Alex Mashinsky on Why Big Banks Are “Terrified” of Crypto

Alex Mashinsky wasn’t always trying to save the world. When he was seven years old he had more pressing problems — like escaping communism.

He vividly recalls riding the train to Vienna out of the Ukraine with his parents, the entirety of their belongings packed up as they made an uncertain journey into a new life. “All I had in the world was two toys,” recalls Mashinsky, “and the border inspector comes up to us and tells me ‘You’re not one of us anymore, so you shouldn’t even be allowed to have that’ and took my toys.”  

From that moment on, Mashinsky vowed never again to be in an environment where he wasn’t in control of his future and everything else besides. He made good on that promise in the US, joining the vanguard of tech developers and entrepreneurs. In 1994 He contributed key parts of VOIP (Voice Over Internet Protocol), now used by billions worldwide. He did seven VC-backed startups in NYC and reaped the rewards of his hard labor.

Mashinsky couldn’t have accomplished any of this under the stultifying atmosphere of late Communism. But after turning 50 years old he’s come to realize that, despite the evidence of his personal triumphs, only a precious few can do this under Capitalism, too.

Equality through Technology

We’ve all read the think pieces on why millennials aren’t getting married or are taking gap years before college or entering the workforce. It’s not because they’re feckless; they don’t see great hope for their lives the way the system is going. They see that all the money is flowing upwards into the hands of the one percent while they’re saddled with massive debt and low income part time jobs.

“The gap between rich and poor has gotten obscene and uncontrollable,” Mashinsky says. “When I came to the US CEO’s made 8-10 times more than the average worker; now it’s 300 times.” The solution isn’t a return to Communism, it’s a technological counterweight that can level the playing field and create opportunity for more than just those at the top.

What Mashinsky wants to do next mirrors his work on VOIP. “We went from a system where only a few large phone companies basically dominated communications and charged people $3 a minute, to one where it’s free,” he says. “My kids don’t even understand how VOIP works but they use it.” Technology, not government interference, took power from the top and redistributed it to the masses.

Mashinsky believes we can do the same to banks by moving our money and finance needs to cryptocurrencies. “This transition can happen in one generation and reinvent society. The difference with money is it touches everything so it is even bigger than the Internet revolution. The reason I’m involved in blockchain and cryptocurrency is to encourage others to build something that could better the lives of the 7 billion people on this planet who aren’t part of the economic success I was lucky to be part of.”

Decentralization is key to freeing up capital and getting monetary power out of the hands of those at the top. ICOs, for instance, have proven the efficacy of the crowd funding model at a scale previously ruled by VC. As Mashinsky notes, “People from all over the world are funding these crazy ideas. As long as they’re running on a decentralized platforms and promise to build a new blockchain based future, investors are saying go ahead, go experiment.”

When we unleash capital as loans, more people get to follow their passions. Ninety percent of ICO ideas will go bust, but that’s always been the case. If we give the new generation opportunity to experiment, “we’ll get the next Amazon, the next Apple, companies even bigger and more transformative than what we have gotten from Internet 2.0,” Mashinsky says.

What VOIP did for long distance communication, cryptocurrencies can do for banks and Money, and the banks know it. Why else would Bank of America, Citi, and JP Morgan be coordinating efforts to prevent their US credit card holders from buying cryptocurrencies? In the interest of defending their monopoly, they’re trying to push through regulation to reduce the threat of cryptocurrencies to their monopolistic business model.

But if we’re going to make good on cryptocurrencies’ threat to the mega banks, Mashinsky says, we need mass adoption. “If there were 500m users it would be difficult to shut this down. You can get regulators and governments to do the wrong thing if there are only 50m people using it.”

In order to push mass adoption, we need an efficient way to store crypto that presents a clear and compelling use case to the user. That’s where Celsius Network comes in. Its goal is to get the next 100 million new people into crypto.

A Community Crypto Bank

Celsius Network’s elevator pitch is a one-two punch. First, users can store their crypto on the network and earn up to five percent in passive income. Second, users can take out dollar loans using their crypto as collateral. Interest rates are in the single digits, no matter the credit score. By incentivizing users to sit on their cryptocurrency — the company has branded itself with the “HODL” meme — Celsius Network is hoping to bring some stability to the volatile market.

Practicing what he preaches, Mashinsky’s company completed an ICO that raised 52 million through sales of its Celsius Token (CEL). The interest pay out is governed by PoS consensus on the Ethereum network, and is “the invisible hand driving the Celsius ecosystem.” Interest is paid on the dollar loans in CEL, and interest is paid out to the HODLers who’ve stored their cryptocurrency on the network in BTC or ETH.

At the heart of Celsius Network is Mashinsky’s belief: We can leverage technology to redistribute power from the top down. That’s why Celsius users get the same loan rate no matter what their credit score is — or how much collateral they’ve put into the system. As he tells it, “The current financial system is unfairly biased towards people with more — more assets, more connections more access. We want to change that for the next generation.”

As he says in closing, “After 50 years of taking from society I had a change of heart — I don’t know if it a change in my genes. But if I die and don’t give back more than what I took that would be my biggest failure.” It’s no wonder the banks are spooked and can’t stop saying bad things about cryptocurrencies; it’s been a long time since they’ve faced a serious challenger.

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Jordan French is the Executive Editor of Block Telegraph. He is a multi-media tech journalist on the editorial staff at and a Fast 50 and Inc. 500-ranked entrepreneur. He is the founder of Notability Partners and the co-founder of BNB Shield, Lisbon Hill Farms, Status Labs, BeeHex, BlockTelegraph, and Grit Daily. A biomedical engineer and intellectual-property attorney, French is the author of upcoming book, The Gritty Entrepreneur.

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