Wednesday 17 October 2018

Straight out of the Ether - a billion-dollar crypto magnate lands in Dublin

Inventing Ethereum made Joe Lubin a billionaire. At the launch of his new ConsenSys office in the capital, Adrian Weckler went to find out what the crypto-celebrity plans next

Left to right: Lory Kehoe, Ireland MD of ConsenSys and Joe Lubin, founder of ConsenSys and Ethereum
Left to right: Lory Kehoe, Ireland MD of ConsenSys and Joe Lubin, founder of ConsenSys and Ethereum

If Joe Lubin is a billionaire, he really doesn't want to admit it.

The 53-year-old Canadian was in Dublin this week to speak at MoneyConf and establish an Irish office for his new company, ConsenSys.

But Lubin is slightly better known for being the co-founder of Ethereum, the best known cryptocurrency ecosystem after Bitcoin.

While Ethereum has a market cap of around $50bn (€42.5bn), Lubin is widely believed to hold one of the largest stashes of the four-year-old asset.

So that's the first thing I ask him.

Is he a billionaire?

"Do you really think I would answer that?" he says, sitting in his Pearse Street Huckletree office.

Why not, I tell him. Own your genius.

But you don't get to where the former Goldman Sachs executive (and one-time reggae producer) is now by not knowing how to deflect such vulgar queries.

"It's kind of an irrelevant question to us," he says. "We very explicitly don't talk about the price of Ether.

"We love the fact that lots of value is coming into our ecosystem in the form of money, in the form of increased perception of value of the various different crypto tokens, in the form of talent, entrepreneurship and so on. All of that perceived growing value is drawing attention."

Now he is talking about ConsenSys, the crypto-consultancy he heads up and which now employs some 900 people across 30 countries.

The new Dublin office already has a handful of people and is, Lubin says, on track to hire 60 people by next year.

ConsenSys helps to accelerate, or even launch, companies and projects that use Ethereum as a platform. This includes Ujo, a platform for musicians to get paid, and uPort, launched as an online identity verification tool.

The company is expanding rapidly, with huge interest from entities as diverse as banks and big financial consultancies to utility companies and music labels. Blockchain is hot news and despite all the sideswipes over Bitcoin, the world's institutional bodies are starting to get closer to it.

This was evident from the official launch of ConsenSys's Dublin office this week, where the fifth floor of the Guinness Storehouse was rammed with hundreds of bankers, lawyers and other card-carrying members of 'Official Ireland'.

The guest of honour to give the welcome speech was Finance Minister Paschal Donohoe, who painted the new ConsenSys installation as the continuation of a tradition of "innovation" in Dublin. It wasn't long ago that European finance ministers were warning of crypto-economies being a scam, suitable only for suckers and scumbags.

But all has changed. On Monday night, the capital's finest suits and frocks sipped Prosecco and nibbled on hors d'oeuvres as they toasted Lubin's arrival in the city.

Such white-collar types love success. Wouldn't crypto developers? As ConsenSys needs them badly, I try again to get Lubin to don a billionaire's chapeau.

"If that's why they're driven to the company, well... I guess that's ok if they're really talented," he says. "But I don't think most people are attracted to a company for reasons like that."

A little more needling on the question reveals that I'm barking up the wrong tree. Lubin describes himself a 'hodler', someone who holds ('hodls') cryptocurrency no matter what. (The misspelling derives from an historical typo someone made on an internet notice board when describing why they were holding - or "hodling" - on to Bitcoin regardless of market movements. Crypto fans have ironically adopted the misspelling as a badge of honour.)

Since the foundation of Ethereum and Ether in 2014, that 'hodl' principle has wielded extraordinary benefits to Lubin's asset portfolio. Ether started out at around 30 cents. Today, it's at $502 (€427). (In January, it hit a high of $1,278.)

That has made a small number of people very wealthy in a very short time.

But it is, Lubin says, only an incidental facet of Ethereum and a new crypto age. Its main utility is not as some sort of substitute for gold, but as a completely new platform that makes many other processes far more efficient and secure.

"Things like shares should be programmable and uncounterfeitable," he says. "There's no reason now not to have natively digital assets. We should be able to trade Beyoncé tickets against bonds. You shouldn't have to trade them all against money."

When he started ConsenSys, Lubin paid some staff using Ether. Will this be the case in Dublin or will people get a choice?

"We still do that a little bit, but it's a bit of a contentious and embarrassing issue. We started paying a lot of people in cryptocurrencies and we just grew too fast. Our legal and HR teams needed to use systems for payroll and taxation and things that don't work really smoothly in cryptocurrencies. So in the United States, we had to shift everybody over [to legacy fiat currencies]," he says.

"There are some little satellites around the world that are still sticking to the old Ether regime for as long as they possibly can. We also have a group that's trying to figure out how we can return to paying in cryptocurrencies and are coming up with interfaces to the kinds of software that we need."

But if the company's legal and HR teams were confounded by dealing with cryptocurrencies on a daily basis, they're not the only ones.

Despite being buzz terms for close to five years, the vast majority of ordinary working people don't know what blockchain is or how it works.

Many who profess a basic understanding of cryptocurrencies, like Bitcoin, still seem to regard it solely as some sort of get-rich-quick thing.

Does this matter to Lubin or ConsenSys?

"It matters to us in that we go to tremendous lengths to educate naive consumers, developers, business people, regulators and politicians," he says.

"But I often do tell people they're never going to use blockchain. The people that really need to use blockchain and pay attention to what blockchain is are the software developers that are going to be delivering applications to normal people.

"Ordinary people will just keep using the world wide web. They'll just use it in better ways and healthier ways, so they won't have to spray around aspects of their identity, in the way that it's stored on corporate servers and monetised in an attempt to make those people their product."

Is it a big deal that the Finance Minister - the second-most senior establishment figure in this country - is heralding the opening of Lubin's office here?

"It is a big deal, but I delivered a keynote a few days back at the International Monetary Fund. There were members from around 70 countries in attendance, including lots of financial leaders. There's just great excitement around the technology," he says.

"There's great trepidation as well because it represents real paradigm shifts in governance. We're adding a native representation of money, a natively digital representation of other kinds of assets, a native construct for identity.

"We are re-architecting how companies or groups of people will offer services to consumers and other businesses and there are definitely some hot-button issues around cryptocurrencies, as there are hot-button issues with respect to securities law around the world. But I think we're about to move through that and get to a clean resolution before the end of this year in most countries around the world."

Why do you say that?

"Because we're having good conversations with all of these people."

So you don't think that much will actually have to be changed or tweaked in relation to legislation and infrastructure?

"I think lots will happen. I think regulators in different jurisdictions are going to call to task projects that are sold as security. There will be statements made by regulators that people should continue good projects but to do some legal homework, structure them properly, don't sell what's intended to be a consumer utility token in massive quantities to speculators," he says.

The economic climate is brittle and trepidatious, with toxic G7 summits and looming trade wars. Does this help the crypto world or does it make any difference?

"I think it's probably likely to be more constructive for our space than less constructive," says Lubin. "As you have greater uncertainty you have a flight to safe-haven assets. It's hard to believe but Bitcoin and Ether and others might now be considered safe-haven assets. So yes, because the last two US administrations have worked to devalue the US dollar, in terms of cryptocurrencies, that may be an opportunity.

But in terms of crypto assets, I think they're going to be huge, no matter what the political climate is."

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