During a panel called ‘Banking on Blockchain,’ about the future role of cryptocurrency in global banking infrastructure, Alex Mashinsky wouldn't let the point go. The panel participants each had a viable plan to roll out new innovative technologies, but Mashinsky had his eyes on building a future with a truly new way of thinking about how people lend money with his Celsius platform, which is creating a decentralized lending apparatus which he hopes will make low-interest loans available to the entire world.
Many of the venture capitalists and CEO's had the objective of making our current financial system sleeker, more efficient, and updated. In response, Mashinsky kept asking insistently what switching from ‘one toll collector to another’ would solve. Mashinsky was committed to cryptocurrencies original revolutionary potential. Mashinsky didn't want to just make a better banking system, he wanted to completely rewrite the way the world thinks about finance.
Celsius designed to offer decentralized stores of value, real peer-to-peer lending, and payment models at low costs. Celsius is a service which users can deposit their money in, and acts as a digital payment service. It's central feature, though, is that it offers a way for people to take out loans without relying on a central institution. Celsius, in Mashinsky’s words, is ‘like a community bank, but our community is the global 7 billion.'
Mashinsky is not a stranger to looking at an existing commodity or market and imagining a way to do it better. Alex Mashinsky came to prominence developing Voice Over IP (VOIP), a telecommunications protocol capable of transmitting voice calls through the internet. VOIP is the key technology which powers Skype, and its a technology that nobody thought was possible until it was created. VOIP now enables free international calling to half the planet. Mashinsky is looking to replicate what Skype did for international calling for global finance.
Speaking to Chepicap after the panel, Mashinsky had his reservations on where crypto is today, noting that ‘all the guys on the panel trying to help all the banks be more efficient and make even more money, none of that translates into helping the guy making $12 an hour.’ Celsius, instead, has its sights set on improving the way the global population can access and distribute funds.
Preach 🙌 https://t.co/qjI50sTQ6z— Celsius Network (@CelsiusNetwork) November 4, 2018
Mashinsky sought to define Celsius apart from some of his competitors who replicate the shortcomings of traditional financial institutions, especially profit maximization. Mashinsky notes that many companies which are trying to capitalize on the second generation of cryptocurrencies are ‘not crypto companies- they are businesses trying to maximize their value by helping the banks and helping financial institutions.’ Instead, Mashinsky is looking for Celsius to serve and expand the communities that use it. Mashinsky is looking to take power back from the banks and giving it to everyone else by building Celsius to the point where it can loan money to anyone at low costs.
It is phantastic to see that @CelsiusNetwork is committed to sustainability development within the @UN, ia. to bring crypto forward for mass adaptation + reducing poverty, while many crypto exchanges are focused only on financial success! And the UN goals: https://t.co/06Y8hVmpVO https://t.co/dQdKkH4TAV— Arwed Kubisch (@ArwedK) October 23, 2018
Mashinsky was excited to talk about how Celsius could help break down the banks, but acknowledged that there are steps he needs to take to reach that goal. When I asked him about creating a financial infrastructure to fight global poverty, he said, ‘I’m not sure if you can go and start there, but if your solution does not have them in mind, you will never end up there.’ Mashinsky claims the first step towards eventually providing a financial platform for the poor, underbanked and unbanked lies in Celsius' initial adoption. ‘If there’s no adoption, all of this stuff is meaningless.'
'What we’re trying to do for example in Celsius is take the low interest rates available in the US and make it fungible to the woman in India that currently pays 30% a year interest, or the farmer in Africa who, even if he mortgages his crops will pay 35% in Nigeria. These things are not hard to solve, we’re doing it today, lending at 5% annualized. The rich people who have assets, like Donald Trump can borrow at 5%.’
Currently, Celsius' waitlist contains mostly contains tech insiders and those in the finance world. Mashinsky's plan first is to build adoption in these demographics in the developed world. This will enable Celsius to have enough revenue to allow adoption to the underbanked and unbanked with ‘no thresholds, no costs,’ and no minimum requirement to take out a loan. Celsius currently requires users to borrow more than a certain amount in order to remain profitable and at scale, which limits how useful the service would be to the huge number of people with low incomes who could potentially use a loan to pull them out of poverty. This minimum, and the loan limits and interest rates still need to be adjusted much lower in order to serve the huge swath of the world with low incomes.
We just wired a $5,000,000.00 loan today. But why did they choose us? We don't just offer the best rates: most of our revenue goes back to the #crypto #community, not to a bank, not to a billionaire investor.#winning #blockchain #cryptocurrency #bitcoin #ethereum #fintech— Celsius Network (@CelsiusNetwork) October 30, 2018
Mashinsky's main goal is to ‘continuously lower the interest rate we charge, and increase the premium- its that simple!’ Celsius's objective is to continuously issue larger loans with lower interest rates and at the same time, increase the premium received by users who deposit with them. Eventually, the the service could not only compete with the banks, but become incredibly useful to those around the world who are financially precarious.
Even now, Mashinsky boasts that Celsisus is already ‘paying seven times more than the banks. I think that’s pretty convincing- people are standing in line to deposit dollars with us.'
As Celsius generates more profit it hopes to keep pressing this margin, offering larger loans with less interest while offering larger premiums. This way, Celsius can realize its overall vision of bringing financial services to the global poor and lower class, who are not only the main victims of profit-seeking financial institutions, but are in fact the largest potential user base for any service.
#Blockchain has made its way to the United Nations (UN). Celsius Network, a blockchain-based borrowing and lending platform, has been chosen to manage the UN Sustainable Development Goals (SDG) Impact Fund, launched by financial services provider Fifth Element.— Phillip Nunn 🚀 (@PhillipNunnUK) September 22, 2018
Adoption is key.
What Mashinsky was most eager to stress was Celsius’ central goal to empower crypto to do what it originally set out to do- transfer value between people without a bank, and with no middle man. ‘People forget why this whole industry was created- that’s why I started Celsius, because haven’t seen a single company that’s actually supposed to do what Satoshi is talking about.'