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There is this sort of psychological
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fallacy as a founder where at one point
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your logical brain needs to be switched
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off because obviously you're working on
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a problem that nobody else sees. I was
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working on the proof of existence
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protocol where we worked with an
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Ethereum node and I told people that I
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believe in a world where there will be
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100,000 nodes that will be run by
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institutions by 2020. That's what I
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said. And people were laughing at me. I
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knew one thing for certain that if I
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hold on and deliver this, it'll be a
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massive win. And when I told other
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people about it, they didn't believe it
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at all. They were telling me we won't do
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that. And then Block Demon itself now
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runs 250,000 nodes, you know, and so you
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need to be stupid enough to also hold on
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to an idea that most smart people around
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you will tell you is a very bad idea.
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I'm Constantine Richtor. I'm the founder
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and CEO of Blog Demon. Blockdemon is the
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leading institutional gateway for
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institutions to connect to really
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blockchains and the web 3 ecosystem. And
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so we're one of the market leaders and
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staples of the crypto industry that it
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has JP Morgan, Goldman Sachs, and City
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Bank as investors and customers. Out of
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the top 500 companies active in crypto,
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70% are customers of block demon for
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infrastructure. Ultimately, what we do
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is the purest form of infrastructure we
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run in a decentralized network. One easy
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way to think about it is that the
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internet ultimately functions via
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different gateways and so do
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blockchains. And so one way I used to
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describe blockchains to people was you
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have ultimately nodes. A node are the
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different members of the network that
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contain a copy of the ledger. Nodes are
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actually like cell towers. It's these
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groupings of individual ledgers that
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make a blockchain. And Block Demon
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manages the individual ledgers. We
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basically run these cell towers for
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blockchains for institutions. We assume
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that we run around 10% of the global
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institutional volume of nodes around the
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world. Block Demon has raised around
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$430 million. The last valuation we've
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had was $3.3
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billion. One memory I always have is
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when the wall came down in Germany. I
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was a teenager at the time. I remember
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the cold war ending when the world
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somehow got a lot closer and also in the
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context of the history of Germany from
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the second world war being very aware
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that it's important to have systems that
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are uncorruptible in order to establish
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truth. And so I remember that time as a
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really important moment to think about
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how do we become closer as humanity? How
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do we communicate and then how do we
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ensure that the forms of communications
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are uncorruptible. What I found really
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exciting about Bitcoin specifically was
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one the immaculate conception story of
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Satoshi ultimately a value system that
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basically gets birthed by itself and
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then the people who can control it
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vanish in the background and leave it
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for the community. And I like the
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encryption and a little bit the sort of
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hackery nature of it. I did like that it
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was a currency of the underdog. Bitcoin
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was started as a result to the financial
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crisis in 2008. And the whole idea was
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to basically take control of money away
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from banks into a system that's
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transparent and fair and accessible to
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anyone. And um that excited me and I
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felt I can actually contribute to it
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because I know how to build and scale
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software companies and I know how to
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corral capital together to work on
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succinct problems and belief is
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important. I believed Bitcoin is one way
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to make the world better, but you also
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have to be an active part in creating
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that world. I didn't just want to make
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money. I also wanted to change the world
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a little bit. And I understand there's
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also lots of concerns and some of it
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might be bad, some of it might be good,
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but the system in itself I really hold
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very dearly. And so I was thinking what
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company in cryptocurrency can you build
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that is part of it but not so
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susceptible to the short-term velocity
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of tokens. And so that's why we started
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with
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infrastructure when I was working on the
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proof of existence protocol where we
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worked with an Ethereum node and saw
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that the physical node and
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infrastructure was very unstable and
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there weren't any tools available. When
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I started researching that subject and
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talking to my friends about it, I saw an
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opportunity and I got really excited
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about it. You know, it feels so great
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when you see a gap in the current
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product landscape. What was very
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apparent was like you couldn't go
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anywhere online and say, "Hey, is there
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a tool that helps me to run an Ethereum
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node really efficiently? Okay, if this
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is hard for us people who are really
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passionate about crypto and blockchain,
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how are institutions and banks going to
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engage in this if there's no tooling,
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nothing available?" What I saw is a
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world in which institutions would want
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to run these Ethereum nodes. And when I
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told other people about it, they didn't
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believe it at all. They were telling me
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we won't do that. But the more I learned
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about the structure of transactions, the
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cost of transactions, the more I saw the
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future in which blockchains become an
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integral part at this, I knew one thing
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for certain that if I hold on and
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deliver this, it'll be a massive win. I
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believed in the vision of the company to
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a point where nobody else believed it
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because obviously you're working on a
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problem that nobody else sees. I think
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that's the resilient part is then to
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continue to work on it while people are
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telling you this is not a problem. Why
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are you working on this? I remember
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raising money in 2017 2018. I told
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people that I believe in a world where
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there will be 100,000 nodes that will be
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run by institutions by 2020. That's what
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I said. and people were laughing at me.
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And then Block Demon itself now runs
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250,000 nodes. Uh you need to be stupid
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enough to also hold on to an idea that
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most smart people around you will tell
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you is a very bad idea.
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Within 6 months of starting the company,
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the markets of crypto fell down a cliff
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which we call the crypto winter which is
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like when the tokens that drive a lot of
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the momentum in blockchain suddenly
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devalue by like 80 90%. Everybody
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stopped investing. Banks started
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exploding. We had two banks at the time.
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One bank went bankrupt and so a lot of
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the inherent growth for the business
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dried up right when I started the
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company. You know, quite frankly, at
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that point in time, everything was so
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bad. We ran out of money a few times.
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Uh, I had to subsidize payroll, for
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example. The only way for Block Demon to
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survive is if I put in everything I have
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without a clear promise of a better
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market environment, and I just have to
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make it last as long as I can with as
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much output as I can. And so there were
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a lot of moments where it felt like wow
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I don't really have a believable path
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forward but still I have to convince
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people that there is one. As an
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entrepreneur that's your job ultimately
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you have to find resources where other
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people can't. You have to keep people
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motivated and inspired when uh it looks
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very bleak and uh you just have to keep
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on leading by example.
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[Music]
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The first one was block demon was very
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small. I think the second time around
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was unique because at that point we
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raised a lot of money. So we had a lot
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of capital. What was difficult is that
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we started 2022 by raising a lot of
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money buying companies to build a sort
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of really cohesive product suite that we
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thought we could sell within the year to
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institutions. And what happened is that
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market just died. There was suddenly a
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lot of pressure on ultimately scaling
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down the projects we worked on that
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created operational pressure on the
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company to how do we rightsize the
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company? How do we losing money in
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developing products that currently have
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no market? It was a lot harder because
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we had to make the hard choice to also
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let go of a lot of block demons and
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people that worked with us in order to
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um ultimately be operational efficient.
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changing strategies and letting go of
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people in order to adjust for a longer
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period of time without any growth of a
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more mature company. And so I'd say that
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crypto winter felt harder to me because
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obviously um losing people from your
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team because of that is really really
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hard. The way I describe it to people,
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it actually just felt like another
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Wednesday. You just take it on the chin
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and are like, "Okay, now I need to solve
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this problem." So you have to maintain
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an illusion of um competence and vision
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where like hey this is not a problem.
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This is just a little bump on the road.
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I know exactly how we're going to solve
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it. It's challenging because as a
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founder you know that a lot of the plans
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and thoughts I had very early on are
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assumptions. I don't know if they're
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right or wrong but I have to pretend I
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do. But you know I mean like anything
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else you just try to not tell yourself
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it's so bad and you just keep moving.
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and we found solutions for it. You know,
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um having a really strong team and
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people who uh have good integrity is
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really important in moments like that.
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And I'm very lucky that I do have a
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great team and people who stuck it out
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with me
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basically in a world where it's so hard
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for us to develop consensus between
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human beings when news and social media
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and everything is so um polarized and
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it's hard to know what's true and what's
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not that systems that are I want to air
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quote infallible and always true are
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really important. When the internet was
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created, people scammed people on the
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internet. I never thought the internet
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shouldn't exist. I thought there should
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be regulation and rules and education to
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protect people from scammers, but that
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the benefit of the technology of open
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access and trade outweighs the downside.
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If done correctly, crypto is the
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antithesis to scamming. It's fully
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transparent. It's traceable. You can see
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every wallet that's active on the
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network. And so it's actually the most
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scam resilient system at its core. I
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think it took us 3 years before
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institutions started engaging with us in
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order to engage with institutions. I
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think we also made the decision at the
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time that the only way institutions are
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going to engage with us is if they also
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own part of blockdemon are part of the
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governance of block demon. And so JP
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Morgan and Goldman Sachs for example
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have uh participate in the board of
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blockdemon. So they're basically also my
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bosses which means that they get to see
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the inside of the company. They get to
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question my choices. They're not just
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outside customers. They also in are
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parts of creating the company. And so I
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think that gave them a lot of
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confidence, right? And so that was an
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important initial step for the first
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customers. And the US has uh started to
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look very very different than it did in
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2024. We see a huge shift that's uh
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materializing very quickly. The
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landscape of crypto will look really
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really different in the US with a lot
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more enterprises and institutions
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actively launching services uh for their
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respective customers around crypto. Uh I
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think in a complicated convoluted world
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that we live in transparency and
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efficiency are really really important.
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They're not a luxury. They're
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requirement for fair governance and
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efficiency. And so I think it is indeed
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a golden age for cryptocurrencies. Yes,
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I've seen it from it being the underdog
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to now becoming basically the not the
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main dog, but the standard, right? And
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so I think we're halfway there. And it's
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so exciting to be a fundamental part of
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something that I want to see it through.
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[Music]
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[Music]
