The last one of our exclusive interviews filmed at The Web Summit in Portugal features Yoni Assia, CEO of eToro and… two interviewers (instead of one). Who took over the mic and asked Yoni about how did legendary Vitalik Buterin used to work in eToro office? Follow the link to watch the whole thing!
Interview with Yoni Assia, CEO of eToro — on his new social project and working with Vitalik Buterin.
- Is crypto here to stay?
Definitely! We’re at eToro are big enthusiasts of crypto, we’ve been involved in crypto space since 2010. I believe we’re just at the very early stages of cryptocurrency. It’s definitely here to stay and probably will significantly grow.
- What is the next step? Regulation-wise?
Now it’s sort of a… quiet before the storm phase. A lot of companies are building products, doing it very fast, we’re going to see a lot of products launched. We just announced our Blockchain Wallet, which is a multisig, multiblockchain wallet. A lot of other companies are also gradually improving — whether it’s blockchain improving their scalability or their decentralisation. Smart contracts applications coming out. Now it’s time when a lot of things are being built. We will see sort of a bull-run, which kicks the whole ecosystem to be more mature.
- Do you agree with Tim Draper predicting $250K by 2020? Are you that optimistic?
I always like to be a bit more cautious, but it’s very good sense in saying it’s gonna hit 50K in 2022. 250 is a bit high. We’re all waiting for sort of a tipping point, an inflection point, where people feel they have to run towards crypto.
- What eToro is working on right now? Next development steps?
Very big projects we’re working on right now. We announced this week the launch of our wallet. We announced our social impact project called The Good Dollar, which is about creating new cryptocurrencies to help the poor and reduce inequality globally, but this is more of a research into economics and cryptocurrencies. We are launching our product in the US later this year, which is very exciting. We’re also developing eToro X —WE our exchange, which will be presented later this month.
- Can you tell us more about that social impact project?
The Good Dollar is basically an experiment, or a series of experiments around how to create a universal basic income, how do you create a cryptocurrency that actually can give people money throughout the world, distribute cryptocurrency. If you think about Bitcoin it’s still very concentrated, traditional capital markets are very concentrated at the rich. 42 richest people in the world own more money that the 3.7 poorest people in the world. How can you use blockchain technology in order to create a fairer system? Which distributes the funds more efficiently? And therefore enable more people to participate in economy and contribute to it?
- Are you aimed at any particular country?
No, we’re looking at it as an internet product, smart contracts which are completely decentralised, the same way Bitcoin is. But have a better mining process. Instead of going to miners who build chips people identify themselves — it’s not anonymous as Bitcoin is — then people vote for who they say they are, and then money is being constantly distributed at 10% a year inflation rate to the poorest in the ecosystem.
- Good luck with that project! You are the best person to ask, as long as you are connected to so many traders — which challenges blockchain industry and crypto industry in particular is facing right now? Which ones we need to overcome?
In ICO space the biggest challenge by far is regulation. It’s both regulation on a government level — nobody know now whether it’s a utility or security, people stop doing ICOs in the US and that dried the market a bit. And second — regulation on a moral compass level. A lot of ICOs raised money, but didn’t deliver. Or took money to another project. That would not happen in the VC world, when you invest you have corporate governance, you have founders agreements, and I think those will have to mature. You have to know when you’re investing in an ICO what you’re investing in, what’s the commitment you’re getting — in order for that market to come back. On the other hand I think gradually fiat rails are becoming better, but still a lot of the banks are blocking crypto. Regulation could definitely help build better rails from crypto to fiat and from fiat to crypto.
- About the regulation: do you think that crypto community needs to educate governments about blockchain more? How do we do that?
Definitely. Benefits of blockchain are enormous for any regulator. Instead of having an opaque financial industry where you don’t know which financial institution has what to which clients — on the blockchain everything is transparent. The opportunity with blockchain is actually to create much better regulated firms than they are today. Our wallet, for example, that we’re launching, we currently have an in principle licence from the regulator in Gibraltar. Basically the biggest issue with regulation is if you open a financial institution, and then a customer comes and deposits $1 million in it, the regulator has to make sure that you actually have those dollars, and haven’t run to Bahamas with that million. When a customer deposits money into our wallet it goes directly onto the blockchain, into an address where he can actually see his funds even outside our platform. And the regulator can see the funds outside our platform. The regulator can see that all our liabilities to customers are exactly what the customers see as liabilities. Therefore significantly reducing the regulatory burden of understanding where the money is. And I think it’s very hard for people to understand the benefits before we see more platforms and more regulators understand and educate themselves with the help of companies about these benefits.
- Why the banks are so afraid of crypto?
First thing is AML, it is really an issue. It’s hard to control second or third stage of where the money was. Banks do not want to be in a position where they suddenly hold money that you can actually find origin and is coming from a bad place. If you’re a bank and you got cash that came from a bad place — there’s really no way to show it but if you got Bitcoins or money that arrived from Bitcoins you can actually see the entire trail and if it came from a bad place. And that trail and the fact there are no KYC for everyone still makes banks fear a lot the AML part. The second part is more on the central bank level. Potentially rightfully so, some bank fear that this has the potential to destabilise the system. If all people in a certain country withdraw funds from the bank to buy Bitcoin that’s a big issue. They don’t necessarily know how to handle this, in some cases they decide to shut it down.
- Which again brings us to the issue of education.
- Yoni, can you tell us a story about Vitalik Buterin? About him actually writing a white paper for Colored Coins? How did that happen, how did you manage to get him there? And what happened later?
This was really the early stage of crypto. I was an enthusiast on BitcoinTalk forum, and I wrote about this concept called Colored Coins, which was how do we tokenise different types of assets — euro, dollars, pounds, gold — on top of the Bitcoin network. I got an email from Vitalik Buterin telling me that he had some time and was very happy to try and help us build this concept of Colored Coins. This was I think when he was 19. And I actually sent him some Bitcoins to start working with us on the white paper of Colored Coins. He wrote the majority the Colored Coins white paper together with me. After writing the paper he told us and me that it was too difficult to tokenise assets on top of the Bitcoin network. He worked at the eToro office a bit, he met a lot of ecosystems in Israel, it’s described in the white papers. Then he decided that the Bitcoin blockchain is not good enough and that he needed to build a new blockchain. I told him it’s too difficult to build a new blockchain, unfortunately — and the rest is history.
- What happened to the Colored Coins protocol?
Eventually it got forked. Everybody sees what forks are now — with Bitcoin and Bitcoin Cash, and Bitcoin Cash 2. So it got forked into 4 different projects, each developers took their own way. We took Colored Coins together with a company spun off, called «Colu», which maintains the Colored Coins protocol and develops local community currencies. We continued to maintain it, but moved it to a sister company called «Colu».
- Did you hear about Vitalik’s launching Ethereum 0.2? What do you think about that?
I think it’s amazing. They realised they need to run faster, and the biggest problem is supporting the past. And they said — f*ck it, if we want to run faster we can start from scratch and build something faster and better. It’s not going to be easy to reveal that fork, but the Ethereum community is close enough to make it happen.
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