How Crypto Will Bring Financial Freedom To The World - Alex Mashinsky / CEO of Celsius

Listen to this incredible conversation with legendary entrepreneur Alex Mashinsky.

Alex is one of the rare entrepreneurs in history to found & lead multiple billion dollar companies.

He is most known as the inventor of VoIP but has a storied career that you could write multiple books on.

Currently, Alex is the CEO/Founder of Celsius and on a mission to bring economic & financial freedom to the hands of the people.

All show notes & resources available here -> https://boundtoberich.com/alex-mashinsky/

You can also watch the video version of this interview on YouTube -> https://youtu.be/9iRDljN5E_4

Join my email newsletter! → https://bit.ly/BTBRnewsletter

Sign up for Celsius to earn 6.2% interest on your Bitcoin and 8.88% interest on your cash. Get $40 in free Bitcoin for signing up via my link -> https://celsiusnetwork.app.link/11858075cb

There are also usually promo codes for even more bonuses so be sure to check for the latest here.

Current active promo codes (as of the publication of this podcast 6/3/21):

• BTC50 – Transfer $400 or more of any supported asset(s) to your Celsius wallet and receive $50 in BTC.
• BTC600 – Transfer $25,000 or more of any supported asset(s) to your Celsius wallet and receive $600 in BTC.
• BTC2500 – Transfer $250,000 or more of any supported asset(s) to your Celsius wallet and receive $2500 in BTC.

Just to make it clear how awesome this is, if you sign up for Celsius via my link and use the promo code 'BTC50', you'll receive $90 in FREE bitcoin once you deposit $400 into Celsius. That's already a 22.5% return off the bat. On top of that, you'll get weekly interest on the $400 you deposited. In addition, the $90 in free bitcoin should drastically appreciate in value since Bitcoin is at 2021 lows as of this post. This is a huge win any way you slice it. Sign up for Celsius and send me a DM on Instagram letting me know you did it!

Enjoyed this episode and want to treat me to a cup of coffee? Thanks, you’re awesome! → https://www.buymeacoffee.com/boundtoberich

Coinbase is how I buy my Bitcoin. Sign up via my link and get $10 in free Bitcoin! → https://www.coinbase.com/join/humet_q

Lolli is a cool way to earn Bitcoin back on your online purchases (like Rakuten/eBates). Get $10 in free Bitcoin via my link! → https://lolli.com/share/fHmWLfbpFq

Check here for links to other cool resources -> https://boundtoberich.com/my-links/

Transcript

This transcript was automatically generated using Descript.

Ismail: Alex, thanks so much for coming on the show, man. Really, really appreciate it. 

Alex: Thanks. Over me mean. 

Ismail: Uh, I, I share in your vision of, uh, bringing regular people to crypto, I think your current vision is to bring a hundred million people to Celsius. Um, so I want this conversation to help put a dent into that.

Hopefully if we can bring a few hundred people or a couple thousand people onto Celsius, I'd be happy. Um, but before we get into that, I'd like to set this stage, um, and get people to know you a little bit more, because when I read the introduction, you sound. It's very unrelatable. This guy just hits home, run after home run.

He does all these big things. So if you don't mind, I have some, I've got a ton of questions that I know I'm not gonna get to, but I'd like to start with something I'm curious about. So I read that you were born in the Ukraine. Right? And my family's also from Eastern Europe, um, from Macedonia. So I go there often, uh, the former Yugoslavia and I, I have a lot of friends and family there and I speak to them.

And one thing that always stands out to me is that, uh, how lucky we are to grow up in America. [00:01:00] We believe we can do anything. Uh, cuz a lot of my friends and family, they don't have that optimism. Um, they, their hope is to get out of the country, to go to America, to go to Europe. So I really want to hear how someone like you who came out of there, uh, this is years ago, before the internet, how did you not fall into that mindset and how did you believe that, hey, I can do something.

Alex: Yeah, sure. So, uh, I mean, , I'm not sure that the United States is, is as that still viewed as that, uh, uh, you know, house in the top of the hill that we all, uh, aspired to come to. Uh, I think, um, um, you know, it used to be that you had an American passport and you can basically go anywhere and do anything now.

Uh, I think a Canadian passport is better, you know, so, So, um, Uh, but definitely growing up, uh, in the Ukraine. And then, uh, my parents immigrated to [00:02:00] Israel when I was seven. So growing up in Israel, it looked like, uh, people in the United States just have a much better life, you know, And, and, uh, if you're gonna get stuck in Ukraine or Israel or, or, you know, uh, Serbia, whatever, uh, uh, Macedonia, whatever the country you're in, uh, you're just not gonna have the same opportunities and.

Um, you know, it's, it's definitely a, um, the United States of America is definitely a place 

Backstory of Alex Mashinsky

Alex: where you, you, your, uh, you can achieve more than your aspirations, right? You can kind of exceed your own expectations, uh, uh, but it's also a very difficult place. Uh, there's no safety net, right? So there's no, uh, if, if it things don't work.

uh, there's no one who really cares about you. Right? You, it's, you don't have your family, you don't have, uh, you know, [00:03:00] no one is time for friendship, you know? Uh, so it's a little bit different. Uh, there, there are sacrifices. It's not just all good, you know? 

Ismail: What about you've made you different growing up there where you then fall into that mindset of, Hey, we can't do anything.

You know, it is what it is. What made you think, I'm gonna go to America and I can do something ? 

Alex: So, And it's a long story, but basically, uh, when I was trying to be an entrepreneur in Israel, that was before Israel was a startup nation. Right? And, and, uh, I, I didn't have any degrees. I didn't, uh, didn't come from a wealthy family or had any capital and just no one wanted to listen to anything I had to say.

So, um, so I, I actually was doing international trade and, and I flew to Europe. , uh, to try to, I was in Paris trying to, uh, close a, a deal that I was working on, and it was just cheaper to get a ticket to New [00:04:00] York with a stop in Paris. You know, Air France gave you basically a lower rate going to New York through Paris than flying direct.

So I, so I had that stop to come to the United States. I, I never, it wasn't like, Okay, I'm, I'm just gonna go to the US and I'm, I'm gonna stay there. I, I had, uh, I had that ticket. I was like, Look, What could go wrong? You know? Let me just go figure it out. Worst case, I always have the return ticket and, uh, if things don't work out, I'm just going to, um, uh, you know, come back.

And, uh, I knew one person in New Jersey that, so I reached out to him and I said, Hey, you know, I'm gonna fly in. Can, can you, Can we meet? Can you come? He's like, Oh, I'm gonna pick you up. And then he never showed up, you know, So I took the. to 42nd Street and that was like my, uh, my introduction to New York.

Ismail: It's funny cuz a lot of my family friends immigrated to America were the same plan. Like they just wanted to come to America, work enough to ha have enough money to buy [00:05:00] a tractor and then go back home and they never left, so. Right. Right. 

Alex: So it's definitely, you know what, what's amazing in America, especially after working in Europe, is that, uh, when I went, and again, I came here as a 21 year.

Um, 

Decide to go to America?

Alex: I went and told people my vision for, you know, the internet. I mean, back then it wasn't the internet, It was, uh, information Super Highway back in the late eighties. Uh, and they looked at me like, What are you talking about? You're not at and t, you're not nine x. Back then it was Ninex, Bill Atlantic, and all these c.

How, how are you gonna get anything done? I'm like, You don't understand that everybody's gonna have internet. And I looked at me like, What are you talking about? You know, You mean phone lines? I'm like, No, Internet . So, So, uh, what's amazing is that in Europe, like I was in France, I was using Minitel, which was their, uh, their version of the internet.

And it was already basically in every [00:06:00] home, right? And, and, uh, so it was easy to see that vision come to. , eh, with the search engine and everything and, and uh, it was nonexistent in the United States of America, right? So everything was BBSs dial up and so on. So a lot of it all has to do with, uh, being at the right place at the right time, right?

So, but people basically heard my ideas. They invested in my company, and, uh, I built, uh, voice of IP and uh, you know, I definitely could not have done that. . 

Ismail: Right. Um, like you said, things may have changed now a little bit, but at that time I think America was the, the north star for entrepreneurs. I, I also read, um, somewhere something about your father, uh, was also like a tinkerer and maybe that rub.

Can you tell me a little bit about your father and did any of that rub off on you? It seems like it did. 

Alex: Yeah. My, my, my dad and my, uh, my grandfather were both, uh, refused next, meaning they, they, they thought that, , [00:07:00] um, you know, Jews should immigrate to Israel and, and they felt that, uh, they wanted to leave the state, the Communist Party, which was a big no-no.

I mean, you know, like, uh, so basically they lost their job. They were, uh, re refusing means refused exit. Right? They were not allowed to, to do anything cuz they were not part of the Communist Party. And uh, and we were lucky that in 1972, , uh, the Americans are actually arm and hammer and, and a bunch of other politicians brokered a deal.

Uh, Russia is struggling with food and, and they're a horrible harvest. So they shipped, uh, 300,000 metric tons of wheat to feed the, the Russian, uh, uh, ma uh, masses. And in exchange, the Russians agreed to release 300,000. , uh, to basically leave Russia, right? So we were in that, uh, outflow and, and [00:08:00] uh, so people, it's funny cuz when people say to me, Why'd you come to America?

I'm like, Well, I owe four metric tons of wheat that the United States paid for me, 1972. And with, with inflation and interest compounding interest, I'm gonna have to work a long time to pay that back. But, but uh, basically while many. While many people, uh, uh, who left, came to the United States, you know, went to Brooklyn and Miami and whatever, my family was adamant about, uh, the fact that we have to immigrate to Israel.

And three months later, the m Kippur War started. So my mother was like, screaming at my dad, , you took us outta Russia and you brought us here. Like, we, we gonna lose this war. It's gonna be the end of us. Cuz the, the Arabs were winning the first few. , you know, first few weeks

Family background.

Alex: it looked like the end was near.

So, um, 

Ismail: it's, it's a crazy story. Um, if you, if you look at it in a certain way where you, you kind of were traded for weed, um, but then [00:09:00] you end up adding so much value to society, like you end up. Putting a little dent into the universe. Right? So, um, this is the stuff that I like to talk about because everyone looks at all these big entrepreneurs and they're like, Wow, they look unrelatable.

I can never be like them, but they all start somewhere. Right? So was there anything else that you did in the beginning I read about, uh, flipping items from customs or, uh, some other things that you were doing in the early days? 

Alex: Well, my, my, the, I, I, I grew up in this tiny, in, in the Ukraine, the tiny little town, uh, called churn of.

Uh, or it, it, uh, it used to be Romania, then it became, uh, uh, Ukraine. But in, in, it used to be culture oz and uh, uh, we had an outhouse. I mean, we had this tiny little decrepit house made out of like, cobbled together, uh, wood and metal plaques and, and there was an outhouse. And I remember like asking myself, Why do I have to, in the middle of the winter, leave the house and go up the hill into the [00:10:00] outhouse to use the bathroom?

You know, it's like, couldn't somebody think about putting the bathroom in the house? I didn't even think that this, like, that was my existence. My, my, my life was about, You know, I love the snow. I was like riding my sled and my whatever, riding. Uh, but, uh, but definitely was, um, very humble beginning. So, so, and like you said, I mean, a lot of it has to do with, um, imagining a different future, right?

Imagining, um, uh, how you can make, uh, things better for yourself, your family, for others, and, and pursuing that dream, right? in the United States, pursuing your dream is almost like a, a God-given, right. You know, like everybody's like taking it for granted. But, uh, I always say to Americans who've never left the United States, that they must travel overseas and see how difficult it is for others.

You know, how, how great we have it here that [00:11:00] we, we just take it for. . 

Ismail: I totally agree. I actually really relate to that story when I visited Macedonia. Same thing in outhouse. And people in America don't realize this. Like, this wasn't that long ago where it wasn't even a toilet. It's like a hole in the ground and you have to go outside the home to use the bathroom.

Uh, thankfully, uh, that was when I was younger. I think recently they've all kind of modernized, uh, at least from what I've seen. So thankfully 

 Years of experience in early Career 

Ismail: that's 

Alex: happened. It's still an now. There's a toilet instead of just a hole in the. Yeah, we're, we're 

Ismail: making progress. . What about, uh, I also heard that you, uh, tried day trading.

Is that true? 

Alex: Yeah, So, so I tried many different things. I think one of the important things about kind of figuring out who you are, what you're good at is trying different things. So, so in the nineties I did some commodity trading, then I did some stock trading. and, um, 

Ismail: um, we, we have a lot of traders listening to this.

Uh, some of my most popular episodes were with traders that made a ton of money recently. Like these young kids, uh, do you have any [00:12:00] advice for them that crypto traders, option traders, all of them are listening, so what would you say? 

Alex: Well, and the, the, the best advice is that, that when you're making money, don't get confused with being in a good market, with you being a super good trader.

Uh, which means that what happens is that you get so much confidence that you, every trade you make is great, or nine outta 10 you win. Uh, that when the market turns, uh, you continue to take the same bets, a similar bets, and, uh, you start losing and you don't realize that the market has turned. You were just saying, you just think to yourself that you can continue to doing and do what you do.

And that's like you get into the bear a bear trap or you get into all kind of other things that really, uh, uh, make you lose a lot of money. So, so unless you are, uh, a world pro at, at picking trends and knowing ahead of others when markets will turn, and very, very few [00:13:00] people do that very well, uh, you're gonna end up, uh, losing money, uh, on in the long run.

So don't get confused between a bull market and you being a genius. , 

Ismail: great advice. Uh, so before we jump into the crypto, I just wanna touch on you also had the idea for Uber way before Uber came around, and I remember, uh, reading somewhere that, uh, it was difficult to see them succeed. Um, so I have a very small example of that, uh, very small compared to yours, but I had this idea for a gym in my town.

It was perfect location.

 Day trading.

Ismail: I researched it, um, and I didn't end up doing it. And lo and behold, somebody else opened a. And I have to drive by this every day. They bought the place next door. They expanded. Expanded. It's a huge success and it was very painful for me to drive by and see that and say, Hey, that was my idea.

Uh, so my takeaway was like, whenever I have an idea, trust my intuition and just go for it. Right? If you fail, if you no big deal, keep going. Would you take away [00:14:00] from the Uber experience and seeing them succeed? Is there anything that you took away from. You carry with you. 

Alex: Yeah. So look in, 

Advice for aspiring traders.

Alex: in life, timing is, uh, everything.

If you are too early, it's just as bad as being too late. And, uh, here we were just too early. I mean, I, I founded the ground link, uh, in 2003 and, and um, when Uber was just getting started in San Francisco, we were in, uh, 5,000 airports all over the world, right? So, , uh, you know, I don't know, I think it was like 40 or 50 million in transactions and, uh, thousands of cars and, and everything was going great.

And, uh, you know, the 2000, uh, the 2008 recession at the Uber started right after the recession. So they grew kind of slowly and then fast, uh, subsidizing rights for their writers. Right. And because we started before the recession, we. A [00:15:00] profitable company and we wanted to stay profitable and we didn't wanna subsidize the right.

We, we were not in the business of giving everybody a 50% discount, you know? So, um, so the but the idea was right idea, right? That, that basically on demand transportation available instantly. So we, we've, we were the, the first app in the app store that offered that on demand service, right? So basically Uber, uh, copied everything we had.

uh, but they had $16 billion worth of subsidies that they gave their customers, and we didn't have that. So, so, uh, having the best idea doesn't mean you win. And, uh, even if you have the idea first and you get the capital, doesn't mean you win. Because if your timing is wrong, a and you burn through all that capital because of a recession or because of whatever.

uh, you kinda spend your bullets and other people are just getting started so they can actually get ahead of you or they can learn from your [00:16:00] mistakes and start where you already are. Uh, where they didn't spend all that money, right? 

Takeaway from the idea of inventing Uber.

Alex: They don't have the arrows in their back for being trailblazer. So, um, so we were, uh, definitely.

You know, also we chose the wrong investors. We had private equity and they definitely had zero interest in subsidized. They're not VCs, right? Uber had VCs who were willing to burn billions of dollars and just gained market share. Uh, and our investors were not willing to do that. They're li they told me, I remember like today and uh, in 2010, they were like, We don't have to worry about these guys.

They're gonna go outta business, uh, giving all these discounts to their customers. You know, I'm like, No, but what if they keep raising. No one's gonna give them billions of dollars to burn on customers. So I left my own company, uh, in 2011, uh, which was very painful. It wasn't easy to leave your creation because I knew it was doom.

And [00:17:00] I remember it like today, my wife told me, You, you should just go and work for Uber. I mean, uh, you know, they, they need you. They'll let you run, uh, New York or the, you know, northeast. Uh, and I was like, I'm too much fraud. Yeah. I work for my competitors, you know, So, uh, obviously in retrospect, I probably should have listened to her, but, uh, uh, it was very painful going through that transition because again, you could see them just copying things.

Everything we did, uh, things that took us years to develop, they were just like, Oh, that's a good idea. Let's just copy that. Right. . Um, so definitely one of those, uh, uh, times where, uh, being too early didn't help. 

Ismail: It's an interest. I think we'll come back to that theme later when we talk about Bitcoin, because I know you have similar thoughts about, uh, Bitcoin in the crypto world.

But I'd like to talk about crypto next because I saw this famous video of you in New York City, uh, talking to regular people on the street and trying to get 'em [00:18:00] to buy a crypto or get them into crypto. Uh, so that's where I want this podcast to do. Right. So how would you. Explain. And by the way, just to set this up, I actually requested a lot of questions from people in the Celsius network on Reddit, Facebook, Twitter.

I got a ton of questions, but they were more, uh, from people that are already in the ecosystem. They're very specific to like features of Celsius. So I'm going a different way with this conversation. I wanna pull new people into Celsius. So let's say you have people listening now, the white collars, the blue collars that kind of have heard about crypto, they don't fully understand it.

How would you. Crypto to a regular person, and why should they have it? 

Alex: Sure. It, it's actually not that difficult, right? The, the, uh, historically, the, uh, when you made something or, and you sold it, you got a gold coin or you got a paper note and you knew that the value was either in the coin, right? I mean, it was made out of a precious metal.[00:19:00] 

Or, uh, the note was backed by gold or backed by some other asset that you knew, uh, had a good standing and, and basically the world, not just the United States, but the world has gone mad. And since, uh, 1971 when the United States went off the gold standard, uh, all the other countries that were tethered to the dollar as the reserve currency also went off the gold standard.

So, so we created these fiat currencies of freeloading currencies. , uh, that have nothing behind them. And when you ask most people what is, what is money made of or how money is made, they'll tell, they'll still talk to you about Fort Knox and they'll talk to you about some other stuff. And so nobody really knows.

And, and if you watch those videos of, uh, Richard Nixon talking about getting off the, uh, gold standard, he says, We will temporarily get off. I instructed the, you know, the head of the. Treasury [00:20:00] to temporarily go off the gold standard. So, so we are running an experiment since 1971, uh, which is called the modern, uh, monetary, uh, theory, mmt.

Basics of Crypto & reason to invest.

Alex: And, uh, it just a crazy experiment. The idea is that we can print as much money as we want on in an unlimited fashion and nothing bad will ever happen. So, history, uh, has about 700. Fiat currencies that we can learn from, uh, that all effectively either ended up in zero worth zero, or lost 90, 99 up between 90 and 99% of their value.

Even the dollar already lost 95% of its value since 1971. So, so that that is the kind of the foundation that most people have to understand that every day when you get paid, your do every day, somebody comes and clips a tiny little piece of your dollar, and it's worth less and less and less every [00:21:00] day.

So, so the context is not, is crypto good or bad? Is it a good investment or whatever the, the context is, is that we, the citizens of the world, and especially the citizens of the United. Don't have a choice. No one asked us if, uh, our tax dollars should be put into savings. If, if, if our government should be frugal.

Every government basically, uh, uh, comes and spends as much as they can to try to, uh, win favor with, uh, their electorates. And, and unfortunately our children and grandchildren are one who gonna have to pay the tab for all of this. So, so, Satoshi. Uh, Na Kumo, who's the inventor of, uh, blockchain of the Bitcoin.

Sorry, not the blockchain. Blockchain existed since the early nineties. Uh, uh, invented or put together, it's like Lego pieces he put together or she put together, uh, uh, a [00:22:00] bunch of things that other people already created, like the blockchain, like, and basically added one more ingredient. It's like taking.

the best soup that exists and adding one ingredient and magically, suddenly everybody wants to have that soup. Right? It becomes like the, the standard for everybody else. Right? And, and that ingredient, additional ingredient was the proof of work, right? So the, the idea that if you gave a separate group an incentive to keep the blockchain, um, uh, safe and, and.

Create, uh, blocks, uh, in a way that is safe and secure and yet limited supply. The most important thing is limited supply. You can create an alternative and, and a replacement to the financial system. You can actually create everything that exists in the financial system on the blockchain, and that system will not need intermediaries.

It will not need the banks [00:23:00] and the financial institutions that we all rely on every day. So that's really the kind of luck. , the foundation of Bitcoin, right, is the idea that, that, uh, you can create the internet, the money that runs on the internet. I call it moip or money over ip, just like VoIP or VO voice of ip.

You can create moip and 7.8 billion people can use it and they can detach themselves or, or separate themselves from this MMT system that is gonna be. , you know, the undoing of all of us. 

Ismail: I totally agree with everything and the how you laid it out. My, one of my most popular episodes was one about, uh, titled Caius Trash, where I dive deeper into stuff like this.

So if anyone's interested, they can see that in the show notes where like even my own mother, um, talks about I have to keep working so I can put my years in to get my pension cuz I'm gonna get this dollar amount. Right. Right. Uh, but it's a fixed dollar amount. So by the time you. , [00:24:00] uh, number, it'll be worthless.

Like you were kind of saying, uh, worthless, not worthless. Uh, so people planning to live on this income that they're getting in the future, even if it's social security, you may not get all of it. And even if you do, it may not be worth what you think it's worth. So it's a big problem for future generations.

Um, but I also heard, um, that you were, you were skeptical the first time you came across the white paper or, or Bitcoin or crypto. So I'm just curious for someone like you who was. Uh, for being like way ahead of trends, uh, in all these different fields. Why do you think you missed it at first and what changed that?

Uh, 

Alex: you get it right? Yeah. So, so, uh, um, so I worked, uh, uh, on myself on, on, uh, on a version, a mo version of money, right? So in 2003, 2004. Eh, I had a startup that tried to, uh, attach money to email and be able to send basically email to, so you can send somebody an email, attach [00:25:00] $20 or $50 or whatever, and they effectively could cash it out.

Right. It wasn't decentralized, it wasn't blockchain based, but I was working on a, a version of a, uh, basically electronic money, right? Or money over the. . Uh, and, uh, so it's not like I didn't know anything. Like, so when I read, when one, one of my employees, uh, sent me the paper and said, I, I posted that on Twitter actually not too long ago.

Uh, I posted on Twitter, the original, uh, email, uh, from, I think it was 2009, and my answer to him was, uh, you know, uh, this is the world's slowest database, which is true. Bitcoin is the world's slowest data. , it is a colossal waste of electricity, which is true. It's a colossal waste of electricity, and it consumes so much, uh, computing power and communications that it's the, the most inefficient way, uh, to create, [00:26:00] uh, um, consensus.

Right? So, so I was right about everything I just said, but I was totally wrong about how important that is, like the solving. Uh, uh, the, you know, the ability to effectively do peer-to-peer transfer a value outside of the traditional banking system. So, um, so I didn't, 

What got you interested in Crypto?

Alex: I didn't pay any attention to it until Mongos after, after Mongos, which was I think 2013.

Um, um, when I saw that Bitcoin just continued walking, like nothing happened, like basically like people just dusted off Mount GOs and continued walking, I said, Wait a second. I'm missing something really, really big here because it should have died instantly. Like they should have just died and we should have never heard about it before.

And yet, here it is. , uh, uh, you know, picking [00:27:00] pa uh, uh, speed, picking up speed and accelerating, and, and, and, and I started, I had to reprogram my brain because my entire, uh, upbringing was all about how do you take the latest technology, make stuff for on faster, cheaper, and better? And this was the opposite of all that stuff, right?

It was, it wasn't the latest technology. Again, the, the blockchain was invented in the. . So we took really old stuff, dusted it off, and put it in a very, very inefficient structure, eh uh, so it was very hard for my brain, which is kind of honed in on innovation and speed and everything else to understand the proof of work and consensus.

and the peer to peer, 

Ismail: it sounds like you, you're putting a lot of value in the proof of work. Like that's the Trojan horse. That's the value here. So what does everyone else now, whether it's Elon Musk, uh, criticizing the, uh, energy waste or [00:28:00] even uh, Ethereum moving to a proof of stake, uh, system, what are they missing?

Why are they wrong? 

Alex: Well, look, a lot of those people, uh, are just trying to fix their PR mistakes. So Elon is talking about all the stuff. , he, uh, I don't think he knew enough about, uh, proof of stake versus proof of work or consensus or whatever. Cuz uh, he, he's two favorite, uh, children was Bitcoin and do coin.

Right? So, so which both are proof of work. So it's not like, uh, uh, you know, he jumped into Ethereum and then he said, Okay. I theorem is moving to proof of stakes, so I'm no longer supporting Bitcoin. Right. So I don't, I don't think that's the, It's not that they're missing something. Right. I think what, what most people don't understand is that, that the, the power that comes from this distributed, eh, computing platform, the, [00:29:00] the Bitcoin network is the world's largest super computer.

It's. A thousand times, uh, more powerful than the hundred largest super computers put together. So if you take all the NSA computers and all the Russian computers, and all the Chinese government computers, you put all them together and plus the next 50 computers put, put them all together. Uh, it will be one, one thousands, the hash power of what Bitcoin is.

That's how powerful. So Bitcoin is already. , the network, the Bitcoin network is by far the world's most powerful computer. So, um, so we are already there. Now that network consumes tremendous amount of electricity and more than the country of Argentina or the state of New York, The whole state, Not the city of New York, the whole state of New York.

So, so obviously 

Adding Value at work.

Alex: there's a lot of concerns about. , [00:30:00] um, the need for so much hash power to secure the network, and there's no going back here. It's not like you can suddenly start reducing the hash power and say, Okay, let's only run 50% or 30%, or whatever. The hash power is increasing, uh, every year, and, and the amount of computing that is necessary is increasing even faster because the asics and the miners are, are running better and better.

They're more and more e. , Uh, but they also consume more power. So, um, so the, the, the conundrum that we have is that this, the, by far the safest network is Bitcoin. The chain, the bitcoin chain is much safer than Ethereum. It's not, it's not like, okay, Ethereum is a little bit less safe. Bitcoin is, again, several thousand times safer than Ethereum.

uh, it, it is so, so much older chain and it has so much more hash power, right? [00:31:00] So, so if you're gonna move billions of dollars into more, it may be trillions of dollars. Eh? How much security do you want? Well, I would tell you that if you really comparing apples to apples, then you, you have to include the cost of running the US military in this calculation.

Why? The US military is not protected. The protecting the United States of America, the US military is protecting the US dollar, the petro dollar, the dollar as the reserve currency of the world, right? And, and so when you think about the cost of running the network, then you should include, uh, all the protections, not just the, Okay, what, how much electricity does it cost to run JP Morgan or Citibank or whatever?

Ismail: You, I also heard that you believe, uh, back to the first mover advantage before with Uber. Um, you, you said that you don't think in 20 years or so that Bitcoin will be the [00:32:00] main, uh, currency. Uh, do you still feel that way? And if so, how does that align with your bullishness on, uh, Bitcoin's price for the next couple years?

Alex: So we already have over 200 blockchains, right? So it's not like, uh, Bitcoin is the only blockchain. What I was saying is, is that I, I think the technology for the winning blockchain has not yet been invented. Uh, so for example, there is definitely a scenario in which, uh, the Chinese government, digital Yuan becomes a reserve currency of the world, The digital currency, it runs on a version of a block.

and, uh, it wins away. Uh, it, it takes over and wins over all of the users, uh, that are using Bitcoin today because the Chinese yuan is definitely gonna be a, a great form of payment, uh, by definition. Right? It's, uh, it's a fiat currency effectively, right? It [00:33:00] just happens to run, It's a digital fiat currency that happens to.

On a blockchain, right? So, uh, there's a scenario where the United States come up, comes up with a digital currency and nothing bad happens with mmt and we start running, uh, uh, you know, on a digital dollar in our wallets and use it as a form of payment. And that has a good chance of winning out against the Bitcoin as well, right?

So, so, um, so there's a lot. Variance in the future of what is the winning strategy? What is the winning, uh, combination? Now, Bitcoin is a phenomenal store value, but it's still, uh, a horrible form of payment. Most people don't use Bitcoin for, for, for payment. And if you did use it for payment, you are super sorry about it because the Tesla that you bought last year with Bitcoin, you look at it and you say to yourself, Oh my.

You know, if I just had the Bitcoin, I would've 10 time, I could buy 10 [00:34:00] Teslas instead of one. So, so 

 Future of Bitcoin.

Alex: when the world's richest person tells you, I will swap you with my Tesla, with your Bitcoin,

you should think hard of who's gonna have the winning hand, uh, at the end of that transaction, right? You're replacing a value, an asset that appreciates in value with something that is depreciates in value, which is the Tesla.

Ismail: It. It's funny you mentioned that a friend of mine's a barber in Manhattan and uh, one of his clients like insisted on P with Bitcoin a few years ago. It's like a $20 haircut. And he said, I looked at it recently, it's like $5,000. Um, so it's great, great trade for him. Um, alright, so how do we, how does, before I get to sell this, I just got one more question cuz I, I saw a video like really early in the year where I think you.

Uh, you were one of the few people who said, Hey, we're gonna have a huge dip in Bitcoin, maybe like 25,000, uh, before we start going back up. And I think you, you said something over a hundred thousand by the end of the year. Um, do you still feel that way? Was that dip that we [00:35:00] just had, do you think that was it?

Or do you still think we're going back into the twenties before, uh, resuming the leg up? 

Alex: Yeah, so the, we are doing this in, uh, May of 2021. Uh, so in January of February of, of 2021, I, I, I kept saying it's too much, too fast. We gonna have to revisit the 25 to 30,000, uh, price levels. And I, I had a lot of, you know, a lot of people.

On Twitter, basically just try to rip me into shreds, right? They're like, Why you dip? You dissing the market. Why are you saying bad things? Stop tweeting. Just keep your ideas to yourself. And, uh, it's not that I wanted to be right, It's not like, Oh, here I'm right. And, and whatever. I, I, I, I feel that, um, you know, people, people wanna get rich quick and they want that to happen.

Super. And they don't understand the [00:36:00] consequences, right? Because what happens is when you, especially when you're on leverage or when you borrow, have borrowed funds and, and, and you don't sell, right? You don't, uh, take anything off the table, you end up getting wrecked. And the problem we had here is that last week when Bitcoin was down 53%, uh, top to bottom in, in just a few days, uh, over 10 million people got wrecked, right?

Completely got liquidated on all the different platforms. Uh, that's just not good, uh, for crypto. So when I'm saying, uh, let's bring a hundred million people into crypto, we just lost 10 million people in one. In, in one week. We lost 10 million people that were super hot and excited about Bitcoin and now they're just sitting, looking themselves in the mirror saying, Oh, you know, I'm never touching this thing again.

I lost all my money in this trade. They 

Ismail: may never come back cuz they got burned. So, 

Alex: Exactly. So, so that's not a good thing for crypto, It's not a good [00:37:00] thing for any of these people. So what do we get? Right? So, so I think, uh, um, uh, slow and steady here wins much better than, uh, uh, fast, up and down and flash crashes and, and recycling, uh, a lot of people.

So I, I, I do think that, I still think we're gonna be over a hundred thousand this year, during 2020. , but I do think we will have another correction after this one as well. And we'll end up the year with less than a hundred thousand dollars. So I know a lot of people are not happy about this view, but uh, I'm sticking with it.

I'm not changing it. 

Ismail: I tend to agree. There's a lot of different models out there. Some people think you'll overshoot a hundred and go way higher. Uh, but it always reverts back, uh, to the mean, I guess a little bit on, its on its continuance to go up. Um, okay, so I want to talk about Celsius. , when I first came across Celsius, I was like, Wow, this is amazing.

I don't understand [00:38:00] how more people don't know about it. Like a lot of, I've been talking about it on my podcast, uh, last few episodes and it's amazing that a lot of people don't know about it yet. So there it shows you the potential for growth. For me, what's amazing is that everyone says, Hey, crypto, Bitcoin, whatever.

You can't really. There's no intrinsic value. It doesn't make money, uh, but for people who are not familiar, you can put the crypto that you have into Celsius and earn a yield on it. So for example, right now there's like a 6.2% yield on Bitcoin, and it varies based on the cryptocurrency. Uh, I wrote a blog post about how you can earn a thousand times the interest that you get at the bank, Chase Bank, Citibank, by putting your money into a stable coin and putting it into Celsius.

So that got a lot of people's attention and that's why I wanted to talk to you. How would you describe to people who are skeptical because everyone's like, Wait, how is that even possible? Why is the bank giving me 0.01% and CELSIUS just can give me 10% or 6% or 5%? Right? How does that make sense? 

Alex: Well, it doesn't make sense.

So, so, uh, for most people, [00:39:00] uh, when the bank tells you that the rate is 0.1%, you, and you see it, one bank, second bank. Third bank, the fourth bank is 0.15%. You, you say to yourself, Okay, well, you know, that is the rate, right? If all the banks, and these are all big banks, they have big offices, big buildings, beautiful, uh, you know, lobbies.

You're saying to yourself, they know what they're doing, they're pros. Uh, so if they say the rate is 0.1%, that must be true. Right? So, so if you look at the rate the banks have been paying over the last, uh, decade or two, you will see that the rate has come down every year, and it actually come down directly in correlation to them buying other banks, right?

So they consolidated the banking world. They, they, they, 

Overall vision of Celsius.

Alex: there's the four fourth largest, uh, banking in the United. have something like 60% of all the deposits, right? Bank of America, JP Morgan, uh, [00:40:00] Chase, uh, Wells Fargo, and, uh, which 1:00 AM I missing? Citibank, right? Cibank. So, so those are the largest banks.

And eh, what you have to ask you yourself is not what they're paying you. You have to ask yourself what are they paying themselves, right? So they're all public companies and they all brag about their earnings to their share. . So if you, instead of looking on their website at what they're telling you, you should be earning, go on the SCC filing, go and do a search for JP Morgan Chase quarterly earnings and see how much money they're giving their shareholders, and you will find out that they're making between 15 and 17% return capital, meaning yield on their capital, right?

They're paying that to their shareholders, either in the form of a dividend or a stock buyback. or a bonus to their employees or anything like that, right? So, So if they can pay themselves 17%, [00:41:00] right? Wouldn't it be fair if they paid themselves 10% and gave you five or 6%, right? Let's split the pie. Should everything go to the shareholders or should we split some to go to the depositors and some to go to the shareholders?

So when I say these things, people look at me and say, Alex, come on. I mean, the Fed has low rates to. So banks are making no money. No banks make more money than ever before. The banks have never made more money than they make now. So the rate the Fed pays, or the, the rate the Fed dictates has nothing to do with what they can pay you.

I'll give you, I'll give you a simple example. Back, uh, 10 years ago when the rate, the fed rate was four or 5%, bank charged you 24% on your credit. . Now the Fed charges bank zero, right? The lowered the rate from four to 5% to zero. So now the cost of capital went [00:42:00] down by 5%. Did your credit card go down from 24% to 19%?

So, so you have to understand that the, while the Fed is lowering the cost of capital for banks, banks continue to charge you an ATM fee and a withdrawal fee, and an inactivity. And an overdraft fee. You name it, a fee upon fee, right? They, uh, they, they're pros at, at charging fees. So, so all that money, and none of it is directed towards the depositor, right?

Why? Because they are so dominant that they don't have to pay. What are you gonna do if, if, if you try to go into your bank account and, and to your bank and demand to know what is the bank doing with your money and who are they lending it? What is the interest rate and how much of it you are getting right?

Just they're gonna laugh at you and throw you out of the bank and close down your bank account cuz they don't need you as a customer. But those are all the [00:43:00] things that Celsius shares with its customers. Every week, Every week we tell all of our customers how much we received in deposits from the community, What did we lend out, how much did we earn?

And we give 80% of that back to our community, to the depositors. , 80% of it goes back to the depositors. So in 700 years of banking, since the Medi Chis started banking in Italy in 700 years, There has never been a crazy banker in not even one crazy person who thought that they should give their customers 80% of what they make right after no traditional banks.

keep 90 to 95% of what they make, they give their customers a fraction of a fraction of 1%. Right? So, So that is what's so hard for people to understand because you are conditioned over many years to not earn anything on your money. People assume [00:44:00] that that is just how it's supposed to be, but rich people, right?

And I'm one of those rich people. Rich people. If I'm, if I go and I give my money to Goldman, and I give them a hundred million dollars. The agreement between me and Goldman Sachs is that I'm the lp, the limited partner, and they're the gp, the general partner, and I get to keep 80% of what they make. That is the agreement between very rich people and the banks, very rich people and their money managers.

So all Celsius did is took what the very, very rich people already. And gave it to a person that has a hundred dollars and said to him, Look, we're gonna treat you as if you have a hundred million dollars, even though you only have a hundred dollars. And we treat, I'm the largest user of Celsius. I have over 350 million of my own money in Celsius.

I, in percentage terms, I earn exactly the same thing as somebody who just joined Celsius and put a hundred dollars to work. If I earn 10% [00:45:00] on stable coins, you will also earn 10% on stable coins. If I earn 6.2% on my. , you will also earn 6.2% on the Bitcoin. And that's what has never been done before.

Ismail: That's why, uh, the banks hate you, but you're, you're loved by the people. So, uh, I guess you're doing something right. Um, one, it it, it's hard to wrap your brain around it because in an inflationary system where the value of the money is decreasing and there's more money being out there, you would think the yield should be higher.

Uh, versus a deflationary system like Bitcoin where it's a fixed. The rate's higher, but I think you explained, explained it well. The other, uh, hiccup I hear from people when I tell 'em about Celsius is like, Well, my bank has F D I C insurance. Right? So I, I'd like to hear what your response is, stuff like this.

But for me it's like I try to explain, Maybe you'll go into this cuz you can explain it better than me. Uh, The fractional reserve versus the collateralized system. Yeah. They have F D I C insurance, but. They, they only have a tiny portion of the money they're lending [00:46:00] out or the money they're collecting from people.

So in a way it's a little bit more risky, especially if you have more capital than that F D I C bar. So I'd like to hear how you respond to that, um, the, that barrier that people have. 

Alex: So, again, look, CEL is not trying to be a federally chartered bank. I mean, our, our job is not to, um, banks take tremendous risk, right?

So most banks are leveraged 10, 20, 30 to. meaning for every dollar they have in deposit, they do $30 worth of lending. Uh, Celsius only does what's called asset back lending abs, right? So, so if we have a dollar in deposit, we can only lend 50 cents on a dollar, right? So, so we are a much safer, uh, uh, lending institutions than traditional banks.

Now most people say, What are you talking? Banks, that word starts with a B. Banks are very safe. Well, if they're so safe, why do we have to bail them out every 10 to [00:47:00] 15 years? They're safe. You can look at the last hundred years, this whole century, last hundred years, and you will see that every 10 to 15 years we had a crisis, and every 10 to 15 years we had a bailout.

And guess who paid every bailout in the history of the United States? The tax. , right? So, so the issue, it wasn't the F D I C show me one time 2008, did the d I C come and say, Okay, uh, Bank of America is in trouble. Merrill Lynch is in trouble. Goldman Sachs is in trouble. Morgan Stan is in trouble. I'm the F D I C.

I'm gonna bail out all these guys. No, we created tarp. 

Fractional Reserve vs Collateralized system.

Alex: We went to the taxpayer and said, Please give us $800 billion. because the F D C cannot bail even one bank. Forget about all the banks that are in trouble. So, So for all the people who think that there is insurance, because when they go to the bank [00:48:00] branch, there's a big label on the door.

As you walk in, as you pull that heavy door, there's a big label that says F D I C. Right? Wow. I feel so safe. Now. What the value of an insurance policy that has never paid. The F D C has never paid out for any bank failure. When Bank, when Bear Stearns, which was the first bank to collapse in 2008, had trouble, did the F D C jump in and say, Okay, we're here.

It's good to go. No. They took it and they forced JP Morgan to buy Bear Stearns, right? The next bank that collapsed, they had, they forced the next bank to buy the next bank and so on, so on. So they didn't cough up any cash. They don't have. , Right. So you can, you can continue fooling yourself. That, that, yes, it's safe.

And it's, it's, it's the same thing like talking about your, uh, uh, your [00:49:00] mother's, uh, retirement plan, right? The, the, the, the, the pension plan. So, so unfortunately, again, we printed so much money just this year in 2021, we printed close to 40% of all the money that ever existed. Right between the Fed and the government and everything else.

So, so that's 40% inflation in monetary terms in one year, and the government is telling you that there's 2% inflation, right? So, so we can continue lying to ourselves or we can look at the facts. Everything I told you, you can go and Google and check for yourself and come to your own conclusions. But, uh, what's important is that you have a plan.

You have a plan. That acts in your best interest, not in the government's best interest, not in the Fed's best interest, not in the bank's best interest. Because all the plans these people are giving you are in their own best interest. Now, your plan should be how? What is the best [00:50:00] store value? How can I protect my asset, not my dollars.

You wanna protect your asset, the value you created, you exchange your time for value. And now you wanna store that value in a way that will protect itself and will accumulate more value, more wealth. Right? So how do you protect the wealth, uh, that you worked so hard for? Because if you keep it in dollars, it's just gonna continuously lose its value.

Ismail: It, it's funny, when I was requesting questions from people like about a week or so ago, uh, someone said, Hey, why don't you ask Alex. Um, how do we, how, how would Celsius react or, or do if Bitcoin went down 50% in a month? And I'm like, I went back to him like, Oh look, it happened in a week. And they're still standing strong.

So I think that goes to what you were just talking about, the collateralization and how it's uh, not as risky as the current system that we're in. So, but 

Alex: just to comment, cause this is [00:51:00] public records, so last. Eh, we had our best week ever, meaning we made the most money last week in the history of the company.

Uh, we had zero institutional liquidation, so people we lent money to, all of them had margin calls and so on. They all gave us, uh, additional collateral. We borrowed money from other people, so we had zero liquidations, meaning we did not get liquidated because we didn't, We had to give more collateral to other people, right?

Goes in a circle, and we had one liquidation on Defi, which we bought back at a loss of something like $10,000, right? So the entire outcome of all of this was that we made millions of dollars and we lost something like $10,000. That was the, the test, the stress test that, uh, Celsius went through. Right?

Now, let's take any of the banks and you pick any bank you want. Let's go and reduce. The value of their assets by [00:52:00] 50% and see what happens. I guarantee you what's gonna happen. They will all have to come to the taxpayers and say, Can you bail us out one more time? That's the only thing that's gonna happen.

They cannot survive. When you look at the stress test, just do a Google test. Of the, the stress test on the banking system and see what is the stress test down 10%, down 20%. There's no scenario of down 50%. They don't even test for that. 

Ismail: I can, uh, testify to that I used to work in, in the financial world as a credit analyst.

So, uh, they value, they do, they evaluate the credit risk and they're definitely not ready for a 50% draw down. And I think, uh, someone who runs Celsius like you, who's prepared and expects a big pullback, uh, I think I'd rather put my money there because. Unlike everybody else that says, Hey, we're going to the moon.

You're actually preparing yourself for the inevitable pullbacks. So one other thing I wanted to touch on, I know we're coming up at the end of our time, [00:53:00] um, that I think is a big benefit to Celsius that I I'd like you to touch on, is the rich people have assets that go up and value and they're able to leverage it and borrow against it without selling and having to pay tax.

Right. And as the value keeps coming up, uh, they're able to leverage it again. So I'd like to have you just touch on that brief. Before we go, uh, people are able to do that with Celsius, with their crypto. They don't have to sell it. There's 1% loans that they can use to take money out of it without having to pay a tax on a sale.

Alex: Sure. And, and again, uh, our previous president obviously used this. Uh, he was bragging how he only pays $700 a year in taxes even though he is a billionaire. Eh? So there are, these are legal ways. This is not like some scam or. Hidden unknown tax loophole. That's just the law. What we're talking about right now is, is what the law is.

The law applies to the rich and the poor. It just that the rich use it every week, every month, and the poor [00:54:00] never use it once, right? So, so if you barely make enough money to make a living, eh, uh, and you pay full tax on it, right? You don't have savings, You don't have, uh, And because of that, you're really living off the work that you do every day.

And you pay full tax, You pay whatever, 30, 40, 50% depending which state you're in. But if you are very, very rich in your, your own buildings or your own, uh, any kind of other asset, and the value of that asset in dollar terms increases or you collecting rent or other other type of dividend, . And what happens is that you can borrow against these assets, just like you can borrow against Bitcoin or your stock.

You can borrow against building, you can borrow against, uh, other assets. And when you take a loan against the asset, that is not considered a sale. It's not like, eh, uh, similar to how you pay taxes when you. A [00:55:00] pay for work that you've done. And because of that, 

Investing crypto in Celsius.

Alex: you can effectively defer taxes on the increase in value.

So if your building is worth twice as much, or your Bitcoin is worth twice as much, you're not paying taxes on that appreciation until you actually sell it. Meaning you can hold it forever, eh, but at the same time, through through, for example, sales years, you can come take a loan, a dollar loan, pay off your credit card bills.

Pay off your mortgage while your Bitcoin and other assets continue to appreciate, continue to earn interest. So that is the, again, it's not a loophole. That is how rich people stay rich. That's how rich people defer taxes. That's how rich people avoid, uh, paying all their money back to the government. So all of us can use it.

And it's just a question. First you have to save. You have to huddle, you have to accumulate assets. That's the first step. You cannot do any of these things [00:56:00] if you haven't accumulated anything. After you accumulate these assets, you can then again, have them earn interest, right? That's what Celsius does. It pays you interest on 45 different assets.

And if you need a loan, you can take a loan and use that to pay your bills. Spend money, go on a fancy trip, uh, pay off your credit cards and everyth. 

Ismail: The, the recipe for wealth. I, I think it's basically the magic of sales use that you're bringing all these benefits at the wealth you had to regular people.

Um, that's why I feel so passionately about getting the word out. Um, Alex, as I expected, I did not get to all my questions, but it was a great conversation. I appreciate your time. Um, I know by the time this gets published, another benefit of sales use so that you guys pre radically have promo codes. So there'll be promo codes, uh, coming out, I think later this week.

And I'll have it in the show notes, everybody. And that's a way. Earn even more, uh, yield by, uh, meeting the metrics of these codes where you put in a certain amount of money Celsius gives you even more money on top of the interest that you'd be earning. So all that stuff will be in the show notes.

 Parting words.

Ismail: Hopefully I [00:57:00] help put a dent into, uh, that a hundred million number, number with, uh, with this episode. And Alex, just thank you so much again. Any parting words, anything you wanna point people to, 

uh, 

Alex: let us know. Sure. So, uh, thanks again for inviting me and, and. Uh, I hope this content will help educate people and, and have them feel more confident about doing what's in their own best interest.

Uh, 

Way to connect with Alex.

Alex: you can follow me on Twitter atin scheme. My last name and celsius.network is our website. Uh, we have over a thousand videos on YouTube. So if you go there and search for Celsius Network, sign up to our channel. Uh, subscribe and hit the bell buttons so you can get notifications. We post videos every.

And, uh, you know, we are gonna be in the Miami, uh, Bitcoin 21, uh, conference. If you go into Miami, you can meet us in person there. And, uh, otherwise, you know, I'm based here in New York and, uh, this is where Celsius was born. So we're very proud of it and, and [00:58:00] would love to meet you all in person. And again, take, uh, take Bitcoin to the moon, right?

That's what, uh, that's what we're trying to do. 

Ismail: All right. Awesome place to leave it. Alex, 

 Thank You & Wrap up!

Ismail: thanks again so much. I really appreciate it. All the links to everything you mentioned I'll have in the show and everybody. Thank you so much, Alex.