Ethereum cofounder Anthony Di Iorio on leaving crypto behind
Anthony Di Iorio became interested in the blockchain and Bitcoin a decade ago—so interested that he cofounded the Ethereum blockchain network in 2013 with Vitalik Buterin. Since Di Iorio stepped away from the daily operation of the network in 2015, Ethereum has become the second-biggest blockchain in the world, behind Bitcoin, and Ethereum’s native currency token, called Ether, has a market value of about $225 billion, according to Bloomberg. Di Iorio, who also bought Bitcoin early on, has become a millionaire many times over, landing him on Forbes’s “richest people in crypto” list.
Di Iorio made a habit of getting in on new crypto projects early and often, but now, at 46, the Canadian entrepreneur is walking away from the crypto space altogether. He’s selling his stake in both the Toronto-based blockchain-focused accelerator Decentral and the Jaxx crypto wallet app it produced. He says he’s focusing on new projects, including philanthropy, well outside of the crypto realm that made him famous. While Di Iorio has a new venture coming up, he says it’s too early to announce it.
Fast Company spoke to him about the rise of crypto, the big changes coming to Ethereum, and his reasons—including his personal safety—for leaving the scene.
The following interview has been condensed and edited for clarity.
Fast Company: Many of us are still trying to understand how crypto works and what it means. Much of the information we’re exposed to is negative: We hear about price instability, massive hype, environmental costs, and the criminal use of Bitcoin. At the same time, crypto has exploded in popularity. Stepping way back for a moment, why is crypto and the blockchain so important and where do you think it’s heading?
Anthony Di Iorio: For me it’s always a long-term term thing and not about the day-to-day ups and downs. But a lot of people get into it with the fear of missing out. I don’t try to tell people what to do, and I don’t give advice to people. I like to suggest what I’ve done and see if that works for people. Education is the most important thing. I always say to people: Try to understand it, and if you can’t understand then try to find some trusted people that can help you break it down. The internet is not a very good place to be doing that, and it’s very challenging. People will jump in based on what other people said.
I got in at $10 in Bitcoin [Bitcoins cost almost $40,000 now]. You go through these ups and downs and they’re going to consistently happen. They’re going to shake out a lot of the people that are getting in for the wrong reasons, and then the big boys are going to come and clean up the little fish.
So it’s more about what to tell new people getting in, that the technologies are growing [and] flourishing. The amount of money that’s going into development and the ecosystem and innovation is just spectacular, much larger than what was going into the internet [during its early days], and it’s here to stay. But it still takes time for people to understand the complexities.
We live in a time when there’s an increasing amount of distrust for institutions, including banks, and there’s a tremendous amount of populism. Do you think those things have contributed to the popularity of this space?
Definitely. My overall thesis, not even just in cryptocurrency, is that there’s a deficiency in business models. That’s the problem. For the last 10 years, I’ve been building technology and tools to empower people to be in control of their lives.
As a whole it’s about trust. The intermediaries you need to trust and rely on to [facilitate] engagement between two people, or between services and [people], have a model that says they are obligated to return profits to shareholders. Generally it comes down to the average person getting screwed, and they say, “I’m not happy and…I want to be in control of my money, I want to be in control of my communications, and my identity.” The models that exist right now are basically saying, “We’re gonna provide you a service, but for that you’re giving up this, this, and this.”
Those situations lead to people [saying they] want to trust other things rather than the promises of a company . . . And that’s definitely one of the reasons this has come up. It’s empowering technology. We need to enable individuals to connect with others that they don’t necessarily know in a way that they can feel safe.
There’s a big change to the way the Ethereum network functions happening this week. What is that change and why is it so important?
The way the system works right now is you have these transactions that have to be put into the blockchain. There’s so many of them that there’s not enough space for them all to be in when they need to get in, so there’s a bidding process that happens. Right now, the more you put in fees, the faster your transaction gets sent.
But what’s been happening over the years is that because of the amazing growth of the Ethereum network and people utilizing it, the fees can get really ridiculous. We’re dealing with a decentralized technology here and data has to flow across the world very rapidly so that everybody has access to the newest blocks. And because of the nature of the internet, connections aren’t that fast all around the world. So the block sizes are limited.
What’s happening is that they’re just getting so full that the fees rise astronomically sometimes, and it just doesn’t become feasible to send a transaction. Over the last few years, Ethereum has been a good testing ground for things, but it hasn’t been scalable. And scalability is at the crux of what’s going on here.
So the proposal that’s been brought forward is changing the way that fees are put on transactions. Now, there’s going to be a base fee for every transaction. And then there’s something that’s going to be like a tip that goes on afterwards. You can decide to tip the miners [who secure and carry out transactions] in order to get your transaction done sooner.
That’s a big change because the way it’s worked up to now is that all the fees go to the miners and the miners are the ones that help secure the network, help put the transactions through, and they’re rewarded because they’re putting energy into a system and it costs them in order to mine. So the . . . tipping system [should] provide a little more equality when transactions are sent, and a little bit more predictability that your transactions are going to go through.
Can you help us understand the significance of the blockchain moving from a “proof of work” model to a “proof of stake” model?
The model that Bitcoin is on, and that Ethereum is on, is called proof of work. Proof of work is highly intensive and uses a lot of energy, and that’s where you’re hearing people talk about how Bitcoin is wasting a lot of energy. [The miners] are outlaying energy and energy costs and machinery in order to get a return and [they’re] being rewarded for that. So the more [energy] you put in, the more you can get in return.
But it does take a lot of energy. Ethereum has planned for a very long time to move to what’s called “proof of stake.” Proof of stake enables you to do the same type of facility of mining in order to earn rewards, but it doesn’t require any type of energy consumption.
Let’s say I’ve got 10,000 Ether. I’m going to take 1,000 and I’m going to stake it to the network, and it’s being held there. As long as you hold it there, you’re actually getting a say in things. [You’re] getting the right to facilitate the same type of [work] helping the transactions get put through. You get a say in what’s going on and you’re rewarded for it.
And it’s not just miners, it ends up being anybody that’s willing to just put the money on hold, or staking it. So no longer do you need equipment and graphics cards to [mine]. It’s a whole different ball game.
That’s the way that Ethereum is going, and it’s expected to come out sometime next year. It’s a massive change: It’s called Ethereum 2.0.
There was a lot of concern in the crypto community this week over the language in the bipartisan infrastructure bill requiring crypto companies to report their tax numbers to the IRS. How do you think lawmakers should be thinking about regulating crypto?
I’m by no means a binary person who says you don’t need regulations, or says you do need regulations. There’s definitely somewhere in the middle . . . so I understand both sides.
I think what it does require is education. It requires an understanding. It requires people to come forward and be able to work with regulators, especially entrepreneurs, to be able to break things down in ways that [lawmakers] get what’s going on, and they get what’s coming in the future.
It’s a global economy. It’s a global space. And those [countries] that embrace it and understand it will do better. Those that are trying to [regulate it] based on fear, or trying to restrict it in the way that they’ve always done are going to be in for a surprise down the road, in terms of how their country is going to be able to flourish with this stuff and create new jobs and all these other things.
In a recent Bloomberg article, you’re quoted as saying this about owning a lot of crypto: “It’s got a risk profile that I am not too enthused about . . . I don’t feel necessarily safe in this space.” Did you mean physically safe, or something else?
Let me explain what I mean by this and I’ll try to put my words delicately because sometimes explaining what it is even further reduces my security.
I like to think that I’m an individual, so freedom has always been a big thing to me. Getting into Bitcoin was very empowering. I could be my own bank. I have full control and there’s no third party or someone that’s having to be there … and that’s worked really well for me.
But over the years and leading up to 2018 as my wealth started to increase, the amount of people reaching out to me wanting things [increased], and the amount of profile that I had [increased]—you know, being on the Forbes list of the wealthiest crypto people and saying that I’m a billionaire even though I’m not.
So think about that risk, and I have wealth in crypto. And people know that I have this, it’s very public, yet I’m my own bank. So think about the potential risks physically and otherwise of people trying to get that money. Things could be safer in a bank.
Think about kidnappings. Kidnappings don’t happen because you can’t get money out of the bank. It’s very difficult to do that, but in crypto it’s untraceable. It’s anonymous.
So yes, security has been on my mind for years, and the more profile, the more visibility I get, the more I have to think about that risk profile. I’ve had a security program in place for years. . . I’ve had risk assessments. It just makes sense.
It’s because of the nature of the industry, the nature of the technology, the empowering tools that enable you to be in control of your life, your money, and your identity. But it comes with a lot of other consequences as well. So [while] I was searching for freedom, I looked around and I’ve got security guys. That doesn’t sound very free to me.
So over the last two years I really started shifting my focus. I came to the conclusion I want to be of service to the world. I want to focus on giving back.
Given your situation, it seems like you might consider liquidating your Bitcoin holdings and putting your assets in a bank.
A lot of my money has gone into building [blockchain-focused accelerator] Decentral and building all the services that the decentralized world needs, the same way that the internet needed the browser and needed cloud services and needed the app stores. I’m building all of that for the decentralized world.
I still hold quite a bit of my crypto. It’s been secured through advanced means . . . I definitely have to take into consideration things where I do protect myself so that it can’t be gotten by anybody.
But at the end of the day, I don’t want to be known necessarily as the crypto guy. I want to be known as a guy who is solving problems and helping people and being of service to the world. And that’s where my focus is going to go down the road.