>> Announcer: Live from Nassau in the Bahamas, it's theCUBE! Covering Polycon 18. Brought to you by Polymath. >> Hello, and welcome back, we're live here in the Bahamas for Polycon 18. This is a cryptocurrency tokenization event. It's really about the future of work, future of infrastructure, and all of the top entrepreneurs and investors are here, I'm John Furrier, Dave Vellante, this is CUBE coverage, our next guest is Mike Bucella who's a partner at BlockTower. Progressive, a hedge fund, doing amazing work. Really putting the stake in the ground. Making investments, and taking a new model of finance, taking some old school techniques, applying to the new school. Mike, welcome, thanks for coming on theCUBE. >> Thank you for having me. >> We were just talking before we came on that you're from Goldman, your team has some expertise, what is the, what's the philosophy of the landscape now? As the young guns look at this landscape, it reminds me that the old days, the PC generation, everyone was poo-pooing the PC generation. Oh, they're just toys, you'd hear that from DAC guys. This shit's working, >> Yeah. >> I mean, isn't it? >> Yeah, so it's interesting. You know, when I first delved into cryptocurrencies I would say probably 90 plus percent of market participants didn't exist that do today. And when you go from old-world finance to new-world, you kind of get this little skeptical look from people. And that was last year, and now simply, six months later, you know, its obviously taken a massive leap forward both from adoption from the broad investment community, institutions, some of the large old-world players in the broker dealer community who are all kind of dipping their toes in this space as well. So, it's certainly grown quite a bit in the last year. >> I mean, there's two reactions to crypto, and one is, in token economics, it's, that's the future, I'm all in, I'm long on the game, and then the other half is, man there's a bunch of scams out there. I mean, I get two reactions from really smart people. The risk-conservative ones, or risk-management oriented it's all about scams in there, it's going to implode, to go take that hill, I'm long on bitcoin and blockchaining. >> Yeah, I mean, as with any new technology and new industry there are going to be bad actors in the space, but you kind of try and, try and bifurcate the community and understand who is actually driving the technology forward, right? Because, you know, I very much appreciate what the technology represents, I am part idealist but I am also part capitalist and realist where I understand the reality of the situation where I am right now. There are, there is a lot of inflated valuation on the market, there are a lot of players in the space who shouldn't necessarily be operating in this particular area, but see the allure of capital markets. But I think, you know, as the investment management area grows, you're going to continue to see a bit more, I guess diligence on the behalf of the investors looking at particular projects and understanding the risks associated with those. >> I was talking with Dave last night, I heard your, some of your hallway conversation when we were bantering last night at the VideoCoin event, and throughout the evening. You have a philosophy, and most successful investors have a risk-management view. Can you share your thoughts on that? Because I think, there's a way to do it, and there's a way to be a pro. >> Yeah. >> You've got your pros. What's the pro tip for you guys? As you talk to investors and say, "Hey young people coming up or seasoned investors, "here's the pro-tip on risk." >> Sure, and as we sit in a conference like this, an amazing regulated token conference, registered token conference, and anchor capital, and you know, any other conference you sit in, if you take a step back, and kind of put yourself in the broad community again, you have to understand that this market is not without its risks. You have to understand that investing in cryptocurrencies takes on an enormous amount of volatility and risk that you need to solve for. Right? So, as you're investing across your entire portfolio, you have to think of crypto as this sleeve as an allocation of your risk capital. And within that, it's going to be one of the most volatile, most cyclical asset classes you're going to invest in. So, you need to, I guess, you want to gingerly approach it, and you want to account for that risk in some way. And as, as fund managers, you should also be accounting for that risk as well. We can talk a bit more about, you know, looking at ICOs versus looking at the broad publicly-listed cryptocurrencies but there are very different risks associated with each one of those underlying investments. >> What's the risk that scares you the most? >> That's a good question. I continuously ask myself, what could crater this market? What could completely degrade network value, and cause the downside, which is absolute zero in this space. I had said for a long time, globally-regulated coordination of market participants, they can't regulate the tokens, or the technology, they can regulate participants, which could degrade valid network. I would have to say, that continues to be the biggest risk although, I think we're seeing, with Clayton and Giancarlo's recent testimony that, you know, the U.S. is looking to be helpful. They want, they're looking to stop a lot of the bad actors in this space, but they're looking to be helpful for the broader community. >> There was a competitive imperative. I mean, I would think. But there's got to be, presumably, there's an investment premise, that's not just, you know, short-term, I'm going to buy low sell high. What is that fundamental investment premise which presumably, you're optimistic about? >> I think you got to approach it from many different angles. Right? When you think about investing in cryptocurrencies more broadly, you should think about it in different types of exposures. Passive exposure, right? So where you have, you know, a small piece of your portfolio with the highest expected return in tokens that you think will generate the most value over time. Store of value, privacy coins, base-level protocols, like, you know, obviously a big Canadian network here, Ethereum, was created out of a group in Toronto. Then you think about the next level, which is more B.C. oriented. So, you know, folks who are investing in early-stage products. The next Ethereum, the next Bitcoin. Something that will displace the leaders, the incumbents of the current market. You can think about more risk-managed approach. Folks who are actively managing this space. To both take advantage of an inefficient mason market, which the likes of which many of us have never seen in a long time, from the traditional asset world. And then you think about private investments and things like exchanges, mining operations, the entire ecosystem. There's a lot of private equity opportunity as well. So you kind of want to diversify your exposures amongst those levels of the ecosystem. >> So those inefficient markets are the ones that are most likely to get disrupted, right? Everybody talks about, you know, banking, >> Yep. >> As, as one of the potential areas where blockchain, I'm just going to drive through, but generally speaking the banking industry hasn't been radically disrupted, as we all talk about it. >> Yeah. >> People are kind of expecting it. What are the inefficiencies you see, and what makes banking sort of right for disruption, and why hasn't it been more disruptive? Is it 'cause of the regulations, the risks associated with that? >> Sure, so, you know, banks do have large working groups looking at blockchain and how it can be implanted into their business. I think as large banks do, they're taking their time and doing a lot of diligence before implementing anything. That's not to say they haven't been investing in the space. You can look at, you know, Goldman Sachs, invested in Circle in its early days. Circle's one of the largest OTC dealers in cryptocurrencies. Circle recently purchased Poloniex, one of the larger exchanges in the U.S. And so, they have their toehold position in this space, and they'll be gathering information and data to understand exactly how it could potentially disrupt their existing businesses, and how they can evolve and become more, I guess, more disruptive in the ecosystem as well. >> I want to get your reaction to some feedback we've been hearing. And we've been commenting on it, on theCUBE here, and on the shows, you see a pattern emerging in ICOs. Certainly, we have enough data to see kind of what people have been doing. Certainly, the FCC has been helping. The FCC has been with the utility, kind of poo-pooing the utility. >> Sure. >> This shift, to security-ized tokens is a great thing. >> Yep. >> Makes the paperwork go faster, it's all about board, these vehicles that people are used to. But now you start to see companies are basically startups doing a big land grab, raising obscene amounts of capitals by startup standards, I mean, you go to venture capital, you raise a series A, and you don't have a product, you get five. >> Yeah. >> Maybe 10 if you got a rockstar team. >> Sure. >> Here, you're raising 50 to 100 million with no product. >> Mhm. >> So you got startups. >> Mhm. >> And then you got the other end of the spectrum, complete pivots. I mean, we're all running out of business, throw the hail Mary! Let's raise 50 million! And then you got the growing companies that are right for token economics. >> Yes. >> So, to me, everyone is focusing on those growth areas versus the pivots and the startups, because those got to be nurtured, board meetings, have to make decisions. >> Right. >> That's like a nightmare! >> Yep. >> I mean, not a nightmare, it's hard, it's hard as hell. >> Yep. >> So what's your thought, your reactions? Do you agree with that? Any commentary and reaction to that? >> I think cryptocurrencies, or digital assets, represent an opportunity for the very early stage projects, who have very smart technology teams, right? And guys just want to focus on the code and development but aren't the types of folks who can go out and raise capital and have the dozen, two dozen, three dozen VC meetings where they have board presentations, and they have to, you know, present their, the full-scope of what their project is going to be. These are guys who, who really are, their time is much better well-spent coding. >> Coding! >> And developing their project. And, I think cryptocurrencies, and what we're seeing here at the conference and the ecosystem are surrounding it helps smart individuals with good projects tap into the funding markets, right? >> So you're saying community is the new benchmark for operation, operating the startup, because that makes sense. Why spend my time going through all these hurdles and hoops, when I can just go to the community for feedback? >> Exactly. >> And governance. >> Right. >> Okay. >> Mike, can you talk about, just from the company's perspective, you always hear, well, that's a bad route because the FCC's going to regulate that, or it falls under some umbrella of regulation, so here's how to get around that, but. At the end of the day, I mean, why not? Why not absorb those, you know, adhere to those regulations? I mean, is it just the cost of doing business? Pay 100 grand a year for an audit? What are you seeing as the logical alternatives for companies? >> Sure. So there is a very lengthy process to doing a traditional listing in an IPO. Or, you know, for some folks, it's a matter of selling equity on their cap table, >> Dave: Right. >> Versus selling a token that's unassociated with any of the capital structure. >> Sure. >> You know, I think, I think regulated, or regulated tokens, right? So, what the future of this business will be are necessary, because-- >> Dave: Sure, it's inevitable, right? >> It's inevitable, right, and I think, for this market to achieve the scale that it needs to, you need to have a framework in place for a large institutional participation. And I don't think you're going to be able to get there without some sort of regulatory framework. >> You need guardrails, but you can't over, overtax the institutional investors. >> Yeah. >> You got to let, I mean the FCC is doing that. They're not, they're not clamping down, they're just kind of sending signals. >> Right, right. And the FCC is doing it, I think, in the right way. >> Yeah. >> Where they're saying, listen, we're going to, we're going to do our diligence in the space. We're going to understand exactly what the token economics are, why you decided to list the utility token, and why you went through an ICO process versus an airdrop. There- >> Airdrops are interesting. >> Right. >> Talk about that, I mean how does that view? >> Well, I mean now, obviously, that's come into play quite a bit, and people are debating whether or not they want to be doing the traditional ICO process or the airdrop. The airdrop, obviously there's a lot less economics associated with that, in terms of the capital raise. But, you know, I would say, again, I think what the regulatory indicis are trying to focus on is, for those, like we just said-- >> What to look at. >> Why exactly have you gone through a token process versus going the traditional route? >> That's interesting. So, I mean, I mentioned tax. Tax consequences is a big thing that's slowing things down a bit, and I won't say it's coming to a screeching halt, but, it's causing people to take pause, because, you know, I'm slinging APIs around, I got Bitcoin over here, I got Integrative Wallet selling Litecoin, and cross over the top is another currency, and all taxable. >> Yep. >> So like, you guys have done hedge funds before as pros. Coming into this new market, how cautious are you of that, and is the industry doing its thing? Are people going to go out of business because they misfired on their allocations? Or, I mean, there's a lot of nuances of being a fund. >> Yeah, I think, I think the biggest mistake you can make as a fund manager in this space, is not taking the most conservative approach to regulatory issues, taxation issues, and operational issues, like security. I think you want to take a hard line, you want to have both your outsourced service providers, and you also want to be in touch with some of the largest accounting firms in the world who have large working groups in this space, right? The big four accounting firms are obviously doing a ton of work here. And you want to constantly take in new information, and be prepared for what the next iteration of tax policy could be. >> Frame what you look for in an investment, and what you say, you don't walk, you run from that investment. What are the parameters? >> So I mean, I'd say broadly speaking, I don't want to touch on BlockTower-specific, but broadly speaking, you know, there's many different ways you can attack the markets, right? There's, you know I said, you can kind of squeeze the orange in eight different ways. And like I said earlier about the different types of underlying exposures, right? Passive, PC, active. Those are the ways you think about it from an investor's standpoint. As a fund manager, it's much different, right? You are managing assets on behalf of an individual, and you are their exposure to the market. Hopefully, you are one of their exposures to the market, as I think any responsible investor in this space should think about it in a sort of cross-list of risk. >> Come March 16th, Bitcoin will go up! That's the prediction. Pay taxes, and then back on the saddle. (mumbling) Mike, BlockTower Capital, congratulations, great firm. Really put the stake in the ground, you're seeing institutional money coming in, that is a great sign for a healthy ecosystem. A lot more work to do, thanks for sharing your insights here in theCUBE. Be back with more live coverage after this short break. I'm John Furrier, Dave Vellante, thanks for watching theCUBE. (electronic music)

>> Voiceover: Live, from San Juan, Puerto Rico. It's theCUBE covering Blockchain Unbound. Brought to you by Blockchain Industries. (Upbeat samba music) >> Hello and welcome to our special on the ground coverage in Puerto Rico. It's theCUBE covering Blockchain Unbound. This is the industry gathering from all the global industry leaders, emerging entrepreneurs, financiers, investors in cryptocurrency, blockchain, the decentralized internet. Part of our continuing coverage. My next guest is Jim Calhoun who's the founder of Coinbot, an innovative entrepreneurial project that turned into something really growing and large. Great to have you on. Thanks for joining. >> Thanks for having me. >> So, Coinbot. First, take a minute to explain what it is, it's a really clever way that you guys built a product for yourselves, and it kind of went crazy, and it's going great. So, talk about what is Coinbot, how you guys got there, and what's going on with it right now. >> So, Coinbot is a chatbot you can message on Facebook, or Slack, or Telegram, that gives you realtime cryptocurrency and fiat prices. Basically what that means is, it's basically an AI you can message. It will tell you BitCoin's price, or Ethereum's price. It'll even do conversions like, how many times have you seen 0.0549 Bitcoin, and you're like, how much is that in dollars? You can just send that to Coinbot, it'll do the calculation for you and give you the right price. >> So James, the #1 question I want to ask you is, because it's like Alexa or Siri for pricing. Is it going to go up? (laughs) >> Yeah. >> Hey, hey Coinbot. Is Bitcoin rising or falling? I mean technically you're not there yet, but you can almost imagine, the dots connecting with the data. >> Yeah. So we get a lot of analytics and data on our backend. The way Coinbot works is we're individually hooked into each exchange. And so a lot of developers find that interesting. They want access to our API. And a lot of traders find that interesting, as far as the data. So, like you said, we can pick up on trends. We can make some positions ourselves sometimes. And, a lot of people are interested in that. >> So it's a free service for users? >> Yes. >> So you go to Coinbot.co, Coinbot.co, it's free, but the analytics is really the compelling thing that's an opportunity. Is there an API to the data? >> Yes. >> Traders? Developers? Can you play with the data? How do people party with the data? >> We're working on our API, and access to our data. Right now if you sign up for our newsletter on our website, we'll email you when it's available, and you can sign up and get early access. >> Okay so we were talking before we came on that you know, a side project for friends. That's kind of how Uber started, by the way. A couple town cars, and next thing you know it's Uber, so. In a way then it went mainstream. Talk about what happened, and where is it now. >> It's funny. I've been trading in crypto for years. And before that, I was in the stock market. So a few friends of mine, we were all in the stock market trading, and we said, let's meet up and talk about some trading strategies. And again, this is in the standard stock market. So we meet at a coffee shop. We sit down. We talk about stocks for about three minutes, and then crypto, Bitcoin comes up. And the next three hours are dominated by crypto. So we started talking about cryptocurrencies, this and that, and so I created a Slack group with us. It's about eight or nine of us at the time. I created a Slack group, and in the Slack group, I noticed people were asking, "What's the price of this?" Or, "Who's longing Ethereum? Who's shorting Bitcoin"? And I would go to Google to find the prices, or go to the exchanges and find the prices, copy and paste it into the chatroom. And one day I just thought to myself, this would be so much easier if there was a bot or something in the chatroom that can do this on it's own. So that's how Coinbot was born. It's basically a group of crypto hedge fund managers, crypto minors. It's a tight knit group of crypto entrepreneurs, and Coinbot lived there for about a year. One of the people in the group, he's also in a lot of other crypto groups. And he asked me, he was like, "Well, I'd like to use Coinbot "in these other groups I'm in. "Have you guys thought about releasing it?" So we released it. We got 2,000 users right off the bat. It kind of exploded like wildfire. We've had exponential growth. I think we're at 25,000 users now, almost to 30,000 just this week, and I think we get 12,000 queries per day. Minimum. >> How do people work with you guys? So let's just say, I want to put it on SiliconANGLE.com, or theCUBE.net, our sites, how do I share it? If I'm a developer, have you guys thought that through? What's the current situation with the product? I know you just get it for free, so how do I integrate it into my workflow via API, or whatnot? >> We can chat after this if you'd like. But right now, if you get in contact us, from our website you can email us directly, those emails go to me actually, and you can ask for API access. We'll ask a couple questions, "What's your project? "What are you looking to do? "What kind of endpoints or data are you looking for?" And if it's the right fit, then we'll approve you. So far we have a handful of developers who have built some products based on our API. One example is CoinView app, and another example is Edublock wants to incorporate Coinbot's API into their curriculum. >> And the Slack group, the original nine guys or so, or gals, was that all here in Puerto Rico? Was it around the world? >> Around the world. >> And where do you live? You live here locally? >> I live in Los Angeles. >> Los Angeles, okay. So you're in LA. So any involvement with Puerto Rico here? Or is you just here for the conference, or? >> So Puerto Rico. I love Puerto Rico. (John laughs) So this is my first time here. The more I'm here, the more I'm learning about it, and the more I'm realizing there's huge opportunities here. I'd be looking to probably start something out here soon. And uh, yeah. >> Are you going to move here? >> I'm considering it. (John laughs) Honestly, now that I've said that publicly, (John laughs) I guess I'll have to stick to my word. But, I'm considering it. Really. >> Awesome. And let's talk about how we can help spread the love, for people who want to promote it, it's CoinBot.co? >> Yes. >> Any other things you want to say about the project? >> We're on Facebook, that's our newest launch. That was about a month ago, and-- >> John: Facebook messenger? >> Facebook messenger. So you can search "Ask Coinbot", or just search "Coinbot", we're the first one to come up. We're on there. >> Other platforms? You had also mentioned Telegram? >> Telegram. We're going to be on Discord next. And we've gotten a lot of requests for Amazon Echo and Google Home. >> Yeah, yeah. Echo's a key. We got some contacts at Amazon, we can help you out there. >> Okay, awesome. (laughs) >> Anything that you see in the marketplace, that you're excited about, things that you're concerned about, as someone who's been trading for a while? We've been covering Bitcoin since 2010, so we've seen some early day stuff. We love the maturation going on, the ecosystem. Your thoughts on the good, what you're concerned about, and what you hope gets better fast? >> Yes. I hope we get some more clarity on regulations, especially when it comes to the ICOs, the initial coin offerings. It's a huge gray area, and everybody of course, anybody like myself, and like yourself, we want to follow the rules, we want to do things properly. But it's hard when there are no rules, necessarily. Or the rules are very early. So I think 2018 is going to be the year of clarify on regulation, and I think that's where Puerto Rico comes in and plays a major role, as being a more innovative space to do those types of things. I think also, being in crypto for a long time as a trader, I think the old days are over, if that makes sense? >> (laughs) Yeah. Getting rich off the massive rise in three days? That's over? (laughs). Those glory days? >> Yeah that's a thing of the past now. But this is a good thing, because I think it'll bring more volume, more stability, and more people will start getting involved in it. >> What do you say to the people out there that are getting into the trading, I hear a lot of parents of their kids that are my age, that have kids who are in high school or college, they're letting them play with some money, and they're learning how fast they can lose money. So as an experienced trader, certainly in crypto, which is kind of Wild West, it's a big wave coming, your advice to folks that want to dabble, put their toe in the water, whether it's learning, and/or trying to make a career out of it. What's your advice? >> This is good. This is a great question actually. So when I give talks at different conferences about Coinbot, I'd say half the people who come up to me after are developers, but the other half are people who are completely new to crypto. And they say, "I love your product "because it's simple, it's not complicated, "it's an easy way for me to get started." So that's part of the reason why we're partnering with Edublock here in Puerto Rico. The blockchain education group. Because we know that our product is good for beginners. And what I've learned is when I first got into crypto, I was in high school. I bought a Bitcoin for $150. But because it was $150, it was a little amount of money, but because it was in there, I found myself constantly checking the prices. And as I was checking prices, I started getting sucked into it more. And I started educating myself, and learning more from there. So I think, if your kids are really into this, give them $100 or however much you can spare, or put $100 in yourself, too, with your kids. And you'll see you'll start getting sucked in. You can message Coinbot. You can check the prices on other apps, and you'll start getting sucked into it. It's almost uncontrollable. >> It's addictive. It's fun. Again I've always said, we even reported on our show, on our sites, this is the biggest wave in the computer revolution ever. If you would combine the other big waves that are well-documented: The PC revolution. Mini computer revolution. Internet revolution. This thing is massive. This wave is here. >> And it's moving really, really fast compared to those. >> Yeah, yeah. And the ecosystem's forming really fast. You've got funding coming in. What's your take on the ecosystem? Obviously it's super fast. What's your views? Early still, but still growing fast. What's the sentiment? >> That's a big question. (John laughs) Let's see. I think it's growing extremely fast, and I think that's a good thing, because I think it's going to be a lot of ups and downs, so the quicker we can go through the ups, the quicker we can go through the downs. If that makes sense? I know that abstract. Basically what I mean is... I think that there's going to be some booms, and there's going to be a lot of busts. Especially this year when it comes to the altcoins. I think we'll start seeing some coins maybe die out. And I think that's a good thing, because it's a natural process of selection, I guess you can say. >> Yeah. Evolution/Darwinism for the crypto world. The ICO boom obviously's been a great run for people looking to raise money, but we've been reporting, obviously, and we also have tokenized our business as well. Not yet ICO'd or maybe not even do it, but the point is utility token. If you don't have a utility, and you're raising money, you now have a security token. It's a nice movement on the ICO front, that should clarify the good, bad and the ugly. The scams from the legit deals. So it'll give people more time to get their utility up and running. What do you see the role of the utility token as security token emerges, as the preferred way to finance new ventures? >> Okay so. I like the direction of security tokens, if only we can figure out a way for many people to participate, as opposed to just accredited investors. So I know there's a lot of types of securities. There's your standard CF, crowdfunding raise. And your reggae, your reggae plus, there's a handful of different directions you can go with security tokens. And we looked into this with Coinbot as well. We've been talking about doing an ICO, and we were torn between utility or security. I think 2018 may be the year of security tokens. Maybe more towards July, towards the end of the year, but I think it's a good direction to go in. It legitimizes our industry, it legitimizes the technology we're building. And as long as we can get all of the participants, as many people involved as possible, and we're not excluding people, who would otherwise not be an accredited investor, or have the opportunities that accredited investors have. I think that's a good thing. >> That's awesome. Question again, on the institutional side: I had a chance to interview the folks, ex-Goldman Sachs guys in charge of BlockTower, and you got Polychain, two different make-up of hedge funds. You got hedge funds in crypto! I mean, come on. This is happening. A good thing. Money's coming into the market. How does that all fit into your mind? How does it all tie together? >> I think the institutions are really banking on the technology of blockchain itself. I'm not sure where they are as far as trading the actual currencies, but I know they like the technology, and to me that's all that's needed. In my mind that's certainty that this industry is going to be the absolute foundation of the future of technology. >> Well you're a great, walking example of what we see in the ecosystem that is unprecedented. That is, someone who's developed, who also makes money with coins. So you're a developer. And you're also seeing the emergence of people like, building products, making money on trades, and then starting hedge funds. A lot of people who are starting financing organizations are entrepreneurs and crypto traders and investors. It's an interesting dynamic because it's not the old model of venture capital where they're just business guys investing in ponies, the techies. It's kind of a new cultural shift. >> It is. >> This is significant. Lot of different dynamics are at play here. They kind of know what's going on, so, interesting to see what the outcome will be. >> Yeah a lot of entrepreneurs in this space come from the front lines. So they got their start trading a couple coins, built some personal wealth from there, and expanded on that and learned more, and now I see people, especially in Puerto Rico, the entrepreneurs I've met since I've been here, the native Puerto Ricans here, have done amazing things coming from the very, very... Coming from zero and building themselves up, and then building a company, and helping others, and helping each other on the island. It's extremely inspiring. So that's why I'm excited to maybe set something up here and possibly move here. >> And it's an opportunity for a new kind of democracy, total decentralized, no central trust issues, complete transparency, but also security, with the immutable blockchain. Great opportunity. >> Yeah. >> James thanks for spending the time and chatting with us here in Puerto Rico. Congratulations on Coinbot. Check it out. I mean to me it's like the Siri, it's the Alexa of pricing. A lot of opportunities, and we'll keep in touch. I'm John Furrier, here in Puerto Rico, on the ground for cryptocurrency blockchain decentralized applications, all the future of work, and how society works, we are here with Blockchain Unbound. Thanks for watching.

>> Announcer: Live From Nassau in the Bahamas, it's theCUBE covering Polycon 18. Brought to you by Polymath. >> Hello and welcome back to our live coverage of Polycon 18. We are in the Bahamas. It's theCUBE's coverage of the cryptocurrency, ICO's, blockchain, the entire industry on token economics. This is sponsored by Polymath, they're the host, hosting us here. They make a securitized token platform to help people tokenize their business. I'm here with Dave Vellante, and we're here with Al Burgio, Cube alumni, one of the only Cube alumni here. Now we're adding more, good to see you. >> Thank you for having me, guys. >> Thanks for coming on, Al, you're the CEO/founder of a blockchain venture, Fusechain, and open-source project, DigitalBits. >> Correct. >> DigitalBits.io, we talked about this on studio in Palo Alto, around the project, how's it going? Are you doing an ICO, what's happening, what's the momentum, talk about what's going on. >> Well the momentum is great, um, as we can see by an event like this. I mean, the attendance in phenomenal, the discussions are great, and there's definitely an ongoing movement towards blockchain, cryptocurrencies and so forth. And we're obviously very excited to be a part of it, and equally so been experiencing phenomenal success while we've been in stealth mode, and we're excited to be sharing that in the coming weeks to the public. >> I always try to get data out of you, but you're like an iron trap, man. You like, will not reveal it. I saw you in the hallways this morning, and even last night at dinner, I mean, surrounded by investors you're getting, and people throwing their cards at you. That's a good sign, I mean, but it's still early. This is an emerging ecosystem, and you're a senior entrepreneur, so you're attracting that kind of interest in the venture solid. What's the story, what's the story of these investors? What are they interested in, why are they approaching you, why the appetite for your project? And how are you approaching as a seasoned ICO, most people want to promote the hell out of their opportunities. You're not, you're taking a different approach. >> Well we definitely, obviously we'll turn on the marketing engine with a full tank of gas. And you'll see that in the coming weeks, but we've been able to definitely have, you know, a significant number of conversations while in the stealth mode phase. Really I think what's attracting a lot of the interest is that we've identified a massive market opportunity. And really where blockchain technology can help, among other things, bring a liquidity to a space that does lack liquidity, and that for us, is the loyalty rewards market. It's a multi-billion dollar market, and we feel that what we've built with the DigitalBits protocol and the DigitalBits network is really going to solve a big problem out there for businesses, enterprises, as well as consumers. And you know, we're excited to be bringing that to life, and with phenomenal support from ecosystem partners, among others. >> Let's talk about the show. We're going to bring you back tomorrow when we wrap up, cause I know you got a lot of meetings and scheduling, you got to check out the sessions, so I want to get your take on the show after the fact. But going into the show, you have some early conversations, some early data's coming in from these hallway conversations and interviews. What are you seeing, I mean, what's the bottom line? Is it ICOs are hot, the SEC is coming down and putting out subpoenas, a wave of subpoenas recently. The advisor role, you got venture capitalists, it's unregulated, they're selling, they're pumping, they're dumping. You know I know of a couple people that are in some coin deals that are, you know, venture funds, but they're also marketing. >> Yeah. >> The same thing, so they're getting their hand slapped. What's the state of the industry? >> I think, you know, there's high energy in the space. It's moving really fast, and some organizations are getting overly anxious, moving perhaps a little too fast without getting their ducks in a row, and maybe perhaps that's resulting in some wrist slapping. But overall, you know, this is a big evolution that's happening. And what we're seeing obviously is a new asset class, but it can take the shape of perhaps the security, or utility, and you know, the law applies to these things differently. And so, you know, people need to do their homework. >> So you were at the VideoCoin event last night. That had been very successful. We're going to have Halsey Minor come on shortly for an interview, seasoned entrepreneur, he's back at the game. I mean, this market's attracting pros. We had the Goldman Sachs guys now run BlockTower, institutional investors, you got pro entrepreneurs coming on, and you got the young guns coming up. I mean this is really kind of a really robust, fertile environment. >> I think it's only the beginning. We're going to see a tremendous amount of ongoing pedigree enter this space. Every day we're seeing evidence of ongoing validation, and you know, it's by no coincidence that we're already seeing some phenomenal pedigree, and I think you know, like I said, it's just going to continue. >> What's the one observation that you would share to people that are watching about this event? Obviously lot of Canadians here, you're Canada living in the U.S., but it's not just Canadians, it's a global economy, what's your observation? >> Sorry? >> What's your observation of the show? >> There's definitely, if I look at the attendee list here, it's this convergence that's happening. So you have Wall Street or the Canadian equivalent, which is Bay Street, you know traditional investment banking, brokerage-type institutions that are here, very curious in terms of how blockchain will impact the securities markets. And then you have the innovators that are on the forefront of this really driving the technology that's going to support and help even that industry evolve. So there's a lot of talk here, in particularly as it relates to that category of things. >> Lot of whales, a lot of influencers, a lot of advisors, a lot of money here, lot of action. >> Lot of action. >> All right, Al Burgio is the founder and CEO of Fusechain, and the sponsors of DigitalBits.io, it's a great open-source project, check it out. I'm going to still try to get some information out of you, cause you're still in stealth mode, but you're good. >> Thanks for having me, guys. >> Thanks for coming on. >> Cube alumni here in Bahamas for theCUBE coverage. I'm John Furrier with Dave Vellante. More coverage after this short break.

(energetic electronic music) >> Narrator: Live, from Nassau, in the Bahamas it's theCUBE covering POLYCON18. Brought to you by, Polymath. (attendees chatting indistinctly) >> Crew Member: So, go, we're live. >> Okay, we're live, welcome back! This is day two of our exclusive CUBE coverage of the Bahamas' POLYCON18 It's a security token conference. It's where the world of cryptocurrency, Blockchain, Bitcoin and everything comes together around powering a new value economy. A new kind of decentralized internet. This is the biggest wave that I've seen in my lifetime. It's really bigger than all the other waves, combined. I'm here with Dave Vellante. We have two days of wall-to-wall coverage. And the bottom line is, Dave, we are seeing historic, massive, wealth creation. We're seeing crypto-billionaires here. I mean, people are new money, they're old money and a massive new landscape is emerging. And the tell-sign of this is, institutional money is coming in, real professionals are coming in. It's moving from a culture of Burning Man and cult of the personalities to real industry formation. You see that with companies coming out with real commercial opportunities. You're seeing ecosystems developing, and you're starting to see biz dev. And it's been probably at least a couple decades since I've gone to a conference where this kind of computer-industry movement is happening where the players are doing deals in the hallways. You're hearing people having substantive conversations around how they can work together to create tons of value. This is a dynamic that is absolutely happening. And we're seeing a lot of wealth involved, from people who have made tons of money, billions of dollars in Bitcoin, to kind of, new migration coming into the sector from Wall Street, from other global markets. We're seeing a sea change of democratizing, with an open-source ethos. To me, this is something that we've never seen before. It has all the elements of the modernization, business model modernizations, technology modernizations, real, disruptive, enabling, technology at the heart of it. And some people ask questions like, "How do we make money?" Bottom line is, there is money being made. How and with who, is the real question. So Dave, day one's over. We were out 'til one in the morning last night, working the hallways, having great conversations. I probably talked to at least six whales as they're called, billionaires in the business, and the vibe is the same. We're here to play the long game, we love this market. There's a culture of ethos, of partnership, and openness, and unwritten rules, and tons of activity. Sure there's bad actors! But there's a lot of great players here, and they are starting to crack down on behavior that's not right, because this is a funding dynamic. It's a funding growth companies dynamic. It's a liquidity dynamic. All these things, classic, business model modernization, happening with a massive wave, your take. >> So, let's share with our audience. Well, first of all, this is an investor conference. It's the first conference built around the topic of security tokens. And we can, maybe, explain that in a moment. But, I have, John, I have never seen at an investor conference, which I guess this is, but it's more than that, Blockchain, technology, etc. But, I've never seen such diversity. Like you said, there's new money, there's old money. There's tons of millennials. 100% of the people here are doing deals. >> Yeah. >> And the conversations in the hall, it's all about ICO's, security tokens, utility tokens, protocols, white papers, business models. So, a lot of diversity. Some super smart millennials. Developers that really understand this stuff, and a lot of money. >> And, more women in tech here than I had thought. >> Yeah, I think it's slightly higher proportion. But, you're also seeing, just really interesting, you're seeing VC's who aren't going to sit back and wait and get disintermediated. You're seeing developers who have made a ton of dough, that are now sprinkling the wealth. You're seeing private equity, you're seeing hedge funds. You're seeing, like I say, traditional VC's, new types of VC's. And, very importantly, you're seeing a major diversity in cultural impact, nationalities. And this is a heavily Canadian show, because the organizers of POLYCON, the folks who started Ethereum. But, a lot of diversity in terms of where people are coming from. It's not just U.S. based, you know, MBA's-- >> Silicon Valley. >> Yeah. >> I mean, the game's changing. The other thing I observed is, we're seeing validation of my premise, a couple weeks ago when I was in Washington D.C. with Theresa Carlson, the most powerful woman in D.C. She's also the chief, and head of, Amazon Web Services' global public sector. Is that the global national stage, the nation building, the digital nation transformation, is part of it. Two, the validation that societal change and entrepreneurship, that was used to be involved in non-profits that never went anywhere, you know, these philanthropy projects. Social entrepreneurship, or societal entrepreneurship, as I call it, is absolutely real. And, in this culture, you're seeing people with Bitcoin, and crypto-currencies funding mission based activities. Now, the younger demographics, I think, lean towards that. That's pretty clear in our reporting and our data. That the younger generation wants to work for companies and communities that have an ethos of mission base. But, mission base is not about changing the world, it's about saving the world. And, this is real, you're looking at Blockchain ventures that track water supply. You're looking at Blockchain ventures that track, you know, food supply. You're looking at solving world hunger kind of challenges. And I think the tell here is, Blockchain is used to identify markets and incumbents, or opportunities where there's idle resource. So, whether that's using compute in a P2P way or solving the world hunger problem, anywhere there's an opportunity to be efficient, Blockchain is being used to solve those problems. And, the creative talent is the technology providers. This is a completely new dynamic. One that Silicon Valley pays lip service to. 'Cause they don't actually do societal change. They say they do, but, they build apps and platforms. So, I think this is a nuanced, but an important game changer for the industry, and the global economy and global entrepreneurship, because you can do things now that can be global impact based investing, and technology investing, in one shot. So, you get a double down effect for change. This is not just cloud computing, have more power, faster, better apps, more monetization. Sure, but now you have over the top, impact to users. The community dynamic, and the societal change is very, very real. That's a big driver of this ecosystem in terms of market selection, human capital, technology, leverage, and now financial. So, it is pretty intoxicating here. People are geared up, they're energized, and it's just pretty phenomenal. >> So, many people in our audience are still probably saying, I just don't get it. So, let's go back to 2008 when Satoshi, whoever that person was, writes this, I think it was an eight page white paper. And, remember what 2008 was like, banks were blowing up, too big to fail, the economic system was melting down, and guess who paid for it? The taxpayers. So, some libertarian minded people said, screw that, we're going to change the world. We're going to create a virtual currency and we're going to take back what the government is taking from us. Essentially, okay. So, that started people like, what, I don't really get it. That has formed a whole new, and people often say, it's not about Bitcoin, it's about Blockchain. Blockchain is building out this whole new internet. And we've talked about that all week. But, what you're seeing now is this concept of a value store a virtual value store, and people leveraging that in so many different ways to build out this new internet. And, they're building protocols, they're building apps, they're building new capabilities that we haven't seen before. That brings state to the internet, a state of communications. Now, let's talk about the investor profiles that we see here. I want to start with developers. So, developers built the internet, and most of them didn't really get paid huge money. Here, many of the developers are like multi, multi-millionaires flying in on private jets. Okay, so why? Because they've developed a new token that they, basically, invested in with their sweat and their money, and the price has gone through the roof. Bitcoin, Ethereum, etc., VC's. VC's, you know, they elbowed out, well they're elbowing their way back in. Private equity, hedge funds, big money. And there's two paths there, one is, guys that read white papers, real hard core technical guys who say, I'm going to invest in just this infrastructure token, utility token. Other guys who say, You know what, I've got big money, I don't really understand the technology, but, I'm going to sprinkle my money around and try to get a big hit. You got angels, you got entrepreneurs, you got superstars that have become billionaires, that are mission based. All these, and here's the thing John, and I want you to sort of explain this to the audience. You have these investor ecosystems forming. It's like the PayPal Mafia, and they're basically buying up all the tokens early, elbowing other people out. You know, one investor told us, We're fighting steel with steel. Steel beats steel, you have to form, it's like Survivor Baha Mar, right? And they're forming groups, and they're eyeing each other, attacking opportunities, elbowing each out, and it's really interesting. >> I mean, it's happening, big time. And, this is healthy, I think, in my mind. Emerging ecosystems have this behavior. The early days of Silicon Valley was very much the same. And it became very much war, now in Silicon Valley. See, people don't syndicate deals as much as they used to. Some are and some aren't, but the notion of teamwork has always been part of Silicon Valley. The old saying is, venture capital is a team sport. That is very much what's going on here. Now, they team up because they have to, but, steel on steel implies art of war. You know, we're going to take more allocations down. That's because the new pro persona of the investor, Dave, is the billionaire developer who captured value from the technology that they built, not someone else, not some central organization, they're the players. Developers, and or the actors who were making money in the early days of Bitcoin, cryptocurrency and Blockchain actually are also starting funds themselves. So, that is a new dynamic. We've never seen that before, where you see a wealthy developer become rich and then also start investing at the same time. You have a smarter investor there, but they're doing it in packs and herds. You have a tribe mentality and people are starting to recognize that, okay, this group here loves Burning Man, this group here is more commercial oriented, this group here, like Polychain is much more technical, and BlockTower's much more Goldman Sachs like. So, you're starting to see the formation of categorical roles in the ecosystem. This is very healthy. Now, in the short term there's some jockeying, right? So, you're starting to see people syndicate together. You buy my coin, I'll buy your coin. So, there's a healthy, robust equilibrium going on where the market of insiders is very much the story. The insiders of this industry are the players. They are the ones, not just building the technology, they're funding technology, they're also recruiting, the talent issue, human capital role, mission based. These are all new dynamics. This is going to be a hard nut to crack if you're an incumbent, venture capitalist, or hedge fund, trying to walk into this ecosystem, throw your weight around and compete on a frontal basis, money for money, steel on steel, if you don't play by the rules of engagement that's emerging. Such as, open source communities, unwritten rules, certain kinds of syndications, eliminating bad behavior. This is a dynamic that's real, and you'll either win or lose if you're an investor, win or lose if you're an entrepreneur if you don't recognize that, kind of, big picture. So, you get down and dirty, you got to pull back and say, okay, what's going on, how do I engage? This is where the true money making is going on. >> That's great analysis, John. You mentioned the word dynamics several times. The other underpinning dynamic is, we are going to take control of our own destinies. I've heard things all week like, I might move out of the U.S. Ya know. (laughs) Do you have a bank account overseas? (laughs) >> Estonia's looking good right now. >> Right, because I'm going to move to a place that's more friendly to this kind of concept. And the U.S. is anti-competitive. And this is the ethos of this community, We are going to control our own destiny. And we're going to go live in places and work in places that are friendly. >> This, to me, is perfect capitalism at work. You know, some would criticize Barack Obama or other folks that might have more of a socialistic bent around having government do redistribution of wealth. This is actually an example where I see redistribution of wealth going on in a capitalistic way. Where the enabling technology, Blockchain, and or new business models with cryptocurrency, which is money, basically open sourced money, as Miko Matsumura would say, and that is the dynamic. That is actually creating real value and redistribution of wealth. And the premise of Blockchain and cryptocurrency, although Bill Tighe pointed out, investor, and leader in the area, money's a concept, right? A dollar's a dollar, it has money value because it's a concept. But, if you look at things like what we learned in business school, the value chain of a organization, value chain, Blockchain, cryptocurrency money, is that this redistribution of wealth is going on in context to redefining business, redefining how people work. And again, I said earlier, the human capital component is very much a real dynamic, it's not just machines taking over the world. Some poopoo AI, some poopoo all this technology, but, human capital, a big force in this market. And, it is a big issue, and you got to learn protocols. We're all developers. So, again, zoom out, opportunity is right there. I think I'm long on this sector. I'm long on this game because the actors are going to self organize, Steel on steel turns into handshakes, or, steel on steel in the right areas, eliminating bad actors. FCC makes some regulations, that's only in the U.S. What about the opportunities for digital nations to say, hey, we're going to be the Wall Street of crypto. There are country opportunities right now where whoever builds that system, taking in crypto, converting it to fiat, will win everything. It's like, I'm surprised no one's done that yet. >> Yeah >> This is coming. >> I can't tell you what the price of Bitcoin is in August, but I agree with you, longterm, there's no question in my mind that this is going to be a key contributor to the digital economy. The build out of the next internet. Remember the fundamentals, you got Bitcoin, it's essentially, you know, a virtual Fort Knox. You got Ethereum, which is a horizontal infrastructure that's much more easily programmed by developers. And then you've got a zillion other protocols and tokens. I want to talk about risk factors. Like what could blow this up, what have we heard? Tax exposure, all these people, all these Bitcoin millionaires and billionaires that think, I don't have to pay taxes, well, guess what? (laughs) You do have to pay taxes. And so, one theory is that's why the price has moderated lately, 'cause people are saying, Wow, it's like I exercised the option, but I don't have cash to pay my taxes. 'Cause we saw a pullback recently. Regulation's the other one we heard. Too much regulation could put some brakes on the momentum here, your thoughts. >> Talent, talent. >> Yep, skill sets, and developer talent, right? >> Yeah, well, the top talent, in the protocol area is going to be at a premium. This is a global issue, so, you know, the old days when cloud, old days, when cloud computing came around, full stack developers were all the rage. Now protocol developers are all the rage. So, if you're a full stack developer and a protocol developer, you can have a lot of leverage. So, the danger, in my opinion is the job hopping nature of some of these ICO's. Hey, I made a bunch of dough on this ICO, they paid me in Ether and or Bitcoin whatever, I'm off to the next one and make a couple million bucks there, and move on to the next one. And so the job hopping factor for top talent is an issue. We heard that loud and clear. The tax thing, I'm bullish on Bitcoin, post April 16th. I think, buy Bitcoin right now and look for it to pop in April. Because I think people are going to realize, Oh shit, I should have sold some and had a tax carry over. >> Well, be careful, be careful. They might have to sell more to meet their tax bill. They might be holding on for a little bit, but I don't know. >> File the extension. (laughs) But anyway, I love the opportun-- >> No, you owe your taxes on the date. Extension doesn't remove you from paying the taxes. >> Yeah, but the issue Dave, is, that what's a scam and what's not a scam? So, you know, if you ask Joe Six Pack on the street, throw crypto and Bitcoin, it's a scam. There's a lot of stuff going on. This industry is absolutely, acutely aware of that dynamic. The risk on the wealth creation opportunity. They know it, so they're creating mechanisms to kind of weed that out. You're seeing PR firms having internal, called, in baseball and in sports it's like, clubhouse issues. There's a clubhouse issue going on in this industry. And they're going to take it amongst themselves. And I think that is going to be the tell sign if this ecosystem succeeds or not. >> Do you think there's more scams, or less scams going on there? >> There'll be less scams because, obviously there's too much money to be made right now. >> Right, and in terms of the percentage of the activity that's going on, in my opinion, the smallest percentages is the scams. The challenge is, anyone could be a scam so you have to sort that out, you got to do-- >> Due diligence. >> As always, you got to do homework. >> Alright, well, day two Dave, we're going to drill into. We got a great line up of guests. We'll be talking to investors, entrepreneurs, some whales coming on, we're going to get their opinion on the future of this market. What's the liquidity, how do you get paid? Who's making the money? How is the value that's being created ultimately captured? And, who's going to get that value? It's theCUBE coverage, from the Bahamas, exclusive coverage of the cryptocurrency, tokenization, here at POLYCON18. We'll be right back. (electronic music)