Alex Mashinsky, Founder & CEO @ Celsius Network
Ascent Conference 2019
[00:00:05] How many you heard about voice of IP or using voice of IP? Yeah, what’s that right? Yeah, everybody is right. Well, I’m here to share with you also money over IP. Did you hear about money over IP? Few people did. Right. OK, go tell it to all the people who are not in the room. We’re not going to learn anything today. So we all basically live in this pyramid. You see a pyramid on the right side or your left side. And we all basically wake up every morning, right, we work, we go to work, we create value, we create earnings for our bosses who create earnings for their bosses and so on. So the one percent can basically maintain the one percent. Right. Today, if you look at America, half of Americans don’t have four hundred dollars to pay for an emergency bill. Half of Americans are in less than fifteen dollars an hour. Right. So the system and I’m I’m an immigrant. I came to this country 30 years ago from a communist country. Right. So obviously, capitalism works much better than socialism, but or communism. But it’s not working for ninety nine percent of Americans. And what we have now is this new system, decentralization. You want to think hard about decentralization? One, two, three. Anybody else? For. So decentralization is a new concept, right? It’s like a fifth system, right? We had communism, socialism, capitalism and all kinds of other Buddhism. Right. And now we have you like that, right? Buddhism and now we have decentralization. Right. It’s a way of thinking. And it basically says, instead of thinking of yourself as to what is your ability to earn capital or earn profit, how about we measure you based on your contribution to society? How many of you would vote for that? As a way of living. OK, so it’s a movement, you either belong to the left side and you probably work on Wall Street or you’re on the right side and something inside of you, your your your soul is saying, hey, you’ve got to do better than this. You can do something else. So what we’re what we’re trying to revolutionize is really money.
[00:02:27] If you think about money and you go back all the way to the Roman Empire, you would see money has not changed in almost five thousand years. We went from coins to bills to notes to digital money, right, but nothing has changed, right? The money’s always concentrated today. Again, wealth in the United States is more concentrated than any time in the history of mankind. OK, more concentrated wealth is more concentrated than any time in history, right? If you look at these different currencies or different empires beside, if you exclude the Roman Empire, almost every other empire with dominant currency only lasted about 100 years. So I’m here to argue that we’re at the end of the cycle for the U.S. dollar and something else is going to come and replace the U.S. dollar because of social unrest. How many of you heard about the block chain? So a lot of you heard about it. What does it look like when you when I say block chain? What what what image comes to your mind?
[00:03:31] Anyone? Ledger, yes, what else?
[00:03:38] Stamp, very good, but but I think it’s actually a tank. And the reason I think it’s a tank is because it’s only good for one thing, I know we have all this excitement and people saying all ledger, the block chain is going to cure cancer and it’s going to take care of all of our problems and. Right. Does three thousand companies trying to do everything with the block chain. But really, it’s an amazing open ledger that allows us to do something we couldn’t do before and that something is to replace money with something that eliminates the middleman, eliminates the toll collector. Right. We’ve eliminated the Internet, the limited toll collectors everywhere. Right. We don’t we basically barely go to the mall anymore. We order everything. Everything is delivered instantly. But we have not been able to find a way to replace money. And what the blocking allows us to do is to basically get ourselves in the tank and transact with anybody in the world safely without us getting attacked or stolen and our assets being stolen or having to use a toll collector that is really not acting in our best interest. Talking about not acting in our best interests, so this is a chart of all the banks since 1990. This will we ended up today we have about four dominant banks in the states. And the great thing in the background is the interest that these banks pay. Anyone in the room earns more than two and a half percent on their money.
[00:05:08] Anyone, anyone remembers when used to earn eight or nine percent of your money.
[00:05:14] So why is that why did we why did why are we earning so little on our money? Why isn’t our money working for us while we are working for our money?
[00:05:23] Do you ask yourself the question?
[00:05:26] If you do, you will find out that it has nothing to do with the economy or the Fed or anything else it has to do with this, with the consolidation of the banking business. You see, what banks do as toll collectors is they take your deposit, you get paid every two weeks, let’s say. Right. And they lend it to the woman behind you on her credit card. They pay you one and a half percent. They charge her twenty four percent, twenty four point seven. Actually, that’s the average in the United States, twenty four point seven, one point six trillion dollars worth of debt on credit cards. Right. So it’s six hundred billion dollars worth of interest that we all pay. We all Americans, just American pay to whom?
[00:06:05] Not to ourselves. Interest doesn’t come to us. It goes to the shareholders of these banks. Right. So. What we decided to do, Celsius decided to say, wait a second, why don’t we take 80 percent of the profit instead of giving it to the shareholders? Why don’t we just give it to the depositors? Isn’t that a simple concept? Right. This is exactly the same thing banks do, but instead of taking that money and taking all the fees and all the the top four banks charged the poorest Americans. Thirty six billion dollars in just overdraft fees last year. The people that cannot finish the month that when one dollar over their account balance had to pay a 30 dollar fine and that’s what they live on, that’s where all these profits come from. So I don’t think that’s a fair system. So if you look at the fees that all of the banks charge, you can do everything the bank does on a block chain, basically for free. And we charge nothing for that service. All right, so again, you deposit, you get one percent. The bank lends it and they charge twenty four percent. Now, where’s all the profit going? Why can’t we replace it with a system where the depositor earned seven percent and the borrowers pay nine percent? Isn’t that a more fair system? Give back 80 percent back to the depositor. Who would vote for that, anyone here would say, hey, I think that’s a fair system. So, you know, how many laws exist against this prevent you from doing this in every state in the United States? There are hundreds of laws, you know, Sarbanes-Oxley. Sixty thousand pages. Of regulation that guarantees that those four banks don’t get any competition. That’s all they did 2008, remember 2008, all we got out of 2008 is a guarantee, a warranty that no one will be able to compete or do anything like this for you or act in your best interest. So Anyone here heard about the Bitcoin, anyone has Bitcoin? So what does a bitcoin do, the bitcoin is a new set of rails. It’s a completely separate highway that does not go and use the system that the banks use. Right, to deliver the same service. It bypasses all the toll collectors. Now, I know some people say, oh, it’s very risky, it goes up and down, forget about the price action, look at the technology, look at the functionality of what it delivers. It allows any person to transact with any person on the planet without any intermediary, without any middleman. OK, now what what do you know in your daily interaction, you can do the same thing. What else can you do, what you can transact with anybody else or interact with anybody else? Without any toll collectors. Cash, well, cash, there is usually either an ATM to get it out or somebody else, you know, Western Union or somebody you want to move money overseas. Thirty dollars at least, right? I mean, so. I’m talking about voice of IP, right, anyone here used voice over IP. Do you remember before voice IP or to basically use your phone company to charge you two or three dollars a minute?
[00:09:45] Fifty cents for local calls. 9X, remember NYNEX, Bell Atlantic? All those guys, they were toll collectors, they were the Monopoly’s that decided how much to charge us to call our uncle overseas or our son was in the military or whatever. Right. They basically did exactly what banks do today. So how did we get rid of all those guys?
[00:10:14] They made most of their money from International Settlements that AT&T 1990. It was the most profitable company in America, most dominant company in America, made most of its profit from just the fact they charge us three dollars to call Japan or Korea or any other country. So what happened? How did we get rid of those guys? Did they lower their prices? Did they come to you with amazing saving plans? No, we created a technology called Voice of IP. I was involved with the original patents 1994. You don’t I know you don’t believe me. You can Google. You can Google that.
[00:10:50] So I wrote the original patents I came to, people said, hey, look, you don’t have to pay NYNEX, you don’t have to pay Bell Atlantic.
[00:10:57] Here is a server that bypasses a new set of rails using TCP IP UDP that bypasses these toll collectors. Today, four and a half billion people use that service for free. Right. I don’t know why the other three billion still pay the phone company. I’m still baffled by that. Right. All you have to do is download an app, one out of 100 that are available out there, so. What we have right now on the block chain is a fight fight between centralization and decentralization between the banks and the people, the rebels like me who are coming the second time. Right. The phone company already hate me. Now the banks are going to hate me, right? I mean, my gut living in New York and having the banks hate you, that’s like, you know, I can’t do anything. But the good news is you cannot walk into a bank and find any young people there. You’re not going to find any young people in banks. You know, they did a survey.
[00:11:52] They found out that the worst thing after worse than going to a doctor for a teenager or for a millennial is to go to a bank branch and interact with the bank. That’s what the that’s what we found out. That’s how painful that experiences.
[00:12:08] So in the crypto space, right, we went through these cycles, pricing cycles and these price cycles basically are just handing off the baton every time we grow the community and we go from anarchists to libertarians for libertarians to speculators.
[00:12:25] That’s where we are right now. Right. We drop the baton and when we drop the baton, the prices go down 60, 70, 80 percent. Because you’re changing the community, right? You’re disrupting who is actually carrying us forward. But I can tell you, voice over IP again, twenty five years later, right? Only half of the population in the world has adopted it. Now, what is harder convincing you to switch your phone company or convince you to deposit your money somewhere else? So this is going to take time. But this revolution is here to stay. Anyone who thinks that this block chain or cryptocurrency or whatever is just a fad doesn’t understand what they’re talking about. OK, I’ve seen this movie before. I know exactly how it ends. And I’m here to share with you that if you’re not getting involved in this, you’re going to miss the next big thing. So, again, on the VoIP side, you know, we went from twenty five to frame relay the big technology that everybody was betting on, all the phone companies were betting on was ATM.
[00:13:31] And the reason VoIP became such a big thing and such a surprise to everybody is because it was based on something completely different. It was based on a network that was back in ninety for an experimental network. So when I built the first gateway VoIP Gateway that ran on TV, IP people laughed at me and they said, Alex, you don’t understand. You’re not smart enough. You you’re only twenty five years old. You don’t understand. The entire Internet runs on the phone network. How is the phone network, how how can you run the entire phone network on the Internet if the entire Internet is a dial up thing that runs on the phone network, you need some you know, why don’t you go back to college or something and learn a little bit more and come back and, you know, but really what happened was that the entire phone network just became an application on the Internet. Right. Skype, WhatsApp is just an application on the Internet. So what if the entire Internet? I know this is going to shock people. They’re going to leave the room in about two minutes. What if the entire Internet is just an application on the block chain?
[00:14:39] Anyone with me here?
[00:14:42] What if we can’t trust anything in the news, everything is fake news, you don’t know who’s telling the truth, who’s not. And the only way to tell the truth, not just to transfer money, but actually have real information about who is the originator who wrote something when it was published. Is it real? Is this image fabricated or not? Is if we use a timestamp Leggio that tells us who is the creator, who is the owner and so on. And if that’s true, the entire Internet is going to have to migrate to the block chain. OK, so are you are you part of that or are you missing all of that? You’re busy doing some SAS or whatever, right? Right, squeezing the last drop out of an industry that’s already is fully built, right. They’re going to kick me out of here or not invite me to the next conference talking like this. So so what is the opportunity? The opportunity is to combine. They secure an immutable block chain. We’re talking economics, right, these are the incentives, the beauty of the Bitcoin is that it gives beautiful incentives to the mining guys, to the people who use the network, which the dollar doesn’t do. Right. The dollar does not give the right incentives to people. Do you know the Fed printed two hundred, the New York Fed printed two hundred and eighty five billion dollars in the last two weeks. While you were busy doing and all kinds of other stuff. There’s 230 million Americans, did you get your share? Did you get a check? Each one of you should have gotten a thousand dollars or more. What happened? Where did all that money go? Oh, you don’t know about it. Well, that’s what happened last two weeks. There was some disaster in the repo market. And guess what? The Fed injected half of all the money that was injected in 2008. While we were busy with our little whatever, you know, so there was an earthquake last week right here in New York, no one noticed, so.
[00:16:49] We cannot continue printing money and have no consequences. OK, so again, to summarize this, I put a little really simple formula for you to remember. Equals empty square, the value of Krypto is the fact that it’s a community based right. And let’s go back to VoIP, right. VoIP to Tomoya, the most valuable company in VoIP is what’s up? How much did WhatsApp charge in revenues? How much your revenues did it have when it sold to Facebook for twenty two billion dollars? Zero. So how can a company with zero revenue be worth twenty two billion, the most valuable VoIP company in history? Right. It’s the size of the community they have right now. They have a billion and a half users. So the future empires are not going to be the companies that make the most profits. It’s the companies that have the highest the biggest membership. The biggest network. Right. The most one of the most valuable companies in the world. Facebook. Right. Why did they pay that price? Because they want to maintain their dominance as the largest network outages. So you want to know what’s going to work, find a large network that has a lot of members and a lot of credit. Right. I’ll skip a few slides because we’re running out of money to think of crypto is like a Pakman that is just going to eat all the asset classes. Or the hype curve, right way past the hype curve. We went through the top and we’re now going towards mass adoption. This is the Gartner hype curve, right? So to get to mass adoption, to cross the chasm, you got to go beyond Bitcoin or beyond Ethereum. Those are the Bitcoin age, right? What’s right now we all struggling to figure out, OK, what is that killer app distributed application? What is that that’s going to get us to mass adoption is going to be security tokens. Is it going to be Libra? Anyone here, fans of Leba giving Facebook even more power? Come on, guys. Let’s let’s let’s help them out. Come on. Right. Or is it going to be stable? Coins, table coins are variants of fiat currencies. Right? It’s like a digital representation of a dollar or yen or euro. And it’s like a baby step towards. Digital currencies, right, it’s if you if you don’t understand all of this and you want to jump on something that at least halfway that safe, go buy some stable coins, you can always get your money back. It’s not going to lose half of its value and so on. So what Celsius did, what my company did is basically enables people to get cheap loans and we give 80 percent of that back to our depositors, but we can only do that inside the digital world. We cannot do it with dollars because of all these all these rules out there that prevent us from giving our customers, uh, acting in the best interest of our customers. Right. These are what the rules prevent us from doing to make sure that the banks can continue extracting. You know, JP Morgan by itself is made 30 billion dollars in profit last year.
[00:19:50] Did you get a check from them? A dividend. Thank you.
[00:19:56] So that’s what we’re here to replace, and we did two point two billion in loans, we have people gave us over four hundred million dollars in deposits in one year. Right. And it’s all community driven, right? It’s all community. Fifty thousand people from 150 countries. And again, so we. We act on behalf of depositors in the best interest of the community and banks obviously act in the bank, in the behalf of shareholders in the best interests of the company. This slide says it all. And you decide, all of you, just like you stop giving your phone, your service to the phone company and you you moved over to an app, you can decide to stop making deposits in banks and empowering them and giving your empowering somebody else is acting in your best interest. It’s up to you. You have to make that decision every day. Thank you very much. I’ll be outside. I’m happy to answer questions.