched the Open Book, which basically was the platform which enabled everyone to see each other in 2010.

Okay, okay. Still, I'm curious, though, do you remember kind of the original or the idea of like copying trades? I mean, I guess it's a somewhat obvious idea, but like not completely. So how did you originally decide on that feature? The feature really started from us showing everyone on the platform, what everybody does. I remember we sat here, you know, middle of the night talking about names. What should we call this concept of copy trading? So we were definitely one of the first platforms to suggest that people can actually copy other people.

It was an extension of the fact that we made. people to see what other people are doing was to basically extend that so you can see somebody's track record and say, hey, I want to copy this guy with $1,000. And from that moment on, you copy his entire portfolio into yours. And every time he trades, he trades automatically at the same time, same proportion and same price in your account. So what was the reaction to that? I mean, I can only imagine that some people maybe, you know, back in those days where social networks were just kind of getting off the ground. And also people, people, I think, tend to have somewhat of a reluctance to share information about, like, sort of their financial wealth or things

like this. How is it received then? And then how has that conception sort of evolved over time? So I think it definitely evolved over time because we've seen significant growth over the past three years, both around crypto and around copy trading. I think a lot of people when initially they joined, and that's also a big part of our network effect today, that it took a relatively long time since we launched the product in 2011 to generate thousands of clients who have nice track record for long duration, which is relatively consistent. and sustainable. So when you go through the platform, you can see hundreds of thousands of accounts. And now in 2019, you can actually find thousands of accounts that have been profitable

for three, four, even five years. And you can see the entire history. So initially, a lot of the challenges we had was about discovery. And what's the right way to let people discover top traders. Our initial thinking then was let's try to basically create a list and let people sort the list. And what we got is people very naively just sorting the list by gains and then choosing the ones who generated the most amount of gains and copy them. And that turned out to be a very bad strategy. So we started doing a lot of analysis on who are the people that our customers should copy. And we got to the conclusion that we should make it more like an app store first,

try to figure out what you're interested in, and then let you find people who are similarly minded. And also always sort of look at risk and reward at the same time. So for example, today, if you trade at very high risk, we have a risk score. So you guys can actually see the platform here in your eyes. So anywhere we mention the returns, the last 12-month returns. We also mentioned the risk score, which is basically the volatility of the portfolio.

So today you can only copy people up to a risk score of seven, and people who are popular investors, which basically means other people are copying them and they're getting paid for it, need to manage that risk score, and at some extent need to actually lower it to six and below. One of the question that comes up here, so let's say you have a 100,000 active traders on there. Of course, just purely from a statistics perspective, if you'd expect that, you know, some of them, even by pure chance, if there's no particular skill, right, like would, you know, outperform others even over an extended time. So I'm curious, like, do you, how do you know whether, you know, a trader has just gone lucky again and again? and then ends up sort of floating to the top and retort

or whether there's like genuine skill behind it. So you can see here what we're using is we're using a lot of filters. Today we're actually also using machine learning. So we basically have about 24 plus parameters, whether it's weekly drawdown number of trades, profitable weeks, profitable months, the risk score, stability of risk score, et cetera, including how many people are copying them and the copiers change,

then we take basically all of these parameters and we feed it into a machine learning algorithm and ask machine learning algorithms to basically rank people with the highest probability of generating profits in the future. Then we have an investment team who actually talk to these people and understand their strategy, and those would be our popular investors. So we went from saying, okay, let's just put everybody out there and have one big list for people to list to a much more curated process where we have machine learning algorithms.

We pick the top traders. And then we actually communicate and talk to those top traders to understand what they're doing, their strategies, and also help them communicate those strategies to our customers. This is so cool. Yeah. It's basically like a crowdsourced way of like finding portfolio managers. Yeah, exactly. So let's say you took who you chose last year as your or maybe two years ago as the top traders on Itoro.

You know, how would those perform versus, you know, like benchmarks of maybe well-known hedge funds or something like S&P 500? So we're doing this. We actually have algorithms that pick top traders. So when you go into Itoro, you can actually choose, for example, this algorithm that every quarter rebalances based on basically logic or machine learning. Who are the top traders on Itoro? And then you can see the track record of those algorithms across time. So we've been able to generate relatively sort of consistent double digit returns across different asset classes.

what's really interesting is that those returns are also uncorrelated necessarily to one market because they diverse between stocks, currencies, cryptocurrencies, ETFs, commodities. So it's a very flexible portfolio across a lot of different assets. So you're investing in top traders that get changed every quarter. And then actually what they trade is not necessarily related to their performance. performance, right? So you can invest in that copy portfolio. That's the name of the product. And that copy portfolio could be 50% stock one quarter and then 50% of currencies and crypto another quarter. That's fascinating. We did get off to a bit of a quick start here

because we wanted to talk to you about your early beginnings in the Israeli crypto space. So we'll come back to Eitor in a few minutes. But yeah, so, you know, Israel. Israel, has been, I've also realized this even more, having been there recently and met a lot of the folks there. And a lot of our early guests on Epicenter were from Israel. And so Israel has always been in sort of the center of innovation around the blockchain space dating back as early as 2012, you know, with Mastercoin and everything. So I'd love for you to talk about your involvement with that community in the early days of Bitcoin. Sure. So I started a, let's call it, playing around. Bitcoin in 2010 and then found the community growing here in 2011. Very lucky to have bought for Eitoro some Bitcoins back then at Mount Gox for $5 and $10.

And then when I saw Bitcoin for the first time, I sort of fell in love with it, the same way that I fell in love in capital markets because of the technology and how it worked. And since I'm very familiar with how traditional financial services work and how broken the current system of currencies and the global infrastructure of finances. So when I started paying people with Bitcoin and sort of wandering around a Bitcoin talk, we started this concept called colored coins. and that sort of discussion started emerging on Bitcoin talk. And then we found out also another group, which was the master coin group, which was sort of running in parallel. And both concepts looked at the similar thing, which is how do you tokenize assets on top of the Bitcoin Protocol? So how do you use the Bitcoin blockchain in order to facilitate basically trading?

or P2P trading of dollars and euros and yen's, etc. And then I basically started offering bounties on Bitcoin talk for people to sort of expand on that vision of colored coins. And a lot of people reacted to that. There was a very big Google group back then that had a lot of the sort of OGs from 2012 and 13 who contributed to the dialogue of basically launching traditional assets or tokenized assets on top of the Bitcoin protocol. And one of those people was also Vitalik, who actually contributed to the project and came to Israel to work with us and wrote a significant part of the original colored coins white paper. and eventually sort of came to the conclusion that the Bitcoin blockchain wasn't meant for tokenization

and sort of went on with Ethereum. But I think back then a lot of people were excited. This was really the early stages of understanding how can you use blockchain for tokenization of assets, for clearing and settlement between different counterparts. That was really the initial concept of blockchain beyond Bitcoin. So talking about Vitalik, and so you met him, I believe, around the end of 2013, and then he went on to found Ethereum in early 2014. What was your reaction to this idea that he had of launching a new blockchain to tokenize assets? How did you take that back then?

There was an ecosystem. Back then, the eco-chamber of maximalism was very, very strong. So I was the first or one of the first investors in MasterCoin when they launched Omni. And again, this was, you know, remember these were when Bitcoin was also cheap. I think we invested 100 Bitcoin as Itoro into Omni and then took out 200 Bitcoin after something like a couple of weeks. So this was really the early, early days of ICOs. back then a lot of the ecosystem was maximalist and thought that a lot of the ideas that Vitalik said were not achievable.

I was just hoping we could build something like that back then on the Bitcoin network and that building a new blockchain is very complex and potentially we could use the Bitcoin protocol. but as Ethereum sort of started developing, and we had a lot of the people involved in the Colored Coins project in Itoro, actually keeping in touch with the progress of Ethereum, we basically started sort of seeing it emerge as a working blockchain. And while we're seeing that, still we had a lot of noises coming from the Bitcoin community, which surprisingly are still there, those voices of maximal. saying that this will never work. So I'd say at core, I thought Bitcoin was the only solution and tokenization need to

happen on top of Bitcoin. But I think eventually when we started seeing smart contracts emerge and the concept of sort of touring complete language running on the blockchain, we thought, you know, this is the decentralization potential opportunity for everything. Okay, so then you went from being obligatory maximalists, which I guess everybody was back then, because that's all there was, to not so maximalists anymore, believing that other platforms can also serve different purposes. Is that, am I sort of characterizing your views here?

I went down all the rabbit hole. I invested in like 25 different ICOs. So I love the concept of blockchaining everything. I love the concept of the tokenization. of traditional assets. I think decentralized finance is a huge opportunity. And it's not only, it's not decentralized finance, as much as it's replacing contracts with code.

So replacing legal contracts with smart contracts, I think is a huge opportunity for finance. Today, to create a lot of times financial contracts between companies that are not even necessarily complex, but have several counterparties. It's extremely hard to do. And you need to go through brokers and prime brokers and ISDA agreements. Again, when you're in the financial services industry, you find out how complex that interest is.

And I think smart contracts and decentralized finance and being able to look at open source code and having trades settle between multiple parties on the blockchain, I think that has an opportunity to completely transform the financial services industry. Yeah, I know, absolutely. I'm curious, because I heard an interview before with you where that's something where I really wanted you to go into it a little bit more in depth. So when you say it could totally transform the finance industry, can you go a bit in detail there?

Like, how is that going to play out? there's a big question of how it's going to play out because I think it's like, you know, looking at 99 or 2000 and how would the internet play out would be very hard to envision Facebook and Google back then. But what is going to play out is that we're looking today at about 140 trillion dollars of assets, of financial assets, that right now are registered basically in local database in various financial institutions. I think that a significant part of that, I just saw research talking about $25 trillion by 2027, is going to transform him to blockchain assets.

And when I say blockchain assets, there's the single feature which I think for me was the aha moment starting dealing with Bitcoin is very simple. It's your ability to self-custody. So your ability to basically send and receive 24-7 any asset that you own. And I think that's a feature that's going to become a requirement of most financial assets in the world. So today you can hold financial assets in multiple financial institutions and they'll just be closed for most of the day. They'll be open for nine hours a day. And you have some financial assets in financial institutions that you simply can't really move easily between either different financial institutions or move them into your own custody.

So when I say blockchain assets, I mean your ability from a technical point of view 24-7 to move those assets anywhere around the world. So often when you hear people talk about, you know, the power of blockchain assets or like decentralized finance, they think of like, okay, the ability to have, you know, censorship resistance or maybe financial access in developing countries. So when you talk about 24-7, the ability 24-7 transfer blockchain assets, what's so revolutionary about that? Is it just a matter of, you know, I want to trade in the evening and now I can. or is there something more fundamental that's going to change when that happens? I think what really happens is it lowers significantly sort of the barriers to entry to participants if everything is on the same technology layer, right? So right now, if you're investing in multiple types of assets in different countries,

it's very hard for you to move all those assets. And when you think about blockchain technology, it's all around basically creating the same stance. and protocols to transfer those assets. So censorship resistant is one thing. It's your ability to always move assets. I think that's core for Bitcoin. But I think the other part is for all assets to basically run in a digital way.

So for you to be able to move those assets, to sell those assets. So today, if you own stocks, it's impossible for you. you know, there's nine hours a day when one specific stock market where you are works. And probably you can't move those stocks. By the way, it's also about time. So when you try to transfer stocks from one broker to another, that's a five to 20 days process. When you move fiat money around the world, in some places it's T plus two or T plus five. When you move an entire industry and say, instead of something,

running and it takes it three days or five days to settle, it settles in, let's say, you know, the 15 second block of Ethereum, you basically accelerate significantly the time of innovation. You accelerate the ability of basically more people to participate and for transactions to happen much, much faster. Yeah, and I think this is where, you know, coming back to your point about we couldn't have imagined what the internet would allow, you know, 10 years in, let alone Facebook or Google. I think this is where, you know, we don't really yet comprehend or can predict what having 24-7 open financial markets, where transactions are instantaneous, where you don't have,

you know, this sort of T plus 20 for moving stocks between when I broker to another. We don't know what that will enable. And this is, this is, I think, where a lot of people are scratching their heads about, like, where the space is heading. I think eventually it ends in a place where you'll be able first to invest digitally in a lot of things that today are impossible, whether it's art, whether it's contracts of talents. You'll be able to buy 5% of an NFL player's contract for the next three years, whether

in equity in rev share in fixed income. you'll be able to buy potentially fractional ownership of an apartment in the U.S. or in Germany. So once you digitize that ownership and you put it in basically one global platform, you'll be able just to find a tremendous amount of things to buy and invest. Yeah, I agree there. I thought it would be interesting to talk a little bit about. So, you know, you became interested in Bitcoin and blockchain and saw the power of tokenization so early on. At the same time, you're already building your business of Eitor.

So I'm curiously, if you can speak a little bit about kind of, you know, how did those two interplay? Like, how did you think about bringing crypto into ETOR or maybe ETOR adopting crypto? And how has that evolved from, you know, when you originally learned about Bitcoin and became involved there? So initially a lot, I would say I saw a lot of skepticism around Bitcoin. So I was sort of very much an enthusiast of Bitcoin. And a lot of the people around me thought that, you know, it's a bit crazy. Internet money and cryptocurrencies crazy and potentially dangerous. So we had a lot of resistance. and I think we worked throughout that resistance to be able to launch Bitcoin trading on Itoro back in 2014 or late 13, which was a lot of work both with regulators.

I think we were the only regulated financial institution in Europe actually offering a Bitcoin trading. So a lot of work was around that and then Mount Gox happened. So just as we launched crypto trading on Itoro for that, the first time old Gox happened. And then a lot of people lost faith during that. I think that was the second crypto winter, if the last one was the third one. And then for a while, from 2014 to 2017, there were very few people on Itoro that actually

traded crypto. Only about 2% of our users traded crypto. But because we kept sort of the relationship and sort of kept to look at. at Ethereum, we then at March 2017 were the first broker to actually list Ethereum as well when it was about, I think it was $6 or $8 just before it started picking up. This was like four months where it went from $6 to $8, it went up to $400. And then we saw a huge wave of people around the Internet who came to explore cryptocurrencies. We started adding more cryptocurrencies into Itoro from XRP to today, the 16 of the top

cryptocurrencies trading on Itoro. But back then in 2017, we were really at the right time and the right place to see a huge demand of people on the internet just looking for ways to access and to buy cryptocurrencies. And I think the fact that they had the social network to talk to one another really enabled even lowering more the barriers to entry. So still today, we're one of the simplest platforms out there to buy cryptocurrency. So you can deposit funds very quickly open an account with five minutes. Verification is automated editor-ed. Editoa. So, like some platforms where you might have the verification take a couple of days on Ito.

It's instantaneous within five minutes. You can open an account. You can fund an account with a credit card or a PayPal in Europe, UK, and Asia. So it's a very simple, fast way to buy cryptocurrencies. But I think the fact that people were able to see other people on the page. So like if you go into the Bitcoin page on Itoro, you can see thousands of people basically talking about Bitcoin or about Ethereum or about XRP. For a lot of people, that was an opportunity for them to suddenly talk to other people who are already investing in cryptocurrency, potentially from another country or from their own country. So talk about this crypto trading feature on Itoro. What does it look like? How does it work and how is it different from other crypto trading experiences, say on Krakken or Coinbase or something like that?

Sure. So first of all, we're a multi-asset trading platform. So you can on our platform buy stocks from 17 different exchanges, from U.S. stock to European stock to Asian stocks. The same way you can actually buy currencies as well, whether it's euros, pounds, yen. So we started Itoro as a social trading platform to basically enable people to access a lot of various assets. And we added crypto just as another asset on Itoro. So the same way you can actually buy Apple stock and you can buy everything with no commission. so there's no ticket fees basically on Itoro.

So you can buy Google stock at fractional share for $50 the same way you can actually buy Bitcoin for $100 or for $1,000. So it's a very simple way to basically invest in cryptocurrencies the same way that you can invest in stocks on the same platform. We then launched our blockchain wallet back about a year ago, which enabled people to move the assets, so to transfer your Bitcoin from the trading platform into a multi-block chain, multi-sig wallet, where it's on chain. So you can actually, when you move your bitcoins from Itoro, which the majority of assets are in cold storage and cost it in Itoro, when you move it to your Itura wallet, you basically see your own crypto on the blockchain. You can go to a block explorer and look at that address. And then you can send and receive basically your Bitcoin, Ethereum and all of the other crypto assets through the wallet.

Okay. So this is a feature that you launched a year ago? Yeah. Okay. Because researching this for this episode, I asked a lot of our listeners and people, you know, around Epicenter, what we should ask you. And a lot of them brought up this idea that, you know, when you were buying crypto on Itoro, that it was locked in.

Do you know why, you know, do you have any idea, why maybe people are confusing that or maybe have this perception that, like, your funds are basically locked on a euro? So first of all, when we originally launched crypto on Itoro, then it was locked in. And we just launched the wallet last year. We also, so in the US, for example, it also depends on which geography. So the US, we launched our crypto trading platform and the wallet basically at the same time. In Europe, it's been running for about a year. We've been gradually rolling it out for all of the different clubs.

So if you are basically when you open an account in Itoro, we have the club system. So if you have an account with more than $5,000, you're a silver account. If you have an account with more than $250,000, you're a diamond account. And basically the duration from when you deposit funds into Itoro and move them into the wallet depends on your club status. And then in Asia, we haven't rolled out the blockchain wallet yet, or the ability to transfer assets from the crypto platform onto the blockchain wallet. Okay, understood.

Can you also dive into ItorRX, right? So I think this is a more recent initiative where you launched a separate cryptocurrency exchange. Like, why did you want to launch an entirely separate product there? Sure. So ItoroX is our crypto asset exchange. So again, the core business of Itoro is a trading platform, which includes stocks, commodities, indices, currencies, ETFs, and cryptocurrencies.

And the experience is a very simple user experience that enables you to buy and sell very easily on the platform. Where we wanted a Nitoro X to basically build infrastructure to enable us to tokenize assets and to issue them and list them on our own exchange so we can create price formation for new types of assets. So throughout the crypto rally, we connected to about 15 different exchanges. So when

you came to Itoro and wanted to buy, it doesn't matter if it's $1,000 worth of Bitcoin, $10,000 or $10 million, you could execute that. What you see is what you get with the rate on Itoro. And we would basically go and aggregate the order books of about 15 other exchanges and then basically go to the market with those orders. What we created on EitorOX, we basically aggregated the same, basically order book of multiple exchanges onto ETOROX and also created basically 12 stable coins

representing Euro, dollar, yen, pound, basically the top 10 fiat currencies, as well as gold and silver. So you can trade on ETOROX both cryptocurrencies and actually are stable coins. So you can trade Bitcoin versus 12 other stable coins and other cryptocurrencies. And you can also trade stable coins versus stable coins like USDX versus Eurox or USDX versus gold on the TOROX platform. And that again takes me to our long-term vision.

We believe in the future of tokenization of assets in order to transform our point. platform to a platform that works with tokenized assets rather than traditional assets. We wanted to build the entire stack of an issuance platform where we can tokenize assets and exchange where we can list those assets with an order book, which basically means we create price formation. So the price can basically, people can understand how the price is formed of any market that we list on ItoroX. and then on top of that, a trading platform that enables people to easily access those assets.

Okay, very cool. So that kind of brings up for me back something you mentioned before, right? When you talked about the power of blockchain assets, you know, you talked about the importance or the role of people kind of controlling their own assets, being able to move them at any time. You know, so far if you look at, I mean, I guess it's different with your wallet or I'm actually not sure, but at least with Itor and ItorX, you still have kind of custodial services or like centralized services where you custody assets for people. So how do you see that evolving in the future? Do you see a contradiction here or do you think that in the future, Itorra will move more towards products where people can retain custody of their assets?

Right. So I think that's a great question. We had a lot of this internal dialogue. when we launched and planned ItorOX, whether we want to build a decentralized version of an exchange or a centralized version of an exchange. We felt that it's a bit too early on for dexes. So when we built colored coins in 2013,

we actually also built on top of the Bitcoin network, a dex, a decentralized exchange. So you could do atomic swaps of tokenized, colored, basically Bitcoins between one another. So I love the concept of decentralized exchanges. The problem is I don't think the market is mature enough for those products from a user experience point of view. So what we've learned across time is one.

It takes time for markets to mature and for user experience to perfect itself. So products are actually more. and more usable. And the other part is for decentralized exchanges to really work well, there needs to be a lot of different assets on top of one specific blockchain because these centralized exchanges really work well when there are multiple assets on basically one blockchain. And when we looked at building in TOROX, we came to the conclusion that it's still in its infancy. And therefore, there should be first a bridge between central, exchanges, so creating liquidity in the traditional form between traditional markets,

centralized services on top of crypto, and then moving to what we call decentralized finance or basically non-custodial financial solutions. So one of the things that we are doing, we have our blockchain labs. We recently announced a new programming language that we've developed called Lira. And that's a formal verification language to write basically financial derivatives, options, swaps, futures, forwards, on top of the Ethereum network in a language that's basically formally verified. Which basically means it's a language that sort of mathematically is closed to prevent sort of bugs and to make it more efficient. And what about Defi? So you also mentioned Defi before and just the amazing power and I think a scale of opportunity that Defi exists.

How do you see that playing out? Do you think maybe you would sort of give access to Defi investment opportunities through EToro and integrate it that way? It's something that we're actually exploring right now is how to enable users of both ToroX in our wallet to be able to access DeFi products. It's something that we have an entire team sort of working around how to integrate centralized, basically, products with defy products. Okay, understood. So I'd like to come back to this concept of social trading a little bit. We've touched on it early in the show. Why do you think that idea is so powerful? Why, you know, I think you guys have over 10 million users, and I've heard a figure that over a trillion

dollars were traded on DeToro just last year alone. Why are people so drawn to this idea of social trading? I think a lot of people are interested in financial markets many, many more than the ones who actually trade the markets because people are still intimidated by the markets. they still are afraid of making decisions on their own. And it's generally a very sort of, it's a very lonely feeling unless you're really connected into the markets. And in social trading where you can suddenly see what other people are doing

and you can talk to them, I think that lowers the barriers to entry. We lowered the barriers to entry through enabling people to see, follow and automatically copy what others are doing. because you don't need to be professional trader or an expert in order to see what somebody else does and define whether he's good enough and copy him. And so by reducing this barrier to entry, do you see either sort of conceptually or actually in practice, do you see this as a risk in some way? Or does that open up the possibility for risky behavior?

I think it's the Superman quote with great power comes great responsibility. There is definitely a lot of responsibility that people need to take when they decide to trade with their own money or to risk their money or to invest their money. We have been working a lot on the platform to constantly educate users about the risks they're taking. So today, based on how you define your profile on Itoro, we will open different features for you. So some people can't trade leverage at all. Some people can't copy other people based on the answers. No one can actually copy people with a risk score higher of seven. So we've done a lot of these because what we've learned is people need to be very well educated

about the risks that they're taking. Philosophically, you can sort of divide the world into two those who believe people should have the freedom to choose and to take risk. And sort of the other half who says, no, let only professionals manage money. So obviously, philosophically, Itoro, and we believe in the democratization of wealth management, and that people should have access to the markets to make their own, decisions, whether it's to move their assets or it's to make their own decisions in what to invest in. And I think capital markets works the best when retail investors actually invest in

what they believe in rather than delegating all the money in the world to very few financial institutions. Yeah, that's an interesting point. So on this idea of education, you know, recently I saw some of your ads online and, you know, they're really funny and they're great and very creative. But do you think that when, you know, people see ads like trade like a Steve, for example, which is a pretty famous E-Toro ad, do you think that when people see that they have a notion of the risks? Because I could see that opening up just possibilities where people are like, hey, I can just copy this guy. and I'm going to get rich quick. Do you think that you guys are doing enough to protect people from, you know,

throwing their entire life savings into something that perhaps they're not extremely educated about? So we are trying as best as possible to educate people about the risks because when you open an account Tony Toro will actually ask questions like, what's your, you know, salary and, sort of liquid assets, etc. We should be able to block you from losing more than you can afford to lose. And that's also a statement that sort of keeps recurring in how we educate people. When you want to understand risks, you know, is don't risk more than you can afford to lose.

And I think that's very important. When you lick eventually at a lot of the Itoro users, a lot of the novice users in Itoro, a lot of them will start with $500 and $1,000. And when you get to a point where you deposit $5,000 into Itoro, you actually get assigned an account manager who talks to you once a month and they will make sure you understand the risks and you're educated in the markets. So we definitely do a lot in helping people understand the risks. But again, as I said, from a philosophical point of view,

we believe people should be able to understand those risks and that actually learning about the markets and learning about those risks and how the markets operate is something that is very good for a financial future of a person. Yeah, I think I would agree with that that you learn by doing and sometimes perhaps you learn by failing. If you guys have the right fail saves in place, I think that you can probably limit some of that risk.

I mean, when I went through the onboarding process, I thought that it was really good. Like, I've seen this on, on other websites as well where you do a very good job of trying to figure out what is the risk profile there. And how does that evolve for time, though? So let's say that I'm on the platform and, you know, I started as a rookie trader and like, now I'm making six figures and I've become educated investor over some time. Does the profile then evolve to allow that person to take on more risk, etc?

So again, the personalization of the platform is relatively complex because we operate in more than a hundred different countries and because the company is regulated in Australia and the UK and Europe, now in the US as well. So basically what can you access in every region would depend on where you're from, the suitability and assessment of what kind of risks you can take. and also where did you open your account and which of our regulated entities did you open an account? So you basically can get a variety, people in France would open an account in Europe and actually by default see French stocks on their platform. People coming in from ads around cryptocurrencies

would actually go into something that's a more defaulted view towards crypto. We really try to segment our audience and understand what's interesting for different types of users, people who are interested into stocks versus people who are interested in crypto versus people who are interested in commodities and try to personalize the platform to what would best fit them. Yeah, I definitely sort of, quote, victim of that because I'm based in France and I opened my account while I was in Germany and I can see only sort of like Commerce Bank and all these

German stocks here. And I think I've been flagged as a German investor, which I don't know if that's good or not. So I think if you now deposit funds as you should and choose that you're from Germany, choose that you're French. Hopefully you'll see more French stuff. I see my French flag is now up behind my little E-Tor or avatar. So yeah. But I think, you know, the processes were constantly evolving the platform and try to personalize it more and more as we learn more about our clients, we try to make the user experience more personalized. I thought your comment was interesting before regarding the importance of having retail investors involved in the markets.

Because I guess when you were trading during the dot com, there was a lot in the US, for example, like lots of retail participation. And then I think after that, it's sort of this. disappeared, right? And now people maybe they buy like ETFs or something like that. There seems to be little involvement. What's a demographic? And what do you think the impact of this is for Itoro? So the average age on Itoro is about 37. And the majority of clients on Itoro are 25 to 45. and we definitely see sort of that cohort of people more interested in tech stock. So if you look at what our users are investing in, they invest in a lot of the known brands.

So almost every person on Itoro, if you'll go to see his portfolio and look at the various assets that they're investing in, you'll see a lot of known brands because people invest in brands or companies who, they use their products. And I think that's a very big difference between how financial institutions look at investing versus how people look at investing. People look at investing because they're interested in a specific company because they're interested in their products. They believe in the sort of longevity of their product offering for a while. And financial institutions generally analyze financials. And the truth is probably somewhere in the middle. Nothing needs to be only from a financial point of view because then you couldn't tell the difference. If you looked at the world only from a numbers point of view, then it doesn't matter what a company does to whether you want

to invest in its stock. And you don't want the world to be completely naive to say, I love that company's products and regardless of its financials, I want to invest in that company. So the truth is somewhere in the middle, but I think that over the past 10, 15 years, it got a lot skewed towards the finance view of let's just analyze numbers and all companies are basically just their spreadsheets. So I'm curious, do you have a sense of how much wealth? We talked about this $1 trillion in trades this year. Do you have a sense of how much wealth you've generated for customers?

And maybe what's like the coolest success story you've heard from a customer? So we have a lot of like the coolest success stories that we see of customers are popular investors. So when you start trading on Itoro, other people can actually see your profile and then follow you or copy you. and I'd say that the coolest success stories that we've seen are popular investors who start to get copied on Itoro. Once you get copied on Itoro, you'll get an email from our popular investor team to basically opt into the popular investor program where you can actually get paid to be copied. And then we saw a lot of very cool success stories of people who actually got to a point where they could sort of quit their job because suddenly they made anywhere between $10 to $30,000 a month from us just by being copied by thousands of people and by tens of millions of dollars.

So I think we saw that to almost an extreme during the crypto rally because people came into Itoro and suddenly saw people generating 300, 400% returns from trading cryptocurrencies, which is obviously hard for a lot of people. So they sort of jumped on that wagon through that. But a lot of the interesting stories are those who managed, sort of managed the risk and the drawdown of the market and sort of emerge as popular investors also after the crypto winter. Okay, cool. Yeah, I mean, this is so cool. I guess it brings us back to your previous point about this kind of like discovery of like portfolio managers. So the people who are really successful at this and you've had like a lot of traders and ITOR users copy their platform. I mean, in essence, they're kind of even though, I mean, they're almost like managing money, right, in a way. But they're not taking any of the risk though. No, they're taking their own risk. I mean, it's the highest amount of risk.

They're risking their own money. It's the same of like a money man. As a manager, I mean, they're investing other people's money too. So in a way, they're also not taking the risk. So what is the scale here? Like what are the biggest portfolios that get invested based on, you know, some of these traders and their portfolio choices? It very much varies.

If you're talking about the total amount of assets copying one trader, then the biggest ones are in the tens of millions of dollars. If you're talking about what's the range of people copying other people, the average is a couple of thousands of dollars per copy. Okay, okay, cool. How does it work here in terms of both the business model for ITOR, but then also the business model for, you know, a trader that gets copied? Like how is it determined how much revenues they generate from that?

First of all, for the users, it's free, right? So when you copy someone, it doesn't cost you anything. If you go to a money manager, he might charge you a 2% management fee and a 20% carry, if it's a hedge fund. We basically don't charge the users anything for it. So when you copy someone, the management part is free for you. When underlying trades are happening in your account due to the trading activity, is where Itoro generates its revenues.

So when you copy someone, it's good for us potentially because you just did one click, but you copied someone potentially is more active and trades more frequently the markets. The person who you copied only gets paid from the amount of assets copying him. So his sole alignment is to have more people to copy him with more money, which aligns very well, basically, the customer and the person being copied.

Now, the person being copied falls under our portfolio management license. So we basically give an umbrella and basically take the data from our customer accounts to enable that portfolio management service in your account. Oh, very cool. Is there also a risk here that, like, if I'm a trader who gets copied by many people, that I have kind of an incentive to like generate more trades because I get paid for for every trade? No, because you don't get paid for every day. You only get paid for the total money copy. Oh, okay, okay, that makes sense. So that's why we broke that. Yeah, exactly. Okay.

So we tried to create the the incentive system in a way that aligns to the maximum, the popular investor and their copiers. And of course, we realize that. We realize that, that within sort of the platform, we should curate the platform and try to give constantly more and more tools for our users to figure out who are the right people to copy. What I meant to say by they're not taking any risk is that the investors that are being copied, that person doesn't need to invest like $10 or $20,000 or $50,000 in their own portfolio. They could be managing maybe $100 or $500 or something like that and then have, like tens, hundreds of thousands of dollars being followed by them, right? Or copied.

So there is, you can see here, I'm sharing with you guys my screen, that when you progress as a popular investor, there are a lot of different requirements. One of those requirements is how much money you have in your account. So in order to manage to basically have more than $150,000 copying you, you will have to have more than $20,000 in your account. Okay. So you need skin in the game. So you have to have skin in the game. You also get a lot of different benefits.

So if you're an elite trader, you need to have skin in the game, but you also need to lower your risk score significantly versus a regular trader on it or. Okay. Understood. So before we wrap up, I didn't want to talk a little bit about the future, you know, of trading and sort of your vision for like where you'll see the future of trading go. And so traditionally, you know, people would like people like my parents, for example, like they have a financial planner and like they're putting their money with this guy and

they're seeing him every month and they're like getting information from him about what kind of trade this should be making, etc. Where do you see this going? And are these people just destined to, you know, be disrupted, I guess, by platforms like Ketaro and is this the future or do you think that like these professions will still continue to exist moving forward? I think these professions will exist, but I think they'll then transform into much more an online advisor, an online global advisor. So I think local financial advisors who don't necessarily have the platforms to give the right service, the right advice to a global

audience, I think gradually that will shift. So if you think about your traditional, again, that really depends in different countries. But there's a couple of things. One, you need to have access to the markets from the point of view of a customer. If you are now, it doesn't matter, you know, Germany or France, and your financial advisor can only advise you on buying German and French stocks, I think gradually everybody understands that the markets are global and you have to diversify your investments globally. Then the second part is I think our generation would expect most of their communication to be done through their mobile app rather than a face-to-face meeting.

And you'd probably want multiple people to be able to give you advice on multiple subjects within one platform. And that's sort of what we're building on Itoro. we want to eventually enable access to as many markets as possible. Ideally, you know, one day markets that maybe don't exist today for retail consumers like art or real estate, but even now the global stock markets. And then we want to give you, through the mobile app, access to people who understand all of these different markets. I think as a platform, we will gradually grow also to the place where,

You can look at this more holistically from a managed account. Today, it's still somewhere in between, you know, it's easier to copy someone else than to choose stocks on your own, but choosing who to copy is still a process. So we made that process easier by saying, okay, here's an algorithm to automatically pick the top traders for you, but there's still a gap between that and saying, okay, the system really understands your goals, how much money is in Itoro versus other platforms, and to help you make financial decisions that are really personalized to your needs. And I think that for us is sort of the next stage of evolution. And on the other part, we'd love to also see more of the

traditional financial advisors sort of on board into Itoro. Cool, awesome. Well, one last question I'm curious about. So we talked a bit about, you know, kind of the future that's coming with blockchain. When you look at Eitor and I mean, you guys have already accomplished like such an amazing number of things in the years since you existed. But if you see kind of this merging of these different trends like AI that you guys are leveraging and blockchain, like what do you see Eitor look like 15 or 20 years from now as a. company and organization. Wow, 15 to 20 years, that's a lot.

So we see ourselves as a global investment house with, you know, we have X amount of customers. I would definitely want to see us with more than 100 million registered users by then, with access to millions of various types of investments and powered by hundreds of thousands of popular investors across all those assets. So the vision of building a global digital investment house, which enables millions of people to access the global markets and to collaborate and communicate around them is really what we're starting to do. And just scaling that into the same time that there is a huge paradigm

shift of digitizing the entire financial services industry, in our view, is a huge opportunity. Where do you see AI play in that? Do you have any idea of how you might be able to leverage AI? So we have a great machine learning team, Eddie Toro. So I'll give you different examples of what machine learning algorithms do for us. So one we mentioned before, there's the top trader copy portfolios, right? So to automatically pick who are the top traders or who should our investments team talk to from the top traders to have them enroll into the popular investor program. Another one is we talked about personalization.

So through basically having all of the data around the users, around which banners they clicked, which ads they saw, which part of the platforms they went in, maybe which copy portfolio or instruments they've basically visited on the platform, were able to basically find the right content to deliver to them through both push notification. emails, CRM, and even through sort of, you know, Google GDN or Facebook ads, right? So we're able to personalize communication with a customer to what's interesting for that customer and to optimize that to basically increase customer engagement with a platform. Other things, again, that are more forward-looking. I do think that AI eventually will replace a lot of the traditional financial or portfolio manager point of view, right? So you'll be entering a lot of data about yourself, your goals, your objectives, your experience, your wealth into the system. I think eventually AI would be able to give you a better recommendation of how to manage your money across multiple people on Itoro,

multiple strategies on Itoro and multiple assets on Itoro better than any specific person. That doesn't mean you wouldn't want to still talk to a person, either from sort of a relationship point of view or somebody that can sort of understand better your needs and enter it into the system. But I think eventually a lot of the decisions in portfolio management, in investment management are going to be automated through AI. That sounds like a very interesting future for you guys. I want to thank you very much for coming on the show today. It was really fascinating discussion and I'm really glad we could finally sit down with you and talk for an hour.

Thank you very much. I enjoyed it very much. Thanks so much, Jenny. It was a great pleasure. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud or wherever you listen to podcasts.

And if you have a Google home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast. Go to epicenter.tv slash subscribe for a full list of places where you can watch and listen. And while you're there, be sure to sign up for the newsletter, so you get new episodes in your inbox as they're released. If you want to interact with us, guests or other podcast listeners, you can follow us on Twitter. And please leave us a review on iTunes.

It helps people find the show, and we're always happy to read them. So thanks so much, and we look forward to being very much. back next week.