In the often hard-to-understand, cryptic world of blockchain and the cryptocurrencies that depend on it, few can claim two A-listers in the industry. The Russians can.
Here are the two household names: Vitalik Buterin, the young founder of the Ethereum blockchain, enabling cryptocurrency issuing startups to flourish in a way venture capital never has. He is now a millionaire many times over.
Pavel Durov continues to make headlines. He fights the law and wins. His messaging app Telegram is currently building its own blockchain platform called the Telegram Open Network. They’ve issued around a billion dollars worth of new coins to help fund it. Durov is a rock star. He lives somewhere between Dubai and St. Kitts. He recently fought a Russian spy agency ban on Telegram. Forbes lists him as a billionaire thanks to his bets on high tech innovation. His new blockchain platform may make him a billionaire many times over.
“Whatsapp, Telegram, Google, all have Russian-Americans or expat Russians leading it or developing it,” says Igor Matsenyuk, a Russian gamer who sold his $80 million position in internet company Mail.ru back in 2010 and now runs IT-Territory, plus venture capital firm Farminers. “If you are talking about the value of the market, of course the U.S. is bigger. But in terms of talent, I think Russia is in the top three along with China,” he says.
First a note to the newcomers: blockchain is a digital ledger. It is disruptive because it does away with the middleman. Think of buying insurance directly from an insurer instead of a broker. Think of making a call without AT&T or, in Russia, the Beeline. That’s the blockchain in a nutshell. It also helps users track every aspect of the sale, from farm to table.
“Blockchain technology starting to penetrate different areas of Russian life,” says Pavel Pribylov, a pharma market mogul and blockchain startup investor. Pribylov is one of the main investors behind new Russian company Glass Cube that is building global insurance blockchain platform called I-chain. “I think you’ll see blockchain become fundamental in the new economy,” he says.
Cryptocurrencies were developed along with blockchain. The new money, like Bitcoin and Buterin’s Ether are on every hedge fund’s radar today.
Russians are all over this space. They are in Silicon Valley on special visas, or zipping in and out of the Bay Area on tourist visas working on projects with Americans. They are in Singapore and Barcelona. They are founders and top advisors, one and all.
Russia may be known as a geopolitical hotspot thanks to another A-lister, Vladimir Putin, but it is — or better yet, can be — much more than the giant gas station Senator John McCain likes to call her. Russia always was a high tech nation. But most of Russia’s tech prowess was pure government largesse that fed the minds of Kremlin-backed physicists. They did manage to blow up an H-bomb, and get a man into space first, but the Russians were never known for putting their science, technology, engineering and math skills to practical, commercial use.
Until the blockchain craze.
As of late last year, 20% of the top 50 blockchain startups by funds raised were Russian. They were either founded solely by Russians or had Russian partners, according to angel investor Elena Masolova. Like many globetrotting Russian techies, Masolova spends a lot of her time in Silicon Valley. She is best known for selling Darberry to Groupon. She has her hands in a bit of everything. She runs a corporate training company called Eduson.TV in the Bay Area, and is an advisor to TokenStars, a cryptocurrency play that lets users sponsor certain athletes.
“The reason is simple why Russia is everywhere on this topic,” she tells me over drinks at the Hotel Ukraine in Moscow. “You have lots of engineering talent and lots of cryptography talent in Russia. Plus you have a Russian economy that is not so great, so blockchain and cryptocurrency in general just looks like an enormous opportunity to entrepreneurs there.”
The Russian Blockheads
The Russians (including Russian-Americans and expats) building blockchain companies include guys like Aleksander Ivanov, founder of the Waves Platform; Vasiliy Suvorov, a senior executive at Luxoft and one of the founders behind the Crypto Valley Association being built in Switzerland; Alex Fork, CEO of fintech firm Humaniq; Alex Fedoseev, CEO of 1World Online; Siberian-turned-Australian Sergei Sergienko, the CEO of ChronoBank; Igor Barinov, the blockchain priest at POA Network in San Francisco; and Sergei Ponomarev, CEO of the Supercomputer Organized by Network Mining company, to name a few.
According to the Unified State Register of Legal Entities in Russia, there were 50 companies registered as blockchain technology firms at the start of the year. Their values range from zero to one billion rubles.
New comers are sprouting up all the time. Some stay close to home. Others think globally.