The Path To Decentralization
How we win the support of institutions, position Israel as a crypto powerhouse, drive financial equality and make internet transactions as seamless as cash payments on the path to decenralization.
Global society trapped in a cycle of debt but we now have a choice. We can live in a world where we have control over our finances.
Our financial future with traditional finance is built on sand and people have little to no control over its course. Seventy percent of all money in the Federal Reserve was printed post-2008. Relationships with the banks have deteriorated into a bad marriage that we stick to out of custom and a lack of alternatives.
We reach into the future and spend money the world doesn’t have. Usually as an IOU to the already rich and eligible. This isn’t credit cards, this is the world economy and it’s a pattern that repeats itself throughout history. The fall of successive empires has been tied - in part - to the implosion of unsustainable economies and every ten to fifteen years we bail out the banks.
Mashinsky suggests that we’re reaching the end of the US dollar’s supreme reign and that we have a choice - to repeat history by investing in fiat currency or to safeguard our future by moving towards decentralization.
Decentralization is the war between toll collectors and users. Money over internet protocol (MoIP) takes the power away from the banks in the same way that voice over internet protocol (VoIP) took power away from the phone companies. Mashinsky has seen this unfold before.
Essentially, we took the power away from the phone companies and put it in the hands of people and that’s what blockchain is enabling for how people manage their money. We’re creating middleware instead of middlemen.
The US dollar is a bad store of value and a great source of payment, whereas Bitcoin is the polar opposite. Decentralization of money will outcompete fiat currency when we succeed in making online payments as simple texting, and create cash for an open internet.
We live in a world where financial divisions are rigid. The system is structured to value people on the profit they generate and not on the valuable contribution they make to their community.
Since the early 2000s, those with tech competencies and a financial head have widened the division between the “haves” and the “have nots”. Decentralization deconstructs the pyramid and allows mobility through the merit and value you bring to your community.
Banks are not your friends. They benefit shareholders and do very little for those depositing the money used to create loans. Celsius Network flips this model on its head to benefit those depositing money, reduce lending, and significantly limit the bloated favour towards shareholders.
The use of fractional reserves means for every $1 dollar we withdraw from the banks, they have to cancel $10 in loans (often to the rich). This is a revolution driven by taking back personal control of your finances.
It’s slow, good for one thing, and moves in a single direction. You won’t solve everything with blockchain and you shouldn’t try.
There is power in composability, middleware, and distributed apps on blockchain and that’s where it outcompetes the banks and all centralized systems. We’re strongest as a well-bridged universe.
Satoshi raised the banner for anarchists and cyberpunks to unify under. Then came libertarians, followed by the speculators, and finally the institutions. Crypto will eventually devour all markets and that means institutions and regulators can’t ignore it, but for the first time in history they are the last to arrive and cultivate the space. A space that we need to protect.
Celsius intends to bring the next one hundred million people into this space with banking on blockchain. To offer more utility and less volatility. What will be the watershed moment for mass adoption, Diem? Security tokens? Or most likely, stable coins?
When we speak about the Path to Eden, we are recognizing the vision of decentralization through web3 and the creation of a permissionless, trustless, space in which people, not middle men, control the value.
In our collective interpretation of the web, we began in Eden, and the forbidden fruit appeared in the form of Centralization. Companies like Facebook and Google turned us and our data into products. Banks, brokers, and other glorified middle men controlled the flow of our income and access to the world around us. Money was printed at an unimaginable rate and our forms of monetary assets fought it out in a race to the bottom.
Centralization functions on highly distributed systems that ringfence power, decision-making, and monetary policy within a small privileged group. It encourages unequal dependency by design and removes the agency of the individual. These middlemen (Amazon, Google, Facebook) have become more influential than democracy.
Decentralization transfers control and decision making to a distributed network. Cryptonetworks and decentralized systems shake the very foundations of finance, governance, and digital life. They have the power to enable a new world and are built on a drastically new frame of security, independence, values, and responsibility.
It doesn’t start with technology, but with us. Decentralization is first and foremost a human revolution. Society’s path towards decentralization has developed through history, and this movement stems from our innate, human desire to protect our future selves and our progeny with systems of fairness.
One of the first acts of decentralization reaches back to Moses and his decision to radically replace unilateral tribal governance with specific councils for areas of decision making.
Technological advances like the Printing Press and The Web have enabled the decentralization of information, but blockchain technology offers the ability to programmably secure the integrity of these systems, values, and distributed governance into scalable and lasting solutions.
We are still at the beginning of this revolution and there are tradeoffs that exist over security and efficiency, but decentralization is possible.
The way we perceive value is changing. DeFi is the fastest-growing market in the world. In October 2020 the total value locked stood at just over $11bn and within a year it had grown to over $140bn.
Adam & Eve is a parable of the frailness of human morality and the need to protect ourselves from our worst tendencies.
The real adopters of decentralization are not the speculators or those trying to make a quick buck, but those that understand what Moses started.
Decentralization needs to be the basis for every innovation, otherwise, we will stray from the path. We need to incentivize the cultural mission with a capital system to rival centralized governance.
We need to resist centralization and pretenders that mimic the values of crypto but are governed by centralized entities or bellwethers.
In Eden, we can create ever-evolving systems that are born adversarial. They are antifragile, enable equality, and are built, governed, and rewarded by the community.
There is a gulf in knowledge among the Israeli population and crypto community. Under 2% have access and active involvement in blockchain and digital assets. That places them in the lower quartile of global adoption at around the same level of engagement as Jordan and Saudi Arabia.
The poor speed of adoption in Israel does not reflect the fertile bedrock of developers, researchers, and innovative companies populating the country. The Startup Nation is blockaded from innovating in Crypto by one of the most stringent financial regulators in the world.
Yariv Gilat believes that the first publicly traded management fund in Israel to focus on digital assets can untangle the regulatory red tape. That he can glue the existing components in this country together to recognise Israel’s vision as Startup Nation.
Not enough funding is flowing into this space and friction, pushback, and obstacles from the banks are hamstringing the advantages that are available to Israel right now.
Opening a business bank account is still challenging in Israel and working in DeFi compounds that. The whole regulatory system and financial gatekeepers are crypto-skeptic, and there has been an absent figurehead in lobbying at the top to change that.
Moving the needle requires the involvement and support of institutional investors and the $1trn worth of dollars circulating in the pension funds and larger players in this space. Inevitably, they will need to shift money into DeFi and crypto. Opening a wallet and being crypto-fluent is a technical impossibility for many institutional investors.
A good management fund is a sherpa for mainstream investors, educates gatekeepers, and de-risks financial plays into crypto to legitimize DeFi as an alternative.
A blockchain banking system is a panacea for the difficulties that Israeli companies and individuals are encountering in the excessive red taping around the financial system.
Yariv Gilat has accrued 30 years in the tech space as a derivative trader and investor. He is involved in over 100 investments and has spent the last eight years on an international stage working with crypto and blockchain. He has turned his focus towards recreating the international success of crypto and blockchain infrastructure in Israel and opening institutional minds to the benefits of blockchain.
Finance is relocating to the internet and DeFi is what happens when you empower developers with the freedom to build the system that supports it.
DeFi is delivering on its promise to democratize finance and make it accessible to the masses. It’s an environment where two guys can build a competitive protocol from their garage and very rapidly become a hive of 2,000 minds wielding a bigger collaborative force than the banks.
It’s money lego that glues a network of protocols together for multiple uses and advantages that a clunky centralized system would struggle with.
Funds can move fluidly and intelligently with protocols that follow the most efficient path for the biggest advantage. It’s money that works for you 24/7 and there’s nothing comparable in the financial system.
The potential with DeFi is limitless, but as Barney Mannerings touched on at Crypto Global, we’re a long way from recognizing that vision.
That’s not to discredit the breakneck speed at which we’re evolving. In 2017, you had to make money by selling your tokens to someone else. There’s now far more choice to hold them, farm them, loan them and do a whole host of things with them.
What makes DeFi interesting makes it equally scary. 75% of the people around the world are not connected to finance as western society is, and what’s happening in places like El Salvador is a bullish move that unseats the currently advantaged.
You only have to look at the team page of a leading player in the global DeFi community to see how Israelis are influencing its course.
However, the regulation is problematic in Israel, traditional investors have been resistant, and to step into an untested corner of DeFi with institutional support has been next to impossible.
We have a hive of trading, crypto, cipher, and cybersecurity talent in Israel that lends itself to making the next superpower, we have interested investors, and we need to harvest both within Israel.
Israel is an influential nation in Crypto and it’s understated how much we’ve contributed to the global crypto space with companies, individuals, and flagbearers. Bancor, Enigma, GK8, Fireblocks, Kirobo, Keytango, the list goes on.
What has previously been a challenge to launch a startup in DeFi and new corners of blockchain is now an opportunity.