(Caribbean music) >> Narrator: Live, from San Juan, Puerto Rico. It's theCUBE, covering Blockchain Unbound. Brought to you by Blockchain Industries. >> Hello, welcome back everyone. I'm John Furrier, co-host of theCUBE. Exclusive coverage here in Puerto Rico for Blockchain Unbound, it's a global conference where a lot of the leaders are coming together. It's our second day of wall-to-wall coverage. Talking to all the top people: government officials, entrepreneurs, investors, and tons of great action here. Our next guest is Marcus Levin who's the co-founder of XYO Network, xyo.network is the URL. Interesting opportunity really built from the ground up. No outside funding, although it does some interesting things with their community. Great IoT example, great use of the cloud, great example of how real entrepreneurs are working with crypto and blockchain to actually grow. Welcome to theCUBE. >> Thank you, John. >> So, tell me a little bit about what you guys do. Take a minute to explain to the audience what XYO Network is, how did you get here, what is it all about? >> Yeah, sure. So, XYO Network is the world's first decentralized location oracle. "Oracle" means data input into smart contracts. Now you have the problem that a lot of data sources are centralized and hackable or spoofable. So, if you make a bet, for example, you need to look at the results of the bet at a website, the website could be hacked, it could collude with someone to provide wrong data. The same problem exists with GPS. GPS is easily spoofable and hackable, like during the Pokemon Go craze, for example, all the kids just downloaded GPS spoofing apps, they get all the rare Pokemons. Or, allegedly the Iranians took down an American drone a few years back sending up a wrong GPS signal. The drone just landed. So, because of that, you can't do transactions based on location data. Today, most applications for location, GPS location, are navigational but not transactional. We solve this by providing a decentralized location data or network. We do this though IoT devices, mobile phone apps, and other types of partnerships. We are around since 2012. Started as an IoT company which provided location beacons, we call it XY Findit. We have about a million of them out there, and they can recognize each other's location. It's like us two taking a selfie together, we print out two copies, put our signatures on there. When we leave each other, we can prove that were here together. And it's the same thing with those devices. Our own devices but also with partnerships we build this mobile app distributors and IoT companies. What can you do with this? You could, for example, do payment up and delivery for e-commerce. So, you could put a chip, a small chip like an RFID chip into Amazon packaging tape. Once the package arrives at your doorstep, or even in your house, the payment gets triggered. It works by the doorbell, your Tesla in the driveway, your neighbor's cell phone, any type of connected device recognizing that the package is there. The payment automatically gets triggered. One third of Americans experienced porch theft in 2016. You don't know if it was a UPS driver, for example, scanning the package but taking it, or your neighbor took the package, or someone random came by. This way, you can prevent porch theft, or you can discover it. Or you could make sure your kids arrived safely at school, they arrived there with their friends and they took the path you wanted them to take. Or hotel review sites, for example, have the problem that they lose their users because they don't believe that the reviews are real anymore. But if you could prove someone flew from San Diego, that's where we're based, to Puerto Rico, has stayed at this hotel for tonight, and then flew back and wrote the review about it, suddenly you have a location-verified review. So, that's all today, but in the world, in five to ten years, full of AI, robots, self-driving cars, drones, smart cities, you need transactional location data and nobody's providing that today and we want to be the center of the future. >> Awesome. So, that's super-exciting, I got to ask you about the IoT piece because, do you need physical devices out there? Are you going to be deploying sensors? Are you leveraging pre-existing infrastructure? I love that selfie example. I can imagine we do a selfie, share it, it's a location-based opportunity. The phone's got location base. How do you guys interface with this? How does it work? >> Right now the network builds on top of our own devices. We are around since 2012, as I said, so we have a large network already. We are an existing company, it's a little rare in the blockchain space. >> Yeah. >> And we build partnerships now with IoT companies like certain light bulb division company, or fridges, all connected devices, mobile app distributors. >> So, you're providing your customers the IoT device folks who are proliferating out there. >> Yeah, we put our code basically out there. We can-- >> Open source? >> Open source, yeah. >> Okay. >> And you can plug it as an SDK into, let's say, your mobile app. Or you can use it as a monetization tool as well, because you earn tokens as you verify location, and this data is part an answer, and so you could earn XYO tokens, as you become-- We call them "sentinels", location verification device in our network. >> So, how do you guys tie this together on the token side? So, you reward, what behavior do you reward with a token? >> There are four components in our network. There's the sentinel, as I spoke about, which are the IoT devices or mobile phones which verify the location. Then you have bridges which relay the data. They relay it into something we call the archivist, which is a distributed computer system, if you are familiar with storage here in this space, for example, or the old system, like Sentient home from Berkeley, it works like that. So, the data's on people's personal computers. And then we have something we call the diviner algorithm, which provides the answers. It works like mining. So, you might want to ask, "Where's my package right now?" And the question gets sent to the network, a bunch of diviners, which works like mining, Ethereum, transactional things. A bunch of diviners will take the data from the archivist, the distributed computer system, and try to find the best answer and try to find as close as possible the consensus as they can. >> What about spoofing? I mean, people might want to spoof the location. >> Yes. >> How do you prevent spoofing? >> Yeah, that's a good question. So, we two could collude pretty easily. But if this entire room of people is who you usually don't know, it's very difficult to collude. So, one of them is scale. Then we build reputation over time. So, as your answers are probable, you build reputation. For example, if all us say we are here at this hotel right now, but you say, "No, we are in Shanghai," your answer is improbable and your reputation goes down. In addition to that, we disincentivize lying-- >> You're very data-driven. >> Extremely. >> This is big time analytics. >> Extremely data-driven. >> So, what are you guys doing for analytics and what chain are you using? 'Cause performance becomes an issue. >> Yep. >> How's the plumbing work? What's the analytics look like? Take a minute to explain that. >> Yeah, it's very beautiful. We have our own chain: the XYO main chain. So, we are an oracle which plugs into any type of smart contract. You know, you have Ethereum and about 19 other coins which have smart contracts. So, we build on our chain to lower the transaction costs, transaction times, and build a more reliable network for ourselves and then it plugs into all other smart contracts. >> So, you have your own chain to manage this? >> Yes. >> So, that's one of the reasons why you, from an operational standpoint, you want to lock that down. >> Yes. >> So you can control performance. >> Exactly. >> Latency, timestamps, security, whatnot. >> Exactly, that's right. >> The openness is for the smart contracts. Is that what you're saying? >> Yeah. >> I can do any smart contract I want. >> This is basically for old site developers it's like an API, you can plug into it-- >> Got it. >> We connect the real world with the blockchain. So, right now you have very limited applications for blockchain in a lot of cases because you can't take offline things and connect them to the chain. What we allow to do is, we call it the API to the real world, where you take location data, put it into the chain and make it transactional. >> So, I got to ask you a question. This is interesting, I love this, I want to get into more of the token sale and what you guys are doing raising money. In the IoT world, certainly with cloud computing, the big debate is, do you move compute to the edge where the data is, or do you move the data back to the centralized cloud? Here, since you're decentralized with the IoT device, is the data coming back to your central network, or-- >> No, it's not. >> Where is the processing at? At the edge? What's the edge equation? Explain that. >> So, everything is decentralized. We believe that our company doesn't need to necessarily exist in a few years and the network will live on and grow as we grow the community, so the community is very important to us. The devices are decentralized, you own your cell phone. The data storage is decentralized. So, you can define, like, 3% of my personal computing power goes to this, for example, you earn XYO tokens. The mining is decentralized like any mining is decentralized today, so us as a company, once people start to build on the platform, we don't need to exist, which makes it beautiful, right? This is what blockchain is all about. Decentralizing and building this platform layer where people can build on top of. >> So, there's a ton of Bluetooth and GPS out there. >> Yep. >> Talk about where you guys have got your traction. I want you to take a minute to explain. We kind of went off on a tangent on some IoT rant, there, I was interested in. But I want to take it back to mainstream. >> Okay. >> There's GPS out there, you've got Bluetooth, everyone's got Bluetooth devices. So, it's not like this is massive new, it's a requirement. >> Yeah. >> You guys did some interesting things how you funded your first token sale. >> Right. >> You have customers. You've been around for how long? >> 2012. >> 2012. You've been successful. No outside capital. >> Yeah. >> So, you bootstrapped. You made things happen. Had some revenue come in. How'd you do it? Take us through that progression. >> Yeah, so we co-founders worked in various ventures together previously and one of our co-founders, the main founder I would say, Arie Trouw, he started this company in 2012, and we bootstrapped it with seven million dollars of our own cash and one and a half million in venture debt. We really believe in what we do. >> You guys put up a lot of capital. >> Yes. >> Congratulations. >> We believe in what we do. We believe in our capabilities to attract the right teams, we have an amazing team. >> That's skin in the game. >> It's skin in the game and it's actually a low-risk investment for me because I know what we are capable of. >> You are underwriting your own competence. >> Exactly, exactly. >> Okay, so, you had seven million of your own cash. Did you pass the hat around, you all kind of contributed money in, or? >> It was mostly from Arie, actually. (laughs) But we all have skin in the game there. >> So, you have a community, then you launch your idea, what happened next? >> Exactly. So, then the VCs started to come. We did some outreach, VCs started to come, they're interested in our idea, you know, they love what we do. Platform is right, quite sexy right now. In blockchain we are a platform and you can build a lot on top of it. We pushed off the VCs and we said we want to take community money first. The reason is, we believe in building this strong community of evangelists, people who believe in us, who want to code with us. We went to all the developer conferences, not to, like, investor conferences, or something like that. And, so, we marketed to about 2,300 people, our token sale and a little under 500 people put some Ethereum into our token sale and 95% were under 5 ETH. That was a very global community. >> Was that a utility token sale? >> Yes. >> Outside the US, 'cause there's credited investors involved, or what was the-- >> It's clearly a utility token, because you can build on top of it. Last weekend, the city of San Diego and 120 hackers, a IoT company, were in our office to build on top of our chain, traffic flow and parking solutions for the city of San Diego. So, it's clearly a utility token but because of the uncertain regulatory environment we are actually running it like it's a security, so, we have a Reg A, Reg D, Reg S, whatever, we have 115 different jurisdictions we look at, I spoke during the whole process, I'm not lying, it's-- >> That's a lot of work. >> Yeah. 23 lawyers I spoke with. It's a lot of hours with lawyers on the phone. The most aggressive on of them, she suggested to me a structure with no taxes but 20% prison potential, I think. (laughs) On the other side-- >> It's a good cause. You're doing it right. So you spent a lot of money to make sure that your community was involved. >> Yes. And they weren't throwing a lot of money, like they're millionaires, they're like, let's throw a thousand dollars? >> Yep. >> That kind of numbers. >> Yes, exactly. >> So, it's not like you're breaking the bank but they feel ownership. >> Absolutely. If you look at our telegram channel-- >> And you've raised, what, a million, two million, three million, from that? >> One point seven. >> From the community? >> Only community, those 400 people. We had it open for five to six days. We closed it down. We didn't take any money anymore. And since yesterday, I started talking with institutionals again and now we are a sexy story so now they come again, right? (laughs) >> Platforms are sexy. >> Exactly. >> We know, we have one, too. >> (laughs) That's awesome. Love your project. >> Well, the thing about platforms is that, as you know, we talked about last night, is that the platform wars and the platform entrepreneurial thinking has radically changed. In the old days, it was, I've got a platform and I'm going to monetize my platform for my application. Look at Facebook. >> Right. >> They monetize their platform data for advertisers, not users. I am a Google search engine, I need to make the best search result so I can get better advertising. And search results, thats a part. But the new order is the platform value goes to the users or customers. >> Right, right. That's right. >> So not... >> We are not rent-seeking. >> This is an open model with platforming. >> 100% open. There is a lot of the platforms are rent-seeking, where a certain percent of each transaction goes to the company or to some founders or something. We don't have that at all. So, what we do, for every token we sell, we allocate one to the company and after the token sale there is not going to be ever more XYO tokens ever again. And we use our portion to build this network but we don't take any fees or anything there. >> How do you make money? >> Building partnerships with companies, helping them to build on top of the chain, building the community. >> At some point you need to take a small cut of something, right? >> Yeah, if we own half the tokens, hopefully there is some value. >> They could be-- okay, so you'll get the token opportunity? >> Yes. >> So, on the security token, do the investors, the community and now token holders, is that an equity security token, so they own the company through the tokens, right? Non-dilutive, non-voting equity, is that what you're thinking? >> Yeah, it's not an equity token. It's still in our mind a utility token but we do something very interesting. During the token sale event, we are going to launch an equity sale at the same time. So, you can decide if you are comfortable in the blockchain space, you know, all you want to be an equity investor. The disadvantage is you have less liquidity there but you have all the protections an equity gives you. We are a California-based company. It was audited financial since 2012. SEC-qualified and regulated, so equity in our case is a kind of sexy kind of thing. >> Yeah, and they have the long game. They're betting on acquisition or something else. >> Basically. >> Oh, well, they've got to get some revenue going. Well, what's next? What are you guys doing? Token sale done, is it working? What, is it going on now, let me just check it out. You've completed it? >> No, it's going to start on March 20th. It's going to run for two months until May 20th and so now it's a lot of travel, speaking with people, engaging. >> (laughs) >> Yeah, that's next. >> Well, congratulations. >> Thank you. >> So glad that Carrie on Facebook notified me of you guys. Super-impressed with what you're doing and we had a great conversation last night at the monetize roof party. Great to know you guys. I think IoT really needs this kind of model because there's a lot of real critical challenges around the role of data, the role of immutability. There's all kind of sensor devices out there, cameras, you can't go anywhere, digital cities are coming, smart cities. >> Right. >> Self-driving cars. It's going to be wired up, big time, so I think you guys got a good opportunity. Thanks for coming on theCUBE. This is John Furrier here in Puerto Rico for exclusive coverage of Blockchain Unbound. More after this short break. (electronic beats)

(upbeat music) >> Announcer: Live from San Juan, Puerto Rico. It's The Cube. Covering BlockChain Unbound. Brought to you by BlockChain Industries. (upbeat music) >> Hello everyone. Welcome back to our exclusive coverage here in Puerto Rico. This is The Cube covering BlockChain Unbound, two days of wall to wall coverage. Got videos flying all over the internet. We're here with Patrick Moynihan, who is with BlockChain Unbound, but conference producer, BlockChain Industry CEO. Thanks for coming on The Cube. >> Thanks for having me John. >> And thank you for producing this conference. It is actually a big event, headlining all the top news stories on Wall Street Journal, CNBC's here, The Cube is here, but more impressive is this rebound in Puerto Rico. This event kind of turned into a flash mob of global players, investors, Bitcoin billionaires, Wales they call 'em, entrepreneurs, a real movement. You even had some folks here from the government in Puerto Rico. A real, not just insider event, this is like a bridging the insider world, and the global community. Congratulations. >> Well thank you. It's been an amazing turn out. I really commend the Puerto Rican government officials for stepping up and there are, you know, the department of economic development is our partner in this and they wanted to really promote this. And as you know, there's many crypto currency holders who are migrating to the island for tax purposes, and the seas and their tax based, which is all fully compliant, and have been in the laws for awhile. But the governor, you know, has really stepped up with his team. We've got Secretary Manuel Laboy who spoke yesterday, and had marvelous words to say. Really supportive of the overall industry. He's an engineer by training. So he's not a politician. So he gets kind of business and structure, if you will, and logic. He's great and also George Joyner, the banking commissioner was here and spoke lovely. So the banking commissioner is also forming a formal working group, as is Manuel Laboy. >> So this is actually a really big movement. I'm reporting here, yesterday and today, that it's not a culture clash. The local island residents, and now governments absolutely are on board with bringing together new a new ecosystem for a lot of reasons. One, they are motivated, there's a rebound going on, the hurricane hit. But now you have a new opportunity to be a digital nation. Digital island, probably in the U.S. I mean really be a player in an economic revitalization. Not only the island, but as an epicenter for all this money movement, all this opportunity with BlockChain. So talk a little bit about that dynamic because I think a lot of mainstream people don't understand actually what's going on in Puerto Rico and how it intersects with this global phenomenon. >> Yeah, that's a great question. So, you know, I think think the people of the crypto currency world believe that the technology is so robust, they want to use Puerto Rico as a test bed for infrastructure, for, you know, internet, for all sorts of different things in terms of building the best infrastructure, the newest best in class. And there's real energy here because there's a social movement underneath the entire crypto currency movement. And that's to basically help your fellow man, or women. That's what this is all about. And leveling the playing field. Taking, you know, big brother largely out of it. And just making it fair and transparent. So, I mean, that movement is huge. If people, if people want to understand crypto currency, they kind of need to understand the social impacts and the ability to really improve people's lives. >> I mean, this is not a tech conference. We do hundreds of tech conferences a year, and in our 10th year with The Cube, and you know what a tech conference looks like. This is not a tech conference. This feels like a tech conference, a developer conference, and the world economic forum kind of rolled in to one. Talk about a little bit about the stats. I mean, you guys sold out early. You weren't expecting this kind of a response here. Give some color into, behind the scenes around the event, BlockChain Unbound. >> Yeah, thank you. So we had an idea to kind of bring the dialogue onto Puerto Rico and really build a prepotency of information. An you know, through the process, and this has been a five an a half week process, we had over 800 attendees here today. It's been sold out for several weeks. We're getting calls from everybody. So you can imagine to get a ticket. But at the end of the day, there's a great mix of finance years, technologists, government people, just regular citizens who want to understand this space and how they can get involved in it. And one thing that we're trying to do is bring an education piece here because the BlockChain is about the next generation, and developing the skills and software for them to prosper and understand, and frankly, just you know, grow the space. Because they're the ones that's going to grow it is the next generation. >> Patrick, I want to get your reaction because one of the things I've observed, I've seen many ways in my day, my age, but this one is massive. And everyone compares to the dot com bubble, which there is some comparisons, more accelerated, obviously, more community that the dot com bubble didn't have, but in those big early days of those major inflection points, the business development, the ecosystem is so early, the nurturing is really important and you see a pattern, you see some emerging entrepreneurs. Boom, lucky strike or good hustling. Do something great. Then you see the PR firms come in, promoting it. You had this kind of promotion, entrepreneur, kind of euphoria, and then you got service providers come in, and then you got investors come in. That then takes to the next step. We've seen that. So we got a lot of PR out there. You see PR firms out there, you know, just pumping a lot of ICO's. The service providers are coming in helping entrepreneurs. Now the institutional investors are coming in with hedge funds. Then it goes to the next level. Real industry leadership, which takes that to the next level That's money, that's connecting different ecosystems. What is your reaction to that? Do you see it the same way and if so, what is that next level growth look like from an architecture standpoint? There's also some government participation. But there's competitions, I mean, Estonia wants to be, I heard France wants to be the ICO city I hear Armenia, you've got Bahrain. I mean, every country wants to be that country. >> They do, and we work closely. >> So what's the leader require to go to that next level? >> That's a great question. You know, we're actually in touch and working with many sovereign governments who have a deep interest in this and want to bring either sovereign wealth coin, or some type of crypto currency play, some type of virtual currency asset into their own system. I mean, what I'm seeing is nothing short of remarkable. The speed of technology and energy into this market is frankly just breathtaking. So what we're looking for next is that netscape moment. That implementation where everyone says, oh my goodness, yes this makes perfect sense. And that largely could be around being on a BlockChain application and having no idea it's BlockChain. And part of that is a technological leap because it is complicated. It's going to take some time to build out and create the speed necessary to make the eubicous behind everything that we do online. And that moments coming, in my opinion. >> You know, one of the things that I'm observing as well, and I think that you're right, I think that there's a new level of leadership. Again, that next level requires new constituents, new stakeholders. I was not happy with the John Oliver greasing of Brock Peters. I thought that was unacceptable. But what that sentiment is about, put that little opinion in there, but I didn't like what he did. I thought that was horrible, but. >> There's no reason to be nasty. >> I mean, they just took him down >> You don't have to be nasty >> Just horrible, John Oliver. I'm coming after you. Only kidding, by the way, he's great, he's funny. But that's kind of a cultural thing. We're hearing conversations in the hallway as, hey, I don't mind the burning man culture. But you can't run an industry like burning man. Although, burning man technically looks like a BlockChain if you look at it from the aerial view. But, you got capital markets coming. You got global governments coming in. So you have that naturation dynamic. So a lot of these early guys are feeling, this is my opinion, I'm seeing this, okay, I don't want to get drowned out. At the same time, we want to go the next level. What is the dynamic, in your opinion, you know, you run a really big firm, you're a senior leader. What is that dynamic? How does everyone win? What are the stakeholders? And what's the formula in your mind? >> You know, I mean, now that's an interesting question because you know, the burning man crew has done incredible things in this space. I think that they're largely viewed as potential anarchists to some government officials and there's a fear factor there So you've got that aspect, and then you've got just straight business people that just simply want to economize and efficiencize and just, you know, be smarter, faster, stronger in their business operation, so, somewhere in the middle, there'll be a blending, and I think, we're all going to have to work together. Competitors, colleagues, everyone working together, with government officials. And again, the regulations are still under flux. The regulators been very clear just saying we think self regulation is a good idea. Step it up. And that's one thing that BlockChain Industries, we're taking extremely seriously. We have our own internal initiatives, as well as several external initiatives. So you're going to be hearing a lot more about our own self regulatory issues in the next several months. >> Well, great point. That's the number one thing we hear is the regulatory issues are what scares people. Because they're out on a limb right now, innovating. >> Yeah. >> They don't want the regulatory regimes and or pressures and signaling stunt the growth of the market. >> Yeah, you know I heard something yesterday that really rung a bell for me. It says, we can accomplish the same thing in the KYCAML does, but just in a different way. In fact, we can use technology to make it easier and more transparent and provide that back to the government officials to keep the bad actors out where needed. And so we're all about that, and we're all about working through a transparent system with full AML. >> So are you guys going to do a lot, you guys in the conference business now? >> Well, you know, I think by mistake we are. We're looking to Tokyo, early October. We'll do a BlockChain Unbound in Tokyo. Very exciting, we've got a great presence in Japan with our local partners, Global Fintech Advisors. They placed a billion six and ICO's in the asian market over the last two an a half years. And so they're very plugged, and they're excited to bring BlockChain Unbound to Tokyo. >> Final question for you. BlockChain Industries, take a minute to explain what you do. What you guys do, obviously you have another business. The conference thing just kind of fell in your lap, lightning in a bottle, congratulations. But, good compliment. What is BlockChain Industries do? >> Thank you. We are a diversified financial holding company. And we invest across the ecosystem BlockChain companies. And that includes, you know, attempted developed crypto bank forming long term mining operations. We do ICO consulting. We invest our own capital in certain deals. And we also have a median education component that really is the brand building globally for us. Because without the education piece, it's very difficult for people to kind of get caught up to speed 'cause there's some technical things you need to understand to really apply this technology into the business world. >> So are people investing in your fund, your company? Is that how it works? >> Yeah, we offer a public vehicle to allow investors access to the private virtual currency markets. In a nutshell, that's what we do. >> It's early days, final observation. What did you learn this week that is going to change your world? >> I learned that average business people and senior business people who have typically been shut off to the idea of BlockChain are now seeing this as very real and here to stay. And I mean, across the board, really technical and sophisticated people across the board, plus even normal citizens. They're hearing about, they're seeing it. It's hear to stay. And the momentum is just beginning. >> And it's a social movement, I agree. Congratulations, you guys did a great job. I know, you know, only a couple weeks to prepare. You pulled it off, congratulations. >> Thanks Boomer, appreciate that man. Good stuff. >> These guys could go all the way. Watch BlockChain Industries of course. BlockChain Unbound is the event. It's The Cube, exclusive coverage here in Puerto Rico. I'm John Furrier. Back with more after the short break. (upbeat music)

>> Narrator: Live from San Juan, Puerto Rico It's theCUBE, covering Blockchain Unbound Brought to you by Blockchain Industries (upbeat music) >> Hey, welcome back everybody, we're live in Puerto Rico for the cryptocurrency, global blockchain, decentralized internet, Cube coverage in Puerto Rico part of Blockchain Unbound. I'm John Furrier, host of theCUBE here, also co-founder of SiliconANGLE Media Inc. And, we're here with a first Cube ever, father/son Cube segment where we're going to kind of break down a summary of the show but mainly get the take from a 22 year old. Here with me is my son Alex Furrier who's been doing the schedule and greeting all the guests. Alec has been also demoing our platform that we haven't formally announced but also Not that we have to but it's out there. theCUBE platform, all the back-end data Because it really is getting everyone here excited So, Alec, welcome to theCUBE. >> Thanks, great to be on, finally, after all these years (John chuckles) to be on, it's an honor. >> Well, thanks for all the hard work you did on the schedule but you're a young gun, you're 22 years old. This is an exciting crypto world for your generation. What's your reaction to the commentary you've heard, the stories you've heard, what's the young perspective on cryptocurrency, blockchain, what's the view? >> Totally, it's a totally crazy culture, right? So, there's a very big influx of young talent and talented minds at that, right? And, this is really changing the revolution landscape. It's accelerating the tech. These ideas are being freely shared whereas before there was bottlenecks in the collaboration aspect of the technological field, right? >> You're a gamer, I know that so you're the young eco-system You don't care about data lakes and data centers and cloud computing. What is your generation look at this as an opportunity? What's exciting about it? What's the perspective? >> Well, there's multiple perspectives. The main two I say, there's multiple perspectives. Main two, is one, there's a shit ton of way to make money. And you know, is there a scam? Is there a risk for my business? You know, blockchain is involved. And there's a little bit of that mumbo jumbo going along. But then, there's also the other side that are really into it and really applying the tech and know that this is the best way to collaborate with peers >> What's the coolest thing you've seen? >> The coolest thing I've seen is probably Hashgraph which is actually not on the blockchain and competitors of the blockchain. And that's actually increasing speeds and pretty much making the tech, the back-end infrastructure better. >> So, you dropped out of UCSB, you're going to maybe go back to school but you're also working as a product manager for our crypto project for SiliconANGLE Media, theCUBE, Cube Network, you were giving demos. What is, what are we doing? How would you explain what we're doing? And, what was some of the reactions to the demo that you were giving? >> All great reactions so far. People are very excited what we're building which is a reputation centrality metric. And, what this does, is allows us to track, what users are talking about, and where they're talking about it. And actually, rank their reputation leaderboard rankings by topic, by frequency, by impact down reverb in the entire network. And that allows us to appropriate connections between two people who have different social, culture and professional topics that they talk about. And allow them to create more value for the entire platform, for the community and more importantly, themselves. >> What is, what does that mean, what problem are we solving? >> So, we're solving the Facebook ad word problem of the old generation which is you as a user do not own your data. Right? >> Yep. >> So now, what we have is this user base struggling to find the monetary value in their social media platforms. But now, we are actually offering a way for them to reverse the paradigm and get paid for interacting with others, creating with others and contributing to the community through all of their social media outlets. >> What was the biggest thing that people reacted to at the demos, the variety of tools we showed them. What was the number one, couple of things that they reacted to, what jumped out at you? >> So, I would say what jumped out is, how blown away these people are. They really are, you know, elevated in their mindset when they think about these concepts. Because it expands their mind and when they realize that I can go and expand someone else's mind and their mind will essentially contribute to the entire community. And everyone's going to grow from one initial idea. >> What are you working on, the project? Please share with the folks, what've you been working on, what specific things that you do and you're managing. What's unique about the technology? Share some color commentary on the project. >> Yeah so right now we have a couple of projects going, and, for now, I'll just talk about the platform side of things which is the more futuristic vision. Specifically, we're creating trending communities so we could actually auto generate stories based on Twitter API data, right? And also, our own platform has even more complex metrics which we'll be rewarding people for, so people will get rewards for using our platform more than the Twitter. But we could still have native content versus in-network content being weighed differently. And so, what we're doing is routing metrics of weighted value with a contextual layer on top through natural language processing and machine learning. >> So, are some people saying "Oh, you're like Steam?" How do you respond to that? >> We're not like Steam. Steam is extremely powerhousey and it's momentum and it doesn't actually do topic weighing Right, so, and we also value attention of the crowd so what we're working on is, what do people influence with their reputation? Whereas Steam, it's like, where do people contribute? How much do they contribute? And so, what we want to do is, we say hey, you know if I get uploads on Reddit that should be weighed in the network somewhere else, right? Instead of having a overall karma, we should have one integrated karmic aspect of a topicality so that if my karma, I'm using karma as an analogy cause Reddit has the up votes karma, down votes karma. >> So what about blockchain, why are we So, how would you explain to someone Okay, you're theCUBE what is the blockchain? What is crypto mean for us? >> So, blockchain, we're using it to add a layer of trust and security to our network. So we want transparency within our network and that means we have to have a ledger for every single engagement, interaction like we tweet on the network, right? >> And the crypto, the token, does what? >> Crypto token will pretty much be able to be cashed out thru Ethereum, right, ERC20 but it would also have a weighted role in our two sided marketplace, bounty ask buy. And, that'll be the main medium of where people identify and exchange their reputation. >> How would you describe out platform to a user out there if they say, what do you like, or what are you disrupting, what aren't you like, what are you guys doing, what you disrupting? And why would I want to use your platform? >> Yeah, so I think we're disrupting, you know, multiple companies, right? And, the one I really associate with is a professional Steamit meets Brave Browser, BAT token versus Steam, right? So, BAT is attention only and attention is valuable. I'm here with you, you have a 20 minute interview with me. That's your attention, that's valuable but it's much more valuable than someone else who isn't interviewing, let's just say, someone who is less fortunate. But, that's also a real time aspect. So there's a time variable, there's a network variable and there's a topicality variable, you know the social graph, you got the interest graph, and then the value graph on top. >> So Alec, so if you had to describe what we do in one sentence, what would it be? Putting you on the spot. >> In one sentence, I would say we would call it, a decentralized media platform with rewards for the user base, based on reputation. >> Alright, my son Alec Furrier is also involved in our crypto project, part of theCUBE network coming soon, house of theCUBE is here, the crypto conference, and what better way to align with the crypto community then demoing our token enabled platform. Congratulations to you, Narendra, Kent, Jeff and the team doing a great job with theCUBE network. Cube alumni are all going to get coins, right? Not yet decided but great work Alec, thanks for sharing. It's theCUBE here, Puerto Rico. I'm John Furrier, my son Alec. Thanks for watching. (upbeat music)

live from San Juan Puerto Rico the cube covering blockchain unbound brought to you by blockchain industries hey welcome back everyone live here at the cube in Puerto Rico for our extended coverage exclusive coverage two days wall-to-wall I'm John for the coast the cube co-founder Silk'n angle Media Inc we're here at Alber geo founder of digital bits I owe two days our racket here in Puerto Rico Puerto Rico great to see you thanks for having me guys keep alumnae you're like you know my wingman on the crypto yeah we both were at poly Connie - you're the only cube alumni their first show in crypto as we start our tour now we have a mask probably like 40 interviews so now have 40 new cube alumni but a great community growing a new level of interesting dynamics I want to get your reaction to in any wave there's always a start entrepreneurs making things happen then the promoters the promoters and the entrepreneurs cheerlead each other they cheer lead but it gets up to the point where there's a lot of growth and then the next levels a new set of stakeholders investors global players new stakeholders governments are it's happening now for me this is the moment I starting to see the ecosystem going to that next level blockchain unbound the event we're here at Puerto Rico is a combination of developer conference industry conference investor conference economic world forum rolled into one so it's kind of a unique thing you've been doing a lot of presentations your sponsor here even though your startup a lot of conversations do you agree with that your thoughts your reaction yeah there's definitely the topics or the presentations both yesterday and today have covered all those areas that you discussed with in addition to die would say there's a focus on Puerto Rico itself I mean this particular event that we chose to sponsor which like to point out that everyone is promoting our logo simply by wearing the lanyard for the event but you promise not even out yet no we actually we had an announcement this week so we issued a press release basically articulating for everyone to understand the vision for our blockchain and also announcing that it's going to be launched on Monday so we're really excited about that the team's been working really hard over the past you know number of months working away and we have more exciting news that obviously would be coming up very shortly in terms of what we've done and so forth but our actual blockchain network is going live on Monday I know slaughter is also a sponsor they had a hot deal you've a hot deal your Protestant alia is coming out on Monday you have an announcement what is the product the digital bits it's an open-source project yeah so what's it going to end blockchain infrastructure protocol so I'm watching you know network that we've launches but anybody can tokenize on this blockchain however the specific vision for our project is to support the loyalty rewards industry we see a huge 1/3 of points every year that I guess you go unredeemed the in the United States alone is over 100 billion dollars and perceived value points sitting on the balance sheets of these issuers from retailers airlines so on and so forth it's a huge liquidity issue that number grows every year and so that's what that's one dot o and blockchain has the opportunity to bring loyalty rewards obviously many other things into to dot o and change that game of them and eliminate tremendous amount of friction and challenges that traditionally been experienced by consumers businesses and so forth in the space and so on our blockchain businesses whether it's their existing loyalty program or new loyalty Ramkin tokenize that program on our blockchain and you know so we're not ourselves operating loyalty program but we are very much supporting that industry and in addition to that these various points that are tokenized on our blockchain can be you know consumers could trade points say four points be and so on that's awesome also al you've been also active in the community here in Puerto Rico I've noticed that you've been involved in a lot of activities here on site Puerto Rico since the hurricane sideways big problems aid now getting back on its feet of this community has been doing a lot of stuff you've been very answering that what's going on explain to the people what is the vibe in Puerto Rico is it is it rebounding is it rebound is on the rebounding coming back the role of check the attacks breaks there's a lot of things going on here and there's a number of events obviously this week and going into early next week under this theme called restart week you know from what we've all learned is that there's still a lot of parts of the cylon without power and so forth what's really great I think about this event among other things is that all the proceeds from this event it's a non-profit so go to the people of Puerto Rico and beyond that there is a community here whether it's you know early in the morning for the course of the day and so forth they can you know arrange initiatives and what-have-you to you know do things here to help give back and there's a not I don't think it's just isolated this week has obviously been a lot of news in terms of things that have been happening leading up to to now and and things happening in the future blockchain you and the botching community put the current securities and so forth are really focused on wanting to help you know this island and I think it's a wonderful Island I mean it's you know it's my first visit here but I you know it's it's not it's not hard to fall in love with Barbara Cuba's landed here for two days we're wrapping up two days of coverage what's your observation in the hallways I hear a lot of things happening I heard one VC our investor not VC but now a token investor seven deals mo use a lot of smart people here so the block tower guy earlier I see all the legacy whales are here so the entrepreneurs are here a lot money flowing around there you know so there's obviously a lot of news in terms of how regulation is evolving some jurisdictions faster than others in terms of the introduction of clarity and what-have-you but that clearly doesn't appear to be flopping the enthusiasm in blockchain I mean and it's just further validation in terms of how powerful this technology really is and and you know we'll continue to find its way into into society and so forth I you know well I think it's people have faith that you know in some of these jurisdictions that aren't necessarily moving as quickly that they'll get there and and so you know as a result of that people just continue to stay in the game because it's great to be early so I got to ask you about the just overall activities on-site off-site cowan agendas around the corner tomorrow yes response to there as well by the way well you're flush with cash why sponsor I'm just curious um so because you're a start-up you don't have a product that's right but you pray to the company yes yeah and so we were getting our brand out there now we're coming out of stealth mode this is the first event that we chose to sponsor when agent obviously being the second and so very important we want to let consumer as businesses you know the community know what what we're doing with watching and you know we have and again the course of the next few weeks additional announcements will be making in terms of great people that are involved great partners and so course we're really excited to get that up and the utter in the open and at the end of the day when you build a product marketing is important alright and so this is a great community to support proceeds are going to the this particular event foresees go to a great cause and a lot of great people here so you know among the people on the planet that we would love to have know what we were up to and so that's why we made the decision so as you're doing an IC oh we're not doing an IC engine yeah okay what what are you doing so we have a lot of interest obviously in our project and you know we basically are taking alternative compliant approach to to this and we'll be announcing that obviously at some point in the future but when I said the legal practice no one in practice that one I'll try to knock you off your game go back and rephrase the question so how are you financing this so the great thing is that we've done nothing crypto in terms of creating you know having capital to build this so meeting your own capital yeah we had our own capital so digital bits was born in a company called fuse chamber so a few chain races traditional equity to go do what it wanted to do and among those things was to give birth to this open source project called digit the digital bits project and so you know we didn't need to prematurely create a token just for the sake of having a funding event so we would have capital to build this we did not need to do anything crypto related to be able to have capital to build a blockchain now you are doing crypto related so the show what what's happening with us is that again the network goes live on Monday will be clearly distributing for the market the utility and you know organically you'll see use of what we've done and obviously during stealth mode we evangelize with key partners and prospective partners which gonna be on that your launch who's gonna be using your chain so it will be obviously businesses that are looking to tokenize but in addition you have names we have names what you know unfortunately I can't say the art this time I get announced my money we will be announcing in the future yeah so not on Monday okay I'm Monday we we've Monday on the launch will announce who are amongst the new additions to the team as well on Monday I've been following the launch will will now so who some of the partners are as well well rumor has it you got a hot deal I can tell by your body language you try not to reveal it what's been the reaction for this project it's been phenomenal I mean it's you know obviously as an entrepreneur to to see a vision become a reality and for others share to share that enthusiasm is is is you know it's humbling and so but you know we're very focused we know it's still you know it's a saying that I like you know you know you know with in early in the early days it's not necessarily the time to you know crack open the champagne you still have to demonstrate product market fit you have to help build a market in our particular case so there's a lot of hard work launch it's a start line it's just like it's only a step along the whole process so a lot more steps ahead but we're very focused we know we believe we know what we need to do and it's gonna be a phenomenal year for us all right what's coolest thing you heard this week and the weirdest thing you heard this week no coming no calm that was the weirdest thing you heard okay we know some weird things going on ow cube alumni wingman on the crypto for the cube great to see you good to have you back on thank you very much good stuff Alberto entrepreneur founder of digital bits yo I'm John furry - cube more coverage here in Puerto Rico blockchain unbound after the short break

>> Announcer: Live from San Juan, Puerto Rico, it's theCUBE, covering Blockchain Unbound. Brought to you by Blockchain Industries. (Caribbean music) >> Welcome back, everyone. We're here for exclusive CUBE coverage in Puerto Rico for Blockchain Unbound, a great conference where entrepreneurs and leaders are all here, coming together at a global level. You've got investors, you've got entrepreneurs, you've got the ecosystem developing. We've got it covered for you, I'm John Furrier, your host of theCUBE. Next guest, Joe Mohen, CEO of Chimes, industry executive, a lot of experience doing an ICO, doing some great work, Joe welcome to theCUBE. >> Thank you, it's a pleasure to be here. >> So, tell us first what Chimes is doing. You've got an interesting approach with music. What are you guys doing? Is there an ICO in the future? Have you done an ICO? Give the quick update. >> Okay, sure. Chimes is a digital media company, and we are consolidating music-related search results on Google in a similar way to what Amazon did with IMDB, consolidating film and television results many years ago. Amazon built an audience of about quarter of a billion to half a billion monthly users, and we expect we can create an audience on that order of magnitude over time. Just like IMDB is the third largest entertainment website in the world, it is our objective to create the fourth largest one. >> What's the value proposition there? Acquire audience, use that audience to tokenize? How does the token economics fit into all this? >> Well, first, like any media company, the first thing you have to get is an audience, right? I remember I interviewed for a job at CBS when I was out of college, and in the interview they said, "Do you know what we make here?" And I said, "You make TV shows." They go, "No, we make audiences." So we have to make an audience with a good product. The audience will be driven primarily by search, okay? But we also do have a double ICO in our future. First, we monetize the big audience. You can monetize with advertising, but that's not enough to make big money anymore, right, we all know that. So we have a layer of crypto products over and above that that we're going to be launching, including, for example, inter-country commerce, hiring producers in another country, hiring songwriters, et cetera, but automating that so we can do it on scale with smart contract. So we are creating a micro-currency that we can use on the website. We're doing an ICO for that but that's not for the purpose of raising capital. >> That's more part of the business model. >> That's part of the business model. >> That's not the financial aspect of it. >> Correct, and that's done so we can scale international commerce with automation. We're doing an actual ICO for the equity, for securities tokens as well. I've done a full IPO myself. My first company, I had Microsoft and Novell as my shareholders and it was a full S1, full registration. >> Interviewer: You went through the whole process. >> Yeah, but I also did a Form 10 once, ten years ago, for another reason. So what we're doing is possibly the first, certainly one of the first, but I think the first registration with the SEC of a company actually doing an ICO. And we're doing that using, I don't want to call it a loophole in securities laws, but there is a provision in the 1934 Securities Act called Section 12G. And what this does is it allows us basically to go public by telling the SEC we're doing it without having to delay it to wait for their permission. A Form 10 looks just like an S1, but when you file it, it's automatically effective 60 days after you file it, period. And so what we're doing is-- >> Period, full stop, no issues, no questions. >> Joe: No issue, right. >> So do you have to fill out all the same paperwork, the S1, >> Correct. >> the normal format, do the business plan, the normal paperwork? >> Joe: No, right, in 1930-- >> But there's no comments coming back? You just chip it to them? >> Comments come back and you have to clear them, just like with a prospectus, just like with an S1, however that doesn't delay it becoming effective. It's effective 60 days later. >> So they can be commenting during the 60 day time clock going on, but after 60 days, you're in. >> It's effective. So we'll continue to clear comments, but the thing is, with tokens, who knows how long that'll take? Is the SEC going to shepherd something through with crypto, or are they going to make it take five years? I don't know! Who knows? So, the thing is, we are complying with all of the laws for registration, but 60 days after we file it, it's effective. What we're doing is, in the pre-sale for the tokens, we're not issuing the tokens themselves to the buyers of the pre-sale for six months. The reason for that is they will have met the statutory holding period. So once the Form 10 is effective, those buyers can sell freely on token exchanges-- >> And what's the statutory holding period, six months? >> Generally six months. There's a few exceptions for affiliates, like an insider like me. >> I'm confused, a holding period kicks in before or after six months? >> After six months, the statutory holding period is satisfied. >> So you're going to wait to delay them anyway six months. >> Joe: Yes. >> So that covers the holding period. >> Correct, and then we file the Form 10, and 60 days later, they can trade and anybody can buy them. >> So do you file a Form 10 before the six month holding period? >> It'll be at about the same time. The reason being is because we have to get all the ducks in a row to be a public company. >> Cutting edge advice here, this is fantastic. So you're basically going to be the first ICO that actually files with the SEC. >> Correct. >> I mean, who does that, nobody. You! >> Watch us! >> John: That's awesome. >> Basically, we're using a provision, it's like we went back in time to 1934, got them to put something in the 1934 Securities Act for the purposes of ICO's, and then we came back to 2018 with the time machine-- >> Are you from the future? Back to the future! You went back and jerry rigged it. Hey, we should put this Form 10 in there! >> Joe: There you go! That's right. >> It could come in handy some day during the crypto bubble. >> Joe: That's right. >> So let's back to the cryptocurrency thing. I think you're onto something that I think is a tell sign that I haven't seen yet. I've been seeing some formation of it. You are using two types of tokens. Your business model is do security token for funding, trade that puppy through the Form 10. Utility token, a separate ICO for the product, and that's going to have one token, two tokens? >> There's one utility token, so to speak, one currency token, and that has its own regulations that you have to manage to also. But that's designed to appreciate, but not to go up 17 times. >> Okay, I want to dig into that for a second, because you mentioned scale. You're going to scale your business model with the utility token. That's the purpose of the utility token. So let's get into how you're going to do these smart contracts. Let's just say that a producer in Europe somewhere, in Italy, says, "Hey, I'm going to do something "with Joe in the UK." And they form a collaboration. >> Joe: That's right. >> Do they use that utility token or a new token gets created? >> No, that utility token. It's called a Chime, the Chime token. And what happens with that token is you can build in the contract administration through the token. Right now, you can do international deals. People do them every day. The difficulty is if you've got an audience of a half a billion people a month, for example, to do that on scale and automate it... Right now, if you do a deal with somebody in Japan, you, the American, has to have an American lawyer and a Japanese lawyer. And if there's a dispute, good luck suing. I, one time, a customer in Hong Kong, owed me a million and a half bucks and he's like, "Sue me." I'm in New York, he's in Hong Kong, and good luck. >> Did you do the New York thing? I'm flying over there and going to break your legs! >> We bitched and complained, threatened them, and ultimately we settled on 30 cents on the dollar, so we did, that's exactly what happened. With a situation like this, with smart contracts, neither side has to hire two sets of lawyers in the other country-- >> So Chime takes care of that. You want Chime to take care of that administrative inefficiency? >> Correct. The company might still get involved in administering exceptions but not everyone single one. What the smart contract does is it allows you to scale international business. The key is international business, and that's a new efficiency into the market, and that's a great-- >> And in the business model, what does that scale mean to you for operationalizing it? More people, do you have to hire them? >> More cash. No, less people and more cash because there's more automation, right? It means more software development-- >> Where's the cash coming from? >> We have a lot of revenue products. Like the obvious, like every other website, we have subscription revenue and advertising revenue. Subscription revenue comes from like... You know how IMDB is the LinkedIn of the TV and film business? So we'll have that too. >> It's not really large, though. It can be. >> Amazon could make it larger if they wanted to. They have their reasons for doing it the way they do it. But, in our case, I'll give you an example of some revenue products. Let's say you want to crowdfund a project. So let's say you want a bunch of Taylor Swift fans to crowdfund a project for her to do a duet with Kanye West. Sounds preposterous, but it's goofy enough. You'd be amazed, Stormy Daniels is crowdfunding a project for her legal bills with Donald Trump, and I betcha it's going to get funded, right? >> John: I would agree. >> So there's a lot of nutty stuff that gets crowdfunded. >> The wisdom of the crowd is actually efficient. >> Yes, that's right, and the whims of the crowd. But also, I'll give you another example. Let's say people want, if they go to a webpage about an artist, the band All American Rejects, for example, and Wheeler, one of the band members... Ten years ago, you could have given your niece a gift of a CD of All American Rejects. Well, good luck now. They wouldn't even know what a CD is in many cases, right? But what you could do is say, "Hey, you know what? "I'll give you a gift of a Google Hangouts chat with him, "And I'll pay $200 for that, or $500 for it." >> It's probably a bot, but anyway, how do you make this happen? This is really important. You're creating value by allowing people to collaborate in a way that's different, so that scales. Is that going to be done in the Chime contract or it's all going to be part of one currency? >> One currency, that's right. We're very careful. We brought in as an advisor, Rod Garrett, who gave one of the keynotes here yesterday. Rod Garrett is the money supply economist from UCSB, but he was also former VP of the New York Fed, he was the leader at the New York Fed for cryptocurrency. Rod is one of the smartest people I've ever met. >> You know him? >> Very well now, and you know what, Rod can explain the most complex things in simple words, which means he actually understands them. So we've actually used Fisher's equation to help model the utility token value over time. And, again, it's designed to appreciate, but we don't want nutty appreciation because then it'll be useless as a currency, right? We have fixed supply, the Bitcoin principle, the fixed supply and stable market so we can keep it reasonably stable. >> You're using the utility token to create value on your network so the creators can capture that value. >> Correct. >> That's what you're doing with the utility. The security is the money making side. How are you backing the security token, with equity or cash flow? >> Equity, and very important, really important, if you did a percentage of revenue or royalties, it wouldn't work, and I'll tell you why. It wouldn't scale, because we're looking five years out, 10 years out, for this to be a good investment. We want investors to buy it. And if you, let's say you need to do a secondary, because an acquisition becomes available, because you're low on money or whatever. Then how do you do a secondary if you've already given away 20% of your revenue to token holders. What if you have to do a secondary or tertiary capital round? How many rounds were necessary for Spotify, I happen to know Spotify, it was six, right? Facebook, Google, how many founds of financing did they do? A lot, and by the way, they still might do more. >> So basically the revenue share is hair on the deal. It really puts a lot of hair on the deal. >> Destroys it, in my opinion, destroys it. It's a dressing thing, but look, if you're really going to grow to a major company and have, be it five or 10 year success, it kills it. This is my opinion. >> What percentage of equity, say they're going to do a 50 million dollar raise, hard cap, soft cap, say 25, that's what seems to be the norm right now, what would be a percentage of equity converting to tokens that you'd see? >> In Chimes' case, we have a Common A class of stock. We're creating a preferred class of stock called a Series T which, if fully sold, would be about 43% of the equity of the company. They had to do it preferred stock, because there's too many, in Delaware Corporate Law, which all the tech companies are all Delaware, common stock would be very difficult to make a token. You can do whatever you want with preferred. So the preferred is more flexible, so it's actual equity, actual shares, it's not a derivative, it's not a rev share, it's not a royalty, it's actual equity. >> It's paper that converts nicely and it scales on the business side. >> So you say, "What's the evaluation?" >> We're selling 100 million dollars worth of the equity, or we're offering 100 million dollars of the equity, the pre-sale evaluation is a little over 200 million. In Chimes' cases, that's because we're not a startup, we're an early stage company. >> How old is the company? >> Pardon me? >> How old is the company? >> Three and a half years. >> So you weren't born yesterday. >> We acquired music databases that were built at a cost of tens of millions of dollars in Europe, funded by the richest guy in Europe, who built it out and then got tired of it, tired of funding it, and then we were able to pick it up basically for equity deals. We picked it up and we're buying a second music database also that's a very big one. So it's not like we're a startup with an idea and a business plan. >> No, you've got assets, and you've got momentum, good management, you obviously know what you're doing. It's awesome. You've got a great scalability mindset. You've got a nicely packaged, clear target. >> That's right, so we're probably a little bit different than a lot of crypto startups, in that, a lot of brilliant entrepreneurs that you see here, but we've been around the block with having to do IPO's, having to do exits, having to do... And you know, I'm a contrarian, right? I was getting a lot of advice yesterday from a lot of really smart people saying, "Hey, raise the money overseas through a foundation." >> "Everyone's doing it!" >> Look, I'm going to take a contrarian approach. >> I'm just going to comply with the law, by doing the registration. And they say, "What if your utility token has to comply "with money transfer laws?" Then we'll comply with them! It's like look, the contrarian approach is, whatever the law is, follow it! It gives us the flex-- >> The thing is you're actually doing what they want you to do, notifying them of what you're doing, and you have a utility! >> By separating out the token into two, one that has the attributes of currency, one that has the attributes of an equity, neither one is screwing up the other. >> I agree, that's really smart, and very novel. A lot of smart people are going down that road because it's actually known things people can understand. Security token is paperwork that you can do. >> Yes, but I'll tell you the other thing that feels very important, a pretty important point to make. By doing registration, the resale can go to anybody. My personal opinion, is you know these second market type of approaches that you can only resale them to accredited investors or to foreign investors or whatever, I think that's mistake. I think what happens is people who take that approach are going to find that the resale value of the token, or the token that has securities is going to be about 10% of what it would have been otherwise. >> If they only do accredited? >> Well yeah, because here's the thing. First, it's not only that they got to be accredited-- >> How do you get around the security token? >> Because it's registered. The waitress working the bar here can buy a publicly traded equity if it's registered, right? She can buy a publicly traded token-- >> That's the Form 10 that you were talking about. >> Right, Form 10 registers the company. The initial batch of trading will be done under 144 because the token holds will evolve over six months, so they can sell them at their leisure, right? There are exceptions, by the way, like an affiliate might have to do some form filing. I would have to file a Form 3, you know, the usual stuff. But, a regular token investor, he can do whatever he wants. And I can call them investors. I can do business in the United States. I don't have to pretend I'm domiciled in a country you've never heard of, right? So it's like look, I'm an American, my staff is mostly American, we do business in America, let's follow American law instead of-- >> Joe, this is a great conversation. We're getting down and dirty under the hood, capital structure, business models, Chimes' really interesting approach. Joe, thanks for sharing that great data here on theCUBE. Section 12G of the 1934 Securities Act. Form 10 is the secret weapon that was built by aliens before us to allow us to get this special clause in there for crypto. I'd love to continue this conversation another time. I think there's four or five things we just identified, great great topics, thanks for sharing. It's theCUBE's coverage here in Puerto Rico, I'm John Furrier, we'll be back with more after this short break. (digital jingle)

>> Announcer: Live, from San Juan, Puerto Rico, it's theCUBE. Covering BlockChain Unbound, brought to you by Blockchain Industries. (Puerto Rican music playing) >> Hey, welcome back everyone. This is theCUBE's exclusive coverage here in Puerto Rico for Blockchain Unbound. I'm John Furrier, the co-host of SiliconANGLE Medias. theCUBE is our flagship product. We go out to the events and extract the signal from the noise. My next guest is Christian Ferri who's with Block Star, doing investments, ICO advisor, he's been in the space, great to see you, nice to meet. >> Absolutely, thanks for having me John. >> Thanks for joining. So, okay, some people are saying that we're the top of the bubble, some people are saying that it's the beginning of a revolution. Some people are, like, staying away, "Oh my God, what's going on?" Some of those investing both in equity and token deals. What's your take on this? I mean, how do you explain this? Because it is a global phenomenon, I mean, what's your take? >> Yeah, I think we're at a very early beginning right now. It's definitely, I would say 1996-97 of the internet bubble if you will. We're seeing some amazing growth, right? So, things are picking up real fast I think. You know, the moment that Bitcoin hits $10,000 a lot of people got interested in all this phenomenon. ICOs are becoming the standard for fundraising for startups. It's an interesting model, you don't have to give up any equity, you don't have to give up any board seats, it's much easier, much simpler. But there are definitely some legalities and regulatory aspects that put some concerns in a lot of people's minds. >> What are the, I mean obviously if you're an investor, you got to get a pound of flesh somewhere, the old days was equity and that was a long game, it had a different gestation period. How are you making money now on the investments? Is it just getting on the discounted tokens? Is there a little liquidity going on? So, if there's no dilution, you got to make money somewhere, so, where is the secret? >> Yeah absolutely, great question. So I think if we're looking at security tokens, to finance investment vehicles, the way you make money is by the value increases of the token, right? So, as you buy a $1 and the token goes to $1.50, you have your 50% increase, right, return. There are new companies in the ICO space, they're thinking about leveraging the equity side of things, but it's fairly new. Right now it's merely a token deal, so when you think about private sale, pre-sale, it's 99% a token deal, right? Although equity's coming in because a lot more venture capital is coming in and they're demanding a piece of the action from a company in equity perspective. >> Yeah, and some of the ICO's, because we've outlined this on theCUBE many times, Blockchain, I call it the Crypto-stack, Blockchain, Cryptocurrency, and the application on the financial is ICO, >> Christian: Right. >> But that ICO also translates into the application dynamics of token economics, tends to value creation. >> Christian: Right. >> Hence what you were talking about token value going up, kind of like how equity investment would go up if it got sold on valuation, etc. >> Christian: Right. >> Okay, ICOs are hot. Now the market is pretty aware of the scams, the scams out there. Young kid puts a fake white paper out there, raises 20 million, >> Christian: Right. >> Next thing you know it's like, "where's the money?". >> Christian: I've heard that before. >> And then you've got legit ICOs going off the blocks which a really legit, going great, how do you make sense of it as an investor? Is it classic word of mouth? >> Yeah. >> What kind of due diligence are you doing? What's your filter? >> I think what you said, word of mouth definitely plays a big role in it, I had to trust that toward your network. Having a research team kind of helps understand the technology behind it, if it's actually feasible. I go through 250 white paper a month. >> So you're a white paper reader. >> I am not, my research team oversees actually. >> Okay. >> But as an investment and advisory firm, we have a lot of inflow of companies that want to get advised on or invested in. And a lot of these white papers are total moon shots, it's like build a YouTube and it's 1982, you have a dial up, you can't do that, you need a broadband, right? >> John: Yeah. >> So, you have to have a very diligent process and team that does that. And then think about 99% of the white paper you'll see are going to be crap or junk. Only one or two percent are going to be good. And so that selection process is very key. On top of that, there are a few things in the tokenization process that can raise red flags. For example, if they're too aggressive on the discounts on the private sale, like 70% discount, 80% discount, it's not a good indication, it's a red flag. >> Really, why not? >> It shows that the product is not that great, right? If you have to give somebody an 80%, if you're buying a Ferrari that is discounted at 80%, would you buy it or would you say, "well I'm not sure"? >> Well you could be, it's like giving warrant coverage on a equity deal, >> Christian: You could. >> You could go up to someone and say hey I'm going to give you 80% discount because I want you in my deal, and I want you to make more money than the other guys. >> And what we see. >> I mean that's the counter argument. >> Yeah and what we see. >> I guess what you're saying is there's two vehicles. >> Yeah. >> Desperation. >> Christian: Yep. >> I got to discount the shit out of it to get attraction. And what I'm saying is it's kind of like a hot deal you want the right people in, I've seen both. >> Christian: Yeah it's a good point, usually what we've seen in the past four and a half years is that the good deals don't get discount more than 35%. That's usually the max they get discounted, especially just because you said you need strategic partners to back you up, to help you out since the beginning. These people should be invested in the project, they should not be incentivized by the discount that you're giving them on a private sale. But they should be incentivized because they believe in you and believe in the product. >> So it's a judgment call. >> Yeah. >> You shouldn't have to drop your drawers, so to speak. >> That's right. >> Good feedback, that's great, now token sale economics, I'm the entrepreneur, how should I be thinking about going to you, and I have a good deal, I have a great product, I've got token economics, I'm a growing company, this is an opportunity for me to scale my business at an unprecedented level. I can get more capital than I can on the private market because it's flowing faster here. What do I got to do to get your attention? >> Well, first of all, from an advisor perspective, we only take usually established companies, they have a minimum of 10 million in ARR, so annual recurring revenue. We make a few exceptions, if there's a very strong team, a very strong advisory board, or they have a few characteristics and qualities that we look for. We kind of trying to wave that 10 million ARR, but we're looking for like stellar team, rockstar teams, with a good advisor board, with technologies actually feasible to be built in the next two or three years. And that can actually be deployed on the market. >> So they want to see product, you got to see product. >> Absolutely, absolutely. >> So you don't investing in the moon shot, as you said. >> No. >> Not really because that's essentially a seed deal. >> Yeah, exactly, there are circumstances when you have a very amazing team, that've done some crazy amazing things in the past, and they're talking about moon shots, right? They're, I'm not going to say a name but there's a big ICO right now raising billions of dollars. >> Telegram. >> Right, well I'm going to say a name. >> Telegram, are you in Telegram? >> Sorry? >> Are you in Telegram? >> Yeah I'm a user, right? >> Not a buyer of the ICO. >> I have not invested. >> Okay. >> I have lot of people that want to invest in an ICO, but I personally have different opinions on it. But there's a lot of moon shooting over there, right? >> John: Yeah. >> So you want to make sure there's a fine balance between what you're promising and what you can actually do. >> Great, so what's your advise to entrepreneurs when they're at the stage of, "I really want to do a token sale, I think we're ready". What's your advisory role? How do you come in and help? They might not be ready for capital but they might want some advisory, maybe throw in a little bit of token cash, not token cash in there, but legit cash via tokens. >> Christian: Absolutely. >> How do you engage? What's your, you mentioned some of the 10 million, but what do you bring to the table? >> So the way it works usually is that they come in with a white paper and an idea on an established business that they want to tokenize, and then we basically have a conversation, we start having a conversation to figure out what they want to do. But the first advice that I give my clients is to stop. This business has too much FOMO in it. >> John: Yeah. >> The fear of missing out. So not just because everybody's out there doing ICO you should be doing an ICO, right? >> John: Yep. >> So this is the first thing to take a step back, figure out what really makes sense for you, and your situation in your company. And number two, I always provide the example where, thinking of going ICO in a three step process. You start with the business, right? >> John: Yep. >> So back in the 90s and I think you were around back then. >> John: Yeah, I was. >> When you were asking somebody, when you were saying, "what are you doing?", it was like "oh I doing a startup, "I'm building a company, I'm building a startup", right? >> John: Yep. >> Everybody was talking about startups. You go just about anywhere in the world talking about Blockchain, and somebody stops you and says, "what are you doing?", an ICO, right? >> Everyone's doing it. >> Everybody's doing it, but an ICO is an investment vehicle and not a company, right? >> John: Yeah. >> So, start with the business, got the business mechanics down right, so free cash flow, unique value proposition, product-market fit. Once you've done the business, think about the token model. >> John: Yeah. >> The token model has to go in hand in hand with your business model and revenue model. And don't settle for the first one to come to mind. There are over 50 business, I'm actually writing a book about it, The First ICO Playbook coming out later this year. >> John: Okay, great. >> It's going to have some new token models in it, and once you figure out the business and token models, now it's time to think about compliance. And compliance can actually enable the rest, and, when under the right jurisdictions, they're a match for the token and the business model. >> John: Alright so the token playbook, great job, I'm glad you're writing that book, I think we need to get a good playbook down. Alright so here's a playbook question for you we're going to go to the playbook on this one. Security token, or utility token, okay, we've got that figured out. We got to have utility. I'm going to raise money in the US and abroad, I've decided to go with the security token, hypothetical instance, what do I do? Security to equity? Security for future cash flows? What is the playbook for the security token? >> Well it's more simple than it sounds, in a sense. So the first this is if you're not sure whether it's a utility or a security, just file it as a security. And from a security standpoint, I think you're covered whether or not you're selling to the US or are a US resident citizen, you still have to comply with the SEC regulations just because you're in the US. And so a security can actually have different terms just like you said, a security to equity, a security to token and so forth. That depends on what your revenue model is and what your structure of your company is, and so a lot of people are doing security equity. Other are doing security token, just because they don't want to give up the equity of the company or the board seats. >> John: So what's the biggest thing that you're scared of in this market, as an investor? Are you worried about regulatory? You worried about too much money chasing not enough good deals? What's your fear? >> One of the initiatives I started last year is called the BlockChain Compliance Alliance. It's a no-profit independent initiative to develop a standard for ICOs. >> John: You started that? >> Yeah, I founded it last year with a few other folks, and then five or six people, >> Trying to build some stability around the process? >> You got it, yeah, it's almost like a self regulating standard, or an SRO, right? >> Yeah. >> And we had the opportunity to engage in some regulators, some folks at the SEC and some other government agencies, not just in the US but also in Europe, and they're very open to have a self-regulating standard. >> We need self-regulating standards, the community's got to take care of business, there's a lot of scams out there. >> Yeah, absolutely, so they're open to say to have an industry of self regulating from the top down, the kind of choke innovations. >> John: Yeah. So I'm not really concerned about too much regulations coming in the regulators. >> John: Well the SEC's just been signaling, they've taken a few obvious scammers down, but they really haven't overreached, in my opinion, I think signaling has been good, but they're signaling. >> They are signaling. >> They're not looking the other way. >> Absolutely, and I think it's they're job, they have to be signaling. >> But then they don't know what they're talking about either so the communities got to step up to your point. >> Correct, right, so we're trying to kind of be that, basically that intermediary, if you will, right? >> How many people are involved in that? Just take a quick minute to explain, URLs or like a website. >> Yeah we do, it's blockchaincompliancealliance.org. >> John: Who's involved in that? >> It's five or six people we're getting on, volunteers, it's a nonprofit, so volunteers. We're looking for additional volunteers, donations, and a board of advisory. We have a few high level advisors. >> Whales, whales. >> Yeah, well. >> They're called whales, are they whales? >> Well, whales don't want to be known, it's hard to find a whale, but I said that we have a few high level advisors that would like to come onboard, we're going to make that announcement soon. >> Us minnows out there. >> But it's going to be exciting. >> That's awesome, okay now back to the token economics, I'm fascinated by the token economics. Again, you can't just whitewash a business in saying, "hey I'm tokenizing now", there really has to be a dynamic. What do you look for, what do you observe, and what's your thoughts on how to actually think about the token economics alignment with the business model? Where does that have to line up for you? >> Yeah, good question, I think there are different aspects of it, first of all, you need to define what a token is. Is that for you an incentive mechanism? In which case, you can use an airdrop model, you don't necessarily have to ask people for money. Or is it a fundraising mechanism, or both? So let's just start with these basic questions. You can think of it, you can move on to say, "who's going to be my user?", right? Who's going to use this token? Think about are they going to be moms, dads, hospitals? Like what's my target? And then how they're going to use it, are they going to hold it? Are they going to sell it, are they going to trade it? So all these different things define the token model, right? And the token model, as we said, needs to go hand in hand with the business model, the revenue model as well. So for example a lot of companies are using the token as a fundraising mechanism, but an incentive mechanism as well to incentivize this behavior. >> So talk about the dynamics of an airdrop and a token swap. We're starting to see airdrops are well known, just take advantage of explaining to folks who don't know. And then, I'll get to the token swapping, we're seeing some synergistic keiretsus for me, so airdrops and then token swaps. >> Yeah, airdrops are becoming, basically the new standard, I would say, they're a way-- >> John: Outside the US? >> Even the US, actually. >> John: Are they doing it in the US? Okay, explain what it is. >> There's a company, I think it's called Earn.com, where you can actually launch your airdrop campaign for free or you have to pay something but >> John: What's the URL? >> Earn, Earn.com >> John: Earn.com, okay yeah I see that. >> E-A-R-N, yeah. >> Explain what an airdrop is, just define it. >> So, it's a very simple term, you basically airdrop tokens, you basically give tokens to users, to people, right? So basically people sign up on your site, and you white list an address, and then you basically send those tokens to that address. So it's a way to circumvent a public sale. >> So get free tokens out? >> Christian: Yeah. >> To generate community activity, marketing buzz. >> Christian: Correct. >> So you're just going to airdrop it, kind of metaphorically. >> Right, there are some ways that people do private sales with airdropping. >> Where's the gotchas on the airdrops? Where are people getting in trouble? >> Well, if the token is a security, depends on if they're giving it to you for free, but the value increases, the token increases in value, that delta becomes dubious. From an IRS perspective, from an SEC perspective, from a CFDC perspective, that we still haven't figured out, but ideally if we give out free tokens to incentivize the community, >> Yeah that's normal marketing usage, in the SEC you view that as a utility, a legit utility. >> Yeah we see that with the new bill that passed in the past couple of days, that's how they define utility. >> Alright now let's talk about swaps, token swaps, because starting to see some activity around, self-forming, which is natural in communities, adjacent businesses saying, "hey I'll swap "two million dollars worth of tokens "for two million dollars of mine". Kind of a Barney deal, you love me, I love you back, kind of thing, but it's trying to cross pollinate communities and share value, basically a Bus Dev Bill. >> Christian: Yeah, absolutely. >> What do you think about that? >> It's great, I've seen that a lot of that in forming new partnerships between ICOs. So, let's say there are two ICOs that definitely want to have some IOJV or some partnership together, they have some qualities that they'd like to have of each other, and that's how they do it, they do a token swap. It's almost like an equity swap from a regular traditional company standpoint. It's almost like you want to have an action in the company, and I think it's a great model, it's a great incentive mechanism. >> A great legal bill too in all this, someone's got to pay for it, lawyers are having some fun with it. >> Yeah. >> Kind of new progressive laws being figured out, lawyers generating new dockets for the first time, final question for you, I know you got to run, appreciate your time spending it with us. Puerto Rico, you're observation here, you're from the bay area like we are, what are you doing here? Why are you here? What's your observation, what's the hallway conversation? Share some color commentary about BlockChain Unbound. >> So, I'll start with why I'm here. So, it's beautiful place, the weather is amazing, the water is amazing, it's a great place to take some time off. I'm speaking at a bunch of conferences, and meeting a few people. And I'm part of the movement of the Puerto Rico Crypto Movement. I think it's great, I had the opportunity to meet with some of the government officials that came here at BlockChain Unbound today, and talk a little bit about what's happening, how can we actually make sure that, create some sort of a system that is made for ICOs and BlockChain, and what I like about it is that it's very open to accept new ideas, very open to try out new things, which not always happens in the government space, so I'm very excited about >> And they're really active to open arms. >> Absolutely, absolutely. So, I have very high expectations and very good sense that things are going to pan out here. >> You do any deals here? Write any checks? Sign any commitments? Verbal MOUs, handshakes, what's happening? >> There's been some of that. I'm a big believer that you need to do enough due diligence on the process, so have a cool off period, a honeymoon period kind of cool off but I think there are some very interesting people here, I met some very interesting brains, very interesting products. And the energy, you can feel the energy. People want to try their risk and invest. >> I see a lot of people doing deals, I saw one VC, I'm sorry, VC, investor, token investor, he's done six deals already here. >> Christian: Yeah. >> He's buying tokens, handshake, verbal commitments, and MOUs. >> Yeah there's a lot of that going on. >> And a lot of money coming it, a lot of international too. >> Absolutely. >> So great to see not just here in Puerto Rico, not just US, this is a global phenomenon. >> It is, this is one of the things that BlockChain is about. It's ubiquitous, it's everywhere, and that's the beauty of it. >> Well, Christian, thanks so much for coming on theCUBE, we really appreciate it, thanks for sharing the data and advice. The BlockChain Playbook is coming out at the end of the year check it out, Christian Ferri with BlockStar. I'm John Furrier with theCUBE, SiliconANGLE Media. Live coverage here, wall to wall, two days, back with more after this short break.

>> Announcer: Live from San Juan, Puerto Rico it's theCUBE! Covering Blockchain Unbound. Brought to you by Blockchain Industries. (Latin music) >> Welcome back everyone, this is theCUBE, exclusive coverage of Puerto Rico covering Blockchain Unbound's global conference where token economics meets the real world global society, Blockchain decentralized applications, and of course, cryptocurrency all kind of coming together. You got investors, you got developers, you got billionaires and millionaires, and you got the capital markets all rolled up into one. My next guest is Andrew Prell, founder and CEO of Convergence, entrepreneur, visionary, experienced entrepreneur, welcome to theCUBE. >> Thank you very much for having me! >> So you're doing some really radical, not radical, progressive, I mean radical sounds (mumbles) Awesome things, you're re-imagining gaming. >> Andrew: Correct. >> Got a great team of people who have seen that movie before, literally, seen the entertainment side of gaming, the pro gaming side to the tactical gaming side, take a minute to explain what you guys are doin' that's super fascinating, how it works in this new era. >> So, we're re-imagining the entire game space, when I say that I'm talking the consumer side, that's cell phones all the way through consoles and PCs, out to the out-of-home entertainment side, which is arcades, location-based entertainment and full-blown theme parks, and marrying them all together with one backbone platform that allows all of the devices to interact with each other in the same game space. So you can be in a $300,000 simulator at Disneyland, workin' with guys on cell phones against guys in their head-mounted displays. Any of that, they all work together in one game space. >> So basically the world is the device, every device. >> Yes. >> On the network, IP connection or global, player, console, screen, and you're connecting them all together. Hence Convergence. >> Right, we're giving every device in the eco-system it's proper place and it's proper prestige. 'Cause if you've got a $5,000 gaming rig, you don't think a guy with a $800 cell phone should be at the exact same level, but maybe 10 other cell phones could be a equal match to you. >> Take me through a use case of how you're going to converge this all together. So you talk to some purists out there, "I've got a 4K monitor, I don't want this cell phone guy "comin' in here, he's got lag, "I got all kinds of gaming issues." Does that go away, how does it all work? >> What we're havin' to do is contextual-based interfaces, meaning that your roles and responsibilities in the game space is dependent on the devices that you bring in. Because virtual reality is not just the head-mounted display, it's all the new gear coming out with the tactile feedback, the bodysuits, the gloves, the boots, the treadmills, all of that. All of that, your roles and responsibilities in each game space is dependent on the device that you enter with. >> So I was at Sundance this year and I had a theme, I did a panel I put together called The New Creative. And if you look at all the new artists out there, they want to break down the elite gatekeepers, right? I mean the virtual-reality and augmented-reality world is colliding with film, filmmakers. You got YouTubers out there with a million, 10 million subscribers, built-in audiences, this new technology coming out. A lot of people are bringing storytelling, filmmaking, and it's just really in the early stages right now. People love the characters, but you start to see the new kind of format. Does this play into your world? I can imagine that, if you're thinking to be disruptive in the way you're thinking, new games're going to emerge so it's not thinking about the old games, it's thinking about potentially new games. >> Andrew: Correct. >> How do you view that, is that somethin' that you see? What's your reaction to that trend of this new, multifaceted VR, AR. >> We see that everybody is going to get to play together, cross every device, the developers are going to get rewarded for creating content, people are going to be rewarded for creating things inside of the games, and the players are going to get rewarded for doing all the top things, and getting to the top levels of all the games, and we're going to reward them through our cryptocurrency. >> We're in Puerto Rico obviously, this world's goin' to another level, Brock Pierce, his community, the Blockchain community, they're comin' to Puerto Rico, tax incentives, the government's here opening up their arms, But you're starting to see it go to the next level. These early industries you got the entrepreneurs and the promoters. The promoters promote the entrepreneurs, there's a lot of love goin' back and forth. But then they hit that threshold, the capital markets come in, you know, you start to see the opportunities, but the money start flowing in. It's kind of happening now, so it's goin' the next level. In your opinion, token economics; now that there's so much money flowin' in, now that people see that Blockchain's legit, now that people see that this is actually a new model, not everybody, but majority-a' people in the industry are all noddin' their heads, "Okay, Blockchain's "got some potential, token economics is a legit thing, "it's disrupting capital structures, "it's disrupting funding." How is it disrupting the gaming business? Can you share your opinion on that? >> People don't understand the overall impact. We didn't understand the overall impact. A lot of the investors coming in still don't fully understand the overall impact. I was in a discussion the other day, I'd written some articles in Medium about token economics, and about the virtuous circle of a token-based investment fund. Meaning everything that it invests, all the fees, everything coming out of it, is all based on a token inside of an ecosystem. We're about to head to GDC, Game Developers Conference, just like Kevin Bachus did for the Xbox, we're going out there to license and buy up all the content that we can through our tokens. Now the cool thing here, the thing that just makes the investment, the cash funds dead, is a dollar bill can not change in value other than go down over time slightly. So we'll just say the dollar bill doesn't change in value. If I was Kevin Bachus back when the Xbox was coming out, and I went and invested a million dollars in a hundred companies in crypto, say the Xbox is crypto, and you could only get to those games through the token, which is what we're doing, and I found Halo, which, a hundred-million people bought the Xbox just because of Halo, then what that does for a cash fund is everybody pats each other on the back because you've got one game that's goin' to exit and that's kind of cool, but that's it. Doesn't affect the rest of the economy other than a nice network effect. Halo gets a hundred million users, the next guy might get five million of those or 10 million of those, that's a nice small impact. When you do it with crypto, and you start out with a penny token, that you put a million dollars into a hundred companies, and you find that Halo, and it explodes, your penny token might go to 10 cents. So what you just did was you just 10-exed what you invested into Halo. >> It's a futures contract on gaming. >> Well. >> Kind of. >> I'm not going to talk to that point. (laughs) We're going to just talk about this example, is you 10-exed, you went from a million to 10 million in Halo, but you also 10-exed every single investment you just did, and you 10-exed every person in that ecosystem that's involved in it, that's getting paid in it. Your suppliers, your publishers, your media. >> John: Everyone gets paid. >> Everybody get 10-exed because you found Halo. So that makes this whole ubiquitous ecosystem involved with everybody else, meaning I get rewarded if you get rewarded, so everybody helps everybody else. >> That is exactly the model of token economics. >> Exactly, it explodes because it's so powerful. >> This is interesting, the inefficiencies of the process that you pointed out, the old way, is eliminated by the new model. Hence, the people who pick up the game are the participants who shorten that efficiencies. >> I had a guy the other guy ask me, "you're not asking for enough money with your ICO, "'cause you've got to go invest in all these companies." And I was like, "you don't understand token economics!". All I have to do is unlock the power of my token and invest with that, and I've already proven, back in 2015 we proved that a lot of the game developers would take our token without it even having a secondary market. >> You haven't even gone to a whole 'nother dimension that you don't even have to go to now, but that's future, is the role of consensus in these communities really also do the filtering at many levels. >> Andrew: 100%! >> If you look at what Activision got their ass handed to them, all you got to do is look at the Reddit threads. The whole gaming thing is, no one wants to see games go corporate. Because they had to force a business model, this is a huge issue, people are losing their shirts. "Oh, great creative studio, they sold out, game's over". The audience flocks away, why? 'Cause they have no incentive. Do you agree? >> I agree a 100%, but there's a lot of professional investors that don't. So we broke up the sum of our funds that we're investing into all these startups, we broke it up into 10 funds, and we're going to turn it into a game. We're going to give one of the funds purely to our token holders, and do a consensus model, and let them vote on what they think we should, what should be in our network. And they're going to go up against nine other investors. I threw down the gauntlet. Whoever gets best wins the extra bonuses. >> So are you raising money now or did you raise the token sale already? >> We're closing out our private presale, and because of Blockchain Unbound I doubt we'll actually hit the open market with the ICO, so people will have to go to our developers that we invest in, and get the tokens through them somehow. >> Good success year, huh? Blockchain Unbound been a good success for you? >> Oh yeah, Brock Pierce is on board, been pushin' behind us since Cayman. Him and Crystal both fully supported us and we're havin' awesome. >> What's your advice to people out there, scratchin' their heads, "Andrew, give me "the 101 on token economics, what's the bottom line, "what do I need to know about, where do I get started, "what do I do?". >> Once you get your token actually, say, authenticated, realized, everything's transparent, and it gets on that secondary market, it's better to use that to invest in anything you need to invest in. Get everybody incentivized around your token. All your employees, all your vendors, everybody incentivized around that token, it's a 1000% more powerful than a dollar, 'cause a dollar doesn't go up in value. Your token can go up and down, but trends up, and as soon as you find just one spark that blows up, everybody, all boats rise equally. It's awesome. >> All right, Andrew Prell, CEO, reimagining gaming. Token economics is a disruptive force. There's math involved, every company will need a a chief economic officer, that'll be a new title, we'll be certainly seein' that out. Thanks for comin' on theCUBE, 'preciate it. I'm John Furrier, you're watchin theCUBE. Exclusive coverage in Puerto Rico for Blockchain Unbound. Part of our two-day wall-to-wall coverage, thanks for watchin', we'll be back with more after this short break.

Live from San Juan, Puerto Rico. It's the Cube. Covering Blockchain Unbound. Brought to you by, Blockchain Industries. >> Welcome back everyone. This is the Cube's exclusive coverage in Puerto Rico. I'm John Furrier, the co-host of the Cube, co-founder of SiliconANGLE Media. In Puerto Rico for Blockchain Unbound, this is a global conference. Going to the next level in industry migration up and growth, and blockchain, decentralized internet and obviously cryptocurrency, changing the world up and down the stack. I have an industry veteran here. My next guest Salim is founding CEO, Singularity University and author of the best-selling book, Exponential Organizations. He's seen many waves, friend, known him for years. Haven't seen you in a while, you look great. You haven't changed. >> (laughs) The hair has changed a lot. >> (laughs) I've still got mine. Hey great to see you. Bumping into you in Puerto Rico is really compelling because you have a nose for the future, and I've always respected that about you. You have the ability to understand at the root level what's going on but also pull back and see the big picture. Puerto Rico is the center of all the action because the killer wrap in this is money. So money is driving a lot of change, but there's some fundamental infrastructure, stack upgrades going on. Blockchain has been highly discussed, crypto is highly hyped, ICO's are-- Scammers out there but now some legits. What's your take? What's your view right now on the current situation? >> Well I think what's happening with a place like Puerto Rico is. When you get kind of wiped out of the old, you have the chance to leap-frog. When you think about any of our traditional environments, laying down Blockchain technologies, et cetera. It's really, really hard because you have to get the Supreme Court, the Constitution to approve blockchain based land titles, and then you build a stack there from a legal perspective. Here they can basically start from scratch and do it completely from the ground up. Which is what's exciting for everybody here. >> The top story that we've been reporting here is that Puerto Rico is rebooting. The hurricane obviously, I won't say a forcing function, but in general when you get wiped out, that is certainly an opportunity to rebuild. If there's any kind of silver lining in that. >> There's a long history of that. Japan got wiped out during World War II, so did Germany and they rebounded incredibly. We've seen that recently with Rwanda. We do a lot of work in Medillin, in Colombia, and that's just been one of the worst cities in the world, is now the most innovative city in the world. So this is the transition that we've seen a pattern for. >> One of the things I'm really excited about decentralization and blockchain is all the conversations have the same pattern. Efficiency is getting wired into things. So if you see slack in the system or inefficiencies, entrepreneurs are feeling the void. The entrepreneurial eye of the tiger goes that to that opportunity to reset, reduce steps, save time and make things easier. Classic value proposition in these new markets. You run a great university but also author of Exponential Organizations. A lot of people are scared, they're like, "Whoa, hold on. Slow down, this is bullshit, "we're not going to prove it." And then the other half saying, "No this is the future." So you have two competing forces colliding. You have the new guard saying, "We got to do this, this is the future." Old guard saying, "Blocks, Road blocks, blockers" You covered this in your book in a way, so how do you win, who wins? How do you create a win win? >> You can create a win win. What you have to do is leap-frog to the newest, fast as possible. The only question is, how can you get to the new? And the problem that you have is, as you rightly pointed out is. When you try disruptive innovation in any large organization or institution, the immune system attacks. I saw this at Yahoo running Brickhouse. Yahoo is supposedly a super advanced organization, and yet the minute you try to do something really radical, you spend all your time fighting the mother ship. So I've been focusing a lot of time the last few years focused on that particular problem, and we're pretty excited, we believe we've cracked it. >> How does someone crack that code? If I'm Puerto Rico, obviously the government officials are here at Blockchain Unbound. This is not just a tech conference. It's like a tech conference, investor conference, kind of world economic form rolled into one. >> Sure >> There's some serious players here. What's your advice to them? >> So what we do, and let me describe what we do in the private sector and what we do in the public sector. A couple of years ago, the global CI of Procter & Gamble came to me and said, "Hey, we'd like to work with you." And what we typically see is, some executive from a big company will come to Singularity. They'll go back headquarters with their hair on fire going, "Oh my god!" If they're from BMW for example. They go back going, "Drones, autonomous cars, hyperloop, VR." Back in Munich, they'll be given a white coat and some medicine and be put in a corner. "You're too crazy, now stand over there." And that's the tension that you are talking about. And then somebody else will come six months later then they'll do the Silicon Valley tour, then they'll have one of our people go over there, and it takes about three years for the big company to get up to speed, just the C-Suite to get up to speed. Forget transmitting that down. So I was talking to Linda Clement-Holmes and I said, "Look we're about to start this three year dance "I've been thinking about this, "let's shrink it to 10 weeks." So we designed what we now call an ExO Sprint. Which is how you get a leadership, culture and management thinking of a legacy organization, three years ahead in a 10 week process. And the way we do it is, we're in an opening workshop, that's really shock and awe. Freaks out all the incumbent management. And then young leaders and future lieutenants of the business do the thinking of what should come next. And they report back. Some thing about that opening workshop suppresses the immune system, and when the new ideas arrive they don't attack them in the same way. >> It's like a transplant if you will. >> It's like when you do a kidney transplant. You suppress the immune system, right? It's that same idea. So we've now run that like a dozen times. We just finished TD Ameritrade, HP, Visa, Black & Decker, et cetera. We're open-sourcing it. We're writing a manual on how to do it so that anybody can self-provision that process and run it. Because, every one of the Global 5000 has to go through that process with or without us. So then we said, "Okay, could we apply it to the public sector?" Where the existing policy is the immune system. You try and update transportation and you're fighting the taxis. Or education and you're fighting the teacher's unions. We have a 16 week process that we run in cities. We do it through a non-profit called the Fastrack Institute based out of Miami. We've run it four times in Medillin, in Colombia and we just finished four months with the mayor of Miami on the future of transportation. We're talking to the officials here about running a similar process here in Puerto Rico. >> Are they serious about that? Because they throw money at projects, it kind of sits on the vine, dies on the vine. Because there is an accelerated movement right now. I mean, exponential change is here. I'll give you an example. We're seeing and reporting that this digital nation trend is on fire. Suddenly everyone wants digital cities, IoT is out there. But now what cryptocurrency, the money being the killer app. It's flowing everywhere, out of Colombia, out of everywhere. Every country is moving money around with crypto it's easier, faster. So everyone is trying to be the crypto, ICO city. Saw it on Telegram today, France wants to be, Paris wants to be the ICO city. Puerto Rico, Bahrain, Armenia, Estonia. U.K. just signed a deal with Coinbase. What the hell is going on? How do you rationalize this and what do you see as a future of state here? >> Well I think, couple of thoughts. And you're hitting into some of the things I've been thinking about a lot recently. Number one is, that when you have a regulatory blockage, it's a huge economic developing opportunity for anybody that can leap-frog it. Nevada authorized autonomous cars early and now a lot of testing is done there. So the cities that have appreciated-- >> So you're saying regulatory is an opportunity to have a competitive advantage? >> Huge, because look at Zug in Switzerland. Nobody had ever heard of the place. You pass through there on the way to Zermatt. But now it's like a destination that everybody needs to get to because they were earlier. This is the traditional advantage of places like Hong Kong or Dubai or whatever. They're open and they're hungry. So we're going to see a lot of that going on. I think there's a bigger trend though, which is that we're seeing more and more action happen at the city level and very, very little happen at the national or global level. The world is moving too fast today for a big country to keep up. It's all going to happen this next century at the city level. >> Or smaller countries. >> Or small countries. >> So what's going on here at Blockchain Unbound for you? Why are you here? What are you doing? What's your story? >> I have this kind of sprint that we run in the private sector and in the public sector and then a community of about 200 consultants. And I have to pay 200 people in 40 countries and it's and unholy mess. Withholding taxes and concerns around money transfer costs-- >> It's a hassle. >> It's a nightmare. And so I've been thinking about an internal cryptocurrency just to pay our network. All of a sudden now, three or four countries have said, "Hey we want to buy that thing, "to have access to your network." So I've got all this demand over here, and I need to figure out how to design this thing properly. So I've been working with some of the folks like Brock and DNA and others to help think through it. But what I'm really excited about here is that, there's a-- You know what I love is the spectrum of dress. You got the radical, Burning Man, hippie guy, all the way to a three-piece suit. And that diversity is very, very rich and really, real creativity comes from it. This feels like the web in '96, '95. It's just starting, people know there's something really magical. They don't quite know what to do. >> Well what I'm impressed about is that there's no real bad vibe from either sets of groups. There's definitely some posturing, I've noticed some things. Obviously I'm wearing a jacket, so those guys aren't giving me hugs like they're giving Brock a hug. I get that, but the thing is, the coexistence is impressive. I'm not seeing any real mud-slinging, again I didn't like how Brock got handled with John Oliver. I thought that was unacceptable because he's done a lot of good work. I don't know him personally, I've never met him, but I like what he's doing, I like his message. His keynote here, at d10e, was awesome. Really the right messaging, I thought. That's something that I want to get behind and I think everyone should. But he just got trashed. Outside of that, welcoming culture. And they're like, "Hey if you don't like it, "just go somewhere else." They're not giving people a lot of shit for what they do. It's really accepting on all sides. >> Here's my take on the whole decentralization thing. We run the world today on a series of very top down hierarchical structures. The corporation, the military industrial complex, Judeo-Christian religions, et cetera. That are very hierarchical-- Designed for managing scarcity, right? We're moving the world very, very quickly to abundance. We now have an abundance of information, we'll soon have an abundance of energy, we'll soon have an abundance of money, et cetera. And when you do these new structures, you need very decentralized structures. Burning Man, the maker movement, the open-source movement, et cetera. It's a very nurturing, participatory, female type of archetype and we're moving very quickly to that. What we're seeing in the world today is the tension going from A to B. >> And also when you have that next level, you usually have entrepreneurs and sponsorships. People who sponsor entrepreneurs the promotion side of it, PR and that starts the industry. Then when it hits that level it's like, "Wow it's going to the next level." Then it gets capital markets to come in. Then you have new stake holders coming in now with government officials. This thing is just rocket-shipping big time. >> Yes >> And so, that's going to change the dynamics. Your thoughts and reaction to that dynamic. >> Completely, for example... When we do these public sprints we end up usually with a decentralized architecture that needs to built. For example, we're working with the justice system in Colombia. And the Supreme Court has asked us to come in and re-do the entire justice system. Now you think about all the court filings and court dates, and briefs, and papers all should be digitized and put on a blockchain type structure because it's all public filing. We have an opportunity to completely re-do that stack and then make that available to the rest of the world. I think that trend is irreversible for anything that previously had centered-- I mean, most government services are yes, ratifying this and ratifying that. They all disappear. >> Well Salim, I want to tap your brain for a second. Since you're here, get it out there, I want to throw a problem at you, quick real time riff with you. So one of the things that I've been thinking about is obviously look at what cloud computing did, no one saw Amazon web services early, except some of the insiders like us. Who saw it's easy to host and build a data center. "I have no money, I'm a start-up or whatever." You use AWS, EC2 and S3... They were misunderstood, now it's clear what they're doing. But that generated the DevOps movement. So question for you is, I want to riff with you on is, "Okay that created programmable infrastructure, "the notion of server-less now going mainstream." Meaning, I don't have to talk about the server, I need resource so I can just make software, make it happen. That's flipped around the old model, where it used to be the network would dictate to the applications what they could do. How is that DevOps ethos, certainly it's driven by open-source, get applied to this cryptocurrency? Because now you have blockchain, cryptocurrency, ICO is kind of an application if you will, capital market. How does that model get flipped? Is there a DevOps model, a blockchain ops model, where the decentralized apps are programming the blockchain? Because the plumbing is the moving chain right now. You got, Hashgraph's got traction, then you got Etherium, Lightning's just got 2.5 million dollars. I mean, anyone who's technical knows it's a moving train in the plumbing. But the business logic is pretty well-defined. I'm like, "I want to innovate this process. "I'm going to eliminate the efficiency." So this dynamic. Does the business model drive infrastructure? Does the plumbing drive the business model? Your thoughts on this new dynamic and how that plays out. >> I suspect you and in violent agreement here. It's always going to be lead by the business model because you need something to act as the power of pull to pull the thing along, right? The real reason for the success of Etherium right now is all the ICOs and it was a money driven thing. Today we're going to see these new stacks, now we're on version three of these new types of stacks coming along, and I think they're all looking for a business model. Once we find some new killer ops for this decentralized structure, then you'll see things happen. But the business model is where it's at. >> So basically I agree with you. I think we're on the same page here. But then advice would be to the entrepreneurs, don't fret about the infrastructure, just nail your business model because the switching cost might not be as high as you think. Where in the old days, when we grew up, you made a bad technical assess and you're out of business. So it's kind of flipped around. >> Yeah, just hearing about this term, atomic swaps. Where you can just, essentially once you have a tokenized structure, you can just move it to something else pretty quickly. Therefore, all the effort should be on that. I think finding the really compelling use cases for this world is going to be fascinating to see. >> So software-defined money, software-defined business, software defined society is coming. >> Yes >> Okay, software defined, that's the world Salim thanks for coming on, sharing your awesome expert opinon. Congratulations on your awesome book. How many countries is your book, Exponential Organizations-- >> It's now about a quarter of a million copies in 15 languages. >> Required reading in all MBA programs, and the C-Suite. Congratulations, it's like the TANEx Engineering that Mark Dandriso put out. A whole new paradigm of management is happening. Digital transformation. >> We now have the ability to scale an organization structure as fast as we can scale technology. >> Blockchain you know, the nature of the firm was all about having people in one spot. So centralized, you can manage stuff. Now with blockchain you have a decentralized organization. That's your new book, the Decentralized Organization. >> Although, I'm not sure I have another book in me. >> There's a book out there for somebody, Decentralized Organizations. Salim, thank you for joining us. The Cube here, I'm John Furrier the co-host. Day two coverage of Blockchain Unbound more coverage after this short break. (electronic music)

>> Narrator: Live from San Juan, Puerto Rico, it's theCube. Covering Blockchain Unbound, brought you to by Blockchain Industries. (upbeat Latin Music) >> Hello everyone welcome back to our our exclusive coverage, theCube in Puerto Rico for the big story about Blockchain UnBound. That's the event it's a global conference from investors, bitcoin billionaires and millionaires, as well as entrepreneurs coming to Puerto Rico to discuss the future of Blockchain, the future cryptocurrency, the future of decentral application. Partnering with the island of Puerto Rico, our next guest is Damarius Riviera with Puerto Rico Advantage. And the big story is a lot of people are moving here for either tax advantages or entrepreneurial reasons and Damarius and her team at the Puerto Rico Advantage help set that up. Damarius, welcome to theCube. >> Hola, how are you? >> Thanks for coming on. >> Thanks. >> One of the big rush here is like a gold rush for folks coming in, moving to Puerto Rico but it's hard. You guys provide a service to do that for folks. How fast is it, how does it work? How does the service work? Okay, we're Puerto Rico Advantage came together as me, I'm a local from Puerto Rico and my partners are American from Wisconsin. They're both Act 20 and Act 22 themselves. So when they got here to the island, they took like seven months to find out the opportunity analysis and if the tax incentives work for them. So when they met me, I worked previously in the government before so I know how all of this works and I said let's come with one business that will be a one stop for each client. So when they come to us they get their grants, plus the relocation services for their business and themselves. >> Certainly the incentives right now are really wonderful for business and folks who are building companies and creating wealth. The tax advantages are here. There's been a surge of people coming here. What's it like? What's, how many people are coming through? Was it a lot of volume? You guys busy? Give us some insight into how it's working. >> Yes, a lot of people are coming. They're moving real estate pretty much in San Juan area. It's gone, so the other places like Dorado and Rincon are packed. When I go to the supermarket, everywhere I go it's full of American and people from upstate. And when you ask them where you're from and they will tell you from Puerto Rico. They're already calling themselves Puerto Rican. So it's very exciting and a great opportunity for us. >> One of the things I've been impressed with is the acceptance and the blending of the island folks and people coming in. Take me through an example. Let's just say hypothetically, hypothetically, I wanted to move to Puerto Rico, what do I do? I call you guys up and say hey get me a flat, get me a house. I need security I need a car. Do I need a driver's license? Do I need insurance, I mean what has to happen? Take me through and how do I, and what happens for me? Is it turn key, is it easy? What do you guys do? What do I have to do? Take me through a use case. >> Okay, first when the client calls, if it's interested in Act 20 business, they will tell a little bit about their business and then we can say if their business qualified. Then, we will take them to the CBA and work everything about the grant. It usually takes two week depending on all the info the client gives us and the quickly and I will manage everything in the government agencies. For the residential part, we schedule their meetings when they have kids to the great private schools here. We help them with the real estate, driver's license. They do need driver's licenses. I take them to get their voters ID, everything. We have like a draft, a checklist, with everything they need to qualify for residence, a Puerto Rico resident. And we take them, we make the process very easy for them. >> So they write a big check to you guys, for the service, but you guide them through the entire process? >> Yes, we do. >> So, for individuals, you can do it for individuals and businesses and individuals right? >> Yes. >> Take me through the scenarios. >> For individuals it will be the basic Act 22. So, that one is very simple and we just tell them what they need to do to comply with the 183 days they need to reside here in Puerto Rico to get the benefits for the grants tax incentives. >> So, take me through the business aspect. >> Oh, the business aspect is also very easy. As long as your company gives an export service, it qualifies. So, we even do the, if they need to hire staff, manage their business, everything. We help them with everything. >> And you guys see a lot of business coming from, people that were going to go to the Cayman Islands, or somewhere else, are they coming here? >> Yes, everybody likes because they feel Puerto Rico is part of the United States, but then we don't pay federal taxes so they have that great benefit, so they're moving a lot of the companies here. >> So since the Hurricane obviously there's been a lot of effort in the U.S. and focusing attention on helping Puerto Rico, and there's been stories good and bad, but as the new Blockchain and the Bitcoin cryptocurrency newly minted millionaires and billionaires come in, how has the culture reacted to that? They seem to be open arms. Has it been well received? What's some of the feedback that's been happening here in Puero Rico with the new in migration of folks? >> Yes, it's very well received and it's amazing because this group of the Blockchain just came after Hurricane Maria. So people were amazed like, wow, they're still considering moving here and help the island, even after this big natural disaster. So, it gives hope to a lot of people here and it's helping the island to do a lot of more progress. >> And what's great is the island is first of all beautiful but, with the infrastructure, opportunity to reboot it and reset new infrastructure, all the tech geeks, this is Blockchain, they're like tech nerds. They love the high-speed internet, they want to have the good infrastructure and the schools have now connected Blockchain. I talked to an entrepreneur here two days ago where he's linking all the schools, educational institutions and colleges with Blockchain to create a community. So there's kind of a nerd nation emerging here in Puerto Rico, isn't there? >> Yes, yes, it's amazing that we've been considered for all of that. >> Well thank you for coming on and explaining The Puerto Rican Advantage. Also, her partners are Jennifer Brockman and Angela Brookman. You guys are doing a great service. Thank you for what you do. I think a lot of people that I've talked to really appreciated it. For folks who want to come to Puerto Rico and help out and contribute but also get some real advantages for the business and as an individual. The tax breaks and the benefits are significant here and it's part of the U.S. So, great stuff. Thank you so much. >> Yes, thank you a lot. >> More live coverage here in Puerto Rico. I'm John Furrier, host of theCube. We're back after this short break. (electronic music)

>> Announcer: Live from San Juan, Puerto Rico, it's theCUBE covering Blockchain Unbound. Brought to you buy Blockchain Industries. (upbeat music) >> Hello everyone, welcome to our exclusive coverage here in Puerto Rico with theCUBE on the ground for extensive two days of coverage for Blockchain Unbound in Puerto Rico where all the action is. It's a global conference where investors, entrepreneurs, thought leaders are all coming together to check out the future and set the agenda for Blockchain cryptocurrency and the decentralized internet. My next guest is John Hartigan, Executive Vice President in Intiva Health. Welcome to theCUBE. >> Thank you. >> So we were talking yesterday with Hash-Craft, CTO, you guys are part of that ecosystem, you guys are doing some of these things with health. Take a minute to explain what you guys are working on and your value proposition. >> Sure, so, Intiva Health is a career and credential management platform for physicians and all licensed medical professionals, and it streamlines and automates the credential management process that they have to go through every time that they either change positions or take on temporary work. And the Hash-Craft integration is allowing us to do instantaneous credential verification. Currently the state of affairs in the granting of privileges at a particular hospital or a facility can take literally weeks and in some cases months to complete. It's a very analog process, and with our integration with Hash-Craft, it will take seconds. >> So I was watching The New York Times today, an our Wall Street Journal article about verification of work history. This Blockchain is certainly a good example of that, but you're now getting it into more of health, what is the use case, what's the low hanging fruit that you guys are going after with your solution, and how does that evolve and how you see that evolving? >> Well, so, like I mentioned, the current verification process for the granting of privileges in a hospital setting, it is pretty much unchanged since the 1950s. The internet helps a lot but what you're talking about is somebody getting a credential paper file with 25 or 30 documents, and opening the file and picking up the phone and calling, and verifying the reputation and provenance of that particular physician. And it's truly a bureaucratic nightmare. It's red tape to the nth degree. And so that represents thousands and hundreds of thousands of hours and billions and billions of dollars in waste that could be reallocated to better patient care for example. >> The big use case we're seeing education, the workplace, but now healthcare. I see a perfect storm for innovation. Healthcare is not known for moving fast. >> John: Correct. >> HIPAA regulations in the past couple decades really put a damper on data sharing for privacy reasons. At that time it seemed like a good call. Has things like HIPAA, has the cloud computing model opened up new avenues for health because everyone wants great healthcare, but the data is stuck in some silo, database. >> Database, absolutely. >> That's the problem. >> That's absolutely a problem. >> So what's your reaction to that? >> So the approach that we're seeing a lot of organizations take is they are attempting to go after the EHRs and the EMRs, the Electronic Health Records for Patients. Of course that is something that needs to be fixed. However the medical space is truly influenced, the main stakeholders are the physicians. They sit on all the committees, they run all the budgets, they make the policy. So it's imperative that we address the physicians and get their buy into any kind of significant change. And what you're seeing now is states, as well as other organizations including the federal medical board, the Federal Association of Medical Boards, as well as the State of Illinois, Wyoming is here, as a matter of fact, representing, and they are all looking at Blockchain solutions for this verification problem for the medical space and remaining HIPAA compliant. >> Let's talk about security because hospitals and healthcare organizations have been really good targets for ransomware. >> John: Absolutely. >> And so we're seeing that mainly because their IT systems have been kind of ancient in some cases, but they're right in the target of, they don't have a lot of IT support. One of the things about Blockchain, it makes these things immutability. So is that something that is on the radar, and how is, I mean, not necessarily ransomware, that's one example of many security issues 'cause you got Internet of Things, you have a slew of cloud-edge technologies-- >> John: Yes. >> That are emerging, that opened up a surface area for a text. So what's your thoughts on that? >> So, as you mentioned, the traditional models have been layered on top of each other overtime. It's a patchwork situation. And because it's a patchwork situation, there is vulnerabilities all over the place, in facilities a lot of times. And besides that, the medical space is probably 10 years behind the times when it comes to technology, maybe five at a minimum. The model that we're using, you mentioned earlier that there are siloed information in these different facilities and hospitals, and that's absolutely true. So all of that information, you have facility A, facility B, facility C, they all have information on one particular provider or physician, but they don't talk to each, and that information is at different levels of accuracy and timeliness, you mentioned time and date stamps. So our model works where the information follows the provider, okay, it's all built around the provider themselves, and then the individual facilities can tap into that information, and also they can influence the information, they can update it. So everybody will then be talking to each other in an anonymous fashion around the one provider updating that information and making it the most accurate in the market, and we get away from the old SaaS model. >> Before we deep dive in here, I'm going to ask you one more thing around as you walked into healthcare providers and then the healthcare industry, you're a different breed, you have Blockchain, you got different solution, the conversation that they're having is, let's put a data leg out there, again, centralized data leg. ISPs are doing that. We know with cybersecurity, any time you have centralized data resources, it's just an easier target to hack. >> John: Correct. >> So it's clear that centralized is not going to be the ideal architecture, and this entire movement is based upon the principles of decentralized data. >> John: Yes. >> So what's it like when you go in there? It must be like, do you have like three heads to them? Or are you like a martian, you're like speaking some foreign language? I mean what is it like, are there people receptive to what you talk about? Talk about some of the experiences you had when you walked in the door and knocked on the front door and walked in and talked to them. >> So it is an interesting situation. When I speak with CEOs and when I speak with COOs, they understand that they're vulnerable when it comes to their data, and they understand how expensive it is if, for example, if they have a HIPAA breach, it's $10,000 per occurrence. Now that means if somebody texts patient information to somebody else on a normal phone, that $10,000 every time that happens, okay. And so if it's a major data breach, and a record of files if they have 50,000 files lost, I mean it could be a killing, a business killing event under the right circumstances. So I tried to educate them about-- >> Do they look at Blockchain as a solution there? Or are they scratching their heads, kicking the tires? What's the reaction? >> They're interested, they don't understand exactly how we can apply Blockchain, and we're trying to educate them as to how that is, we are capable of doing so. We're explaining about the vast security improvements by decentralizing the information, and they are receptive, they're just reticent because they're very, tend to be more conservative. So as these organizations like the State of Illinois and the Federal Association of Medical Boards, as they start to adopt the hospitals and facilities, they're starting to look in and oh say, "Hey, this is a real thing, "and there may be a real application here." >> Talk about your business, you market, you go on after obviously healthcare, product specifically in the business model, where are you guys? How big are you? Are you funded? Are you doing an ICO? How are you using token economics? How is it working? Give us a status on the company. >> Sure, so, we've been in business for approximately two years. We're a funded startup out of Austin, Texas. We are born actually out of a practice management company which is an important point because a technology company trying to solve this problem would really struggle because there is a lot of bureaucracy, there's a lot of nuance in how the system operates because it is evolved overtime. So that gives us a very significant advantage. We have an operating platform that has been out for a little over a year now, and we have thousands and thousands of physicians and other licensed medical professionals that use the platform now. >> Are they paying customers or are they just users? >> No, so the model works like this, it's free to the providers, it's also free to the facilities and medical groups, and so we allow that platform, that utility for them to use. How we monetize is we have other curated goods and services for the providers along their career journey. So, for example, continuing medical education. All providers are required to take so many units a year, and we have a very robust online library of CME. And we also have partnerships with medical malpractice organizations. >> So it's a premium model. You get them using the platform. >> Correct, that's right. >> Where does tokens fit in? Where does the cryptocurrency fit in? Do you have a token as a utility, obviously, it's a utility token. I mean explain the model. >> Correct. Yeah so we just announced last Friday. in South by Southwest that we are launching a token, a utility token, and it'll go on sale April 19th. And basically how it works is the providers, the physicians will earn tokens by taking actions in the platform that update their data for example, or if they look for a job on our platform, or if they do different tasks in the platform that improve the veracity of their data, and then they will be able to use those tokens to purchase the continuing medical education courses, travel courses, medical malpractice insurance, a number of different resources. >> Token will monitor behavior, engage behavior, and then a two-sided marketplace for clearing house. >> Exactly. >> How does the token go up in value? >> We have multiple partners that are involved, so the partners will be also purchasing advertising time, or it's a sponsorship model, so they'll be able to sponsor within the platform. So the more partners we bring in, the more providers we have, the value-- >> So suppliers, people who want to reach those guys. So >> Exactly. >> You get the coins, you see who's doing what. You get a vibe on who's active and then >> Exactly. That's a signal to potential people who want to buy coins. >> Yeah, and when we announced that we were doing this token, we had multiple partners that we have been in business with for the last two years, saying, "We want in, we want to do this, "we want to get involved." Oh another thing that we're doing with the token, we have an exclusive relationship with the National Osteoporosis Foundation, and we put forth to them that we would like to set them up with a crypto wallet so that they can accept donations, and then we would also match those donations up to a certain point that they receive in crypto. So we want to help our organizations, our not-for-profits by facilitating crypto acceptance. >> So talk about your relationship with Hash-Craft. It's two days old but it's been around for two years, they announced a couple days ago. It got good feedback, a lot of developers are using it. It's not a theorem but that's the compatibility to a theorem. You're betting on that platform. How long have you worked with these guys, and why the bet on Hash-Craft? >> So we were looking at Blockchain Technologies about two years ago because we realized, as you mentioned earlier, the security issues we have. We have to be very aware of the type of data that we're holding. So at the time though, there were significant issues with speed, significant issues with storage, and how it would work by actually putting a credential packet into Blockchain, and the technology frankly just wasn't there, and so we started looking for alternatives. Thankfully we were in Texas, and we happened to run into Hash-Craft, and they explained what they were doing, and we thought this must be too good to be true. It checked off all of our boxes. And we had multiple conversations about how we would actually execute an integration into our current platform with Hash-Craft. So we've been in talks with them for, I think, a little over five or six months, and we will actually, it looks like be one of the very first applications on the market integrating Hash-Craft. >> It's interesting, they don't really have a Blockchain-based solution, it's a DAG, a directed acyclic graphic model. Did that bother you guys? You don't care, it's plumbing. I mean does it matter? >> So actually the way that it is established, it has all of the benefits of Blockchain, and none of the fat and sugar, so to speak. I mean there are a number of things that they do that Blockchain-- >> You mean performance issues and security? >> Performance, speed is a big one, but also fairness on the date and timestamps, because with the verification system, you have to prove, you have to be able to prove and show that this date and timestamp is immutable, and that it has been established in a fair manner. And they have been able to solve that problem, where the Blockchain model, there is still some question about, if you have some bad actors in there, they can significantly influence the date and timestamps. And that was very significant for our model. >> Alright, well, congratulations. What's next for the company? What are you guys doing? What's the plan, what's the team like? Well, excited obviously. What's next? >> So we are going to be announcing some very big partnerships that we've established here late spring. I was hoping to do it here now, however we've-- >> Come on, break it out then. >> I would like to but I have to be careful. So we have some big partnerships we're going to be announcing, and of course we have the token sale coming up so there'll be a big-- >> Host: When is that sale happening? >> So it starts April 19th, and it'll run for about six weeks. >> What's the hard cap and soft cap? >> Yeah, we prefer not to talk about that, but let's say, soft cap, about 12 million. And we have some interested parties that want to do more, and so we're looking at what our best options are as far as setting the value to the token, and what the partnerships that are going to significantly impact it will be. >> Well, great job, congratulations. One of the big concerns to this market is scams versus legit, and you're starting to see clearly that this is a year, flight to quality, where real businesses are tokenizing for real reasons, to scale, provide value. You guys are a great example of that. Thanks for sharing that information. >> We're really excited, and it's very exciting to bring this to the healthcare space which is, as we said, conservative and somewhat traditional. And we believe that we will be setting the standard moving forward for primary source verification. >> And you can just summarize the main problem that you solve. >> Yeah, it is that analog primary source verification of the credential documents, and when our platform goes live, we will literally be putting hours of time a day, something like eight hours back into the providers' lives, and back to the money of that, associated with that back to their pockets, which we hope translates into better patient care. >> So verification trust and they save time. >> John: Absolutely. >> It's always a good thing when you can reduce the steps to do something, save time, make it easy. That's a business model of success. >> Absolutely and more secure. >> John Hatigan, who's with Intiva, Executive Vice President from Austin, Texas here in Puerto Rico for theCUBE coverage. Day Two of two days of live coverage here in Puerto Rico, I'm John Furrier with theCUBE host. We'll be back with more live coverage after this short break. (upbeat music)

>> Announcer: Live from San Juan, Puerto Rico, it's The Cube covering Blockchain Unbound, brought to you by Blockchain Industries. (rhythmic salsa music) >> Hello, everyone, welcome back to our exclusive coverage here in Puerto Rico, Blockchain Unbound Global Conference where the leaders in the industry from entrepreneurs to investors and everything in between, from San Francisco to New York, Miami, South Africa, Russia, all over the world are here in Puerto Rico, The Cube's coverage. Our next guest is Naomi Brockwell who is hosting the event here on stage. She's emceeing it all. You go to her YouTube channels /naomibrockwell, check out her videos, hosts events all over the industry, Blockchain, celebrity, thought leader, futurist. What else are you? >> You're very, very kind. It's all not true, but I have been in the space for awhile and I love Blockchain text, so it's exciting to be here. >> I'm really impressed by your stamina and passion on stage. What a line up today, so give us the quick highlights What happened today, we were here filming. What happened inside the venue? We saw some great talks come through there. >> Yeah, we saw some great ones. A probably a highlight for me was seeing Alena. She was the former CEO of SatoshiLabs, which created Trezor, one of mt favorite hard wallets, by the way, and it was just great listening to her talk about security because that is something that is so important and people do not take seriously enough. I have people telling me, "Oh, Naomi, I started up this wallet, and I stood my public in the..." I was like, "So did you write down your private key and all that, it's in a safe place?" He's like "Yup, it's in my DropBox." I'm like, "No, what are you doing, this is not good!" Hearing her basically say anything that has touched the internet ever, any device that has been on the internet ever is not secure. Do not trust it, you need to use offline things. >> There's a lot of wallet grabbing going on digitally. >> Absolutely. >> That's come up. I saw some stuff on Telegram, people that we know, be like, "Hey, beware, a lot of hacking out there. "Got to watch your coins." >> And also, I mean there's just huge gains to be made, right, so it makes sense, especially we expect the price of Bitcoin to go up. You have hackers just targeting at specific wallets, and specific vulnerabilities, and they just keep going until they get through, so you've got to be vigilant and you got to take every precaution possible. Got to take it seriously. >> Is there a best practice that you observed? >> Absolutely. Don't store anything online. And another thing, people are telling me, "Yeah, you know, I have my private key written down." I'm like, "Great, you wrote it down twice?" They're like, "Yeah, I just printed that out twice." I'm like, "No, your printer stores an image "of everything you've ever printed out "and it's connected to wifi at all times. "That is going to be hacked. "Do not print out your private key, "your paper wallet, anything. "You've got to write this down." Paper and pen is the best practice you can use and-- >> Going old school analog, big time. >> Absolutely. And isn't that funny? You have this amazing new tech that's fantastic, cutting edge, and what are we doing to keep it safe? Pen and paper. >> Yeah, turn off all wifi, put on some vinyl records, eight-track recorder, going old school. Okay, I got to get-- >> But holding your own coins, holding your own money, having control of your own money, no one said that's the easiest practice. They just said it was the most secure and is going to give you the most power over your funds, and so if you want to do that, there's a price to pay and that is being vigilant about your security. >> One of the things about that I'm interested in talking to you about is being someone who's present at creation of a big movement like this. You've seen the evolution. What's the growing pains in the industry 'cause we're seeing a lot of people who are the pioneers, now that people, I won't call them tourists because they're still young and emerging, but you have a lot of get-rich-quick schemes. Those are obviously being filtered out pretty quickly by the community, but you're seeing new entrants come in. You have financing, got big numbers coming in, big money. How has it evolved, I mean, what's your observation? How is it maturing? What's some of the vibe? You've got some factions over here, you've got some factions over there. People are still getting along. What's the overall sentiment? >> I've been in this space for about five years, so in this industry, it's like being an absolute veteran, and what you've seen is it started out as this very libertarian space. People were interested in taking their money out of the control of government and having more autonomy over their finds, having more control over their funds. Blockchain was invented as a tool for giving people more freedom, and what you're seeing now is a bunch of people who entered the space who don't necessarily share that ethos, but what I love about Blockchain is that they're taking this technology that is inherently taking people towards a more decentralized free society, and they're applying it to all different industries. So my point of view, it doesn't bother me at all that the new entrants don't necessarily share this passion for freedom that the people who've been here since the beginning have, but the fact that they are taking this and making the world a more free place regardless is really exciting to me. >> And that's the real opportunity 'cause inherently the ethos is Blockchain, so it's not so much a political orientation or this or that. It's how you apply it. >> Exactly, and so Blockchain, being a decentralized ledger is great because when you decentralize any power structure, no matter what industry it is, I mean, you're really making people more free, you're giving them more responsibility, and I like seeing things become decentralized. >> Certainly we're a media company, we're kind of a new car, we don't believe in a central gatekeeper, so I got to ask you the question. As a YouTuber who has a big fan base and in the community, it's really disheartening for me to see John Oliver take down Brock Pierce, although it was a hilarious video up until the point where he maliciously went after Brock in a very vicious way. How does one person have that power. I mean, it shouldn't be that way, or the New York Times or a certain publication that, they're the gatekeeper still. That was an example I looked at and said, "That's where Blockchain can disrupt the media." I mean, it's great comedy, but it kind of went over the top. >> For me, I mean-- >> He got fired by the Eagles project. They wiped his name off everything. I mean, that's just, I just see that as a problem. You, what's your thoughts? >> When you say how do these people get there, John Oliver is a funny guy. I see how he got there, he's very talented, he has a great team, great writing, but that section, I thought it was pretty spot on for most of the Bitcoin segment. It got to that section, I was like, "Oh, this is kind of sloppy research." so that was disappointing. I saw that Brendan Bloomer had a nice response that he posted. He's the head of EOS. >> What did he say? >> He was just very funny and playful with John, so that was nice to see. He set him straight in terms of saying like, "What does this technology enable?" He was basically arguing Blockchain doesn't go far enough. It doesn't fulfill the needs that I see in society so I created this other thing which does XYZ. He was authoritative in stating that, "no, you just don't understand the tech." He basically clarified the Brock situation and said, "No, actually having him involved was really great." He's not involved for various reasons. Yeah, it was an interesting segment that the-- >> It was so funny after that one point. I'm like, "Oh, boy." >> I was enjoying it up til then. I was like, "Okay, this makes sense, you know. >> It's funny. >> And then it gets up to that and I'm like, "Okay, this just became an at home and I'm going to tag. This is a cheap throw, and people do that with Bitcoin. Since it's inception, you've seen people in media and mainstream media in particular target Bitcoin and they're just adopting the government narrative saying, "Oh, everyone in this industry is corrupt," or "Everyone in this industry is an ICO scammer," or "Everyone in this industry is a drug runner "and they're all selling drugs on the dark web." It's like, you know what, you can do some research and do a bit better than that, so to see John Oliver perpetuating those at-home and I'm going to attack was disappointing, but at the same time, we are seeing that narrative shift, and you're seeing more news outlets become more positive about Bitcoin. >> Also the data is the self-government and the community has the data. The truth is going to get out there. That's the purpose of Bitcoin, Blockchain, and Crypto. You've got consensus, you've got algorithms, you've got machine learning. Okay, cool. What are you up to? You've got an exciting couple things going on. You've got a lot going on, so take a quick minute to explain your big project. You've got some exciting, cool things, share it. >> Got some fun things going on at the moment. While I'm not emceeing 20 to 40 Blockchain conferences a year, which is exciting, but takes up a lot of my time, I am a television producer. I have my own show. It's Bitcoin, Blockchain-tech based. Then on top of that, I'm a film producer, television producer. We're working on a really exciting series right now. It's called The HardFork Series. It's this dystopian future, it's a sci-fi thriller. $18 million, or it's a large budget, and we have one of the guys from Ozark, on Netflix originally. If you haven't seen it, you should see it. It's a great show. Christopher James Baker is our lead and the community support we have garnered for this project is great because we have not only Hollywood types, our director is a Sundance alumni. We've also got people in the Crypto Space who have a huge amount of credibility. We've got Bruce Fenton, Jason King on our Board of Advisors. People who understand the space, so the community is excited about for the first time having a mainstream production that is being created with a large budget where people in the industry have control of the narrative. We haven't had control of the narrative yet. >> That's true. >> The government's still controlling it, mainstream media's still controlling it, and so to create a series that could potentially expose people to this technology for the first time and to have control of that narrative is exciting. >> Is it going to be inspirational, it going to be a comedy? >> It's going to be gritty, it's a sci-fi thriller. We call it a crypto-thriller noir. Is that not the best genre you've ever heard? It's pretty cool. It's this idea that in the future the government has their own Blockchain and there's Crypto Coins that they have. It's all centralized and they control the populous with this augmented reality where everything is gamified. Basically the idea is the government's trying to distract people from important issues, like gamifying everything. You have this group of renegades who comes in. They're like, "No, we're going to decentralize this." They come and work their magic. >> It's Mr. Robot meets Black Mirror. >> Oh, yeah, no, it's pretty great. >> Kind of thing goin' on? It basically is a tale about the power of decentralization and how it can disrupt all authoritarian role, which I think is just a great topic for right now. >> What's your background? Where are you, out of LA, New York? >> I'm based in New York. My background actually. >> How'd you get here? >> I was an opera singer. That's how I got here. I moved to New York as an opera singer and then pivoted into movie production, and from there went on to television production. I got into the Crypto Space because I'm really interested in Australian economics and love the philosophy that Bitcoin was created on. It's been an interesting journey. >> You got addicted. >> Yeah, now I kind of-- >> You went to the light. >> Yeah, I'm bringing everything together now with my Bitcoin, economics-based, Crypto-thriller noir, so it's pretty exciting. >> I'm super impressed. Congratulations on all your continued success. Great job emceeing the Blockchain Unbound. >> Thank you. >> Great energy, great mind, great to have you on The Cube. Thanks for sharing >> It's wonderful to be here. >> your story. Thanks for everything. It's The Cube, I'm John Furrier here. Breaking down, we've got all the action in Puerto Rico. Thought leaders, entrepreneurs, investors, people in the industry sharing their story. Sharing the data with you, that's our mission. Thanks for watching. Day two tomorrow, we'll see you then. (engaging tones)

(bright samba music) >> Narrator: Live from San Juan, Puerto Rico. It's The Cube. Covering Blockchain Unbound. Brought to you by Blockchain Industries. (bright samba music) >> Hello everyone and welcome back to The Cube's exclusive coverage here in Puerto Rico for Blockchain Unbound global conference where leaders from around the world, Silicon Valley, Miami, New York, all over the United States and Puerto Rico and Moscow and South Africa, all over the world come together to talk about the impact of blockchain, cryptocurrency, and a decentralized internet and the impact on society. Our next guest is David Orban. He's the managing director of Networking Society Ventures. Also does some investing. On the keynote speech of the closing session here on Day 1 of Blockchain Unbound. Thanks for joining me. >> Thank you very much for having me. >> So one of the big things that we're seeing in this revolution with blockchain and cryptocurrency is an awareness of how to reimagine democracy, society, and among other things, money transfer, and how that's impacting the world, from entrepreneurship to NGO's and society for good, AI for good, technology for good. So I got to ask ya, I heard some of your presentation, is there's some good tailwinds and some good headwinds in this industry, what's your assessment right now of the state of the globe with respect to how a network society will evolve and what are some of your observations and conclusions? >> One of our fundamental assumptions is that social change is only possible if sustainable technologies emerge to catalyze it. You know, if a slave rebellion won under the Roman Empire, the night of the victory, the slaves would be around the fire to decide who would be the slave the next morning, because they needed slaves to do everything. Today, not only we have achieved a level in our human civilization to outlaw slavery, we have incredible new inventions, like blockchain, to imagine a new social contract that is going to unstoppably come. >> This social contract is interesting, because now you have, I mean, democratization in digital transformation has been kicked around for a long time. Where are some real good examples that you can point to where you see really bright lights of innovation around democratization and digital transformation where it's working, and also where it's not working and what we need to do better? >> Certainly it is fashionable to pretend that technology hasn't helped. And one of the reasons why many people take that stance, is because they are confused. Too many simultaneous changes make the future even harder to predict today that it used to be the case 10, 20 or a hundred years ago. This is especially hard for those who are in charge of making those predictions, politicians, regulators, policy makers. We appointed or elected them in order to make decisions for everybody else. It is an impossible job, but they cannot afford to say that is the case. >> Yeah, and certainly we're in the media business and our model is open media, and even in the media you still have these gate keepers. So we see interesting trends, right so we're seeing disruption horizontally across all industries. If you look at blockchain and some of the things that are coming out, it's spurring real creativity from entrepreneurs as well as leaders, progressives if you will, that are being focused on efficiencies, which is spawning these little spots of innovation. I saw your use case around the solar panel. It was working. They killed it. So, you know, this is examples of where you see people get the value of really fast. So where are the efficiencies? Where's the value of creation coming from? What is blockchain? What is crypto? What is decentralized apps enabling? Is it, are we running too fast? Is it an enabling technology? What's your reaction, the thoughts? >> Some of us have been around in the first internet boom, 20 years ago, and the big three trillion dollars of value have been achieved by the dot-coms as measured by their market capitalization. And you would say, well, that bubble burst, and it all disappeared, but it didn't. We are still using the transatlantic fiber optic cables that were laid down then, and that created the premise for the next 20 years of technology based economic growth. So with blockchain, we are seeing the same, except that contrary to that, which was a quite provincial Silicon Valley phenomenon, blockchain innovation is today, global. So it is going to incredible places incredibly fast, and it is extremely competitive. There are projects that are doing the same thing, addressing the same challenge, all over the world. And it is fantastic. We even have a name for it. It's called forking or ray forking. >> Yeah, forking creates competition, but also faster time the value. Let's talk about the bubble. The dot-com bubble, which I lived through, and you have as well, was again, a Silicon Valley phenomenon, some New York, mostly America, basically, but everything happened. So everything that was talked about actually happened. But at that time, we didn't have a very wired community. Today we have organic communities in place, whether it's from open source communities online to actually a connected global network, AKA mobile internet. The role of communities now, seems to be that counter balancing self-governing opportunity. So I want to get your thoughts. Is the bubble going to be predicated, or letting some air out of that bubble, can it come from the communities? Because you could argue that efficiency in the communities with sourcing the truth if exposing the data can create very fast efficiencies around the transparency, so the thesis is, with the bubble behavior, also comes a connected community. So what's your view on the role of the community as a mechanism to continue to clean up or sanitize or whatever word we want to use to manage and help the self-governing? Because if it's organic ground swell, the communities should theoretically be monitoring and self-governing the growth. You thoughts. >> Those that are afraid of what is happening are incredibly capable of accusing the blockchain world of a thing and its opposite. Because they are saying, oh my god, the value, the metric value, which some mistakenly call the market capitalization, of tokens is increasing too fast, this is a bubble. And then maybe a month later, they will say, oh look it, everything is going to zero, I told you so. Well, either one is the problem or the other is the problem, but not both. The answer to your question is that yes, the community is expressing what is going on at the fine granularity that was not possible before because you would measure that by the subsequent venture funding stages of a startup, and maybe there would be a year or two years or more between one or the other of the stages. Today with tokens, every minute we are measuring the heartbeat of the project and the sentiment of the community around it. And everybody can vote with their tokens. Do I want to be part of this? Or I don't feel aligned anymore. And it is beautiful. But an even more important fact is that yes, today the community is global. When in 1976, Richard Dawkins wrote The Selfish Gene and the last chapter defined memes, which were the unit of the evolution of culture, he didn't mean silly images on the internet with captions. What he meant is, we should really be able to build a new science here. Memetic Engineering is what is fake news, and it is up to people like you and me who believe in the positive role of technology to show that we can actually have memetic engineering that benefits society and the markets. >> I mean, who'd have fake news is two things, the payload of fake news and actually the infrastructure gamification of what it did. I postulate that for, on one end of the spectrum is fake news, you could almost move to the other side of the spectrum and say, this good news. So clickbait equals fake news equals bad behavior, real bait, content, equals real news, real community. So there's a spectrum that you can almost say, we could actually weaponize content for good. >> Evolving our tool set in order to make sure that the wisdom of the crowds creates incredible investment and wealth creation opportunities for billions, not only for the gate keepers is what should be the regulators' best job, and they should be excited to have it rather than panicking. >> I want to ask you a question, philosophically. You mentioned tokens and governance, what we can vote for what people can vote with their coins and or some sort of consensus, gesture, or actually, real token transfer, as a way of voting. This actually, could solve the truth problem, because if you think about it, this is a new mechanism to understand sentiment within, whether it's a project or society, this new mechanism could be a source of truth, hence, but no centralized control, so you got the decentralization thing happening, but that's all predicated on going around a central authority, but the token dynamic, actually if you think about it, could be a token of truth, because statistically, it should work that way. Is that how you see it happening? And is that a directional correct statement? >> For too many years, we believed that Churchill's quip, democracy's the worst kind of government, except every other kind of government, was just a joke. He was giving us a challenge. And we were too weak to step up to that challenge and to design better governance mechanisms, better political instruments, and that is what is happening today. More and more people realize that they are freed up by technology where their relationship with the nation state that pretends to own them through citizenship and taxation can and will be renegotiated. >> I got to ask you a question. I love your logo, you've got a network graph up there that show the network society, implying that we're all connected, almost, you can argue, border-less nations, if you will. But I got to ask you, as that vision of a network society implies we're all connected, so we're all in one big tribe, although maybe, with different characteristics, but how do you see the future as we look at the current internet as almost a 30 year old stack, I mean, we're talkin' ancient relic by today's standards. So how do you see the stack evolving to match this criteria of a network society where the expectations of users and communities in society, whether it's government or groups are expecting new kinds of experiences, new kinds of outcomes? What in the stack is evolving? I mean, blockchain is one piece of it, but we're dealing with an old stack. I mean, it's old guard stuff, keep company's legacy. But the stack needs to be modernized. How does a stack modernize to intersect with your vision of a network society? >> Biological evolution has never been able to go meta. Our eyes are still so badly designed that the nerves bringing signals to our brain puncture the screen on which the images are projected. It's so stupid. We are able to understand when our designs are bad, and we are able to go deep, and actually rip out what has been the best way of going about certain things. This has happened in energy, where we are still in the process of electrifying a lot of things, many stoves are still gas stoves rather than electric as they should be. Or in transportation where we went from horses to cars and now we going to rapidly go to electric transportation. The internet is very young. It's just 30 years old, and the consumer space, just 50, 60 years old as a technology, but it must be fundamentally rebuilt and rethought. >> Yeah, it needs an engine change. It needs a tune up. >> What is dangerous is that there are very powerfully faulty memes being planted into the brains of too many people bringing desirable vulnerabilities in our infrastructure. And too few understand that those vulnerabilities caught everyone, whether they are friends, or real or pretend enemies. We have to build sustainable human civilization on a solid foundation. Nobody is served by maintaining those vulnerabilities that are still poking holes in vital infrastructure around us. >> Yeah, I mean, vital infrastructure and also the soft infrastructure, AKA the human psyche, AK memes in one tactic, to control the belief system and the narrative. But that's an attention driven mindset, so we're seeing that that fake news weaponizing content really prayed on the attention aspect of people where the reputation piece wasn't there. A lot of people now realizing that. How important is reputation in this new era of society, because there's something that's been challenging. We've seen every project, I mean, every project that I've seen, that I like, has an element of reputation in it. So there's a, because you have identity. Identity is super important. Attention, we know what does there. Get my attention. But the new discovery, the new navigation, the new progression to proficiency or value needs to be trusted. Reputation is an important part. Your reaction. >> Blockchain is making a lot of things measurable that were not before, and measuring them, it is able to assign value to them, and wherever there is value, new markets are being born. That is how incredible resources are now being poured in problems that were ignored for many, many years. And what is beautiful, is that blockchain is doing it open source. That is why new sustainable business models are evolving so fast. Back in the days, we would say an internet year is 3 months. I am now saying a blockchain year is 3 weeks. >> So that's fundamental, this value piece. That seems to be the equation that seems to be consistent. That's what you're saying, this value measurement seems to be a key metric and store, that's what the value is going to circulate around? Is that? >> So um, for the moment, our lives are bounded, limited. We have a given number of years to live, and more and more people realize that what they need to maximize is their benefit together with everybody else's benefit, because that is what makes human society valuable to its components and as a whole. So that kind of new outlook is being driven in the blockchain industry by people who don't necessarily need the second billion or the second million, but there are too many people who need to make ends meet, and it is just plain unacceptable that we let them live a life that does not fulfill their potential. >> This is a new opportunity to reimagine that equation. So I got to ask you, I love your work on social economic impact with blockchain, one of the things that we're observing in our reporting and analysis is, societal entrepreneurship is now emerging, what used to be a waterfall philanthropy exercise of NGO's and whatnot, fund something, stand up some servers, build a data center, uh, funding's over, project's over, start all over again. You're kind of chasing this tail. We're seeing real action with people who understand the businesses of nonprofits. We're turning that domain expertise into real, viable ventures. This is now an emerging trend, we're seeing certainly in Washington DC, where they have networks of people that they know, and now building on a tech stack is easier than it every was, so you're starting to see these real business opportunities getting funded and growing, that never would have gotten funding before, whether it's a, you know, an app for missing and exploited children, human trafficking, battered women, to water saving, water purification, all these things are now happening. What's your view on this, because this is kind of an unreported area around this entrepreneurship trend that things are getting to value faster? Do you see the same thing? >> If you ask the founder of the Ford Motor Company if he believed that damaging a community was a good business practice, he would have probably punched you, or at least laughed. Because today, those who feel that maximizing profit is a sacred duty of any capitalistic enterprise, even if it does include extracting and harming communities, employees, stakeholders, is extremely misguided. Positive impact is not counter to profit. They go hand in hand. >> Mission driven enterprises can exist. It's not just for the philanthropy. >> There is nothing else, but a sustainable business. In a long term an unsustainable business cannot be sustained. So if you want to build a business that lasts, you must build it sustainably, ecologically, socially, but of course, also in terms of it being profitable. And what is beautiful about the blockchain is that it completely decoupled the long term sustainability of a project from this silly decision. Should it be a for profit? Should it be a nonprofit? Who cares? What it should be is an inspiration for millions of people to align their creativity and passion with that project. And profits and sustainability will follow. >> And the funding's there and the opportunity time to value is shorter than ever before. Thank you so much for spending the time coming on The Cube and sharing your ideas and your mission and vision. And thanks for coming on. The Cube appreciate it. Okay, we are here with Dave Orban, managing director, Network Society Ventures, changing the world, societal economic impact. I'm John Furrier, your Washington Cube. More live coverage, day 2 tomorrow. We're here both days, Thursday and Friday. Here in Puerto Rico, for Blockchain Unbound, I'm John Furrier. Thanks for watching. (light techno music) (light techno music)

>> Announcer: Live from San Juan, Puerto Rico. It's theCUBE, covering Block Chain Unbound, Brought to you by Blockchain Industries. >> Hello, everyone, welcome back to theCUBE's exclusive coverage in Puerto Rico for Block Chain Unbound. It's a global event, people from all around the world, from South Africa, Miami, Russia, San Francisco, New York, all around the world, talking about Blockchain cryptocurrency, the decentralized internet, and the future of Money, that's the killer app in Blockchain and cryptocurrency. I'm John Furrier, your host, my next guest is Scott Picken, who's the founder and CEO of Wealth Migrate Platform. Scott, thanks for coming on. >> Yeah, awesome John, thanks for having me. It's quite an exciting group of people here. >> We met last night, had a great conversation, I really liked some of the things that we were talking about, I wanted to bring you on because being in South Africa, where you're living and working, you have a unique perspective because you see the global landscape. So, I'm from Silicon Valley, we're here in Puerto Rico, America's got their view, the UK just announced a deal with Coinbase for essentially a license to convert funds into separate bank accounts through faster payment mechanisms, basically taking crypto and turning it into Fiat. Kind of a game changer. >> The one thing with the UK is they've been at the head of all of the different innovations over the last five to 10 years. They were right at the head in terms of crowdfunding and they're doing exactly the same in terms of now with the whole cryptospace. And it's actually quite interesting because when you take into account Brexit, they actually really need to do it because they want funds coming into the country, they want to be seen as the future of the banking market, et cetera, so it's actually really exciting. When you look around the world it's fascinating that I said this to you last night, that America really grew because Europe used to have all the controls. And so the capital basically left Europe and were in America and now it's happening 300 years later as America has all the controls and the capital's starting to go elsewhere. >> So America's turning into Europe. And so the potential is to bring, you don't have to say it, I'm an American and we're concerned about it. Americans are concerned that we don't want to be that old guard, like Europe was to America in the America days. So a new liberation's happening. UK's putting a stake in the ground, saying, "We want to get our mojo back," my words. >> Scott: sitting here in Puerto Rico. >> Yeah, they're in Puerto Rico. They're going to put a stake in the ground saying, "We're going to give you tax breaks 'til 2036." This is a money flow game right now. So you've been doing some pioneering work, what's your perspective, talk a little bit about some of the world dynamics that you see because, let's face it, this is the transfer of money, with crypto, it's happening at a massive scale, not just some underbelly boutique underground activities. This is front and center, mainstream, real money, real commerce. Your thoughts? >> I would take it a step back, actually. I think there's eight major macro trends that are all culminating at the same time. So the first one is in the education space, and the whole of education is changing, and it's really becoming gamification, and it's becoming learning while doing. So you don't learn and then go do something, you actually learn while you're doing it. The second one, for me, is the whole Blockchain. And what that's enabling people is getting democratization to wealth and access to assets, whether they're in their country or global assets, basically. The third thing that's really important is you've got the rise of the middle class. You know, a lot of people talk about the unbanked three billion, but what they don't realize is that 1.2 billion people joined the middle class. And they are primarily in the emerging world, they're in Africa, India, China. And what they want is, they want health, they want education, and they want access to wealth. Then you take into account what's happening in terms of collaborative investing. In the old days it was I do it on my own, you do it on your own, we sort of trust the financial industry. Now we're coming together, it's the power of the crowd. I could go on and on, that's just four of them, there's another four. They're all coming together and because this is happening is why we're seeing this metamorphosis and cryptocurrency is the catalyst on top of Blockchain that's allowing this to take place. >> Talk about some of the things that you've been advocating for, I know you were sharing a private story, maybe this may or may not be the right time to talk about it, but you put forth some pretty forthright concepts in memos and letters to folks, and no one will publish it. What are those views, because we've got the cameras rolling right now, share your vision. >> Again, I fundamentally believe that technology can solve grand challenges. And when you take our platform and what we're doing, we're effectively helping the 99% invest in commercial real estate like the top 1%. So what we were talking about last night was, I come from a country, South Africa, I was previously from Zimbabwe, and unfortunately for us is that in South Africa, they're talking now about taking away land without compensation. So land redistribution without compensation. Now, Einstein says that if you want to solve a problem, you can't solve it with the same reality that created the problem. And so I wrote a letter to the President, an open letter two weeks ago, and I said, listen. Why don't we do it differently? You're giving a person a piece of land in the middle of nowhere when they've never been a farmer will not help them get wealthy, I guarantee it. And if I'm wrong, let's go look at Zimbabwe. Which is a economic disaster. What about if we give them access to ownership of a good quality commercial asset that's earning a passive income? That is how you'll grow your wealth. And then add to that, Cape Town nearly became the first city, and it still could be the first city, that literally runs out of water. So why don't you go build a decent ionization plant in Cape Town with government money, allow people that you would give land to actually access to that asset and allow them to have the ownership? And that's sort of the concept, where you just think about it completely different. And you allow technology to actually give people what they want, which is wealth and prosperity for their family, and not just a farm in the middle of nowhere. >> And you're really addressing, I think, the incentive system combined with structural change. You talk about gamification earlier, this is kind of the dynamic. How important from an education standpoint, meaning educating stakeholders, old guard or existing governments, because you have this organic groundswell coming up of young people, people with vision that are older and more experienced like us, what's the formula, how do you get this ball rolling? >> So it's quite interesting, I get asked this question all the time and for us, in the first world, a lot of what we're talking about is it nice to have? It's sort of a bit of a game and if I can participate, but where I come from in the emerging world, it's a necessity. There are no other solutions. So if you live in South Africa or China or India and you want to get your money into a first world country like England, Australia, or America, it's very very difficult and virtually no one can do it. But it's a major problem, because you want world preservation, you want your Plan B, you want your children to be able to go to a first world university, et cetera, et cetera, et cetera. And so to answer your question, I think the way it will get solved is in communities where it's not a nice to have, it's a necessity. In terms of educating the old guard, I believe that what happens is you get groundswell, like literally when people really need a solution solved, they persuade governments and regulators to change and it's interesting, coming back to how we started the conversation, that's why smaller countries are often the ones to adopt the regulated new change and, more importantly, countries in emerging markets, whereas first world countries are trying to protect what they have and, unfortunately, the new world is about capital. And its capital flows. >> It's a choice between playing offense or defense, really in my mind it's a sports metaphor, whatever sport you like you know. We love the sports analogies. But this is what UK's doing, they're playing offense. And I think you're seeing other countries wanting to restructure themselves as digital nations because that's what the young people are expecting. So with that in mind, you have a global fabric here at this event, and it's just a microcosm of what we're seeing, which is outside the US, call it the little US bubble that we're living in, Silicon Valley, that's one case I'm wary of, but the growth outside the United States and even in Asia and south of the border, if you will, south of the equator, there's a ton of global action. What is, in your opinion, the few global things that are going on, that people should know about when it comes to how money's flowing and what they can do to take advantage of the trend rather than trying to hold it back. What do we do, is it get into the current? Ride the wave? What should people understand about the new global dynamic? >> So the first thing I would say is, I always laugh at this, but people don't understand how much innovation's going on in China. Like, go and understand WeChat to start off with. It is phenomenal, what is happening. The second thing for me is the global capital flows. When you consider how much capital is moving from the emerging world into the first world, primarily in real estate at the moment. And that's just the top 1% of the top 1%, you know, that's the people with 10, a hundred million dollars. But I've already said to you, there's 1.2 billion people coming into the emerging markets. In the middle class, they're going to want the same things. And so those capital flows are going to be going cross border. I also believe, with time, capital flows will be going from the first world into the emerging world in a safe way but wanting higher returns. >> So then the emerging world, the US has a shrinking middle class, but yet the emerging world has a growing middle class. That's going to attract new entrants. >> Exactly. >> Okay. >> Well, take into account China. Has China had a big impact on the global economy in the last 20 years? Yes or no? >> Yes. >> How many people are in the middle class in China? Plus or minus? >> Don't know. >> I've heard different reports from 200 million to 400 million, but whether it's 200 or 400-- >> It's more than it was 10 years ago. >> I know, but think about the impact that's had on the global economy. I'm not saying that this is 1.2 billion in the next 10 years, it's either a factor of five to eight, depending on which way you want to look at it. >> How much money, in your guesstimation, if you had to throw a dart at the board, order of magnitude, is flowing out of China with crypto into other assets? >> In the crypto space that's fascinating, because a lot of it is hard to tell, actually. In real estate last year alone, it was just short of 30 billion dollars went into commercial real estate from China. Now what's interesting is that a lot of that money is sort of gray, like no one actually knows where it's coming from, which is why China tightened it up so much. It's also why they tightened up the crypto side of things. Because a lot of people want to get their money out of the country and into first world economies, and that's why, in the emerging world, cryptocurrencies have been embraced more, actually, than in the first world. >> John: It's a faster way to move that money. >> Coming back to necessity. So in South Africa, in Zimbabwe, in China you pay more for Bitcoin than you do in America or Europe. I don't know if you know that. >> John: No, I don't know that. >> And by quite a lot. Like in Zimbabwe you pay nearly double. So a lot of people are making money by overcharging coins. They buy them in Europe, they sell them in South Africa, they sell them in Zimbabwe, they sell them in Nigeria. >> So the demand to move the money out of country is very high. >> Well, because they've got capital controls. So they have currency controls. So you're only allowed to move a certain amount of capital out of the country legally. So what happens now, you buy cryptocurrency and you can effectively invest in assets around the world. And you literally started off this conversation, right in the beginning, there's a democratization in terms of capital flows and what's happening, and people are going to put their capital where they want to. And governments, I believe, are not going to be able to control it by putting up controls, they're going to have to make their countries attractive so that the capital's flowing into the country, not out of the country. >> So what's your take on big multinational corporations that have capital structures, have equity positions, and it could be also growing venture-backed or private equity-based companies, they have capital structures, they have equity investors, in some case public, and privates, and unicorn valleys or whatnot, now moving to look at utility tokens as a way to get to a global gamification. So you have multiple securities, a utility, and in some cases a security token a real security. That seems to be a dynamic, are you seeing that on a global scale, are you seeing any activity there, we're seeing a little bit of movement around big companies trying to figure out how to play in crypto. >> From my experience, not a huge amount. I think that most people, they have a board, it's all around reputation, they got to meet the lawyers, the lawyers tell them, you're going to get crucified. And so from my experience, not a huge amount, it tends to be the small to medium enterprises that are prepared to go out and look at it. However, I will say from our personal business perspective, we built our entire company on a community. We've got shareholders all over the world and so for me, when it came to the crypto and the ICO market, that was just doing that more aggressively, effectively, and community-based companies are the future. So whether you're a Fortune 500 company or a start up, it's all about building the community, and I believe that whether it's utility token or security or a combination of the two, it provides an incredible vehicle to ultimately be the catalyst to a community. And if you're the catalyst to a community adding value, then you're going to build a company of value. >> And capture that value. So, Scott, I got to ask you about Wealth Migrate. Talk about your platform. First of all, thank you for sharing your perspective here on theCUBE. It's been fantastic to get that data out. What's your company about? Take a minute to explain what you guys are doing, your value proposition, state of the company, are you doing an ICO, have you had an ICO, what's the status of the company? >> So from Wealth Migrate's perspective, the platform went live in October, 2013, so we're a little over four years in now. We've effectively got members from 111 countries around the world and we've raised just short of 70 million dollars. All though the platform, all on Blockchain. We've facilitated real estate deals of over 485 million dollars and what I'm proudest of, actually, is that we've got a higher than 70% reinvestment rate. What we're doing is we're allowing the 99% to invest like the 1%, our minimum investment at the moment is $1,000, we're beta testing $100, and my dream is to get it to $1. You asked a little bit about the ICO. We built our platform on Blockchain not because of an ICO. Our number one challenge was trust. And ultimately Blockchain enabled us to solve the trust problem. The second thing for us is that my dream is to get it to $1 per person per investment. I want to solve the wealth gap. And I truly believe we can do it when we can allow anyone anywhere to invest in good quality assets. I can't do it with the current system, there's too many friction costs. With crypto and volume I can. >> Whether it's semantics, or education and/or hurdle rate on dollars, it's an interesting concept. You want to make the 99% invest like the 1%. Explain what that means, take a minute to explain that concept. I mean, some people are like, "Okay, I know what "the 1% is, there was a movement about that." So now you're talking about something pretty radical and interesting. What does that actually mean? I mean, empowering people to make more money? Unpack that concept. >> So let me ask you a question. Do you personally own a medical building? >> Do I own what? >> A medical building. >> No. >> Like a hospital, medical building. >> No. >> So it's 2009, I'm in Bondi Beach, Sydney and I meet two US dollar billionaires. I had helped about two and a half thousand people buy houses and apartments in England, Australia, America, and South Africa. And I sat with them and I said, "What are you investing in?" And they said, "Medical buildings." I said, "Why medical buildings?" And they said, "Well think about it. "No matter what happens in the global economy, "people need doctors." I was like, that makes sense. Secondly, they said, "Doctors never move." I was like, that makes sense. Thirdly, doctors are very good at being doctors, but they're not accountants. And so they sign long term, good, favorable leases. Now from a property perspective, real estate perspective, that's a no brainer. And I said to them, "How do I participate?" And they said it's really simple. It's for friends and family, there's eight people only, it's five million Australian dollars each. I was like, now there's the problem. That company today is over 700 million dollars, it's on the Australian Stock Exchange, and it's what I call financial exclusion. You and me don't own medical buildings. Since October 2013, we've enabled people to invest in medical buildings from $1,000. So the top 1% get wealthy by investing in better assets than the 99%. >> John: Because they have access. >> Because they've got access. >> John: And the cash. >> And the cash. But we've dropped the barriers to entry. Because you and I can participate now from $1,000 and I will get it to $1. >> So it's a combination of leveraging the asset based securitization with that opportunity by using a crowdsourcing kind of model, is that what you're thinking? >> So, effectively, and I'd suggest-- >> John: I'm oversimplifying it. >> No, no, 100%, I'd suggest everyone goes and looks up the term collaborative investing which is ultimately, it's a thing that's been going on for decades by very wealthy people on how to successfully invest. We've taken that but we've added a smart component. And why that's important is because in the past you needed 10, 50 million dollars to do collaborative investing, now you can do collaborative investing with $1,000. >> Yeah and what's beautiful is that you understand potentially whose reputation you're working with, you can move in herds, network effect kicks in, that's awesome. >> What gives me the greatest pleasure, I mean, children, my son is six years old, he's already investing. You know, most kids are playing Monopoly, he's playing real Monopoly, and so are adults. And what gives me the most pleasure and pride ever, and what I'm grateful for, is that we're changing people's lives. >> People talk about how to solve the welfare system, all kinds of things, you make people own something, or try to own something or trade, whether they make money or lose money, you learn from it, you're better for it. Here, you're providing a great service by opening the door, lowering the barriers to entry, to potentially wealth creation. >> Dude, I call it freedom. At the end of the day, if you're where you want to live, where you want to send your kids to school, how you want to retire, whether you want to donate to the church or whatever, I don't really care what you want, but I want you to have the freedom to be able to do it. And wealthy people get that freedom by investing in quality assets. And we're just allowing them to do that now. >> And the democratization is multiful, in this case you're creating a new economy model so the whole freedom, democracy aspect is in play. >> Well, I mean if you think about it, when you get into $1 per person, $1 will not change your life. But if you change your habits, you'll change your financial destiny. And so my philosophy is get it to $1, so that every single person can participate. And once you start to learn good habits around money and wealth, the rest just, it's a formula. >> It's a flywheel. Kickstand. Scott Picken, who's the founder and CEO of Wealth Migrate Platform from South Africa, formerly of Zimbabwe we learned today, great sharing the global perspective. Thanks for coming on theCUBE. Exclusive coverage from Puerto Rico, this is theCUBE, I'm John Furrier getting the signal here out of all the noise in the market, this is what we do, this is theCUBE's mission, to bring you the best content, best story from the best people, more coverage here in Puerto Rico. Day one of two days of coverage. After this short break, thanks for watching.

>> Narrator: Live from San Juan, Puerto Rico. It's the CUBE, covering Blockchain Unbound. Brought to you by Blockchain Industries. (upbeat Spanish-style music) >> Hey, welcome back everyone. We're here in Puerto Rico for exclusive CUBE coverage, I'm John Furry, you're host. Here, with Blockchain Unbound, this is a global event. From everyone from Silicon Valley, New York, Miami, Russia, Eastern Europe, all over the world, and Puerto Rico coming together, talk about the future of the economy, Blockchain decentralized apps, and more. Our next guest is CUBE alumni, and part of our inaugural crypto currency coverage, from Polycon 18, back to give a command performance, Nithin Eapen Chief Investment Officer at Arcadia Crypto Ventures, good to see you. >> Good to see you too John. >> So, you had a great showing at our first crypto event, PolyCon, great to see you back in the trenches, you're out, hard-working, pounding the pavement, doing deals. What's your analysis here, I mean, you're here networking, you checked out the sessions. What's your take? >> We've met some really good founders, really good projects, so that's the key thing that we are looking for. The main idea as our tagline says, "We back Blockchain's best." We are looking for the best founders. We are looking for the teams, then for the idea. Anything that's decentralized, we are backing them. >> So, network effect has been a big part of the conference I've been having. We talked about security tokens, utility tokens. A lot of interesting things going on here, but there's a backdrop. You've got multiple events going on. You've have Blockchain Unbound, run by Blockchain Industries, great team, which put this event together in five weeks. So, shout out to those guys. >> (laughs) You have Coin Agenda, >> That's coming! going on, another event going next door, which is after this event. And then you have a lot of series of little events, meet-ups, the local community had a great crypto mixer, Puerto Rico, a lot of action. >> Too much action, and it's like at the same time, look at it, TokenFest in San Francisco, another 2,000 people over there, here people are on the waiting list, so much action. >> And that's going on this week, as well. You have anyone going to that event? >> I know, I've got a lot of friends going over there. For me, it made sense, this is closer. I thought I would meet a lot of them. Puerto Rico is better I found, you know? >> A lot of big money here, a lot of smart money. >> A lot of smart money, a lot of big money. >> John: Global? >> Global, and the greatest part of Puerto Rico is, it's bringing this concept like, they have reduced taxes for US people to zero percent for individuals, for the next, until 2036. Now that's a big difference. If you want to change your domicile to Puerto Rico, for your business it's 4% corporate taxes, and individual it's 0% now, that's... >> John: But you got to move here. >> You got to move here, okay. But you don't have to give up your US citizenship. Now, I think what's going to happen right now is they're going to be other states maybe going to compete for this, or other countries are going to compete for the capital to flow, where does capitol flow to? Capital will flow to cheaper places, or lesser taxes. >> So, I got to ask you, I was talking to you earlier this morning, here on the CUBE I said, "There's two killer apps, one of them is money." Money is the killer app. >> No doubt! >> Your reaction to that? >> It is, okay all of our lives, let's say for your son, or my kid, or for me, what my parents, when we went to school, why did they make us go to school or learn, they tell us, "Okay you got to go to college!" Why, they want us to have a better life, they want to have a better car. How do you get them, you want money for them. But in none of those years did somebody teach you, how does money originate? What is money, is it something you should buy the Garmin? So in everything that we go for, unless we're the Buddha or Jesus himself, we do it for money. >> Well you bring up a good point. I mean I have a immigrant background from my family, my wife's family as well. >> Where did you come from? >> Well I'm actually Native American, I mean American. >> Okay But two, three generations back they, Ireland, >> Ireland, okay! French Canadian, a little bit of Armenian in me but that's okay, all kind of blended. I'm in the melting pot, I'm not 1st generation but, in Boston where my parents were from, very much an immigrant town, and they didn't have any money. So if you look at now, what's gone through the financial dot-com bubble, which had some impact, but the financial crisis is 2018, if you look at what's happened since then, the generation of millennials there in more debt. They're not realizing college, it might not be the thing. So we went to school so that we can have a better life than our parents did. Now it's like everyone's realizing that, shit we're screwed. So watching as a path, of freedom. >> It is! A new way to create wealth, capture the value, but in a new way. >> Yes, because you have a chance to be a part of an economy without, a permission of a centralized organization. So, earlier if you wanted to work somewhere, you needed an organization to work. This is making it much easier to be a part of the economy. to contribute, to help people to get help, all this is happening and you don't have to go to school. Maybe school is overrated, our colleges overrated. It is too expensive, you spend 200 thousand dollars on college. What is your ROI, when is your ROI? Maybe some disciplines have it. But this is your chance to.. >> Well, you you know that we love media and our disruptive media at the CUBE is to do things differently, but lets talk about some current events that's been happening. So this week, John Oliver created a video trashing crypto currency, it was actually funny. But it got to the Brock Pierce part, and he really had it out for Brock Pierce. He absolutely destroyed him. >> He did! And since then, he lost his place EOS. They wiped away all his DNA of evidence with the company. This is a comedian, at John Oliver, you're a freaking comedian. What gives him the right to I have that kind of influence on someone's job when he's just telling a joke. There's no actually substance of any facts of any kind at what he's doing, So that's a central authority figure that took an editorial comedic routine, and put it out there, but people think that's news. >> See, >> That's not The power of media, that the power of all the old traditional media, is that they had a bigger reach. I think it's going to change, it is going to be the YouTube's. And it's going to become a decentralized YouTube equivalent, or a decentralized media equivalents. Like, a lot of people have made memes and you know, fun videos that go viral and they'll take things down. The same, John Oliver obviously, he has us laugh. >> He's funny as hell though. He is funny as hell! >> You got to admit, >> He's pretty funny! The bit was really good, >> But end of the day, but he really went after Brock Pierce. Something was going on there, he took him down. >> See the traditional industries or traditional media they want to take down everybody that they don't consider, the birds of a same feather, this is somebody weird, like Trump, they try to take down Trump. They will try to take down anything which doesn't fit their globalist, elitist agenda. End of the day, like Brock Pierce sitting on a billion, and John over with his comedy, who has the bigger laugh? I don't know, if you ask me. >> When you have F U money like Brock Pierce does, I'm sure it rolls off his shoulders. But it does impact the ecosystem a bit. Basically EOS has erased his name in any capacity. So, obviously this impacts to public opinion. So these comedians and news rep, they have an obligation to share the data. Editorializing, I mean I do it all the time, don't get me wrong. >> (laughs) But, there's a point, consensus is part of the algorithm now in these Blockchain and Crypto communities where you have Blockchain as a store, against him. >> Okay! But consensus and transparency is a huge deal. >> Nithin: Yes! >> This is part of the formula. >> I know but see, the whole thing... When John Oliver does something, it's not about consensus. He can do it, okay, it's going to change! It's like this, when Bitcoin came in 2009, the traditionalists were coming up at the story that, "it is fake money, it's not going to go anywhere." Then it became one dollar, they were just laughing at it. Then became 10 dollars, they said it's going to go down. Then it became hundred dollars, they did the same thing. And it's only after long time they will realize, "Oh my God, it's changed." The rock has been pulled under my leg. It's like when Amazon came, all the traditional retail guys said, "Nobody's going to go and buy a book without touching it." Now we have Toys "R" Us that just went bankrupt. There's no more Toys" R" Us, you know, you have to buy your toys pretty much from Amazon at this point. >> Well everything in the model of future will be all contexual so, videos, comedian, news articles, reports, editorial, all will roll into one thing. That's going to be a great thing. >> Yes! >> And media is going to take a lot of, natural language processing, it's going to get transcript link. I think you're already doing it right, you're going to take a transcript of what I speak, you're going to attach the words, you're going to attach it to brands, you can sell that, and that is going to be the future. >> Well lets get some of that intellectual property out of your head and into the camera, and for the audience. What are you hearing in the hallways here, obviously this is a great networking event here. Lot's of agendas, phenomenal, as well as we had over sold almost by double. There's people out in the hallways, it's sold out, so there's a lot of Lobby Con going on. There's a conference within the conference going on. >> Nithin: It is! We call it Lobby Con! >> (laughs) What are you hearing in the hallways, what is some of the cool things that's new to you, that you're discovering? >> So lot of people are now telling me they are very excited about security tokens. They're telling me they're buying security tokens. I asked them, which security tokens? It's not there yet, okay. See, that's where I tend to differ. If security tokens are going to be the big thing, I'm going to be buying it because we are informed. >> John: Buy everything that moves. >> We buy it as it moves, but, security token, my question is, so you're trying to make something that is a utility, now you're going to make it security? So that is equity markets, there is a CC for that. And you're going to fit this in over there, I'm like, I don't know, what are people trying achieve? This is a free market and they're trying to bring it into regulation. >> What's a red flag for you as a, security token implies directly that you're securing something. What are they, >> You're pretty much What are people securing, equity, future cash flows, dividends, what are some of the vehicles you've seen? >> At that time they are pretty much secure, or securing future cash flows as dividends. They're going to give dividends, they're saying if you're a token holder, you're going to get dividends. My question at that time is, then why do you want a token, why can't it be in equity? Oh, you think you can come with their argument that it's more liquid, but equity's a liquid. I don't think it isn't a liquid. But it is a great way to go around and secularize a lot of things. You can have a small business, think of it, you and me we have a small business, let's say we have a partnership We have a small... >> We have a small business, We have a small business, we have a partnership. It's very hard to exit out of a small business. If we can fractionalize the ownership of a business thru tokens, and there might be people are willing to buy, put thousand dollars in, and maybe I can exit at some point. Otherwise there's no exit for me. It's very hard to exit out of a small business. Now then, what's the difference between that and equity? I don't know you know, those lines are blurred but, I'm happy for the fact that something like that will give liquidity to a lot of small business owners. America is a country of small business owners. Across the globe it supports small business owners. If it brings liquidity, okay I'm happy with that. But it's really beating the purpose that we don't want a centralized power controlling us. Because now that you have Google and Facebook that banned crypto-currency ads. Why, Women's Day, all our data, they give us a free access but they hold a lot of our personal data. I'm thinking, the guy who brings in the, a decentralized search or a decentralized social media, I'm going to invest in them. I don't care if their a success or if the success will come later. There are going to be multiple libertarian investors like me that's going to invest in them. >> What I learned was that money is a killer app, and I'll stand by that. I think marketplaces are also the killer app. You ever think, >> Perfectly true! that this conference, that kind of validates where I was thinking was, the people who nailed a business model, that's the critical, critical pacing item. If you screw the business model up, you go sideways. The technology risk isn't as bad as the business model decision risk. So I'm seeing the successful ICOs, or plays, have a lock in on the structural value proposition and to be directionally correct, with an understanding of what the hedge is on the technology. >> Yep! >> So they can manage it. So it's like programmable plumbing. They're recognizing that dynamic. The other thing that I'm learning is that the money flow from other countries is massive. If you want a money launderer from Colombia, it's coming in from Metadine Narcos. It's coming in from Japan, and China. Bitcoin and Blockchain is a money transfer opportunity so, I'm seeing a massive amount of money, flowing in >> Capital is flowing, in massive waves. >> it's flowing in. >> And it's good, and even if these projects fail, it's a good thing because, you had all this money that was stuck somewhere, that flowed in, and as I said, many of those projects are going to fail. Let them fail, because this money has flowed in, you will have a lot of people come and work on these projects, and eventually the correct solution will emerge. >> And new structural dynamics are at play. And new investors are coming in. >> New investors, so many new investors. You know the funny thing John, after we met at Polycon, I think that 99% of the people I meet here are totally new. All the guys we met at Polycon in Bahamas, totally different. I only know very few people that I met over there. So that means a whole set of investors, or common people, who just want to learn about it, totally new. That's really good! And who wins here, the average citizen entrepreneur, the average citizen player that wants to start something whether it's a banking, a service provider of some sort, a entrepreneur, or a new financial instrument or firm, all have greenfield opportunity here. >> Because, see earlier when you wanted to raise money, I was talking to a founder the other day, I asked him, how hard it was for you to raise your first raise, like 10 years ago? He was telling me that he walked the doors across multiple VCs, to kind of scrap in one and a half million dollars. And then he did his second loan after eight years. >> He'd have to crawl on his knees to get that. >> And that too, you won't get the attention, you need to know reference, now you have a chance to go to the world, and monies were, so easy money coming in is a bad thing in a way that most entrepreneurs will feel the investors will lose their money. but that's different, but it at least you have access and you can try to think that you had any in mind earlier. You had no option, they would take a big stake. Now there's no dilution, this is pretty much cloud funding on steroids. You have a chance to go to market, you get the go to market money and see if it works. And if it doesn't work, let's fix it after that. >> Nithin, I got to get your thoughts on building a company, 'cause obviously, you're also not only in this as an investor, you're also doing strategic advisory work for people building the venture architecture and then the actual build up plans for their venture. So you've talked about this in the past, you have a relationship with some protocol guys, you can check with them, there's some good network there. But there's also a dynamic with this industry where the business development aspect of it is really important. People are partnering, >> Very very important. And there's a way to partner and a way not a partner. There's a way to do token economics and there's a way not to do token economics. What is your advice, to companies that have a good thing going on, they have a tail wind at their back, they got wind in their sails, but have to make some hot partnering decisions. Looking for fellows, fellowship in that ecosystem. How do you advise folks in this partnerships and then talk about token economics after? >> So the first thing I would tell founders is to reach out. This community is very very supportive. Like you can reach out to me, you can reach out to other guys, LinkedIn, Facebook, or come to these events, and in the hallways. Say your idea and you need help, because you will need help, you cannot run this alone. You are running a company, you are running your team. Have a good team, that's a first thing. Have a great team, great founders, vision, execution, you need that. The next key thing is, you have to think about marketing and how do you market, you need to get some big names on your board who can reach out to their network and tell them about your idea. And they reach out of the rest for you. >> So networks are super important. >> Super super important, like... >> So advisor, that their advisor selection should be based on their network that they bring to the table. >> Right, so the first advisor selection is the guy who will help you flush out your idea properly as tokens. The next advisor set is a marketing advisor or a technical advisor. The marketing advisers also very important because you need to market the product, get the money in, because end of the day, you need money to build it. You need to pay your employees, whether it's in Bitcoins or in fear, It doesn't matter, one of these is required. So you have these three things, then you need to build strategic partnerships in your business. Say, let's see your a loyalty points guy, like Al is doing, You know Al right? >> Al Burgio, >> From FuZe Chain now doing DigitalBits. Hot deal, hot deal! >> Hot deal, hot deal. >> Look at what Al did, he went out, he got his strategic partnerships with the loyalty guys, now he's got the brand, the strategic partnerships, he's built a product already. The money he needs is only for go to market so that he can push it to multiple companies and get them on the chain. Brilliant idea so, strategic partnerships, advisors, founding team, and then, show the idea to the people. Go out there, let them know that this is what you're doing, why this idea is great, how big is the market, there was a problem that you're solving, what is your solution. Explain yourself frankly and honestly, and I think the community will reward you, to go and find your dream. >> Great point, be honest, ask for help. Again, I can't reiterate my experience of, I'll share, is during the computer revolution, Internet revolution, Web.1.o, and now partnering in the early days when it's forming, can make or break a company. Make or break a company. >> Very True! So, note to that, okay now, token economics. >> Nithin: Sure! >> Sounds easy, but you really got to make sure that you have a good economic framework that matches the value proposition. Talk about what you advise there. >> So last day of the one founder restart to me, ICO is going on for our seventh day into the ICO. He's raised less than 300 thousand dollars. I meet him, and he needs help. After what, seven days into the ICO, all I could tell him is, shut off your ICO, it's not going to raise money. He's like, "Why," and I'm like, he said, "read this paper." I'm like, "There's nothing in this paper "I can put money into." And he's like, "Why is that?" So I asked him, so how many companies has he put his money into, how many points has he bought? Four years, he has not bought a single coin. And he's flustered something by himself. So he's never bought a coin, and he's expecting people to buy coins at his price. So I tell people, either you should notice, you should be an investor yourself. So there are different kinds of investors, there are institutional investors that are funds, family offices, and then are retail investors. If you're not any one of these, or any one of in this group, how do you know what these guys are buying it for? So reach out to them! >> That's where the advisory comes in, Know your customer! >> Know your customer! And not the KYC in a different way, but know 'em from a marketing standpoint. Know how the retail, >> Exactly! purchase is made. >> Because if... >> If you yourself are a buyer, at least you have some idea. If you've never bought a token, and if you're, I had another founder tell me that, my tokens are worth hundred million. I'm like, you don't have a user, you just have a product. You're tokens are worth shite, if you ask me. It's worth zero, I can tell my house is worth hundred million dollars. It's only worth as much as the top buyer. How much is he willing to pay for me? So I told the founder, I'll pay so much for this price because I think, if it's about that, there's a huge risk as the main investor coming in. He doesn't agree! >> So lets talk about some, how rounds are being done now. So one trend that I'm seeing, not, I shouldn't say trend, a few deals I've seen done, but it seems like a trend, I'm trying to get validation on this, Where people are avoiding the public ICO altogether, doing all privates. >> Yes! Basically over subscribed round. Trend, dynamic, real deal, what's your thoughts on reaction to that? >> It's just that the founders are adapting. Because if you go to the public, the moment you're going to the public, what's happening is, there's the SEZ component. Whether it's a utility and they can come after you, so they have made it private. And then they went after, and even further, a lot of the founders that I know, they just stopped accepting money from US entities or US individuals. Well it's a bad deal for a small investor. See the big investors are wealthy investors. They all have an external entity where they can invest into it. What about the small investor who was investing thousand dollars or 5,000 dollars? Now you have pretty much shut out his chance of getting into a great ICO. So the founder is going to raise his money from maybe Korea, Japan, China, and Singapore. He's going to form a company or a foundation in Cayman, or Lichtenstein, or Gibraltar. The small investor is a loser. The large institutional investor has no loss in this process, so, that is the founder adapting because he does not want, >> They want to manage, >> They don't want it to become lawsuits, basically. >> Compliance, audits, SEZ problems, they don't end fencing problems. >> So now let's compare, in contrast, different kind of companies. US based company, wants to raise money in the US, they do accredited. But they want to go outside, say Asia, or an Asia company wants to raise money in the US, what's that dynamic like, what are the issues? >> I think what's going to happen is they going to, some of them are going to register themselves as a security token, some of them are going to do just a reg D for very high net worth individuals. And the common, the the public round, they going to raise it from the China, the Korea, Japan, or is lobbying them. And that's what I think, multiple small countries are going to come into the space, which they know now, they can get the capital flowing into their company, and they going to allow their rules to be lax. They going to let capitol flow through. And then US will have to change, or maybe UK will have to change, whoever is against this will have to change. Capital means money, belt capital, and resource capital, like humans, we tend to move to places that are freer. Why did I move from India to US, or why did your parents or the earlier generation move to US? >> John: For a better life. >> It's a better life, the real better life is, you have the freedom over your property, the fruits of your labor. If the fruits of your labor are taxed at 50% or thirty, the more it goes up, you just don't want to work anymore, or you're going to to search for that place that will tax you less. >> Like Puerto Rico! >> Nithan: Puerto Rico! >> Are you bullish on Puerto Rico? >> I am bullish on Puerto Rico because, these, if they can sustain this, and have the rule of law, means they can protect people's wealth, like from crime and all those things, crime or being kidnapped. These two things happen, I'm telling you, most people will move or some of state will have to change their laws. >> They got to get >> the security up. Nithan, thanks so much for coming on the CUBE. Really appreciate your insight. Thanks for sharing! >> Thank you very much. This is the CUBEs exclusive coverage from Puerto Rico where we're getting on the ground here. Getting all the data from the Blockchain Unbound Conference. Part of restart week. I'm John Furry here, we've got more coverage after this break, thanks for watching! (upbeat electronic music)