Celsius is a peer-to-peer (P2P) and blockchain-powered global lending and borrowing network designed to enable coin holders to earn interest.
Instead of being a centralized platform, Celsius will be powered by a global community of members. Its main goal is to create a modern P2P platform for coin lending (and borrowing) while developing a future-proof protocol for the upcoming generation of financial services. Celsius aims to deliver the best options for both lenders and borrowers by promising attractive interest rates.
We recently sat down with Alex Mashinsky, the CEO of Celsius to have a chat about the project as well as to find out his thoughts and insights.
Hi, Alex. Thanks for joining us today. Can you tell us more about yourself and Celsius?
Thank you for having me. I am an immigrant who was lucky enough to come to the US and start seven different venture-backed companies. Celsius is my way of giving back and creating an opportunity for people all over the world. Celsius enables any coin holder at any corner of the globe to earn real interest on their crypto coin and have a chance at financial independence.
First off, why did you decide to use the blockchain to build Celsius?
The blockchain is the first real technology threat that the large banks have faced for the past 100 years. It has the potential to spur a new financial revolution from which they cannot adjust. We decided to build Celsius using blockchain to leverage the technology’s global presence and decentralized design to extract the bank’s profits and distribute them to our members.
What was your thought process behind it?
We want to find the best way to add the next 100M crypto users to the market, and we came to the conclusion that offering coin holders 5-7% in interest on their coins would be the best way to get there. My view is that the most critical next step to the viability of the blockchain as a replacement to the existing banking system is to scale its user base and create more universally beneficial applications for users.
Tell us about how you came up with the idea for Celsius.
I have six children and I was shocked to find out that they did not know about ways to earn interest and ways to have your money work for you. So, I decided to do something about it.
Did you face a problem within the consumer credit industry or do you think there is a gap in the market for Celsius to fill?
The world needs banking but it does not need banks. Unfortunately, the continued concentration in the banking sector has allowed banks to pay people less than 2% interest but charge our credit cards 25% interest when lending us the same dollars. The large gap in the two rates is due to the banks’ excessive greed and because of a lack of alternative banking choices out there. At Celsius, we plan to fix this rate problem without the help of a bank.
What do you think is the biggest problem Celsius will solve and why is the problem important to solve?
We are creating a P2P platform that will enable basic banking functions like the banks but without high fees and profit-mongering bank tactics. We will also be serving the half of the world population that is currently neglected or underserved by banks.
Editors Pick: Celsius ICO
The modern credit system is a mess, particularly for millennials and the Generation X youths. Unlike previous generations, today’s youths can only hope for the best in buying or even renting a house because of the flawed credit system; the simple act of opening bank accounts is still a tedious
Before we move on to talking more about Celsius, I’m interested to know your thoughts about the current financial services industry. Why do you think that the industry is facing a “crisis” right now and why is it affecting millennials and the Gen X’ers particularly hard?
The crisis started in 2008 when banks and financial institutions lost 22 trillion dollars and endangered the entire world economy and every person on this planet. As a result of that, all central banks lowered interest rates to near 0% to allow the guilty banks to recover and generate record profits to re-fill their coffers. Now, ten years later, the rates still remain so low that one cannot earn any return on their cash but has to pay the same high rates banks charged in 2008. So, in essence, we bailed out the banks so they can continue to take away all of our cash and give us almost nothing in return
Can you explain how the lending protocol works in Celsius?
We do several things, first and most importantly we pay high interest to coin holders. We also enable these holders to borrow dollars against their crypto balances so that they don’t have to sell their coins to extract value. On the lending side, we have financial players who want access to coins and are willing to give us cash deposits and pay the interest on these coins. So we match both sides and make a market. We also enable our lending community to do P2P lending so credit can be extended beyond normal limits.
If possible, could you explain it in a way a non-technical person can understand?
Well, think of your old local credit union bank president. He knew your family and ate at your restaurant so when you needed a loan or favor he was willing to listen and accommodate you. We are a membership organization and our job is to enable our members to behave as one big family and help each other. Celsius acts as a guardian and custodian of this membership.
Tell us more about the interesting technologies in Celsius.
We have built our protocols and algorithms on top of the Ethereum platform but we will also support the top 20 coins and their blockchains. We help you move your coins from other wallets and aggregate many lenders into large pools of coins to diversify risk and improve security. We then take a security deposit from borrowers and charge them interest via our smart contract platform. Overall we use the latest technology and leverage existing partners like large exchanges to execute trades which generate interest income for our coin holders.
Other than smart contracts, do you have other things like AI or machine learning to help improve the efficiency of Celsius?
Yes, we use many different technologies to make sure we only admit good actors and that our members all work together to increase the profitability and prosperity of our platform. We all can win since the banks are the ones losing our business and our fees. The AI technology and especially big data play a role.
Tell us more about your co-founders and your team. How did you meet them and what do you think makes them the perfect fit for Celsius’ vision?
David Brill and Daniel Leon are great innovators who come from the financial and social worlds and complement my technology and marketplace experience. We were all investors in Coins and ICOs and decided we had to do something about the banks.
What has been your happiest moment so far working on Celsius?
I have been honored to present Celsius at more than 20 conferences all over the world and get to talk to people from many countries and walks of life and hear their stories and needs.
On the flipside, what has been the most painful, or perhaps the most regretful decision you’ve made with Celsius?
It had to be working with the lawyers and getting them to dig and dig until we found all the legal ways to do what we need to do.
Is Celsius already working with notable businesses or firms? Are there any future partnerships in process? If yes, can you explain briefly about it?
We have partnered with firms that complement our solutions and enable us to scale. We announced some of them like Lenndo, Micromoney, and Sirin Labs and we have several others that we will be announcing soon. We are always looking for the best breed of companies to join us in helping improve our members’ experience.
Tell us about the DEG token. What was the process of designing the DEG token and were there previous versions of the DEG token that were scrapped?
The Token has a unique and scalable utility which really differentiates it from almost all other tokens. Our borrowers have to use the DEG to interact with the platform and this creates a continuous demand for the token. Our Lenders are the recipients of these DEG token which they can keep or recycle back to the borrowers.
What do you think is the biggest challenge or obstacle Celsius will face? How do you plan to tackle that challenge?
Our biggest challenge is to balance the growth we have with our role as the custodian who is guarding the members against admitting bad actors as members.
Moving on to more personal stuff, what does a typical day in your life look like?
Well, Celsius is a 24-7 commitment with a lot of travel and meetings. I spend a substantial time with our team as well as customers and investors. Building a new company is a balance of creating a future and convincing others to follow this new and exciting future.
Can you express one personal opinion of yours about the blockchain? It doesn’t matter if it’s negative or positive, we just want to hear your thoughts on it.
I compare the blockchain to the Cambrian explosion in which a huge amount of new life was brought into this world but of which only a small percentage has survived. We are in the early stages of this explosion but we need to remember that most of these ideas will not make it. The hard part is to figure out who has a winning idea and has the team to execute on it.
Finally, what other personal goals (besides your career) do you have in life? Is there anything else in life you want to achieve?
After I turned 50 I decided to find ways to give back and help the less fortunate, I was looking for ways to do well but also do good and create solutions that help others help themselves. I joined several non-profits and do a lot of talks and presentations to educate and explain how people can find a new better path in life. I hope to impact many people in the next 30 years and leave a legacy that shows I gave more than I took from this world.
That concludes our Interview with Alex Mashinsky
We’ll be scheduling even more exclusive interviews like this in the coming weeks to delve into the minds of what makes a blockchain startup tick as well asking the questions you want to know the most.
To make sure you don’t miss out on our exclusive interviews, go ahead and sign-up to our mailing list and subscribe to our social media channels.
Get in touch to let us know who you want us to interview as well as the questions you want us to ask. You’ll get notifications on the latest exclusive articles as soon as they appear on our website – we won’t and will never spam you.