The Pomp Podcast - Alex Mashinsky: What Decentralization Really Means

Episode Date: November 21, 2018

Alex Mashinsky is the founder and CEO of Celsius Network. He has invented and built a number of disruptive technologies over the years, including Voice Over IP. In this conversation, Mashinsky and Anthony Pompliano discuss Bitcoin, crypto lending, and building sustainable companies around disruptive tech.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Alex Mashinsky is the founder and CEO of Celsius Network. He has invented or built a number of disruptive technologies over the years, including voiceover IP and ride sharing. We We cover a lot in this conversation, from Bitcoin to crypto lending to building sustainable companies around disruptive tech. I had fun recording this, so I hope you enjoy it as well. This podcast is presented by BlockWorks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur and want to attend exclusive events and dinners, visit them at BlockWorksGroup.io.

I promise you won't be disappointed. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. before we get into this episode i want to give a quick shout out to one of our sponsors saluna is a blockchain computing company powered by its own renewable energy the team is planning

to build a 900 megawatt facility on top of a 37 000 acre location one of the best wind sites in the world in southern morocco you'll hear more from them later in this episode but i'd love if you could go check out their website you can find them at saluna.io all right guys i'm super excited i've got alex here uh thank you so much for coming sure thanks for having us all right we got a lot to get through because you've got a long and storied career so let's start uh from the very beginning and uh let's talk about all the things you've done kind of pre-crypto so uh for context right i was born in the ukraine grew up in israel came here just over 30 years ago so uh communism socialism and capitalism right i tested all three systems

which one's better uh well capitalism is definitely better for people like me but i don't think capitalism covers it for uh the seven billion seven and a half billion people that live on this planet so i think you know i i view i view blockchain crypto is almost like the fourth system right it's a system that can liberate all of us to have a different reason for living because instead of just profit accumulation we can actually create value through our contribution to society and that's the opportunity if you look at uh um ethereum for example right vitalik his contribution right he used to work for blockchain.com and and bitcoin.com and and came to the bitcoin foundation uh proposed the the the smart contract and they're like ah we don't

think we're going to include that and it goes and it creates this amazing new platform that created a whole plethora of new right like a camber explosion of innovation right so so that kind of value creation which really empowers almost everybody on the planet is just not possible wasn't possible because all this concentrated in silicon valley and just few cities in the united states and now i think the blockchain enables that makes it fungible across the entire planet absolutely um all right so get to the u.s what do you do first so i i was trading commodities physical commodities literally a trader all right let's physical physical deliveries of sugar urea sodium cyanide gold name it right and and uh then i was like where are you doing this at

i i had my own trading company out of luxembourg okay uh target trading systems that was the name of the company and and uh i just didn't like what i was doing i was i was you know it was it was all about just you know talking to people and not really creating anything and then i decided to get into technology so my first company was actually a voicemail company we created the first pc based voicemail those annoying things that answer the phone but back then it was revolutionary because we were competing with octal and vmx which like a mainframe solutions and i did the same thing for one-tenth of the price and so how do you get into that from trading well i have a technical background and so i've been tinkering with technical things since i was

you know a teenager yep so i started electrical engineering and and so on so They have a very good technical background, and I found that to be really exciting, the ability to take a few boards, put them in a PC, and voila, you can do anything you wanted, right? And then we just started connecting it to bigger and bigger phone lines, and I realized that I could actually build a phone switch that replaced the traditional system that Bell Labs and all the other guys built, right? So we built a whole phone switch that cost 1,100 of what Bell Labs charged AT&T. And our breakthrough was in, like, 94 when I wrote the VoIP protocol. I wrote the first patents about that, October 1994. And I went to AT&T and I showed them that I can take a phone call, compress it, put it on the Internet, and ship it anywhere, basically, and put it back on the phone network on the other side.

That was a breakthrough idea. And they immediately gave me a contract to put in a few countries in Japan and Korea, a few other places. And it was front page in the New York Times, 1995. I think it was like August of 1995. How did you come up with that idea, though? Well, it was kind of obvious for me because when I saw the Internet, it was obvious that the Internet is going to be a billion times bigger than the phone network. back then if you wanted to get on the internet you had to dial use the phone line to dial in and use your 9.6 kilobit modem to connect and that was like the fastest motor you can buy so i was like

no that's all that is going to be eliminated your phone is going to be able to be always connected always on which everybody promised is going to be here faster than we can even think about so voice is just going to be an application on the internet okay voice is an application on the internet let's build a protocol that enables that right so how do we integrate with the system seven right the the signaling system how do we sample it right we take tdm and put it on ip do we use tcp ip do we use udp right all the signaling what happens if we lose some of the packets all that stuff right how do you move from one network to another all these things were things that no one has solved before and you know i wrote like 50 patents on that i was like i didn't

get any sleep for like two years and and uh it was it was just amazing time it was just like the one of the funnest funnest most fun time of my life uh knowing that you're like the first you're like trailblazing everything so you think you've got let's call it 50 or about 50 patents over 50 issued patents on the voiceover ip and i mean you and other things yeah but you're on the front lines of this and first patent first foundational patent for voice of ip wow and as you're building this what are people telling you they believe in it they don't believe in it they think you're crazy what's the reaction as you start telling people so a break was and you know in in retrospect you look at it and say it's obvious but i didn't know that when i went to at&t and showed it to

them they had a project they were working with with bell labs where they were supposed to deploy basically the the State Department came to them and said we're tired of paying all these phone companies all over the world's billions of dollars because there was three times as much traffic coming from the US to Japan for example than the other way around because the prices in the US were half the price from Japan so and the State Department just said the settlement rate doesn't make any sense we're tired of paying all these settlements and then task AT&T to solve the problem so AT&T went to Bell Labs and after a year Bell Labs didn't

deliver anything and then we show up with this box and they're like take this box go to japan install it and bypass the phone company over there kdd it was the the main the exclusive international voice provider for japan all right we're gonna get into the good stuff now so we went to att gens which was the local subsidiary that had local lines bypassed kdd connected it directly to the international switches here gateway a voip gateway there a voip gateway in the u.s and that was the rest was history let me uh recap this for people so you took voice from the united states sent it over the internet right connected it in a foreign country and you were able to bypass the incumbent infrastructure that was previously necessary in order to uh allow that

voice uh to transmit across country lines and that was what the patent was about okay when you do that what is kdd who's the incumbent what's their reaction well look i there's a long story about that because uh i actually physically i went on a plane with the box and the installation was in the kdd building in shinjuku okay and by the way they don't let people on planes with boxes anymore yes that's how long ago this was exactly and there's a long story of other things that were problematic and and dialogic which made the boards gave me defective boards when i plugged in the entity line the japan is like a specialized t1 line it's not like the u.s old t1 lines it has its own protocol and whatever and we plug that in a red light went on instead of a green

light and i was like freaking out i was like there for the whole night trying to figure out why the phone lines are now working and it ended up being just the the dialogic misplaced the leds they put the red one in the place where the green one was and all the time everything was working all i had to do is do a test call and we're working but anyway so things like that that like nothing was easy right so uh so but i install it i do the testing and we start terminating traffic bypassing kdd and the next morning it's front page in in the new york times which again att leaked that intentionally as per the instruction of the state department they wouldn't do that otherwise and And there was just a war between AT&T and KDD.

And they ended up lowering the settlement rate from like $3 to like $1.75 or something like that. So the incumbents weren't happy with this, obviously. Oh, they were furious. They were furious. And they found out when we installed it. But they couldn't terminate it because we were using legal lines. We were using boards that were authorized to be used in Japan. So we didn't do anything illegal.

but they were freaking out that there was a way suddenly to bypass the infrastructure and what do they do so they're mad right and they figure out what you guys did they realize that it's legal what's their reaction though well in the beginning they were like they hated us but then you know kdd became my customer and they wanted us to install it in in brazil and other places where they had a problem with settlement it's like listen this is a really bad idea but now we're to use it and lower our own termination prices in all the countries where we have expats and so it's kind of like the gandhi quote right first they ignore you then they laugh at you then they fight you then you win right right and that's basically what you went through but like with the blockchain

they all thought this was a great tool for them to improve their profitability they didn't see this as something that's going to evolve into a free service for all that bypasses i mean today at&t is losing money on their international voice yep right they're offering it just because they have to you're not because you're going to switch to verizon if you they didn't offer you invoice in international voice but all the revenues are coming from the seller service not for from the other stuff so so back so that that transition and same thing today i mean if you look at jp morgan implementing blockchain they're not thinking about crypto or how crypto is going to become the dominant store of value and a payment platform worldwide they're saying hey

first let's steal the mona lisa of these guys let's take ethereum call it somewhere something else and convince all the banks to work with us. Oh, we said we're not going to say bad things about people. Well, and so I think that, you know, part of this story is we've seen this disruption playbook play out so many times throughout history that it's almost predictable, right? It really is. But you have to find the crack in the wall and you got to get through it And you got to, we were lucky. I mean, I didn't know that the State Department sanctioned this and everybody was looking for it.

I was, they called me the rubber man because I could do anything with my little switch, right? They couldn't get their big switches to do any of that stuff. And they would just start plugging me in everywhere they needed a rubber man to fix their problems. So, Arbinet ended up being a public company,

1.7 billion market cap. And I made a lot of money. And today, 3.5 billion people use VoIP for free. The bigger question is, why isn't the other 3 billion using it? Why are 3 billion people on the planet after 25 years still paying for their phone lines? I don't understand that. Why do you think? Because technology adoption, like Bill Gates said that, right?

It's always slower than what you predict in the first five years, and it's always much bigger. You overestimate what we can do in two years and underestimate what we can do in 10. Absolutely. All right. So after you get through the VoIP phase of your life, right, you write all these patents. You never get over them all the time in real life. It's like, you know, when you become a star and you're 20 and then you can top that, that's how I am. You peaked in the VoIP phase?

That's it. It was all downhill from there. Got it. So, all right. So you do this, right? And what ends up happening is you guys obviously disrupt the heck out of these guys. And they say, look, actually, we want to use technology ourselves. And so you kind of win, right?

You eclipse what they were doing before. it's cheaper it's faster it's better etc what do you do next so 2003 um right before urban actually went public i come up with this idea that uh ground transportation is going to be on your phone and you're going to have it real easy you can order any driver and they're going to be coming to you and and take you anywhere you want to go and we build it on the on the on the blackberry and we were the first ones to launch on the iphone 2007 and we're the first one to launch on android and by 2008 we have uh over 35 million in revenues 50 million in capital that were raised from vcs and we're in over 100 countries what's it called ground link okay

still around still in more cities than uber today but obviously not the huge success that uber was And my mistake was choosing PE investors instead of VC investors. And the funny thing, I was sitting with Bill Gurley a week before he invested in Uber. So it was me and Travis, right? And I know Travis. I told Bill, look, you know me for 15 years. By then, I already had over a billion in exits. I made money for all my investors every time I touched something.

Travis failed in the first 10 companies he started. Failed, lost all the money every time on every company he founded prior to Uber, right? And I said, who are you going to invest in? Are you going to invest in Mashinsky or are you going to invest in Jarvis? And he looks at me, he's like, ah, you know, he's local, he's pure play, you're all over the place. We're going to go with Uber, you know, Uber taxi, as it was called back then. And my investors basically didn't want to pick the fight and cut the prices by half because we were profitable, right? And Uber just decimated us.

I mean, it was very, very painful. It was the most painful experience. Besides being in the military and almost getting killed, this was the most terrifying, kind of painful, destructive experience of my life. And so do you think that they were just more ruthless in terms of price cutting and just expansion and the way that they use data? Is that right or is it something else? They realize much faster than anyone else that you can actually break every law, every state law, and not go to jail and that the community is going to back you up.

And by mistake, all of this happened by mistake because their prices were higher than ours when they started in San Francisco. And then because Lyft showed up in San Francisco, they decided to cut the prices by half. And when they saw the hockey stick on the adoption curve, they said, hey, just keep losing money. Let's lose money on every transaction. We're going to make it up in volume, right? eventually after you raised 20 billion and network effects yes network effects but but again i look i know the team i'm telling you they didn't plan any of that up front you know like all of that happened kind of like uh it was innovation out of necessity the dominoes fell

perfectly for them and for us nothing went out right just like everything is going right for us in celsius nothing went right for me in ground link you know it's just horrible and and sometimes you're just not in the right place and not on time i was way too early and by the time in 2008 being seen in a limo after the collapse was a disaster yep you know people were like it's not just that we couldn't advertise i couldn't even tell people that i was running like a limo company right so so uh so i think they could put a young spin on it but they really the thing that made this industry uh what it is is the fact that anyone could become a driver the fact that anyone could get a smartphone take the navigation system didn't need to know the streets in manhattan didn't

need to know how to get to the airport enabled millions of new people to be part-timers or join this this revolution and because they had all these drivers they could then basically somehow get closer and closer closer to the price point that they were at so the losses were actually going down the supply the supply side was the innovation while they were building uh critical mass and we we didn't understand that until it was too late and and because what we did was we partnered with 45 taxi and limo companies all over the world so anywhere you landed we provided you three or four choices which was whoever bid to be the best price but it was always twice the price of uber right but we had 10 times many cities so yep so uh anyway look i wanted i wanted to go

head-to-head with those guys and and and i when i saw that they're not going to do it i just uh resigned the ceo in 2010 and and just said i'm gonna go and do the next thing and the funniest thing one of my ex-employees sends me satoshi's paper and i look at this he says you gotta do this it's for you you know you're the best guy to do this you know and i looked at it and i said it's slow it's inefficient it's never gonna scale that was my analysis of it in in 2010 which which ended up being true but not true you know so obviously i'm here absolutely so what do you do from 2010 till crypto so i sat on a few boards i ran a public company uh okay so in parallel to uh uh groundlink my friend my best friend haggai sheffi died on september 11th you know in the

towers and i said i'm gonna do something for the city i'm gonna do something to make this a better place right and and i i ended up zeroing in on the subway and how the fact that didn't have any connectivity in the subway and i went and fought with mti for years right to convince them to put wireless in the subways and after like three or four years of fighting they basically said okay go do a survey of course i paid for the survey you know 70 of the people said of course we want connectivity and this is back when seller penetration in new york city was less than 50 you know so so then they put it out for bid 400 people bid out right to participate in the project then it's down to like 40 and and uh you know and my wife one morning sunday morning throws the

times on my on my lap and says hey you're in the paper and then she like looks at me and says you're either the dumbest guy around or the smartest guy at this moment i don't know why i'm like what what happened i read the article it says transit wireless our company uh gets the award from the mta to build and and run the you know the city 300 underground stations who won the wireless service and we paid 46 million for it and then says the four carriers at&t verizon sprint and so on paid four dollars their bid was four dollars so she's like you think you're overpaid you know and i'm like no you don't understand i'm sure i'm gonna call the reporter in the mta and it's like 40 million they just it's a typo on the on the printout so first i

called the mta and i'm like couldn't you guys call me and tell me that we won i have to find it out in the paper you know and he's like and and the other thing that's four dollars is that really 40 million he's like no it's four dollars one dollar per carrier they basically said to themselves there's no way the mta is going to give it to some shitty little company they're going to give it to the four big carriers who colluded together to create their own company to provide the service guess you know like seriously i can't believe the mta even would allow that anyway so so i overpaid for the franchise so hold on hold on by like what is a thousand x or ten thousand x hold on so they all bid four dollars and you built uh 46 million dollars 46 million dollars if you could

go back would you have bid five dollars or would you still bid 46 look you needed you needed to beat a lot to convince mta to even try you because if you bid whatever uh a hundred thousand dollars they would be like ah for a hundred thousand it's not worth the risk for 46 million it's worth the risk so who knows if 20 million was enough or 10 million or 5 million but but giving them that you know you know that uh carrot was definitely not not just that we we had two things that allowed us to win and this is the first time this is public so no one knows no one heard that story before one is we my partner at nab construction is a third generation construction company in new york city and him and his dad built half of the station renovated them so we had cat cam

designs of all the stations so we knew that we knew where the crossings were we knew where the lines were we knew where we could get power where all of our competitors really didn't have access to that information right and and so we had a design that required the minimum amount of crossings of the rails because we so we provided the least amount of disruption for the city we basically said we can do the whole project and we can do it down to like seven days of disruption for all the lines right where everybody else would have to disrupt them hundreds of times every time you have to run a cable under the rails you have to stop the train yep right so so and you know how disruption in the city people hate them anyway so we basically guaranteed the highest price and

the least amount of disruption and that was enough for the mta to take a risk on us and then 2008 happens our partner mary lynch basically defaults on funding us they're like notice who can't find you we're selling yourself out the bank of america go find a new parent so that was a disaster and and uh so i was teaching this in in in colombia in another school like i was giving this to the student what would you do you know how would you get out of the hole you're 46 million in the hole and your funding partner just left you you know like and it's 2008 no one funding anything what'd you do and and we ended up finding a strategic uh partner uh broadcast australia who came in took half of the project and and you know and helped us uh build it up and today

eight million people use it every day for free and they love it you know i i we we usually go and and interview people in the subway just to ask them i use the subway every day and i ask people like about the phone and when did they start using it and do you know who built it no one knows who built it right now no one has a clue and and many of them complain many of them say yeah i'm using it but i hate the fact that people next to me are talking you know i want some silence you can't win you can't you know when you build it they they they uh they don't want it and when you have it they want to quiet you know so anyway so that was a lot of fun and and it's a great project i think again this is another giving power to the people it's something that the

carriers didn't want because because the carriers charge you unlimited service anyway so if you're in the subway for an hour it's like a gym membership right they don't want you to occupy the airwaves occupy the network and so they did not want this thing to happen absolutely all right so but i love them as customers well listen you're you're you're giving the telecom companies a hard time from the 90s all the way through to the 2000s um so the rubber man keeps keeps jumping out of uh yeah yeah i love it i love it all right so 2010 somebody sent you uh satoshi nakamoto's white paper you read it and say and he rubbed it in my face in 2016 he's like hey you know i showed it to you okay all right so you do nothing nothing nothing mongox happens and i see this thing

recovers and i'm like wow this is an an atomic bomb just went off and no one has any side effects you know it's like this thing has legs you know this thing is gonna be bigger than i think what am i missing so i started studying studying studying right like just trying to find why am i missing what i'm missing right because usually i'm the early guy i'm usually the guy five years ahead not five years behind and and and i realized that the power of consensus is the power of the blockchain and that that there are applications that could not exist without consensus without an open ledger without the ability to take something and make it fungible across the planet as a single largest database single largest computer that ever ever was created so so and

then i said to myself okay what are those killer apps right because it's definitely not uh trading coins with each other right and and and and i started investing i started looking at projects being an advisor putting money into different things and i'm probably on i don't know how many 20 25 projects that i thought had merit and and and uh but almost none of them have really scaled right most of them are still building still experimenting so again this this cambrian explosion of innovation and 5 000 projects icos right and so on i think that most of them are missing the mark. They're not understanding where is the power and the fact that you need to reinvent the healthcare business or the real estate business or the finance business, not take a

syringe and inject the blockchain into a bank, but rather reinvent the whole idea of a bank or the whole idea of healthcare using these platforms as a technology as an enabler. Absolutely. All right. what are you doing right now so i couldn't find anything and it i i was trying to get into fintech since like 2010 so so when i when i left groundlink i was like okay i'm gonna go into fintech because that was like the hot thing and i i couldn't find anything in fintech it was all incremental i don't do incremental right for me it's like if it's not disruptive it's not worth my time you know and and i rather fail in a disruptive effort than try to do some incremental bullshit about trying to do a better paypal or whatever you know absolutely you're ready for this when i first moved to

silicon valley uh somebody gave me a piece of advice they said i think it's a piece of advice first was keep your personal burn rate as low as possible so you always have optionality right good piece of advice um and and then the second piece of advice that he said was you will be rewarded here for taking big swings more than you will be rewarded for having small success right and the example he used was napster he said listen napster was so disruptive it was such a big idea it was so um ahead of its time for the incumbents and it didn't work right right it got shut down but it left a crater in the earth and when sean parker showed up for his next thing everyone was riding with him yeah right because they said look this guy goes big yes and if you

go big there's always the binary it's going to work or it's not but people would rather in the venture business ride with people who go big than people who are you know highly high probability of small success and funds are getting paid to take the risk right i mean so so so the biggest thinkers get on a plane and go in silicon valley i mean you have the highest concentration of the biggest thinkers that's what silicon valley really is right and it's a combination of it's a marketplace right the highest biggest thinkers and the biggest risk takers so and i i had several opportunities to move to the valley but i have six kids a beautiful wife was you know like so i i every time i you know kid number one kid number two three i i just you know i got tied down to new

york so the roots are here so absolutely all right so so uh let's talk about celsius right what exactly are you guys doing um and kind of where are you guys so yeah so three simple things right we pay interest on crypto jesus what a simple idea right how come no one's doing it so pay interest in crypto second thing right that we issue dollar loans so similar to block fi or salt or nexo but the big difference there is that those guys uh basically issue loans charge a lot of money and they have to return the capital that they receive the interest that they receive to the people that gave them the capital so they have to charge 15 18 24 percent because the cost of capital is a single you know double digits right so so hold on you're paying interest on crypto you're

issuing loans and what's the third thing this the third thing is about mass adoption how do we bring the next 100 million people into crypto right and what is that blocking element right how come people are not joining and when you think about it today uh to you have to explain it you have to get people to trust it you have to have people figure out how to open a wallet they have to understand what addressing is they have to understand they have to trust their technical ability to move stuff like i said after 25 years people don't know how to download a voip app and and make a free VoIP call. So crypto is way complicated.

Absolutely. So early adopters may be great at it, but the average Joe has no clue how to do this stuff. So we have a cell pay service and cell pay basically allows you to send or receive crypto from anyone on the planet without knowing their address, without coordinating with them,

asking them, what's your wallet ID? Do you have a Litecoin address in a wallet? Or do you have Celsius tokens or whatever? you can just send anything or receive anything and and that transaction can be done via sms or email or social media or any other medium and you don't need to have it know any have any knowledge about the blockchain or cryptocurrencies or anything like that so all right so three things are you're paying interest on crypto you're doing loans and you've got this we'll call it a paypal venmo style uh service the the paypal or venmo style service is i can have crypto in a wallet

i want to send it to you whether you have a wallet or not i can email it i can text it etc to you you get a link you then click that link and then you basically get a wallet and you're able to automatically creates a wallet for you and the money is sitting there in the wallet and then you can redistribute it send it to other people you can add more coins that you already have or whatever they gave you can start earning interest you don't have to do anything it starts earning interest immediately yep so okay so that's on the paypal venmo side right but for crypto on the loan side just asset-backed lending right people put collateral up and then you're giving them dollar loans and then when you get to but good we do it at five percent okay so you do

five percent loans right annual annualized right so so most of the people on the planet like farmers in africa pay 30 sometimes 35 right most people on their credit card 20 24 and we asked ourselves How come when you borrow against your house, you can get 5% interest rate, but when you put in crypto as collateral, you have to pay 24%? That's just ridiculous. So, we decided to create a model in which we will charge as little as possible and give as much of that as possible back to the community. So, the money would stay inside the crypto world. Got it. Okay.

That's the whole point. The whole point, it's like a community bank, the old school community bank, where you made a deposit and the banker used it to give your neighbors a mortgage. And then the interest from the mortgage was used up to build a basketball court in your community. Today, that mortgage is being sold to Germany or Japan, and there's no connection between the bank and the guy who took the mortgage or the guy that owned the mortgage. Absolutely. That makes sense. And then on the paying interest, how does that work? So when you pay interest on crypto.

So it's a proof of stake implementation, right? So we basically create a giant pool of BTC. All the people that deposit the BTC are the collateral that we get. We use that collateral to get access to dollars, cheap dollars, because it's asset-backed, right? But we have hundreds of millions of dollars of stuff. And we issue the loans. And the interest from the loans is distributed pro rata to the people in the pool. So if you come in, you put 1% of the BTC in the pool, you will get 1% distribution.

every week we distribute what we can get and the interest level dictates uh how much did we do a good job did we get six or seven percent we did a horrible job and we're only paying two percent yep so the the and that's why people ask me oh it sounds like bitconnect i'm like no bitconnect used the new guy money to buy their token and and basically everybody came and bought it at a higher and higher higher price there's no token here you you get back the same btc that you put in right The issue is just the value. If we cannot create any income, then the interest distribution is zero. But everybody still has a BTC, and we only do asset-backed lending.

So we have hedge funds that come to us and say, oh, you have 10,000 BTC? I want a short BTC. I'll pay you 12% to borrow BTC from you and go short, and it'll give you Ether or dollars as collateral. Great. You give me 150% collateral, and I get to charge you 12%. that's going to bump my weekly payments to my community. I love doing that. Makes a lot of sense there.

All right. So anyone cannot explain to you how they make money, be wary of that. Anyone that can explain it, you can go and audit that. And so the piece that is the most important piece of Celsius is then we take all the data that we just talked about and we publish it as an open book to the community. There's no bank that does it.

And that's the beauty of the blockchain. So anyone, if you're a member, if you're a depositor, if you're a borrower, can go and look. It's public addresses. I mean, you can go and look at everything. How many deposits did we get? How many loans did we issue? How much do we have in collateral? Because you can see all these transactions, and you can do your own audit and decide,

are we doing the right thing or are we not doing the right thing? Are we delivering back to the community 80% of the income as we promised, or are we only giving 65%? Well, why are you giving 65%? And so on, so on, so on. So people already created websites, independent websites, nothing to do with us, that are auditing us on the information we publish on the blockchain, which I love. My guys came to me and said, hey, look at these guys. They're publishing our data. I'm like, that's what we want.

That's what we were dreaming for. Absolutely. So where are we going with all this, right? Blockchain, Bitcoin, crypto. There's a bunch of promises to the technology, right? In terms of, you know, it's distributed, it's decentralized, it's immutable, kind of all of these buzzwords, I think, that people are now throwing around this industry. And they see a bunch of intellectual capital and financial capital rushing in. What's going to be the final product, right?

Or kind of what is the impact of all of this motion, right? Are we actually going to make progress or is it just motion? So I term it from VoIP to MoIP, right? From a voice over IP to money over IP. Okay. And it's the freedom and the independence and the fungibility of, like in America, most Americans don't, again, I was born overseas, I grew up, I went to the military, I suffered overseas. And I always tell Americans, especially ones that never have the passport or traveled anywhere, that you really don't appreciate what you have here, right? You take for granted all this stuff.

So every one of us has multiple credit cards. Every one of us has multiple bank accounts, right? multiple uh many of us have multiple cars and multiple homes most people on the planet don't have any of these things right and and they don't even have the access for it right so so for the first time the blockchain takes it and makes it fungible across the planet it takes the interest rate that you have in the us and you can give it to a guy in vietnam you can give it to a guy in namibia you can give it to a guy in india and they can they can harness that to improve their life and join the middle class yep and that's the opportunity the opportunity is that seven billion

people who are not part of the middle class can join the middle class because suddenly they can get access to the same just like you know the internet made information and and work basically fungible across the planet now the blockchain is making money and the access to uh funds funds and and and creation of value fungible across the planet and and that's what i'm saying like i I don't feel like people are working on that. When people are trading and manipulating stuff and exchanges are doing all the bad stuff that they do, everybody's just looking at tomorrow.

How do I make money tomorrow? They're not thinking about the opportunity. Let's talk about the exchanges for a second, because I know you've got a bunch of thoughts here. I love exchanges. What are the exchanges doing that you're concerned about and you think is unsustainable? So first, I understand what they're doing.

I understand why they're doing it. It's just that what I don't understand is all the people that give them their coins, why are they doing it, right? Okay, well, let's start with just, what are the exchanges doing? So almost every exchange out there front runs its own customers.

They front run their customers? Yes. Okay, and describe what that means. So when they see the orders coming in, they know what the book looks like, they know where everybody else's position is, and they know that the price of the Bitcoin or the Ether is going to go either up or down.

and then they take action before they execute the orders of their own customers. To make money. To make money, right. So to enhance their own profits, right? So trading their own account on the information that they have from their own customers,

not acting in the best interest of their own customers. Okay. So I'll give you a simple example, right? So take Binance, look at the profit. They already announced they're going to make over a billion dollars this year. They announce every day how many trades they have. you know their fee structure if you take all the trades they make times the fee that's less than

half of a billion dollars so more than half of a billion dollars comes from them doing activities that are not in the best interest of their customers on the opposite side of the spectrum you have coinbase coinbase declared to the sec that they're not trading they don't have proprietary trading they do not do front running and they do not short any of the coins that they list right so we for example we did the ICO in March we have not listed on a single exchange you know why we went exchange by exchange and said people came to us Binance came to us gave us an offer and we said we want you we're acting on the best interest of our community that's the most important thing for me my credibility with my community is everything right because they trust

me not just with the coins but for me to act in their best interest right and I said to Binance good you send me an email that says you're not doing any of these things and I will list with you and I'll pay you even the listing fees. I have no problem. Of course, they didn't send me that email. Every exchange we met with until recently, we finally found two exchanges that send us that confirmation that they're not doing any of these things and we agreed to list with them, right? But that's what I want the entire community to do. I'm calling for the entire community to withdraw their coins from all these guys who are acting against us, BitMEX and Binance and all these guys and really go and deposit it with people who are acting in the best interest

of the community. Coinbase is acting in the best interest of the community and a few other ones, right? What's their name? Blocktopia or something? What's the name

of the guys in New Zealand? Cryptotopia. Love those guys, okay? I checked them out, looked at everything they're doing, small exchange, but if you take out

all of the fake trades that everybody has, they're top 10 in the world. Okay, so if you look at, so front running is a huge issue in your opinion, right? What other things

are the exchanges doing? So several exchanges, I'm not going to name names, got caught shorting coins that they listed. So they would basically come to you as an ICO and say, hey, list with us. We'll charge you whatever, half a million, a million, sometimes $3 million to list. You must hire this market maker, which is going to use computers to create fake trades to pump up your coin or token. And then they would short. They would look at, they know the analysis. They can see where it's peaking.

And then they would come into the market because you have to give the exchange a few million coins. They require that in the contract. And then they just dump that on the market at the highest price. And then everybody liquidates and obviously they cover their short at a much lower price. So several exchanges, when analysis was made about these pump and dump schemes, the volume came from within the exchange. There was no new coins being deposited. You could see that these transactions came from inside the exchange. right so you could very easily settle that these were not external actions but internal actions so

so what you're saying here is not only was their front running going on or still going on you're claiming that there is uh wash trading happening to to push the price up and then at the peak whenever an exchange decides that they then are shorting the tokens and suppressing the price covering their short at the bottom they would dump the coins that were provided to them to do market making got it in the in under the disguise of market making really it was just a profit enhancer and these profit enhancers are 20 30 50 million dollars a pop right so these are you're talking about when when a coin gets to a billion or two billion dollar valuation it's very easy to make 50 million dollars on it it doesn't have to move much all right so so we got front

running wash trading shorting the tokens you need more i mean what i want to hear it all i want to hear i want to hear everything so so so exchanges do a lot of trades fake trades to create volume right and and again you don't think that these things hurt you but what hurts you is the fact that there is no real pricing the price you see is not a real price for example bitmex which is all synthetic trading it does it's not real real coins it is the dog that is wagging that is you know it's it's the it's instead of the dog wagging the tail it's a tail that's wagging the dog because now pricing on on real exchanges is based on fake trading that's happening on bitmex you know i'm gonna i'm gonna get arthur hayes right arthur hayes is a gangster man i'm telling

you. I have no problem. I'm going to bring you back. Special forces, Israeli military, 15 rounds, ready to go. I'm going to get you and Arthur Hayes in a room and you guys could debate this out. I was in Lebanon in 1984. No problem. I'll take anybody. The one thing that Arthur has said that just absolutely cracked me up was he said, real traders go both ways. Look, he was on CNBC. I'm quoting him on CNBC. People asked him, is it going up and down? He said, I could care less about bitcoin i don't care if it goes up and down i'm just here to make money so when you deploy but isn't but i'm quoting him i know but hold on so hold on though so i'm let's say i'm here to say the opposite i know but let's say he said that do you want to change humanity or do you want to just

put a few more coins in your wall but here's what i think what his response to that would be right everyone who's involved in any capitalistic uh endeavor right at some percentage it could be one percent of their motivation it could be a hundred percent of their motivation has the motivation he's the largest exchange on the planet okay have some sensibility some responsibility you know even the the worst guy the worst offenders on wall street have some charitable activities and whatever okay so going and getting two floors in hong kong and pretending like you you're in the seattle islands and you have nothing to do with any laws or any no one can go after me come on okay i'm a rich guy too i'm part of the one percent okay and i'm doing everything to give

it back to the people because that's where i came from i came here with a hundred dollars in the plastic bag to this country you know and when i looked i turned 50 i look at myself in the mirror and i couldn't tell myself i gave back more than i took i definitely took more and i i'm dedicating the rest of my life to give him back but i mean you know again i'm not gonna name names but we got a bunch of billionaires in this business okay you know they're all my neighbors in this hampton you know no no not calling names but like how much more do you need yep we can change the fucking world here absolutely all right so so here's uh only seven billion people are depending on us to do the right thing the few of us well so here's my question if everyone was to

do the right thing can i drop the mic no you can't and and so if everyone was to do what you consider to be the right thing right and start to create this democratization of access to financial services and money and kind of everything that is the promise of crypto blockchain bitcoin etc what are the banks going to do what's the legacy financial system what's their reaction it's a great question because what did the phone companies do that's why i'm asking right to the phone company today at&t realized oh shit we are gonna get killed by this voip thing and they bought all the cable companies in the united states right they became the largest cable guy and that didn't work out so then they said you know what why don't we become like a wireless company because we're

not gonna make any money on anything else right so the banks are gonna have to find a new business to be in because and look the the biggest offenders are not in the united states i can give you a few countries in africa where no one trusts anyone and all the transactions have to go back to paris and those guys make 15 to 20 percent on every transaction a farmer wants a loan and it has to be approved by some guy in paris and and and they take a 20 fee you know as a toll collector so So, I'm not sitting here telling you U.S. banks are bad or whatever. U.S. banks, Jamie Dimon is doing everything he can to produce value for himself and his shareholders. And he's doing an excellent job at that.

Okay? And he's doing his job. I mean, I'm not sitting here saying he's not doing his job. Okay. I'm just saying that no one is doing the job of creating. And again, you know, you can't stop innovation. You can't stop destruction. Disruption.

Right? And sometimes you have destruction with disruption. right so so here again the bitcoin is 10 years old and we have 6 million active wallets i mean it's just painful it's it's it's like you know we're giving this amazing new dna right that can can solve cure all the all the diseases on the planet and we're using it to you know to light the room or something i don't know i mean it just it's just painful what do you think i have to find a better analogy what do you think a bank's gonna do right so the legacy financial system they say we see what's going on we don't want this to happen how do they fight it so let's see what

let's take so jp morgan takes makes a copy of the ethereum platform call it uh core what do they call it quorum yep uh goes to their bunch of banks and says look are we gonna let these guys have the cream and have the cake and have the desserts and everything else now let's create our own platform let's replace swift and iban and everybody else with our own network why are we giving it to ripple or giving it to ethereum or anyone else right so they took our mona lisa called it something else created their own consortium and now they're gonna try to basically create tens of billions of dollars of additional profits but but isn't that isn't that they're right yeah it is i'm not open source right it is okay i'm saying they're allowed to do everything

they can okay okay so they they it's their job to do everything they can to defend their turf defer in their mode defend their mode or or anything like that right but at the same time as they're leaving they're throwing an atomic bomb right by by basically discrediting all the people that created everything they're using by bad mouthing crypto calling it a scam right look at Nouriel Roubini right I had two debates with him right I mean just just well so here so here's I here's not having any Jamie Dimon or Nouriel Roubini do not have a single valid argument that they can defend not one okay so bring him out here let's have a conversation but but here so here's who I will defend I'll defend the employees that are working on the blockchain teams and the

crypto teams at the big banks, right? I think that their thought process, their motivations, their work is not reflective of the leadership's public statements, right? And here's why I say that. I don't agree with you. Okay. Well, so here's my take on it and then you tell me why you disagree. Most of these people are pro-Bitcoin, they're pro-crypto, right? And they're trying to use the technology and they're saying that they can actually create more change by leveraging the legacy financial systems resources and being in those rooms taking the open source software and then creating change so take VoIP for a second three billion people use it three billion people don't and so if we can get all six billion people to use it some people are going to use the upstarts

who created VoIP. But the other 3 billion people are going to use it from incumbents, right? And so if you look at the blockchain space, if let's say that 6 billion people end up using some sort of, you know, decentralized blockchain based financial product, right? If half of those people come from what you and I would consider new crypto startups, companies, etc, right? This is everything from the coin bases of the world to the blockchains, the world, etc, right? If that serves half of the addressable market and the other half is served by the large banks using similar technology don't you have a choice as a user right as a individual participant in the market you can either go use what we would consider the hardcore crypto or you can go use the legacy financial

system but you have choice of course so look if the job was our job was to get seven billion people to use voip i agree with every argument you made okay but the the no bank can sit here with an honest face look you in the face and tell you that their job is to bring seven billion people to the middle class they don't okay they you know the the world bank did a survey and they took i think the bottom five billion people and in total they have 400 billion in assets okay that's nothing it's like no no bank would even bother with these people so the issue their their job is not to bring seven billion people into the middle class their job is to make sure the one percent stays one percent and they get to do all their banking right so we all live in the pyramid

in which we wake up every morning and we work for the guy that we report to and we have to make profit for him and he has to make profit for his boss and so on so on so on until the ceo has to deliver and i ran two public companies yep right a ceo has to deliver the profits to the shareholders that structure is passe right the whole point of decentralization coming and disrupting decentralization which is those pyramids and by the way that's why salt has a pyramid as their logo and we have a circle as a logo right just plug hold on hold on hold on listen here here's my uh here's my question no right i'm answering your question though i'm saying that the the disruption the real disruption is not about who's gonna use bitcoin better the bank or us as a

startup or whatever but but there's a tsunami care but shouldn't we care about point let me make my point okay so there's a tsunami of of of it's like again it's a new economic system if you believe it's a new economic decentralization is a new economic system a tsunami that's going to wash everything and everything is going to reappear as a decentralized platform if you're still running a centralized platform you will not be able to compete with a decentralized platform because in a decentralized platform it's not about how much profit you generate it's about each member of the network showing how much they're contributing to the network right so it goes back to like concept like like ethernet where where every node on the network is adding you

know uh two or three uh times more than than the than the value of the network right so so the opportunity here is to reinvent the banking world to reinvent real estate to reinvent every industry as a decentralized service that is allowing everybody equal participation but is decentralization that's the opposite of what's happening today but is decentralization always the right thing i believe that every existing business in the next 50 or 100 years will be reinvented as a decentralized platform and it's going to be on an open blockchain not a private blockchain like jp morgan is doing general consensus might not be proof of work it might be proof of stake or some other implementation but the point is is is that when you act in a completely transparent way

on behalf of all of your stakeholders right there's nothing better than that so everybody eventually you see the piece that everybody's missing is is that banks don't have any power the only reason banks are this monolithic institution that we all fear of is because we deposit money with them every day if tomorrow everybody in america stopped depositing power they were depositing dollars with these banks they will all be out of business right so just like people stopped using the phone network and used voip and all the phone companies lost all their power the same way if you decide that then if you personally right you get less than one percent on your money in the bank they then turn around and give it to jason here on his credit

card and charge them 24%. And they're allowed to do it 10 to 1 with fractional reserves. So they make 240% on your 1%. Now, do you think that is in the best interest of the account holders or is that in the best interest of the shareholders? Obviously, it's in the best interest of the shareholders. You're not going to fix that. That's my point. Well, let me ask this hypothetical. If it came out that Goldman Sachs, JP Morgan, Citi, Morgan Stanley, et cetera, were actually creating products to drive adoption of bitcoin not rehypothecation not fractional reserve actual drive true adoption of bitcoin if they did that would you change your mind look they all no would you narrow yes or no would you change your mind if that's what they were doing are you talking

about oscar and all these things i mean none of these things are if all the legacy there's no there's no bank that could exist with without leverage their entire business model is their fractional reserves right i mean so we we have the opposite not just that we are one-to-one but because we take two bitcoins for every bitcoin that we lend out every every ten thousand dollars we need twenty thousand dollars in deposit we we always have reserves not fractional reserve reserves which is what it should be so if you take the leverage out of the system you're actually going to save the system you see the bubble is not in crypto the bubble is in the bond market The bubble is in real estate.

All these assets are at all-time highs. And when that bubble pops and everybody's trying to make their way into cryptocurrencies, that's when Bitcoin is going to be worth $100,000, right? You think it's going to happen? Of course it's going to happen. We never had more debt in history. And again, it has nothing to do with who's president or if there's a war or not war. Economies have their own cycles and some presidents ride them up and some presidents ride them down.

It has nothing to do with who's in charge, right? Ray Dalio tells that story better than anybody else so all I'm saying is is that crypto is the only platform that is completely detached and unaffiliated and uncorrelated to all of these bubbles that are all correlated are all in the same place and the fact that the the fed used five bazookas in a row to get us out of trouble to reflate us doesn't mean that the next time the bazooka is going to work so the problem we're having really is that look there's no i have six kids at home there's no chance that my kids are going to live a better life than me there's just no chance because there's 23 trillion in debt and we keep adding more and more debt on top of it

there's no chance that they can repay of that yeah but but i would disagree with that and the data shows that we live in a safer more prosperous time today than any other time in history it doesn't mean it will continue forever every empire in history you could say that at some point the roman empire survived for 1600 years no no i'm not i'm not saying just the united states hold on but this is important right so i agree every every great empire in history has fallen completely agree every we're only 270 years into it right so we're we're not even a quarter of the way i i fully am on board with all of the historical um you know analogies yeah the other fiat currencies average is 27 right kind of in modern history it's about 40 or so so so completely get it

but what i will say is regardless of what empire is in charge what geography you look at today the data shows that we live in a safer more prosperous time than in any other point in history and i would argue that that will continue even if the things you're describing happen in terms of the debt bubbles it's all that kind of stuff right and it's because the the human progress right is a trend that those things are so small compared to thousands of years of historical momentum right i i don't think it has anything let's say the u.s let's say let's say the u.s debt situation completely blows up the u.s dollar goes away do humans not americans human lives on a global scale all of a sudden get worse it will be the largest transfer of wealth in history

right so i may agree with that but do their lives actually get worse of course it will be a disastrous uh i mean look look look at germany germany the mark before world war ii okay between world war one or before world war one was one of the most powerful uh currencies on the planet the pound was one of the most powerful uh currencies up to world war ii right so so and and then then they were basically useless you could you could take a shovel worth of those things and you couldn't buy bread with it right so and the reason these things happen is because people who basically the united kingdom or other countries had the right to print as many pounds as they wanted and everybody on the planet would would accept them and exchange them and that's

what the u.s dollar is the power of the united states okay is not in our military or in our technology we are the reserve currency of the planet everything is denominated in dollars it doesn't matter if it's an oil transaction between china and and south africa or it's a gold transaction between or it's a diamond transaction anything all because all these things are denominated in dollars the world runs on our economy so we can continue printing these things and issue debt and do whatever we want to do and we're abusing that power i mean what's happening is is that our politicians and the people who are in charge are just and it's not just a trump administration i'm talking about people before that too right are just abusing that power because

they don't understand it and the the federal reserve that's supposed to protect the dollar is basically is much more worried about inflation is much more worried about employment rather than the power of the US dollar because they got this, they were awarded this exclusive franchise, right? And it's not gonna last forever. I mean, don't you think the Chinese are gunning for us? I mean, they're building a whole thing with Silk Road

where the only accepted currency is gonna be what? You think the dollar? No. So, and it has to do with crypto, right? When you see England and Japan supporting crypto, it's because they lost, their currencies lost the ability to be reserve currencies. And you're seeing China and the U.S. not really supporting it

because they're fighting over it. They have it right now and they don't want to give away the power. So they definitely don't want to, they're okay losing it to each other. They definitely want this third player called Bitcoin coming and taking it away from them. Will Bitcoin be the global reserve currency of the world? If a disastrous thing happened, like you said, with the dollar collapsing, no one's going to take another fiat currency.

No one's going to accept it. You think we are one major fiat currency negative event away from mass adoption? The next bazooka is not going to reflate our markets. Because when you have so much debt that no one is willing to accept your dollars, they're just looking at it saying, I would never use it. Then everybody starts dumping their dollars, right? I mean, China has $3 trillion worth of bonds that basically they're going to have to dump eventually, right? I mean, they're not going to sit and hold that stuff when they see the United States keep printing and Trump sitting there and saying, you know, I'm not sure I'm going to, you know, I'm going to accept all those notes back when they come and show them and ask me for this or that.

So, you see, back in the Roman Empire, each coin carried its own weight in gold. You didn't have to worry about when it said it was backed by gold, each coin was backed by its own value, right? In 1972, we go off the gold standard, and since then, we've started building this bubble that has never been bigger. There's nothing in history like this bubble. Nothing like that ever existed because everything until now was based one-on-one on actual hard currency, gold reserve, or some commodity that you had. It didn't matter if it was diamonds or whatever you had, right? I mean, the South African rand was one of the most valuable currencies. Why? It came in a gold printed thing or it was backed by diamond.

And you knew that they had all the diamonds in the world. So all I'm saying is that the catalyst, the hockey stick for Bitcoin has a much higher chance of happening if there's a disaster on the other side than us going and signing up one person at a time as Celsius is trying to do every day. because we're trying to convince them that, hey, take 5% of the loan from us. What's the one thing in the crypto space that if you could change, you think would create an inflection point? So you can't change anything in the legacy system.

You can't cause an economic chaotic event or anything like that. You got to change something in crypto. What's the one thing you would change that you think could create that inflection point? Yeah, so I'm a movie buff. You know, the Matrix, where the guy touches him in the forehead

and it turns him from a speculator to a guy who actually wants to do well and do good at the same time yep that's my dream is to is to take all these people and show them why look it's very rare in history that you can work on something and do well and do good at the same time most people on wall street can say that they can't wake up in the morning look in the mirror and say i'm doing good and i'm doing well i'm creating value for everybody on wall street you're creating value somebody else lost it on the other side right but here like you said i mean look this is again the the blockchain is a bigger innovation wave than the internet you needed the internet to make it happen but now it's money it

touches everything the internet didn't touch everything you know we're excited about google and we're excited about facebook that's nothing that these little empires and monopolies that were created on the internet are going to look like nothing compared to the monopolies that are gonna be created on a blockchain. I just want those monopolies to act in the best interest of their coin and wallet holders, not in the best interest of the shareholders. If they're monopolies, will they be decentralized?

That's the hope. That they'll be decentralized monopolies. Decentralized monopolies, yes. Because then people can vote with their feet. Because if the monopoly is not acting in your best interest, you can always hop to another blockchain, which is, again, a fork of the original one that is doing what it was supposed to do, right?

Everything still works. So the beauty of the system is just, when you understand it, you know, and I read Satoshi's paper at least 100 times and most people don't get to page nine, which is the most interesting page, which is the page where the references are, you know? And like Newton said,

we're standing on the shoulders of giants, right? I went and I met the people who actually invented the blockchain. So this guy, Scott Stornetta, who invented the blockchain in Belcore in 1991, I met with him, I talked to him, and I'm like, why aren't you part of the blockchain project? Why aren't you part of the Ethereum project? And he's like, no one is building anything I'm proud of.

No one is trying to make this something that's going to... And I worked for six months to convince him to join the Celsius project. And he finally joined. Because this is not about money. This is not about creating value. This is about enabling everybody on the planet to participate. And then, you know, intelligence is distributed equally across the planet. It's not like most people think the United States has the smartest people in the world

because half of them are immigrants, you know, because they came here, not because they were born here, right? Look at public companies. Most of them are ran by foreigners who came here. So intelligence in Africa, on a percentage basis, the brilliance in Africa is the same as it is in the United States. And when you enable these tools worldwide, you're going to see the next empires being born all over the world because people are going to

come with the killer ideas out of africa and out of india and out of asia and also out of the united states but it's not going to be as concentrated as exclusive as we have it today if somebody at home is listening to this and you had two sentences to describe to them why blockchain bitcoin and crypto is so important what's the two sentence elevator pitch when you're gonna be on a deathbed and you're gonna look back at your life you're not gonna think about who died with the most toys or i wish i won i took more things from that guy or you know i was really nasty to this person and i wish i was even more nasty right you're gonna think about the legacy you're gonna leave on this planet and there was never a better time never has been a better time to leave legacy leave your

legacy and have more impact than the blockchain because it's going to disrupt every industry everything has to be reinvented there's never an opportunity like that right so so it doesn't matter what you've done your entire life you could be the best in the world on the blockchain because the experts are maybe one year ahead of you so you could take your skill set and apply it to one vertical and do that better on the blockchain if you really understand what it's about better than anyone else on the planet and it doesn't matter if you're from russia or china or namibia or or israel or from the united states and and that's the opportunity but again most people you know like churchill said right you they stumble across the opportunity they get up and walk away

so so it's staring at us in the face now it took me years years right i mean i you know usually i see these things in a second it took me years to understand it because it's different than anything we had before. It's the opposite. It's inefficient. It's slow. It requires consensus by design, right? All these people trying to speed up the blockchain. Jeez, guys, you don't get what it's all about, right? The whole point of it is consensus. That's the longest two sentences I've ever heard, but that was pretty good. All right. So I'll let you ask me one question to end this in a second. But the only other question I have for you, what's the one thought that you have that you think the majority of other people would disagree with you on what's your most

controversial thought in crypto um oh in crypto okay um what's controversial i'm scared of anything outside of crypto so let's keep it a crypto um none of the existing blockchains are gonna be the winners 20 years from now none none zero zero bitcoin included bitcoin included wow zero percent yes and the reason for it is when you look at who won on any category voip or social media or anything it's the last guy to get it right not the first guy to get it right okay almost always so i'll agree with you as that has happened in multiple industries but i will disagree with you that bitcoin is not the last one and here's why four major attempts at electronic cash beforehand all had issues technical issues right as far as we understand

today bitcoin was the last of the five and it was the one that solved every technical problem So shouldn't Bitcoin be the last one? Well, everybody thinks of the last one. You know, I'm famous for two things, inventing VoIP and sitting with Sergey Brin when he was still in Stanford with him looking for the first $100,000 check to get out. And I said to him, who needs another search engine?

We have AltaVista, we have Lycos, we have all these great products that have a huge... AltaVista had 80% market share back in 1998. Had to work out for them. Exactly. So my point is, whoever you think has it. And they had an alpha chip that was 10 times faster than anything else, right? They just didn't know what business they were in. They thought they were in the chip business and not

in the search business. So a lot of things can go right. A lot of things can go wrong, right? It's not about Bitcoin itself. It's not like Bitcoin has bad design or whatever, right? But after 10 years, we still don't have a killer app. So in many cases, the killer app dictates who wins, It's not the technology dictates what's the killer app. And we haven't found the killer app yet. Is Bitcoin not the killer app? No, it's not. Why not?

We've proven that. After 10 years, we have 6 million active accounts. See, I would disagree with that, right? Because active accounts in an inflationary system, activity is a sign of usage, adoption, economic progress, or economic activity, et cetera, right? In a disinflationary or deflationary system, actually activity could be measured by who is not spending, who is not using it. I understand and I agree with the assumption.

The issue is that when your entire user base is speculators who are just trying to outmaneuver each other, you're not really creating any value. So the whole opportunity of the blockchain is value creation in a completely new architecture, right? It's a circle that replaces this triangle that I was talking about where value is creating by how much profit you generated for your boss. Here it's how much did you contribute to society? Basically, each node, each participant on Ethereum is measured by how much they're contributing to the network, right? so so you can measure it in transaction or you because transactions do generate value but you need a killer app you need an activity that creates value when you have a bunch of speculators exchanging coins with each other you're creating fake value that value will create and disappear

which is the cycles we're going through now you may go to new highs i'm not just saying that it may even get to a hundred thousand that's not the point it just means you have more speculators you're not creating value all right let's wrap it up with one question that you can ask me why are you in the blockchain at all like you you were you were uh you know like mr silicon valley right doing uh tech and and other startups what what made you switch and why are you so passionate about it i think that there's um two elements that i probably don't talk about a lot but, but are, uh, are incredibly important. So one is, um, I believe that the American mindset and perspective is actually one of our greatest, um, obstacles to understanding the

power of this technology, right? So I do agree with you that people who have experienced other ways of life, uh, and have seen other, um, interactions with financial institutions, with money, et cetera, um, have an advantage in terms of understanding what this is really about. And I've traveled quite a bit. I was in, uh, obviously the army, uh, myself and, and have seen enough to understand that this is big enough to go dedicate, um, my time to, right. Uh, and I think that the second thing is, you know, look, I used to run, you know, a growth team at Facebook, for example, right. And so I really, really understand the power of incentives of network effects, right, Metcalfe's law, all this stuff. And I tend to agree that the winners of the

centralized world are going to be drastically dwarfed by the winners of the decentralized world. Um, and I think that there are not enough people coming into this industry, uh, who have the same skill sets and experiences that I have. Right. So I actually think the number one skill set that is missing from the entire industry, plenty of finance people, there's plenty of developers and all that stuff. It's the individuals who have run these growth teams or worked on these growth teams because they have a, um, unique perspective and just, they understand enough of the engineering

side. They're most of them are not engineers. I'm not an engineer. Right. So I don't write code in terms of sit down and write something from scratch. But I understand enough. Right. I'm not a product designer, but I understand enough. Right. I'm actually not a statistician, but I understand enough. Right. So they have this really unique kind of multidisciplinary experience and approach, and the key is they've previously applied it to incentivizing individuals to join and stay retained for networks that then increase the value of those networks, right? So you see this across Twitter, Facebook, all this stuff. As more and more of these people discover what is somewhat of a special skill to apply to this space, I think we're going to see them all come in. And when that happens, I think we're going to start seeing some really, really special stuff built. And so, you know, look, I tell them all the time, like, I just hope to be a small part of it, right?

It would be awesome to just be around and have some small contribution to it. And so, you know, here I am talking to you. It's funny you say that. First, it's a unique, sustainable, competitive advantage. Everything you just described. So cheers to you. Don't tell anybody my secrets. No one listens to the podcast anyways.

And by the way, congrats on kicking Apple and getting yourself back at the top of the list. We're recording this on the day that I got back into the app store after my mysterious disappearance. And the community went crazy cheering for you. So that is the best indication of support. but uh you know i was just i was just in sf with joe lubin from consensus right and he had this competition for startups people that have ideas and and i think ether was at 184 70 or something

it was like at the lowest point you know it was and i'm like sweating it you know i have a lot of ether myself and and i'm like look at like joe you're not worried at all he's like look at these people and they show me all these people competing he's like every one of them came from google and amazon and microsoft they're leaving the best jobs in the world and they're coming with their here with their crazy ideas and they can't sleep they they're so passionate about this that tells me that they have no problem we're not gonna have any issues if the best talent in the world wants to do this you don't have to worry about the price of the of the coin so and and you know it was you need that comfort even me i'm sold right i don't need any encouragement but even i needed that

hand-holding to cross the chasm and and and get reignited and and and get through it so so huddling is not an easy task and and if you're a real believer that's when you test it you test it when it breaks new lows and and and you're challenging every thought you have and and you have to re-examine every idea you have and and and reignite yourself and keep running i couldn't have said it any better listen this is super fun i really really enjoy you coming on you've got a unique perspective yourself and hopefully we can do this again this is great and thanks for having us again absolutely all right guys we're back here with john belazer the ceo of saluna you can check them out at saluna.io so john saluna plans to support the

local economy of morocco where your site is located what are some of the ways you guys are going to do that pomp as i mentioned one of our core values is supporting the local economies where we work. And in Dakla, where our wind site is located, we plan to recruit, train. In fact, we plan to build an academy where we're going to train folks on the technology that's going to be focused on supporting our operations there. Over time, we plan to work with a number of universities in the area because we're going to become a significant employer there. We plan to employ hundreds if not thousands of employees in that region focus on areas such as security blockchain mechanical engineering and a host of other areas that are going to be supporting the

wind site and the data center part of of the of the project and so it's going to be important for us to really build a funnel of expertise coming from these universities in morocco muhammad the Fifth, for example, is a great university with great talent actually coming out with strong technology and cybersecurity expertise that we can leverage. And then in addition to that, we have a 1% program. So 1% of our revenue will be donated to the local economy to help with schools, training, infrastructure, and the local community in the area. Very cool. Now, I'm super excited about what you guys are building. And again, guys, you can go check this out at saluna.io.

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