How blockchain will ‘eat’ finance: An interview with eToro CEO Yoni Assia

Yoni Assia is quite confident that traditional finance will eventually fully transition over to blockchain—in his oft-repeated words, “it’s going to eat their existing financial systems.” Having begun trading at just 13 years old, the eToro CEO brought the social trading platform into the crypto space in 2010, with a further step towards adoption in the launch of the eToroX crypto exchange earlier this year.

More recently, on Sept. 15, eToro released their own smart money programming language, Lira.

MODERN CONSENSUS: Let’s talk about Lira. There’s so many languages already out there, what makes this one necessary?

YONI ASSIA: A lot of our view is always a very long term view. We understand that a big part of “blockchain eating finance world” is going to be around moving away from contracts that are sort of legal frameworks to smart contract frameworks.

That process is a very long term process, but the derivatives industry is a $550 trillion industry [on a notional amount]. We are going to see all sorts of of big banks and financial institutions going into blockchain, developing their own blockchains, connecting to one another. And we’re going to need a way for eToro to work with all of these banks to transact financial contracts. So for us, building this and open sourcing this is our way of staying ahead of the curve.

Lira will basically take very specific domain language for financial contracts, like options and forwards and swaps and futures, within two lines of code.

You could create what otherwise would require 100 pages of legal work, or hundreds of lines and solidity, to create basically financial derivatives and financial contracts on top of Ethereum.

We’re progressing in transition from traditional finance to blockchain. 

How you see that transition to smart contacts happening?

I think it’s very hard. If you’d asked me seven years ago how tokenization will work, and 

who’s going to be the biggest stablecoin in seven years, I wouldn’t be able to guess it’s Tether of Bitfinex.

It’s still not very clear which blockchain and how. I asked that to Joe [Lubin] yesterday, and he said it’s already clear who won [laugh].

Ethereum is a very good platform, potentially, especially with a lot of their work and scalability and their partnership with JP[Morgan], the Enterprise Ethereum Alliance, but the jury’s still out on how that transition is going to happen.

How soon do you think that big organizations like JPMorgan are going to go forward with real blockchain adoption? JPM Coin was announced long ago, and then there has been relative silence.

First of all, I don’t think we’ll necessarily hear, because if five banks are doing inter-transactions between themselves on a permissioned blockchain, you’re not necessarily going to know about it. There are a lot of blockchains that have a lot of transactions today that nobody’s necessarily hearing about. 

I think big organizations using it [will] grow slowly as a curve over the next five years, but eventually it’s going to eat their existing financial systems.

Do you think that every project needs to have its own token?

No, I think that projects could have their tokens. There is a valid thesis for utility coins, but we haven’t really seen it. A big part of utility tokens is the economics, token economics, etc. that hasn’t really been really proved yet. That entire world does make sense, but you don’t need to tokenize everything. 

You don’t believe in the tokenization of everything? 

I do believe, again, in finance. I believe anything that is of financial value will eventually get tokenized, or a significant part of the world that has value tokenized. I don’t think you need to have value attributed to anything. 

That’s going to be odd a bit, if people are going to have a token for every person—but that’s not so nice, tokenizing humans. At some point, you need liquidity as well. 

A big part of tokenization is it’s worthwhile only if there are actually buyers and sellers [and] there’s actual liquidity. [If] there is no liquidity and you can’t exchange it, [then] there is no real point of it being a token.

What do you think is going to be the thing that’s really going to take off—tokenization, DApps, smart contracts, Bitcoin?

Bitcoin is king. Nobody is gonna be able to take his kingdom away—as a store of value and as a hedge against governments—and that’s going to continue. 

It’s in the highest level of brand awareness like Coca-Cola, McDonald’s. Things fail, anything could happen. But that’s a very good case, and currently the biggest case.

Defi [decentralized finance] is super interesting. The tokenization of real world assets, or new type of assets together with defi — which is the ability to trade it, lend it, borrow it, etc. collateralize it.That’s a very big thing, but it’s gonna be a slow cooker, it’s gonna take time to mature gradually. 

I’m going to push back on the term “defi,” as I’ve heard it thrown it around as the new buzzword instead of fintech. Can you explain why defi matters?

In general, it’s very similar to the concept of just blockchain. Let’s talk about Bitcoin as defi. 

Bitcoin—defi—is you can hold your own currency. That’s the biggest feature, as you can hold it on your own. It’s 24/7 and you’re not reliant at all on financial services and intermediaries. 

You can’t hold digital dollars today yourself. You have to own it in a bank that’s regulated. They have their own rules, and you don’t know what’s happening necessarily with your money. It’s not transparent. The money system isn’t transparent, whereas blockchain is transparent. If you hold your own bitcoin, it’s on the blockchain. You can see it. 

Have that code transparent on a blockchain and you’ll get a much more transparent ecosystem, potentially less risk, significantly less risky. It’s not a buzzword, it’s using technology. 

Do I think that one day you’re gonna use insurance and those insurance contracts are gonna be in smart code? I do. Because if I were the regulator, I’d say, hey, I want that level of transparency. If I were a consumer, I’d say I wanted that level of transparency, and that potentially could significantly reduce risk and costs in every single financial ecosystem. 

From that point of view, when it does happen and blockchain sort of eats finance, you won’t necessarily know that it happened. You will still buy insurance the same way or get a mortgage, but the ecosystem around it will all be based on code that is verifiable by different parties.

This interview has been edited and condensed for clarity.