Yoni Assia, Founder & CEO of eToro: From the Army to an Award Winning Crypto Platform

Yoni Assia is the Founder & CEO of eToro. In this conversation, Yoni and Anthony Pompliano discuss their backgrounds in the military and what they learned from those experiences, how eToro started and why Yoni got them into crypto, DAOs, and the future of eToro's US expansion. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Anthony Pompliano?

  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. Yoni Assia is the founder and CEO of eToro. In this episode, we discussed our backgrounds in the military, how eToro got started, why Yoni helped build the Colored Coin project, how Yoni decided not to join Vitalik in building Ethereum, what his thought process was in getting eToro into crypto, and how Yoni is planning to expand into the United States. I really enjoyed this conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp

• 0:46Anthony Pompliano?

  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. Alright guys, bang bang, get ready. I have a secret that I'm gonna uncover for you. A bunch of you guys are gonna feel real dumb right now because you're about to hear about a company that you've probably heard the name, you have no clue what they do, and you have definitely no clue how big they are. Yoni's here, CEO and founder. Thank you very much

• 1:28Anthony Pompliano?

  for coming and agreeing to tell some of your secrets.

• 1:32Speaker 01

  Thank you for having me, Pomp. Bang bang.

• 1:34Anthony Pompliano?

  Alright, so you're not American. Most of you don't know who you are. Let's start from the very beginning in terms of your career and kind of how you eventually get to starting eToro.

• 1:47Speaker 01

  Sure, so I'm an Israeli.

• 1:50Anthony Pompliano?

  All Israelis are badasses.

• 1:53Speaker 01

  Uh, born and raised in Israel. So a real one. Got my first shares of a company for my bar mitzvah. Um, so my father was also a CEO and a founder of a company, which was actually, uh, uh, went public on NASDAQ. Okay. Um, and he gave me some shares as a present for my bar mitzvah. Um, and while my brother and sister sort of were hodlers, just kept it. I actually asked him for a power of attorney to my account to start trading it. Uh, he wasn't that happy, but, uh, it was his son's request. So I started trading when I was about 13. Completely fell in love in the markets.

• 2:33Speaker 01

  Um, then the dot com bubble started, uh, which was fucking awesome to trade. I mean, you know, you could have made 500% in three months on a penny stock. Everything was going up. Uh, it was like, ju- just like the crypto. Crypto 2017, it sounds like you're talking about. Exactly the same. Um, and I learned a lot about the markets, fell in love in the markets. Uh, then went into, uh, the army as a programmer. Uh, I remember, uh, actually in my sort of during the draft. Uh, I'm with my uniform and my M16 on the back. Uh, and I'm calling my father from a pay phone.

• 3:15Speaker 01

  Uh, with, by the way, what's called in Israel, a simon or, or a token. Okay. Right? A pay phone. Uh, and I'm like, what's happening in the markets? What's happening in the markets? So this was like where everything was crushing 60%, 70%. Uh, so then I became a programmer. Um, I, I sort of, uh, throughout my army service, uh, and the intelligence core unit, uh, uh, learned a lot about technology. Then started a company, um, with guys from my army unit, uh, which has nothing to do with the markets, except the fact that it was around roller coasters. What? Roller coasters. Okay.

• 3:58Speaker 01

  We, we developed video cameras and installed them on roller coasters like in Paramount, Disney. So you could actually buy a video of yourself on the roller coaster. So the only thing that's very similar to the markets are the markets are like a roller.

• 4:14Speaker 01

  And then I started working on Itoro in two thousand and brainstorming about Itoro in two thousand and five with my older brother Ronen. So Ronen comes from industrial design background and he used to make fun of me during our childhood that I have an accountant fetish because he used to see me as a fourteen year old finance geek with filled with like screens and the charts and the pink newspapers and you know here the conversations around sort of the markets and he said, listen, it sounds super interesting, but it looks horrible like the user interface of whatever the fuck you're doing is just hor- am I allowed to

• 4:55Anthony Pompliano?

  Yeah, of course, yeah.

• 4:56Speaker 01

  Uh, just

• 4:57Anthony Pompliano?

  You can do whatever you want, actually. There's zero rules on this podcast.

• 5:00Speaker 01

  No censorship in podcasts. Okay. So we we just started brainstorming about how can we hack the user experience? How can we make it basically simpler and more engaging, more fun to trade the global markets? And that's how we started Itoro. Just thinking about how do we make this more simple, more fun? How we do we engage with more people than are engaging with the markets right now?

• 5:28Anthony Pompliano?

  And so let's go back first to the army. I'm fascinated. I was in the US Army, right? You're in the Israeli Army. I was actually joking around with somebody at your company a lot and I told him that every Israeli is a badass because they're forced to go through the training and then they each make each other tougher as a nation, right? What was it like to do programming in the intelligence side while being in the army, right? For me, I was just a dummy with a gun and a foot soldier, right? And just got told to go do what I needed to do. You were kind of on a be intelligent, right? What was that like?

• 6:03Speaker 01

  Can I tell you off the record?

• 6:05Anthony Pompliano?

  Yeah, of course.

• 6:05Speaker 01

  Yeah. No, so

• 6:07Anthony Pompliano?

  You're gonna be great. You're gonna be a podcast star.

• 6:09Speaker 01

  Yeah.

• 6:09Anthony Pompliano?

  Cursing off the record. Great start.

• 6:12Speaker 01

  Yeah, I'm gonna have to kill you after. But so first of all, obviously didn't make me any tougher because I'm a geek and I just sort of I started as they called it a PC boy, where they don't necessarily train you as a programmer. They just give you stuff to do. So you know, you just walk in the room and people tell you, I need this and that and this to automate and you're like Okay, I'll figure that out. Uh, so, so it's really interesting, cause what's really interesting about, uh, at least in Israel, the, the tech part of the army is, they pay something like a hundred and fifty dollar per month for people.

• 6:55Anthony Pompliano?

  Mm-hmm.

• 6:56Speaker 01

  Uh, but these are hot, you know, very smart people who go through, you know, very, uh, specific either training or tests.

• 7:04Anthony Pompliano?

  Uh-huh.

• 7:04Speaker 01

  Uh, so you get into this place where you have the smartest people, you know, everybody in the room is the smartest person in the room, so everybody's brilliant, but they get paid nothing, so, so people just give them work and some thou-, you know, somehow magic happens.

• 7:22Anthony Pompliano?

  Uh-huh.

• 7:23Speaker 01

  Uh, so, so it's a super interesting environment, because I've never seen after, and this was like, seventeen years, you go, you, you can't see that amount of, smart people in a room together, working on, on, you know, on a problem, outside, I think tho- those places. Uh, because a- anywhere else, you, you just calculate and say, okay, to bring in like two hundred extremely smart people, you know, from all areas, uh, okay, that would cost me for like a month, I don't know, gazillion dollars, so, I can't do it, so, and that's how you get very difficult stuff solved.

• 8:05Anthony Pompliano?

  Mm-hmm. I- i- it's, um, it, it's really interesting, those types of experiences, because there's the physical component, there's the intellectual component, uh, and what I've learned, and it sounds like probably some things that you as well, is all the soft skills you learn, right? The leadership, the problem solving, uh, the whole idea of like, hey, go figure this out. You don't really have a chance to say no, and you're just like, all right, I'll be back in, uh, two days, and like, you, you just figure it out, right? And, and you're kind of thrown into the deep end.

• 8:31Speaker 01

  I think that's a lot of my experience from that, um, i- is exactly that, that's, you need to throw people sort of into the swimming pool for them to learn how to swim, uh, and the good ones will learn how to swim, and that's the guys you want around you. Um, and, and it's, by the way, What I've learned across then my my sort of business career is that a lot of the experienced managers that I've, you know, either interviewed of seen or worked with. They come from a different point of view of people need to be told exactly what to do. Um, and I think generally, especially in startup world and entrepreneurship world, you just need to assume

• 9:11Speaker 01

  that you need to tell people, you know, what the problem is and that you need a solution and to let them find the solution.

• 9:19Anthony Pompliano?

  It it it's funny because I I saw somebody tweet this on Twitter and I forget who who it was, but they basically said, uh, your job is not to hire people to tell them what to do. Your job is to hire people who surprise you by what they can do, right? And it's this whole idea of, you just point, look, there's a problem. You guys are all smart, figured out. And if you've hired the right people and kind of built a team structure, etc. correctly, uh, they can do that and will probably do it better, faster, you know, more efficiently than you would have told them what to do, right? And so I think that it is, um, it's a dynamic of companies in general, but especially startups, um, young founders take time to learn that and and the faster they figure that out, the more effective the whole team.

• 10:00Speaker 01

  By the way, sometimes it's it's something in the middle. So, you know, you want to get A to Z.

• 10:07Anthony Pompliano?

  In the US, we say Z, but yeah.

• 10:08Speaker 01

  Yeah, Z, A to Z. Uh, and like, sometimes good leadership is like, okay, we're A. I want to get to Z.

• 10:16Anthony Pompliano?

  Zed.

• 10:16Speaker 01

  Eh, Zed. Hey, that's inconsistent. Um, eh, but but I want to go through like D and H and O in the middle. I don't care if we if we miss some, especially as Israelis like, uh, but but but generally that's still fine. So you should be able to tell people, I'm here, I want to get there and and I want to go through, I want to see this happening. I want to go through these specific letters and that's fine. You should be able to direct people and they should fill fill in the gaps.

• 10:49Anthony Pompliano?

  Yep.

• 10:50Speaker 01

  Right? That that's the difference between vision and execution.

• 10:53Anthony Pompliano?

  I think that's a great way to put it. Uh, all right, let's jump to Etoro. You guys got a massive business. Um, what the hell do you do?

• 11:00Speaker 01

  So we're the largest social trading network in the world.

• 11:04Anthony Pompliano?

  What does that mean?

• 11:05Speaker 01

  That means that people can trade stocks, commodities, currencies, indices, ETFs, and cryptocurrencies on our platform.

• 11:15Speaker 01

  We have, last year, we have 10 million registered users who last year traded about a trillion dollars on our platform, and they trade within a social network. So relatively early on, what we found out is that the most engaging part of the platform, this was a trading platform with a super slick UI. So our first patents was about how do we gamify the user experience in financial trading? And what we've learned is that the most engaging part of a platform is actually the social part, where people talk to one another. So people were coming into the chat, they saw other people's names, and they were like, "Hey, Tal, what are you trading? Are you trading the euro again? Are you trading dollar? Are you trading oil?"

• 11:58Speaker 01

  So gradually, what we did is we took the whole social part and made it the center of the platform. So when you join Itoro, you can actually see what hundreds of thousands of real traders that have real money in their accounts, what they're trading. You can follow them to get updated on the feed on every trade they do, or comment that they have on the markets, and you can automatically copy them. So you can find a trader from Germany, trading German stocks, who did 30% here for the past three years, and you say, "Okay, I want to copy this guy with a thousand dollars." It'll automatically copy his entire portfolio into your thousand dollars, same proportion. So he has 10% in Volkswagen, 10% in Google, you'll have a hundred dollars in each.

• 12:42Speaker 01

  And then every time he trades, it trades automatically in your account.

• 12:45Anthony Pompliano?

  All right, so let's, just so people didn't miss this, you have 10 million users around the world.

• 12:52Speaker 01

  Yeah.

• 12:52Anthony Pompliano?

  Who traded a trillion dollars last year. A trillion dollars in volume in a single year is absurd, right?

• 12:59Speaker 01

  Yeah, I love that number, a trillion.

• 13:00Anthony Pompliano?

  A trillion, like if you had hit, what would it be, 990 billion, then that would have really sucked, right? So hitting a trillion's a big deal. And what they're essentially doing is they're coming there for two reasons, right? One is they can trade a whole bunch of assets, right? So stocks, commodities, currencies, indices, cryptocurrencies, ETFs, a whole bunch of stuff.

• 13:21Anthony Pompliano?

  But the part that you're describing is this layer on top of it, right? Because you can go trade stocks on a lot of different platforms. But the social component of having a profile, having a portfolio, somebody being able to follow you, you follow them, communicate, right? Follow, not follow, all this stuff. Really what you did was you built a community of traders who then you gave them access to trading these assets. And it resulted in, what are we, 12 years since you started the company?

• 13:49Speaker 01

  Yeah.

• 13:49Anthony Pompliano?

  Right? 12 years later, they did a trillion dollars in annual volume. It's pretty incredible.

• 13:54Speaker 01

  Yeah. Fun, fun as well.

• 13:56Anthony Pompliano?

  All right. Let's talk through, what did you start with? Right, so 2007, you guys start the company. Do you, I'm assuming you don't start with all those assets?

• 14:05Speaker 01

  Right.

• 14:05Anthony Pompliano?

  You don't start with all the social stuff?

• 14:07Speaker 01

  So we started with visualizing trading in the FX markets.

• 14:13Anthony Pompliano?

  Okay.

• 14:14Speaker 01

  Then we started going through sort of the transition into a social network around 2009, 10. This was also when we heard our first US investors. So Howard Lindzen from StockTwits, then Spar Capital invested basically the B round and C round. Eni Toro. And then sort of we became a real social network. And in parallel, we started adding commodities. So it started FX, then commodities, then indices, whether it's S and P, NASDAQ, Dow Jones, but also all of the European ones. So when you trade stocks on Etoro, it's not only US stocks.

• 14:53Speaker 01

  We trade stocks from 13 different exchanges, basically from Hong Kong to European ones, et cetera. And then we started adding stocks, I think the first time was about 2014.

• 15:07Anthony Pompliano?

  And so as you're doing this, you're building this massive business, right? And as people at home can probably tell, I'm super impressed by what you guys built. But you had a parallel life in crypto. So when did you first come across crypto? And then we can get into some of the things that you did that probably people don't even know that you were doing.

• 15:26Speaker 01

  So we started sort of playing around with Bitcoin in two thousand and ten. Uh, we actually bought uh for the company's books. So I got excited from it. This was, I remember buying Bitcoin with PayPal through like a faucet thing on the internet. Um, but uh, we actually started buying in Mount Gox. I recently because we still have like ten Bitcoins there. So I had to go through like the history of our trading in Mount Gox. So we bought fifty thousand dollars worth of Bitcoin at an average of roughly five dollars. Uh, per Bitcoin. Uh, a- a- and then I came to my board. Uh, actually it was a bit more complex. So we started, we called it Bitcoin X. Bitcoin X, okay. Bitcoin X.

• 16:10Speaker 01

  And the concept of Bitcoin X is let's build a decentralized exchange. This is two thousand and eleven, twelve. Let's build a decentralized exchange. And a part of the presentation of Bitcoin X was we're gonna launch a token on top of Bitcoin X. And we're gonna give it away to the first contributors. So we're gonna do like an ICO. And this is like this, there was a group there of a lot of the old OGs. Yep. Um, uh, around this. Uh, and then I presented it to uh, to my board. And they were like, uh, Bitcoin is money laundering. That you were not allowed to touch that in the company. Like, that's horrible. If you have an idea there, like, spin it out, spit it out.

• 16:55Speaker 01

  Uh, that was when VCs were extremely toxic uh, around crypto. Like, uh, uh, investors in general. Like, they're, they heard Bitcoin back then, that was like, uh, You're a criminal. Big red alert, you're a criminal, that's money laundering. Uh, I had a complete, you know, heard a couple of lectures of you're running a financial institution. You can't touch that shit. Don't, you know, you have to get away from that as fast as possible. And at some point, a- a- and they were like, sell it, sell it. And at some point, I'm like, nah, let's not talk about it in the board anymore. Um, a- and then I started paying programmers. Uh, I was at Bitcoin Talk and I, I decided, okay.

• 17:41Speaker 01

  Company doesn't want to deal with it, but it's still interesting. So let's just tell the world things that are interesting and what I think we can do with this technology. And I started writing about colored coins. Um, I think mid 2012, I started writing about colored coins and Bitcoin talk. Uh, then J R Willett, who eventually did the second Bitcoin white paper and Master Coin, uh, started responding to it and there was like a, a group of about 250 people in Google groups, uh, who started basically, some of them coding, I actually send people, uh, Bitcoin. Uh, so I would send them Bitcoin and ask them to like, you know, write a white paper or write some code.

• 18:24Speaker 01

  Uh, Alex Mizrahi was very active. He's a guy from, uh, Ukraine who runs now, uh, Chroma Way. Um, and then, uh, one day I got a, an email, uh, from, uh, someone saying, hi. Um, I'm, I'm 19 years old, uh, and, uh, I wanna, uh, work on your project called Card Coins. I have, uh, some, uh, JavaScript expertise. I think I can really help here contributing. Uh, do you have anything to do with me for like, uh, uh, two days a week? And who was that person? Vitalik Buterin.

• 19:03Speaker 01

  So, alright. And by the way, and I replied, yes. So he wrote the, the first JavaScript, uh, web wallet for, back then there was no web wallets. Everything was still like downloadable. Was mo- mostly Bitcoin Core. Uh, it was a web wallet where you could actually register a new token, right? So you could actually register IBM shares or the euro or the dollar. So our vision was let's tokenize traditional assets, Euro, Dollars and Yens on top of the Bitcoin protocol. Um, so we actually wrote the code for the wallet, then he wrote the white paper, working with our team.

• 19:43Speaker 01

  Um, and he actually came to our offices, this was, uh, late 13, late 2013, October 13. To work on the white paper of colored coins. And at some point, he just said, listen, I don't think you can do it on Bitcoin. Uh, like it's not the right platform, uh, and maybe you need to build a new blockchain. And we're, and we're, everybody was Bitcoin maximalist back then, right? By definition, everybody's back because it's the only thing you have. Um, and we thought, back then, basically the colored coins group started forking away.

• 20:19Anthony Pompliano?

  What, what was the idea for colored coins?

• 20:20Speaker 01

  Co- colored coins concept was you can take a Bitcoin. Uh, and you can color its origin, basically on the blockchain itself to say, this specific Bitcoin is actually pegged to gold. Uh, and all of the satoshis, each of, each of the satoshis that represent this Bitcoin, each of them is an ounce divided by 10,000. And therefore, if anybody sends now one of these ounces on the Bitcoin blockchain, you'll be able to backtrack and say, okay, this is actually gold, right? So if I'm the issuer and I'm saying, hey, I'm coloring this Bitcoin with gold.

• 21:01Speaker 01

  And I'm now selling it to people and the value of those Bitcoins is actually the value. One Satoshi is equal to one divided by 10,000, an ounce of gold. Uh, and I'm committed as the issuer, whoever brings me back one of those satoshis, I'm going to pay them back in gold, right? So that was the concept, basically what became eventually Tether on Omni, which is Mastercoin, which was a related pro- sort of project back then. Uh, so we thought of, let's build a platform to tokenize, to enable tokenization of anything, starting with real world assets, right? So fiat and commodities on top of the Bitcoin network.

• 21:41Anthony Pompliano?

  And what year is this?

• 21:43Speaker 01

  This is, uh, 2013.

• 21:45Anthony Pompliano?

  Okay. That's a long time ago.

• 21:47Speaker 01

  That's a long time ago.

• 21:48Anthony Pompliano?

  And it's pretty forward-thinking to have been thinking about it at that point. Um, for a whole bunch of reasons, that group fragments doesn't happen, right?

• 21:58Speaker 01

  So, uh, fifty, fifty-fifty, it did happen. So there was coloredcoins.org.

• 22:04Anthony Pompliano?

  Yes.

• 22:04Speaker 01

  There was an open-source project that we supported. Um, then basically sort of Ethereum forked away to become Ethereum.

• 22:14Anthony Pompliano?

  Okay.

• 22:14Speaker 01

  Um, and Chroma Way sort of forked away to become, what's today, Chromo Police, uh, which did in ICA as well.

• 22:22Anthony Pompliano?

  But you're not talking about code when you talk about fork, you're talking about the people.

• 22:25Speaker 01

  The people.

• 22:25Anthony Pompliano?

  Left the colored coins group.

• 22:27Speaker 01

  Yeah, yeah, yeah.

• 22:27Anthony Pompliano?

  And to go start different projects.

• 22:28Speaker 01

  It was people sort of forking.

• 22:31Anthony Pompliano?

  Yep.

• 22:31Speaker 01

  Away the concept to, to various different groups.

• 22:34Anthony Pompliano?

  Implementation, they wanted to do it. And so when Vitalik.

• 22:38Speaker 01

  We eventually spun off the company to a separate company called Kalu.

• 22:43Anthony Pompliano?

  Okay.

• 22:43Speaker 01

  Uh, which, uh, then kept on working on colored coins, the protocol and sort of built the protocol.

• 22:50Anthony Pompliano?

  Uh-huh.

• 22:51Speaker 01

  Uh, but I think eventually after Ethereum, uh, sort of emerged, we actually realized it's a better tokenization platform and actually works as a tokenization platform. So we all gave up a bit about the original vision of colored coins.

• 23:07Anthony Pompliano?

  Yep. Um, it, it's fascinating because you're sitting there, nineteen-year-old Vitalik emails you. You have no clue what, what he's going to end up doing, right? All this stuff. It's just another person. You answer. Um, did you have a conversation with him when he kind of said, hey, I'm gonna go build Ethereum and, and kind of go down that path? Or, or walk me through kind of your experience as Ethereum got built, right?

• 23:34Speaker 01

  So.

• 23:37Speaker 01

  First of all, there's a saying that one of my investors said that from time to time now, I need to remind it to myself.

• 23:46Speaker 01

  Don't regret investments that you haven't done, because you need to learn to regret on the investments that you have done. So, first, obviously, a mistake not believing that Vitalik could set up a new blockchain and that it's going to be too complicated, right? So that was my first reaction. Building a new blockchain is super complicated. Why not use Bitcoin? And I was quite adamant around it.

• 24:18Speaker 01

  Second part is when Ethereum started happening, everyone around me, while I, you know, I saw the vision of Ethereum. I remember sending an email to Vitalik. I think this was even before the ICO. Like, you're trying to do to the legal system what Bitcoin does to money. You're like, smart contracts is you're trying to replace the entire legal infrastructure globally. It's gonna take gazillion years. Like, I couldn't see the implementation of eventually an ICO and a term sheet, which was basically started the whole crypto boom, in my opinion.

• 25:00Speaker 01

  But it's, you know, the concept, I still think the concepts of smart contracts for governance and for replacing legal systems, that's mind blowing. Because if you can replace lawyers with coders and if you can replace legal interpretation with discrete mathematical interpretation, that would make our lives, I think, much better.

• 25:26Speaker 01

  But I thought it would take much, much longer for something like that to actually happen. So, and the second part was, even when the network was alive, I still hold a grudge against the people who told me that. Every person I asked about Ethereum, every single person I knew, and I asked about Ethereum. And, you know, I'm not technical sufficiently. You know, I have a master's in computer sciences. I'm supposed to be, but I'm a manager, so I'm not really. But every person who, you know, supposed to look at code and supposed to know what's working and what's not working, the difference between does this work or not explicitly told

• 26:09Speaker 01

  me Ethereum does not work and it is not going to work and it's garbage. And those are what we call today Bitcoin maximalist. And that was a big mistake, sort of being in that echo chamber and understanding I'm in an echo chamber. Again, some of them would still argue that it doesn't work. I have to say I don't understand that argument. I'm like, but it's working, but I'm working with it. I'm moving stuff. It's actually, look, here is a token. But so I can't, I really don't relate to that statement.

• 26:48Anthony Pompliano?

  Got it. And so while this is going on, right, let's go back to you're running Etoro, which is a big company. And were you keeping kind of the crypto and the excitement and the innovation around money and legal frameworks, et cetera, separate? Or and at what point did they kind of intersect and you say, okay, we did the color coin thing, right? Ethereum is obviously going to be a thing that's going to be big. We probably should incorporate it to what we're doing at Etoro.

• 27:17Speaker 01

  So we, first of all, launched Bitcoin trading on the Etoro platform, I think, in demo in around 2013.

• 27:28Anthony Pompliano?

  Wow.

• 27:29Speaker 01

  Now, 2013, at least nine months, was me fighting with compliance and regulation people, explaining to them why, why we need to, to launch Bitcoin and why does it make sense? Why can we do it on our platform under our securities broker license? And eventually, we launched it. I think demo trading was late 13. Real trading was beginning of 2014. Right? So this was me in my company, fighting with every single person in management that

• 28:10Speaker 01

  this needs to be done now because something's happening. We have to do it. And then remember what happened in 2014. Mount Gox.

• 28:22Speaker 01

  So this was I I I visited Mount Gox. I actually looked at the papers for Mount Gox to buy Mount Gox. Uh, um, so I I was with Mark and emails. I I was in Japan. I went to their offices and I'm like, wow, this is an amazing business. And I call my COO and I tell my COO, you would not believe the amount of customers they have and everything is automated. And everything's working. And then when Mount Gox happens, my COO calls me and says, you see what happens when everything's automated in their own controls? Like, damn it, he's right. Um, but that sort of started the crypto winter of fourteen, right? So we were, for three years, we had Bitcoin on the platform. Nobody would trade Bitcoin.

• 29:08Speaker 01

  Like, two percent of our users actually traded Bitcoin.

• 29:11Anthony Pompliano?

  And did they know what it was and they weren't interested? Or do you think that there was both? The people who knew about it weren't interested and also just a lot of people didn't know about it?

• 29:19Speaker 01

  Most people didn't know about it.

• 29:20Anthony Pompliano?

  Yep.

• 29:21Speaker 01

  Uh, the the platform was still much more geared toward, uh, we also launched that year. Uh, uh, equities for the first time.

• 29:29Anthony Pompliano?

  Okay.

• 29:29Speaker 01

  Uh, we actually had a super interesting campaign, um, which is free stocks, uh, but giving away free stocks. So you would open an account in Etoro and we'd give people like, uh, free stocks, um, uh, which was super successful. And sort of people didn't really look at Bitcoin back then. There wasn't any buzz. So it took three years, at least from the launch till Ethereum happened. So when Ethereum started picking up after the Dow.

• 30:01Anthony Pompliano?

  Cause it's like two thousand seventeen, I think it's like Q, end of Q one, beginning of Q two is the first time Ethereum goes from like ten dollars to thirty.

• 30:08Speaker 01

  We launched Ethereum on the platform at six dollars.

• 30:11Anthony Pompliano?

  Okay, perfect.

• 30:11Speaker 01

  And we started looking at, uh, uh, so first of all, I send this amazing, this was another blow. I send this email to all of the employees in the company. This is like back then two hundred and fifty employees about the launch of the Dow. And I'm like, guys, this is the future. Decentralized autonomous organization. Oh my God, somebody's launching a VC that has no managers and no voting right. Wow. And I'm like this, this thread to all of the employees in the company. Uh, super excited about it. And I'm like, you know, you can buy like this Ethereum and then invest in the Dow. And then the Dow happened. I'm like, oh damn.

• 30:55Speaker 01

  Oh, two for two on, uh, on big ideas. Oh, for two on avoiding bad execution. I still am a big believer in DAOs, by the way. It will, it will happen. They will happen. It's just, we got work to do. Yep, but, but maybe fix a bit of the bugs first. Um, but, uh, so that took us back a while. And then, uh, we launched Ethereum when it was six dollars. And we just launched it like a second before it took off. And we were the only place in Europe. Uh, and in probably other like 50 countries at least. So we operate in a hundred and 20 plus countries. Um, where you could buy Ethereum, you could invest in Ethereum and in Bitcoin with a credit card.

• 31:40Speaker 01

  Uh, because we're a securities broker. A lot of people deposit funds not only through wires and bank transfers, but also through credit cards, debit cards, PayPal, et cetera. Um, and suddenly they could invest in the crypto markets, uh, through us. And then Ethereum went from six dollars on our platform to $400 in like four months. And that became vi- you know, crazy viral. Uh, we saw amounts of users coming from everywhere. Uh, and they were just coming to buy Ethereum. And then we started adding more cryptos, uh, like XRP, Litecoin, et cetera, et cetera. And then we caught the boom and, and by the way, we have offices in, in Shanghai.

• 32:24Speaker 01

  So we got front row seats, uh, to really understand what's happening in China. Uh, so back then we already had a big office in China. Um, and, and China, by the way, uh, I don't think people outside really understand.

• 32:40Speaker 01

  How big crypto was in China, much bigger than in the US. Oh, for sure. The, the big. China, Korea and Japan, huge. Uh, the pre-ban, what, what was, you know, was an earthquake. There's two places where there was an earthquake. It's South Korea and China, you know, Japan to some extent, but they managed to sort of control it because of Mount Glocks that happened before. But our, our guys in China for a while, like, thought, you know, it's the end, uh, you know, this is the big, you know, whole new beginning. Finance is restarting. Everybody's gonna look at their wealth from a Bitcoin perspective and measure their wealth only in Bitcoin. Everybody were doing ICOs. Everybody were doing ICOs. It's like you would go somewhere.

• 33:25Speaker 01

  And your sister's doing an ICO, your mother's doing an ICO, your grandfather's doing, everybody's doing ICO for something. And like, there were more than a hundred websites aggregating ICOs, uh, in each of them, maybe a hundred ICOs, like. Something really insane in, in its size. And then there was the Chinese ban, right? And then August came in. And everybody thought, okay, this is the end. By the way, interestingly enough, it got exactly to the point where we are now. So. Post-Chinese ban Bitcoin went down from, I think, seven, eight thousand to thirty-five hundred. And everybody felt like this was ma- this was the end. Um, what I said is if Bitcoin survives that.

• 34:07Speaker 01

  That's like, you know, having a whole group of gangsters coming after someone. Um, uh, I don't know, who slept with a, with a gangster's boss's wife, uh, and, you know. They come in with these thousand gunmen and they're shooting down the house. And, you know, everything's rubble. And then suddenly he comes up and he becomes this legend. This is what happened to Bitcoin. August, September, because everybody were sure, like, a Chinese ban.

• 34:36Anthony Pompliano?

  It's over.

• 34:37Speaker 01

  It's over. And when it started sort of taking its head up again, I think that's when some beautiful mysterious forces said like, wow, this can resist a Chinese ban. This is super interesting. Let's go in. Uh, and, and then big money from somewhere came into the market and, you know, took us through the wide uh, to 20,000.

• 35:01Anthony Pompliano?

  What, what's, what's fascinating to me is, um, so the world you're describing, right? May, may the listeners of the podcast, they're in the U S, right? But most of the listeners in the U S and, um, you've built this whole business outside the U S. So you're a trillion dollars of annual volume outside the U S. When all this is going on with Bitcoin and Ethereum, 2017, et cetera, all outside the U S, right? And so what you guys got a front row seat was not just China, right? You, you obviously saw China, but you're seeing kind of the entire world and different areas are waking up more than others, et cetera. But they're all coming to you and they're saying, there is a new type of asset. We'd like to participate in. And so maybe talk about, um, you know, there, there's kind of initial bull run, China ban, it crashes a little bit.

• 35:46Anthony Pompliano?

  We see this resurgence into Q3 and Q4 of 2017 and even into like January, February of 18. What's that do to the business? Right? In terms of like, how, like what are the, what's the impact for somebody who you have a core business outside of crypto? And you add these crypto assets?

• 36:04Speaker 01

  Yeah. So, so first I, I love how you, you ask these, uh, uh, so rhetorically when we both know you looked at our numbers.

• 36:15Speaker 01

  But.

• 36:15Anthony Pompliano?

  I'm going to make you tell me all the fascinating things. So everybody else knows how cool this company is.

• 36:20Speaker 01

  I think you signed an NDA. Um, but.

• 36:22Anthony Pompliano?

  That's why I'm asking, not telling.

• 36:25Speaker 01

  But first of all, like 2007, we grew from 2016 to 17 by about 400%. Uh, from 2016 to 18 by about 600%. We saw one day in 2017, I think it was December, uh, peak of ripple, uh, sorry, XRP.

• 36:48Speaker 01

  Peak of, we saw.

• 36:51Speaker 01

  The number of new funded accounts at Etoro in one day, I think, reached about twenty thousand new funded accounts. Uh, which is almost like a year, maybe three years before that, uh, or six to nine months. Uh, so we saw in one day a hundred thousand registrations. Uh, so mi- mind blowing numbers throughout that period. Um, and then throughout eighteen, I was, I have to say I was in denial. The majority of eighteen. Why?

• 37:28Speaker 01

  I did not believe until, when was it, August, the fall from sixty five hundred to around thr- thirty five hundred? Yep. Until that point, I'm like, it's a correction. Yep. It's a correction. I like, in, in consensus last year. About May of two thousand eighteen. I heard, I sat down with a couple of the guys who, like the CEOs of the exchanges that were, um, founded back in two thousand twelve, thirteen. And they all told me, listen, this is going to be as painful as the last crypto winter. This is gonna take a while, two, three years. And I'm like, it's a correction, it's a correction.

• 38:13Speaker 01

  And it took me a long while to understand that, you know, the gravity uh, of, of sort of the, uh, the winter we're in.

• 38:26Speaker 01

  Part of that, and, and that's why we're very lucky at Etoro, um, or smart, depends who you ask. Uh, we're, we're a multi-asset platform, so we haven't, so our revenues are still four times higher than they were when everything started. Because a lot of our customers who came to crypto, then went on to trade stocks and commodities and indices. And wh- while we saw crypto becoming from two percent of our audience to almost ninety percent of our audience, uh, and volumes in crypto or revenues of crypto

• 39:06Speaker 01

  from our total revenues going from two percent to ninety percent. They're now back at ten percent.

• 39:15Anthony Pompliano?

  Yep. So what you just described is a world where you went from crypto basically non-existent as part of the business, right? You had Bitcoin in, but no one was really using it. Low, single-digit in terms of volume and revenue. And all of a sudden, it became your business, right? It became very high, double-digit percentages. And then through 18, as this all dropped, they returned. But the interesting thing is they returned to a level that is higher than before, right? I think that it's one of the most interesting charts. If you look at Bitcoin's price, for example, everyone always talks about the highs, right? Marty Bent from Tales of the Crypto always talks about, "Look at the lows. Every year, what's

• 39:56Anthony Pompliano?

  the new low?" Right? And in six of the last seven years, it's higher than it was the year before and all that. But also, the people who came in to trade crypto, even though that volume was going away in crypto, a high percentage of them started trading traditional assets. Whereas they became eToro users, and they were asset-agnostic, even though crypto was going away.

• 40:16Speaker 01

  Yeah.

• 40:17Anthony Pompliano?

  What do you think is driving that? Do you think it's the social components of the platform? Do you think it's just these people have a propensity to want to trade assets?

• 40:26Speaker 01

  I think, and again, that goes to eToro's bigger vision. I think significantly more people want to trade the markets than they actually do. I think when we're talking right now, people are hearing this podcast, a lot of people in this listening mode, they really want to buy Bitcoin. They think it's a good opportunity to buy Bitcoin right now because prices are attractive. They've been listening to your podcast for a while. But they're lazy. And they're not gonna buy Bitcoin until the next bull run. And then they're gonna be

• 41:09Speaker 01

  afraid because it just went from 3,500 to 4,500. Now, maybe it's too late, then it's 5,000. No, maybe now it's too late, right? So the problem is, the majority of the time... We're not trading, we're not in the markets because we're lazy, because it's not accessible, because you need to wire money somewhere, you need to transfer money somewhere. Um, and it's very hard psychologically for us to move money. To move money from your bank somehow became this very, very difficult thing to do. Like to move money from one financial institution to another is like going to your dentist.

• 41:49Speaker 01

  Um, and I think what happened is crypto in general made it easier, but I think for us, people came onto the platform and became easier for them, right? And by the way, there's a very big difference between the US and the rest of the world. The US has E-Trade, Fidelity, Schwab, Ameritrade, sort of went through the uh, the E-trading 1.0 revolution. That never really happened in most places around the world. There's a roughly five to 10x difference between the amount of people who trade stocks in the US to every other country in the world. That's a big opportunity, by the way, for Etoro. So we're enabling people in, you know, anywhere in Southeast Asia and in Europe to trade US stocks where

• 42:31Anthony Pompliano?

  It's hard.

• 42:31Speaker 01

  It's, it's, it's, it's hard, it's expensive and they're basically not used to it. They're learning on it from the internet, not from TV and not from their local financial advisors, which want to sell them some shitty bank product. Um, so that's a very big opportunity and I think that's where, for us, crypto and the world of trading converges because once people start trading crypto, they get sort of uh, hooked to the same thing that I got hooked when I traded in the, in the dot com bubble, right? You fall in love in the markets. You're like, you're certainly part of that complex web of the markets.

• 43:09Anthony Pompliano?

  So massive business outside the US. Uh, you just announced that you're coming to the US. Um, the part that uh, is very surprising to me. Um, so most US investors, if they were to think, uh, what is Etoro like in the US? It's probably Robinhood or Coinbase, right? Um, you're much bigger than, um, for sure, Robinhood. I'm not sure about Coinbase, but for sure, Robinhood, uh, both in users, revenue, profitability, et cetera. Why come to the US?

• 43:38Speaker 01

  I think from a longer term perspective,

• 43:43Speaker 01

  we see the potential of tokenization of assets and sort of the underlying blockchain technology as something that's going to disrupt the infrastructure of financial services. Okay. And that the opportunity there is to to really compete eventually, and again, it's not direct competition, but it's like to build the new Goldman's, the new Morgans, the new JP's. That's the size of businesses that we have opportunities to build, right? So you think about assets under management. It's a hundred and fifty trillion dollar business in assets. And if you understand enough blockchain technology and you understand everything that's happening

• 44:27Speaker 01

  in the infrastructure and how the world works right now, which is completely chaotic, then it's quite certain that we're going to see transition of, I don't know, somewhere between fifty to a hundred trillion dollars into the blockchain in the next ten years. And within that transition, companies that are there in the space, positioned well, understand where the money flow is. They're going to manage trillions of dollars. Now, who manages trillions of dollars now? There are companies, I adore these companies. There's what, less than ten probably? No, no, there are. You think there's more? There's more than ten that manage trillions of dollars. There's actually, I think about almost a hundred with hundreds of billions of dollars. For sure, hundreds of billions, yeah, yeah.

• 45:12Speaker 01

  Big Swiss banks, you know, UBS's was two trillion. I'm meeting more and more companies who manage a trillion dollars. That's very interesting. The only one I can think of off the top of my head is Fidelity. I think they've got like one point seven or something. Fidelity, Vanguard, if I'm not mistaken, JP Goldman, Morgan, Citi. Got it. You've got a few. Okay. Um, but and and then you think about, okay, this is a very big opportunity. And and the opportunity is eventually disrupting the capital markets. There is no doubt about the fact that the US capital markets are sort of the example of capital markets in the world. Right. That's the center of capital markets in the world, the most sophisticated capital markets in the world. And it's going to happen here as well.

• 45:56Speaker 01

  Uh, and it might happen on the JP Morgan blockchain or on the Goldman Sachs blockchain. But we need to be here that when that happens. And and tho- those are two very big and different trends. It's like one trend is the backend. The backend is gonna get blockchain and tokenized. And the frontend is just gonna get a hell of a better user experience. So eventually, everything is moving from user experience, which is you trust your banker. You do things sort of on these static forms. Uh, you're waiting for somebody to convince you over the phone uh or in the newspaper.

• 46:37Speaker 01

  To to, you know, to push notifications, to emails, to online marketing. Everything's becoming on uh online. You're getting these hundreds of messages a day to convince you to do a financial transaction. And then you're doing it very fast on your mobile phone, right? So that's inevitable from one end. And from the other end, it's the infrastructure becomes faster, easier to basically send and receive any type of financial asset uh worldwide, right? Whether it's a, you know, a percent in a Van Gogh painting uh or a a percent in an apartment in Poland uh or whether it's stock in Japan or Australia.

• 47:16Speaker 01

  So you've got these two bit very big trends that eventually make things simpler and easier. I think those two trends are gonna sort of converge in the next ten years. I think the US is going to be a very big part, obviously, of of the global open financial system.

• 47:34Anthony Pompliano?

  Yeah, what you're talking about, the way I usually articulate it is, um. We moved from an analog world, or the physical world, where literally people traded stocks, physical stocks, paper money, all this stuff, to an electronic world. The electronic world started kind of in the 80s, right? Now we can trade ones and zeros on screens, whether they're money, stocks, commodities, etc. But there's still a physical settlement time lag, right? Meaning that I may send you money, but there's two or three day settlement time. I may send you stock, all that kind of stuff. We're now going to this digital world. So analog to electronic, to now we're going digital. And we go to the digital world, we need three things. We need digitally native assets. So these are assets that are issued in the digital world.

• 48:11Speaker 01

  Tokenized assets.

• 48:12Anthony Pompliano?

  Tokenized assets, Bitcoin, all this stuff. So that they're digitally native in the sense issued, governed, and exist solely in the digital world. They're not representations of any physical asset. So digitally native assets, then you need digitally native accounting, the ability for, if all the assets are computer files, right? And the ability that for me just to copy those and then send them out, the double spend problem. Now you need this accounting, and then you also need digitally native contracts to govern all of these transactions.

• 48:37Speaker 01

  Smart contracts.

• 48:38Anthony Pompliano?

  Smart contracts. So you get digitally native assets, blockchain, and smart contracts. That world looks a hell of a lot like automation, machine-to-machine transactions, right? All the things that you were talking about along the way that you got excited about. That world is coming. It just takes a little bit longer to get there than probably you first think.

• 48:56Speaker 01

  It's gonna take longer, but I'll give you an example. So my father was a Swiss banker, and he started, it's actually an interesting story in its own, but he started a bank in Switzerland together with Israeli Mossad. And one of, I'm not sure I'm supposed to talk about this, but never mind. And I think that, and one of the reasons is because the Israeli Mossad needed to do payments overseas back, that was back in the 50s. So I heard a lot of stories from him about banking pre-computer age, right?

• 49:40Anthony Pompliano?

  Wow.

• 49:40Speaker 01

  Think about it. They did banking before computers. Now, one of the s- s- s- stories he used to tell me is how do they reconcile every day, right? And they had these books, ledgers, right? So every uh person had a a ledger, right? Every account manager had a ledger. He had clients coming in and he used to open the ledger. And in the ledger saying, okay, this person wants to move money from X to Y. Uh, or wants to withdraw money, uh, we go to the safe and give him his money. And then he would do all of these ledgers, uh, transactions with people, one on one. And then he would close the ledger at about three uh P M every day.

• 50:25Speaker 01

  That's the the bank uh account manager. Now, there was a process in the bank, he had many branches. Uh, there was a process in the bank where now in each of the branch. Uh, there was a basically a person doing reconciliation within the branch. He would take all of these ledgers, so you think think twenty different account managers. You take all of these ledgers with a pencil uh uh and and and an eraser. And you create this combined ledger of all of the ledgers in the bank. So all of the transfers within the bank close up, but if the transfers are beyond the branch, they're still open. Now, so at four P M, somebody would come with a car.

• 51:07Speaker 01

  And gradual and collect with each of the banks would collect the joint ledger, right? Basically, branch ledger. To the center, to to the central branch would take all of the ledgers of all of the banks. Uh, with the ledger, by the way, came the the difference to the bank, that that branch had to actually move into the other banks or opposite. Uh, and he would reconcile all of those, right? A- and then he would send everybody the next day's ledger. But was daily reconciliation, right? And then the next day, people came in and they had, okay, here's our ledger, right? And then banks with uh transfers with other banks, that's much more complicated.

• 51:52Speaker 01

  That by definition could not be settled on T plus one. Why? Because you had to first close your own books. Then just you could have said, okay, here's the money that's now outside of my banks. Now let's reconcile between all of the different banks and that's basically your T plus two. Now that's basically banking today, right? So, computers didn't change settlement times. They just enabled it to be more efficient, to be global. But the settlement timing process is still based on daily reconciliations.

• 52:33Speaker 01

  Risk management in banks, to a large degree, is still based on that. So we're looking at moving from, you know, daily to maybe a thousand times a day, or 10,000 times a day, or 100,000 times a day. The level of efficiency potentially is not multiplied by 24. It's not, you know, you don't have a block only once an hour. You suddenly have a block in real time. And that's a very big change that also changes things to like leverage, right? So big banks offer you leverage, um, can offer you leverage of up to 25 times, 30 times, 40 times, right?

• 53:17Speaker 01

  So a process of leveraging the system is quite significant. In theory, in smart contracts, you know, if you think about milliseconds, you can leverage someone with 10,000 times, 100,000 times, right? So suddenly that changes the perspective as well. Because the whole concept of leverage is generally based on the fact that the risk timing is one day. If the risk timing is suddenly a second, how much risk are you willing to take for one second, right? That significantly increases that as well. And we haven't started to scratch the surface of what that enables.

• 53:57Anthony Pompliano?

  You're hitting on my favorite topic in crypto, which is while everyone is arguing over how overhyped is all of this, I actually think the question we should be asking is how much are we underestimating the impact that all this will have on the world, right? Everyone else believes that it's overhyped.

• 54:15Speaker 01

  I think it's underhyped.

• 54:16Anthony Pompliano?

  I argue the complete opposite, right? And I think that's why I like you so much is this idea that we actually can't comprehend how impactful this will be if it plays out how we think it will.

• 54:27Speaker 01

  I'll I'll give two things. One is sort of, you know, easy to analyze. People can understand it, especially by the way people who understand financial services. So if you look like a, you you look at a country like Israel. When the internet came. Everybody said, listen, this is gonna destroy local media. And local media say, ah, no. And and now it's pretty obvious that Google in Israel and Facebook in Israel is much, much bigger from a consumer point of view than the local newspapers, right? So local newspapers and local advertising in newspapers and and local advertising in TV significantly lost market share to Google and Facebook.

• 55:13Speaker 01

  And Google and Facebook are are, you know, very, very, very big companies because they took that market share of local advertising. That's local advertising in a lot of different countries and obviously in the US.

• 55:31Speaker 01

  Now, if you think about the largest advertising companies in Israel. And then you compare them to the five largest banks in Israel. And then you compare them to the five largest insurance companies in Israel. Each insurance companies Israel in Israel manages about fifty billion dollars, right? There's five of those. There's five big banks. If you think about Australia. There are four banks that are worth over fifty billion dollars. If you go around the world and look at financial services companies. These are the biggest companies everywhere. In every single country, the biggest companies are gonna be those mammoth

• 56:16Speaker 01

  insurance companies managing trillions or banks, etc. Now, you think about blockchain, what it's disrupting, when it actually disrupts the local financial services. It disrupts those companies, those the big banks in every country. Who, by the way, and and the difference is when a big bank or a big insurance company runs into problems, it's not like your local newspaper in Wyoming going bankrupt.

• 56:45Speaker 01

  People will, might lose their money, right? There, there will be bailouts. So, so thi- this is much, much, this is, this is at least ten x bigger than the internet because people don't understand. This impacts the entire financial services system and it's inevitable. And that's the easy part where, what, which people can understand and relate to. The, the more difficult part is, is truly the de-pegging of, uh, the creation of money from government. And what that means to a lot of countries out there. Now, it's very hard in the US to understand that. Uh, and I understand why, because the dollar is the world's currency.

• 57:29Speaker 01

  And everybody, when they think about the dollar, you, you know, it's real money, it's physical money, you can trust the dollar. It's been here for a while, um, but there are about a hundred and eighty, ninety currencies out there. Um, and the average lifetime span of a fiat currency is thirty years. So unless you're in the UK, which by the way now with Brexit is problematic, or in Euro, or in the, you know, European Union, which again is a bit problematic, or, or in the US, uh, or in Japan, right?

• 58:09Speaker 01

  If you look at the big fiats, if you're, you know, in most, the majority of people around the world, by far, the majority of people around the world, are based where their local fiat currency will probably either not exist, devalue by more than eighty percent, or default in the next thirty years. Oh, for sure. And, and if you realize that that's going to happen, then that's, and, that's a very big paradigm shift. Cause previously if that happened, you as a citizen of that eh, country, you were like, okay, um, Israel had a hyperinflation in the eighties. Uh, okay, a shekel now is worth, uh, uh, less than a.

• 58:55Speaker 01

  You know, zero point zero zero one checkal. Okay, there's a government bailout. All of my stocks are worth now zero. Okay, they're printing me again money. I still owe my house. Somehow, you know, it's still still actually works. Everybody's taking care of you. Nothing. You know, a lot of people lose money, things shift, whoever's smart sort of stays in the game. Now, when everybody's connected to the internet and where people actually can buy Bitcoin and can buy those assets globally, it's those changes are going to be significantly different.

• 59:27Anthony Pompliano?

  I usually go to this one line where I just say people are going to trust machines over other humans. Right? And the reason why I say that is every fiat currency in the world is run by what is supposed to be a disciplined process of humans. Right? The central banks, the Federal Reserve, right? You know, even dictators in countries, they're supposed to keep monetary policy disciplined and it's all human decision making. Like the idea that in two thousand and nineteen, we don't know what the next interest rate decision is, is is wild. Right? Where people are going to go in a room, they're going to look at some data, they're going to kind of lick their fingers, stick it in the air and say, I think that we should do X or Z. Absolutely nuts. The idea that I can look at an algorithm that is more transparent, I can see the code, I can look at exactly how the system is designed.

• 1:00:12Anthony Pompliano?

  I can go back to January third, two thousand nineteen or two thousand and nine, look at every single transaction. And I actually know exactly what's going on in real time. I don't, I can't say how much money is being printed right now. Right? But I can look on the Bitcoin network and tell you how much money or is how much Bitcoin is being produced right now. And then I can tell you what the disinflationary schedule is moving forward, right? It's coded into the code. That's a very big shift, but it just comes back to you and I already trust machines. Right? If you come to New York and you get lost, you don't ask somebody on the street, you pull up Google Maps. Right? Say, hey, machine, tell me where to go. And so I think that is a big shift for people when they make it. It's just a, of course, that's going to happen. They just haven't sat and thought about it.

• 1:00:53Speaker 01

  Again, it's, in my opinion, it's inevitable. By the way, AI coming to asset management is also inevitable.

• 1:01:02Anthony Pompliano?

  Okay, explain that.

• 1:01:05Speaker 01

  So you're thinking about things like interest rate change, right? Yep. And you imagine this room, I actually sat in a central bank, I won't mention which one, very large country, and I'm sitting in the room with people talking about blockchain with the main guys there. And like, does anyone, and I ask, listen, after a big discussion where they explained to me, this was, I think, two thousand fourteen or fifteen, there will never, they don't see any chance for a central bank issued digital currency. And I'm like, what do you think, we're gonna play with this paper in the next twenty years? And they're like, ah, financial stability, yada, yada. And I'm like, how many people in the central bank have a computer science degree?

• 1:01:51Speaker 01

  And they look at me and they say, no one.

• 1:01:55Speaker 01

  No one. In the entire central bank, there isn't a single person with a computer sciences degree. And I think that's, that's, that's the shift. So changes in interest rate are a lot of people who don't necessarily understand how to compute things. They understand logic, they understand psychology. Yeah, they're smart people. They're smart people, they don't understand how things are being computed. Okay? And that's a very big, and that's the transition. Everything eventually should be run in the way computers run them.

• 1:02:40Speaker 01

  But again, the big asset managers in the world, still today, the active funds, eventually there is a person there saying, hmm, let's invest in Apple, a hundred billion dollars. There is actually a person there making the decision and, and, and, you know, running an investment committee and signing a paper. That's still how it's done. There are ETFs, by the way, is a great example of something being automated, but think about what they, what they automated, they're like. Let's automate, you know, the simplest rule there is. Market cap weighting. Let's follow the index and that's it and it beats everyone, right? Those are the simplest rules possible.

• 1:03:21Speaker 01

  What there are probably smarter rules, uh, which algorithms and machine learning can come up with. Right now, obviously secret, that's what algorithm hedge funds do. But eventually that's where this entire industry is going.

• 1:03:35Anthony Pompliano?

  The part that just shocks me, um, and I joke a lot on Twitter just because, uh, it's a way for me to put these ideas out there in a non-confrontational, non-serious way. But I am serious about them, right? I tweeted the other day and I said, uh, technologist or Wall Street's under attack from technologists that are using their weapon of choice of math, software and memes, right? Kind of joke, you know, ha ha, whatever. But the idea that they're actually using math and software, right? And what you're talking about here is the machines are smarter than us. Like, there's no argument about that anymore, right? My computer is smarter than me if it is applied correctly. And so the challenge is, one, people have to be, uh, less egotistical and think that we are smarter than the machines.

• 1:04:16Anthony Pompliano?

  But also two, to your point about the central banks not having computer scientists, they could have the best computers in the world sitting there. If no one knows how to use them or apply them, it doesn't help them.

• 1:04:25Speaker 01

  Right. So, so there's, there is this sort of metaphor.

• 1:04:33Speaker 01

  Not sure metaphor would be the right way to call it, but, uh, where you think about this Uber, you know, big machine, smart machine, uh, like a DAO, right? And, and this DAO eventually sort of takes over control of another DAO, right? And all it wants is to generate more profit. And these DAOs eventually sort of learn how they now can buy tokenized assets. There's tokenized securities, they start taking over things and also start making decisions of how things are being run, right? Because there's governance on the blockchain, uh, and nobody necessarily has ownership now on some of these DAOs.

• 1:05:17Speaker 01

  And they're all running on their own and they're starting to manage how things are actually being managed. And then, you know, they start. Running places, right? So Google needs to generate more profit. That's a very easy KPI for a DAO. And now let's sync everything and all the KPIs and everything and the decisions and the MBOs and the OKRs. And everything happens algorithmically. And then people wake up and they're like, we're, we're working for this huge machine. Nobody understands what's exactly happening here, but we want more stuff to buy. We want, uh, uh, we have to work more. We have to work longer hours.

• 1:05:56Speaker 01

  We need to make money, et cetera, et cetera. And then some of them say, you know, we don't want to take part of it. And they go and they live in India and they live, you know, just by the river. And they disconnect from computers because everything becomes too much, too expensive for them. So if you don't, you don't slave yourself into the machine, you can't buy electricity or data or, or anything anymore. And you're like a poor man suddenly on the river. And then you say something like, you know, happiness, happiness is, is not about being a part of that machine. And then you think about this, uh, dystopian future, right? And you say, when is this dystopian future?

• 1:06:38Speaker 01

  And the guy in India says, what do you mean? You're living it right, in it right now.

• 1:06:42Anthony Pompliano?

  Uh huh. Exactly. Why are you still working on E's horror? What, what, what's, what's the thing that drives you every day to continue building company?

• 1:06:51Speaker 01

  I think we are at a very interesting point in time that happens once in a lifetime. Uh, where the industry, which, you know, I, I'm passionate about, which is the finance industry, sort of converging with technology. It, it is, those two industries are going to completely converge. And that's going to be like the big boom. Um, and, and I, I know, I want to be, I want to be there when that happens. And a part of that. And again, this is a whole other discussion. We're gonna do another podcast on it. I, I think the actual meaning of money

• 1:07:36Speaker 01

  uh, and what is money and how, what do we do in order to get money um, is gonna change in our lifetime. Uh, we're actually working, we have this product, Nitoro, uh, experiment, we call it truly nonprofit social impact project called the good dollar about just printing money for trying to bring in a billion people. Give them a, a wallet, give them a blockchain wallet and print them money. And then try to hack, what can they do with that money? So how can people actually create value? So if you print people money and just give it to them, how can they create the value to it?

• 1:08:18Speaker 01

  Um, and I think, and, and that's super interesting because I think that changes really the fabric of, of how, you know, we think about capitalism uh, and how things work today.

• 1:08:30Anthony Pompliano?

  For sure. Um, we're gonna get cut short, so let's get into, there's a couple rapid fire questions I usually end up with. Uh, and then you're gonna have to come back and we got a lot more to talk about. Um, what is the one thing that you believe in crypto that a high majority of other people disagree with you on? What's your most controversial thought in crypto?

• 1:08:52Speaker 01

  There's no good way around what I'm gonna say right now. Um, I think XRP is really interesting.

• 1:09:00Anthony Pompliano?

  Okay. Oh, interesting. All right. Man, there's a lot of people who are gonna like that you said that. Go ahead.

• 1:09:04Speaker 01

  Yeah. So I thought I'm gonna say it, then the XRP guys are finally gonna say something positive about me, but I just realized I just, to the actual purpose of your question was a trap. Um, but, but I, I think it's, it's super interesting to see the, the emotional, uh, almost religious thing happening around the XRP community. Um, and for a long time I could not understand it. I could not understand necessarily what people are seeing. But then I realized that if so many people are seeing it and protecting it.

• 1:09:42Speaker 01

  That is what creates value for cryptocurrencies and that's interesting. I'm not sure how it became what it is, but it's a very interesting sort of community fabric that's running there.

• 1:09:57Anthony Pompliano?

  CZ, the CEO of Binance, he believes something very similar where he says, "Look, one of the key components to money is everyone buying into the same belief system, right? And if everyone believes it has value, it has value and it is money." So I think that's really interesting. What's one regulation you would change or improve if you could? In the US or in an international market? I'll let you choose.

• 1:10:22Speaker 01

  I generally think that KYC is very problematic in a lot of places. By the way, in the US, that actually does work very well. In the US, I would love to see consolidation of sort of the different regulators or maybe a fintech regulator that's sort of more easy with fintech firms. But outside the US, KYC is a big issue, whether it's a US firm eventually accepting people from India or Nigeria or whatever. So there are still no real digital identities and because of it, the cost of KYCing

• 1:11:05Speaker 01

  a customer, unless you're a French company, accepting French citizens or a US company, accepting US customers. If you're a global company trying to cater to a lot of users, the cost per KYC, AML, etc. for a customer would be north of $10 and that means, and that's the reason, you have 2 billion people unbanked.

• 1:11:29Anthony Pompliano?

  Yep.

• 1:11:30Speaker 01

  Because you need $40 billion just to KYC AML them.

• 1:11:37Anthony Pompliano?

  What's the most important company in crypto other than eToro?

• 1:11:42Speaker 01

  The most important company, uh, so companies is a good question because I I'm I'm an ether fan generally.

• 1:11:49Anthony Pompliano?

  Okay.

• 1:11:50Speaker 01

  Um, but Ethereum is not exactly a company.

• 1:11:52Anthony Pompliano?

  That's okay, you can say Ethereum.

• 1:11:53Speaker 01

  Um, so.

• 1:11:55Anthony Pompliano?

  You say Ethereum.

• 1:11:55Speaker 01

  I'm I'm very, yeah, I'm I'm I'm still an ether fan.

• 1:11:59Anthony Pompliano?

  It it's fascinating to hear that, given where you came from, from the Bitcoin side.

• 1:12:03Speaker 01

  Yeah.

• 1:12:03Anthony Pompliano?

  In terms of all that.

• 1:12:05Speaker 01

  No, Bitcoin is truly not a company.

• 1:12:07Anthony Pompliano?

  Yeah.

• 1:12:07Speaker 01

  That I couldn't even find the company.

• 1:12:10Anthony Pompliano?

  Got it. Uh, what's the most important book you've ever read?

• 1:12:14Speaker 01

  Nineteen eighty-four.

• 1:12:15Anthony Pompliano?

  Why?

• 1:12:17Speaker 01

  Um, it

• 1:12:21Speaker 01

  brought me to realize uh, that reality is simply a perception and subjective. Um, and it brought me to that realization with tears. And I think it's a it's a really good book in that that it takes you to that extent that you're that is not what I thought, reality and what's going to happen.

• 1:12:45Anthony Pompliano?

  I love it. Uh, I usually end up letting you ask me one question, but before we do that, we talk aliens. Do you think they're real or not?

• 1:12:55Speaker 01

  Um, nah, not really. Um.

• 1:13:01Anthony Pompliano?

  You don't think they're real?

• 1:13:02Speaker 01

  No.

• 1:13:03Anthony Pompliano?

  Why not?

• 1:13:04Speaker 01

  I haven't seen one.

• 1:13:06Anthony Pompliano?

  It's actually a pretty good argument.

• 1:13:09Anthony Pompliano?

  Not really, but I'll give it to you. All right. Second part of that question, which is now my new favorite question to ask is, uh, I'm scared when I think of the depths of the ocean. I'd much rather go to space than go to the depths of the ocean. Which way would you go? Depths of the ocean or to space?

• 1:13:25Speaker 01

  Well, it's a good question, but I I would prefer to go to space because it's sound like more fun and going to have more tech around, but I do understand why the depth of the ocean is scary.

• 1:13:35Anthony Pompliano?

  Yeah, like you're you're, I just, I feel like there's things down there that we don't even know about and it's so close that we should and I'm I'm just not into the ocean stuff. Space sounds way cooler. Uh, what one question would you ask me?

• 1:13:47Speaker 01

  What's the most important company in crypto?

• 1:13:49Anthony Pompliano?

  Bitcoin.

• 1:13:50Speaker 01

  That's not a company.

• 1:13:52Anthony Pompliano?

  Well, maybe that's why it is the most important.

• 1:13:55Speaker 01

  Why it is the most important?

• 1:13:58Anthony Pompliano?

  It's the first, it has the potential to have the biggest impact, and I actually think the fact that it is so decentralized. You know what I'm actually fascinated by that's related to this? Have you been paying attention at all to the Lightning Torch? Lightning Network Torch got passed around, and there's a bunch of people on Twitter who's were saying.

• 1:14:15Speaker 01

  Did you get it already?

• 1:14:16Anthony Pompliano?

  Yeah, I got it pretty early on. I actually thought it was like a scam or something, right? People tweeted me all this crazy stuff. And Hoddlenot, the guy who started it, I think is the guy. He, that guy deserves an award because he literally DM'd me and walked me through. Here's every single thing, like he did me a bunch of teaching, right? So I'm super thankful to him. But I saw everyone tweeting like, who's gonna send it to Iran? Who's gonna send it to Iran? And I'm not exactly sure what happened, but I think they sent it outside the US. Somebody took it.

• 1:14:45Speaker 01

  You know what got into Iran?

• 1:14:46Anthony Pompliano?

  Oh, yeah. It went into Iran, and they sent it to Israel.

• 1:14:49Speaker 01

  To Israel? That was awesome.

• 1:14:50Anthony Pompliano?

  It like, to me, watching that happen is incredible.

• 1:14:55Speaker 01

  A hundred percent. I a hundred percent agree.

• 1:14:58Anthony Pompliano?

  Like, the idea that we just sent it to a country like.

• 1:15:00Speaker 01

  If I knew that I could choose Bitcoin as the most important company, I would choose Bitcoin. But I think Bitcoin is here a hundred percent to stay more than anything else. Simply because of its brand awareness. It has the brand awareness of Coca-Cola, McDonald's, Starbucks today. And that's not going away. That's like, it's the first, my kids, my grandkids, they're gonna know about Bitcoin.

• 1:15:24Anthony Pompliano?

  I had somebody tell me recently that the two things that their kids want to talk about are Bitcoin and Fortnite V-Bucks. And I thought that was super interesting that to kids, same thing, right? There's like a real world video game, you know, credit currency. And then there's like one actually in the video game, but to them, they're just growing up with all of this stuff. So it's pretty cool. Thank you so much. I appreciate you coming on. If you get, where can people go find out about Etoro US?

• 1:15:51Speaker 01

  Etoro.com.

• 1:15:53Anthony Pompliano?

  And it'll just kick them over to the US site? All right. And what about people outside the US?

• 1:15:57Speaker 01

  Etoro.com.

• 1:15:58Anthony Pompliano?

  Man, it's like you guys are like automating where they're from.

• 1:16:02Anthony Pompliano?

  All right. I appreciate you doing this. We'll have to do it again next time we're together.

• 1:16:06Speaker 01

  Thank you very much.

• 1:16:08Anthony Pompliano?

  Hey everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.