>> From the Hard Rock Hotel in Las Vegas, it's theCUBE covering HoshoCon 2018. Brought to you by Hosho. >> Okay, welcome back everyone. It's theCUBE live coverage here in Las Vegas for the first annual blockchain security conference. The brightest minds in the industry coming together, it's called HoshoCon, and it's presented by, and sponsored by Hosho. But it's not their event, it's an industry event. And we're here with the co-founder and president, Hartej Sawhney, who is theCUBE alumni. Great to see you. You guys are doing a great event. Thanks for coming on. >> Yeah, it's always good to see you, and I'm so glad theCUBE is here at HoshoCon. >> So you've talked with us many times, but recently in Toronto about this event. This is not your company's event. You guys are putting it together. You're holding it because there's no other conferences that do this, but it's not just you guys. You guys are bringing the industry brains together. >> Yeah, I mean, we see ourselves as being on the intersection of cybersecurity and blockchain. And (coughs) just getting over a cold, but not a lot of conferences are out there that have a open discussion about cyber security in the blockchain industry. And hundreds of millions of dollars are stolen from exchanges. And 10% of all the money in the ICO space has been lost or stolen. And there's simply not enough platforms for this to be discussed. So, we figured we'd start the first conference that solely focuses on being a blockchain security conference. We chose not to have any ICO pitch competition. And it feels like there's more and more typical blockchain conferences out there, but it's important to be home base for anyone who wants to affiliate themselves with cyber security and the blockchain industry. >> And the depth and breadth of security is changing. We are hearing talks with, unfortunately I won't be able to attend the sessions, we're interviewing people all day, but amazing talks. How to hack an exchange, all these new surface areas. I mean, people kind of generally know they're unsecure, but this growth going on. There's new things happening. This is exposing some of the security vulnerabilities. What is the hot topics in the talk tracks here at HoshoCon? >> We have Anand Prakash, who runs a company called AppSecure. He's one of the worlds best white hat hackers. Who has hacked into the likes of Linkedin, Facebook, Google, all the top names. And to have someone walk us through today, Anand Prakash said, "Here's how you hack into a crypto "currency exchange and here's how they actually did it." And to have a white hat hacker walk us through that, it opens up our eye balls as to how easy it actually was for a Japanese exchange to loose 500 million dollars. That's no small sum of money. And this industry is only going to survive if we together as a community come together and evaluate how was it that 500 million dollars got stolen? And how can we as a community of global lovers of bitcoin make sure that this does not happen moving forward? >> On that exchange hack, 500 million dollars in Japan, was that white hat done or was that black hat? >> It was black hat. Unfortunately the money's not been given back. >> So it's not given back. So that's a half a billion dollars? >> It's half a billion dollars stolen, yeah you know. How many industries are worth just about that much? >> Yes, you could feed a couple countries. This is legit, right? Obviously it's like total, you know, wild west if you want to call it. Stage coach robberies they got the mask on. No one knows who it is. This is real, this is absolutely real. What are you guys doing as an industry? What's happening here to prevent this? What are the key, you know hygiene or social, anti-social engineering? What are the key things that are going on that are solving this problem? >> So, every exchange needs to value security and get a penetration test. Every company needs to make sure that somebody at their company is in charge of their in house security practices. Most companies when you ask them, "Who's in charge of security?" They point their finger at the CTO. The CTO is in charge of architecting the software. You need to have somebody full time, in house taking care of the security. Ideally a CISO and if you can afford it, pay someone five to ten thousand dollars a month as a consultant to come in for a couple of months and take care of your in house security. These are basic things that, you know, surprisingly most bitcoin exchanges often times when they're hacked, they're hacked by a basic phishing attack. That one of your employees opened up the wrong email. They opened up a PDF and the hacker gained access to your computer and is now monitoring your keyboard strokes and stole millions of dollars. Or the exchange didn't get an actual penetration test of their exchange. Or exchanges are listing contracts that have not gone through a professional smart contract audit. These things are now, also we're seeing them service in regulation with central governments. And it seems that all the smaller island nations are spearheading the way in terms of writing clarity on regulation. In Malta, Bermuda, Gibraltar, all of them are trying to spearhead the way. I'm much more excited, to be honest, about some of the larger nations bringing clarity on regulation in the next two to three years. We all can't just move to a small island off the coast of Italy that is infamous for actually laundering money in the gaming space. Yes, now they're trying to bring clean clarity doing KYC and AML in Malta and write a actual regulation about security. And if you're domiciled in Malta and you're a exchange then you can only list a token that's been audited. It's wonderful but at the end of the day Malta is also a part of the EU and if the EU changes their mind, things can change Malta. I just feel like it shows the immaturity of the space. If very legitimate companies are all going to flee to small countries like Malta or to islands like Bermuda. Good on those island nations for being so pragmatic and forward thinking and for bringing legal clarity. I mean if I was in an exchange today, arguably yes you have to go to Malta if you want clarity on regulation and you don't want to be in the United States. Right now, Malta is your choice. I'm just personally a little bit much more excited about the next three years where, I make a joke to my co-founder and I say, "The suits are coming." That we look around these conferences and you don't see that many suits but the fortunate 500, many of them are either writing private blockchains, they're evaluating how they're going to leverage blockchain technology in their major businesses and they're going to leverage decentralized applications and tokenization for already running products that have millions of customers, that are already profitable and then when they get tokenized they're going to be up and running right away. So the next two to three years are going to be very interesting. From Hosho's perspective we've taken a big turn towards catering towards more publicly traded large sophisticated companies. We've partnered up with Telefonica. Telefonica is a Fortune 200 company. Its wonderful to be able to leverage that kind of a brand. To deal with major world wide entities that are publicly traded come to Telefonica and evaluate how they can leverage blockchain technology and get one bundled security package that includes Hosho, Rivets, and Telefonica. >> Yeah the Rivets solution is interesting. It's a hardware based solution. So the subscriber of the phone becomes the entity. It's really interesting and I think this points to new paradigms of security, which I want to get to in a second but I want to just unpack what you said about the small country, big country dynamic. Great for the small countries to be opportunistic. To be creative and capture this opportunity. But people want stability. They want clarity on regulations, yes, but also standards, technical standards. >> We can't all just move to the small country of Malta. >> Yeah I'll be in a plane the whole time. >> It just doesn't work. >> Yeah and by the way the game changes too. Whats the implications of say, Malta decides one day, "You know what?" "We're getting out, we're changing things." A company would have to move their domicile again. So it's a moving train, you don't know what you're going to get. It might be stable now but it's not a scalable opportunity. >> Yeah, people have families and they want to stay where they are. Simple as that. We have large countries that have a strong crypto community that's growing and let's see how they pan out. Singapore seems like a likely next candidate. You have Korea. I would argue to say that the worlds first decentralized application that will be massively adopted will be in Korea. Korea is going to be the place where we have the worlds first decentralized application launched with mass adoption, a paradigm shift. The kind of shift where you forgot what it was like before you used Gmail regularly. >> Yeah, total, total infrastructure change. Alright so I got to ask you the hallway conversation question. Obviously you're very popular here. It's you event, you're sponsoring with the community. I see you talking to a lot of people at the VIP dinner last night. What are some of the hallway conversations that you're having? A lot of interesting people here from diverse backgrounds, in security, technology, some policy, some regulatory, some business, and legal, but really bright minds. What's the hallway conversation like? What are you talking about? >> We're talking about how all of us are going to survive crypto winter that we just entered. We've entered a time where fund raising has become extremely difficult. A lot of funds are simply bleeding. They lost a lot of money and they're not cutting checks right now. So the companies that are going to survive and stick around through this crypto winter, they're making a strong statement and they're going to be the ones that are going to stick around. And a lot of them are here at this conference at HoshoCon. And it amazing to have discussions to see what are the problems that fellow founders are facing? Building companies that will survive this crypto winter. Another thing has been just what are we going to do as a community to self-regulate? Are we going to create self-regulatory organizations? Are we going to let another Moody's get created? What is our viewpoint on regulation in the space overall, right? We love Max Keiser. His viewpoint on regulation is very extreme where he believes bitcoin is a self-regulatory technology. And on the other hand we have people saying, "No, we need to quickly move to regulate the space. "Work with central banks, work with central governments, "and write out the regulations." That's been lot of the hallway conversation. And a lot of other ones that have been really intriguing to me has been people talking about what are things that they have done within their company to protect their employees. Because the reality is in the crypto currency space every single employee of a major company in this industry is a target by naturally being in this industry. And this includes you. We are all naturally targets. And it's not about how much bitcoin you have maybe its about how much bitcoin someone thinks you have. And all of a sudden you become a target. And we need to think about things like our physical security. So some of the more interesting conversations I've been having with people have been around, along the lines of what are you doing to protect you and your family in regards to your physical security? On top of that your online presences. >> So ransoms, people getting kidnapped and or extorted. These kinds of physical pressures? >> Yeah, like ShapeShift has a lot of great stories. Michael Perklin from, the CIS of ShapeShift is here. You should totally talk to him and get him on theCUBE. Michael Perklin has a long list of war stories that ShapeShift has been through. Some of them they went through before he was actually hired as a CISO. And ShapeShift would've also not been hacked of millions of dollars if they had brought on a CISO earlier such as Michael Perklin. I believe they had hired him as a consultant. Did not renew the contract, got hacked, and brought him on as CISO. And he was like, "If you had continued working with me "I would of, this would of been avoided." And that's really-- >> It's foolish. >> One other thing I've seen with ShapeShift actually is online you'll notice that all the employees of ShapeShift, their last names are not online. So on the website it says, their chief marketing officers name is Emily, it says "Emily Shape Shift". And their badges at conferences also says "Emily Shape Shift". These are interesting things to learn from other companies that this is what you're doing to protect your employees from them being hacked. It's very interesting for us to all exchange notes-- >> Shoot I'm out there, (mumbles) everywhere pretty much online. >> Well I'm out there as well. We just got to protect ourselves and we got to think about things like our physical security. People feel uncomfortable thinking about their physical security. They think that, "Oh no we're in America, "we'll just call the cops." What about when we travel? What about when you and I are in a village in Thailand hanging out? We are microorganisms and when microorganisms are hungry they'll do what ever it takes to eat. So if they smell abundance, you and I are in trouble. >> Yeah, we got to be careful. And this is something that you really got to worry about because there's been tons of war stories. Now ultimately when you get back down to the wallet, it's one of the things we've been talking a lot this morning on, with Rivets, was on about the notion of how hard it is for mainstream to use tokens. Where's my private key? This has always been the crypto problem, even with private key encryption. >> Yeah, or should we build a multi-sig wallet to store your tokens in a secure manner? People have been asking us for a long time, Crypto funds, ICO's, "How do we store our tokens!" And our problem was that A, we've either hacked into the other wallets that are available and we saw that they're insecure or the UI and UX completely sucks. So we said lets build our own and so we built our own. >> Are you open sourcing that, is that-- >> No, we're going to be, this is going to be a unique multi-sig wallet that we release, it's not. You're open sourcing the actual code of the wallet or else it's not going to be considered legitimate. >> Yeah, it's good, it's a goldmine. >> It's a profitable venture. >> And that's going to be 100% bullet proof? >> It's going to be very secure. >> Let's talk about Meadow Suite. >> So, we came to a point where our engineers needed better tooling to find security vulnerabilities in smart contracts. And what is available, Truffle, is weak and slow. And so we built Meadow Suite. We built in a long list of tools and a full suite of tooling that we believe are going to be used by a long list of people that are building on the Ethereum blockchain. Including a lot of our competitors. And so we've open sourced it and we're excited for people to check out Meadow Suite. It's on GitHub and our engineers have put a lot of time and effort into it. We even have our own logo for it. >> And the goal is to automate things, make it easier? What's the main, main initial goals? >> I would say, long story short, is to find security vulnerabilities in smart contracts and to build tooling around that. And to effectively build and find vulnerabilities in smart contracts. >> So they build it into their development process natively? >> Correct. >> Alright Hartej great to have you on and hey congratulations for putting on this event. I know we've talked about >> Awesome to be here. it in the past, it actually happened. It's the first inaugural one. >> We had this vision and I'm glad it came through. We had a great global events team. Gabriel Shepherd, and Ryan Shewchuk, and Brad Horspool, and Michelle Yon. And like they've put on conference's the size of Southwest by Southwest. And our vision is, look we're not in the events business. And we're a cyber security business at the end of the day. But we found it necessary that there has to be a conference where there's a platform for people to talk about cyber security intersecting with the blockchain industry. There's got to be a platform for someone to get on stage and say, "Hey here's lessons that "we learned from getting hacked" And if this industry is going to survive, this topic needs to survive. And the brands that want to affiliate themselves with blockchain security and that want to be apart of the discussion. This will be a go to conference every single year. We're going to keep doing it and I look forward to having you at every single one, coming. >> It's been great. And you know what's key is having reputable people working together in a community, building an open community, sharing data, sharing best practices, and having candid conversations. >> Yep, it's the only way to get someone as epic as Andreas Antonopoulos to your conference. I mean my co-founder and I have been looking up to Andreas for so long. Watching videos of Andreas. Watching videos of Max Keiser, Stacy Herbert. To have them here is really just truly remarkable and I'm grateful, I'm honored, I'm touched. I'm touched to have you here. I miss David Vellante, I wish he was here. >> He's in San Francisco, he says hi. He was going to fly in tonight but-- >> He texted me. >> He did, okay. >> Hartej it's great to see you. >> Great to see you >> Congratulations. as well. thank you. >> Great event. Okay we're here live with theCUBe coverage for HoshoCon 2018, the first inaugural security conference on blockchain. Industry leaders coming together. The brilliant, bright minds of the industry working out the solutions, trying to pedal faster. Better security, check it out HoshoCon.com. I'm John Furrier stay with us for more coverage after this short break. (techno music)

>> Live, from Toronto Canada, it's the CUBE! Covering Blockchain Futurist Conference 2018. Brought to you by the CUBE. >> Hello everyone and welcome back. This is the CUBE's exclusive coverage here in Toronto for the Blockchain Futurist Conference, we're here all week. Yesterday we were at the Global Cloud and Blockchain Summit put on by DigitalBits and the community, here is the big show around thought leadership around the future of blockchain and where it's going. Certainly token economics is the hottest thing with blockchain, although the markets are down the market is not down when it comes to building things. I'm John Furrier with Dave Vellante, here with CUBE alumni and special guest Hartej Sawhney who is the founder of Hosho doing a lot of work on security space and they have a conference coming up that the CUBE will be broadcasting live at, HoshoCon this coming fall, it's in October I believe, welcome to the CUBE. >> Thank you so much for having me. >> Always great to see you man. >> What's the date of the event, real quick, what's the date on your event? >> It's October 9th to the 11th, Hard Rock Hotel & Casino, we rented out the entire property, we want everyone only to bump into the people that we're inviting and they're coming. And the focus is blockchain security. We attend over 130 conferences a year, and there's never enough conversation about blockchain security, so we figured, y'know, Defcon is still pure cybersecurity, Devcon from Ethereum is more for Ethereum developers only, and every other conference is more of a traditional blockchain conference with ICO pitch competitions. We figured we're not going to do that, and we're going to try to combine the worlds, a Defcon meets Devcon vibe, and have hackers welcome, have white hat hackers host a bug bounty, invite bright minds in the space like Max Keiser and Stacy Herbert, the founder of the Trezor wallet, RSA, y'know we've even invited everyone from our competitors to everyone in the media, to everyone that are leading the blockchain whole space. >> That's the way to run an event with community, congratulations. Mark your calendar we've got HoshoCon coming up in October. Hartej, I want to ask you, I know Dave wants to ask you your trip around the world kind of questions, but I want to get your take on something we're seeing emerging, and I know you've been talking about, I want to get your thoughts and reaction and vision on: we're starting to see the world, the losers go out of the market, and certainly prices are down on the coins, and the coins are a lot of tokens out there, >> Too many damn tokens! (laughing) >> The losers are the only ones who borrowed money to buy bitcoin. >> (laughs) Someone shorted bitcoin. >> That's it. >> But there's now an emphasis on builders and there's always been an entrepreneurial market here, alpha entrepreneurs are coming into the space you're starting to see engineers really building great stuff, there's an emphasis on builders, not just the quick hit ponies. >> Yep. >> So your thoughts on that trend. >> It's during the down-market that you can really focus on building real businesses that solve problems, that have some sort of foresight into how they're going to make real money with a product that's built and tested, and maybe even enterprise grade. And I also think that the future of fundraising is going to be security tokens, and we don't really have a viable security exchange available yet, but giving away actual equity in your business through a security token is something very exciting for sophisticated investors to participate in this future tokenized economy. >> But you're talking about real equity, not just percentage of coin. >> Yeah, y'know, actual equity in the business, but in the form of a security token. I think that's the future of fundraising to some extent. >> Is that a dual sort of vector, two vectors there, one is the value of the token itself and the equity that you get, right? >> Correct, I mean you're basically getting equity in the company, securitized in token form, and then maybe a platform like Securitize or Polymath, the security exchanges that are coming out, will list them. And so I think during the down-markets, when prices are down, again I said before the joke but it's also the truth: the only people losing in this market are the ones who borrowed to buy bitcoin. The people who believe in the technology remain to ignore the price more or less. And if you're focused on building a company this is the time to focus on building a real business. A lot of times in an up-market you think you see a business opportunity just because of the amount of money surely available to be thrown at any project, you can ICO just about any idea and get a couple a million dollars to work on it, not as easy during a down-market so you're starting to take a step back, and ask yourself questions like how do we hit $20,000 of monthly recurring revenue? And that shouldn't be such a crazy thing to ask. When you go to Silicon Valley, unless you're two-time exited, or went to Stanford, or you were an early employee at Facebook, you're not getting your first million dollar check for 15 or 20 percent of your business, even, until you make 20, 25K monthly recurring revenue. I say this on stage at a lot of my keynotes, and I feel like some people glaze their eyes over like, "obviously I know that", the majority are running an ICO where they are nowhere close to making 20K monthly recurring and when you say what's your project they go, "well, our latest traction is that we've closed about "1.5 million in our private pre-sale." That's not traction, you don't have a product built. You raised money. >> And that's a dotcom bubble dynamic where the milestone of fundraising was the traction and that really had nothing to do with building a viable business. And the benefit of blockchain is to do things differently, but achieve the same outcome, either more efficient or faster, in a new way, whether it's starting a company or achieving success. >> Yep, but at the same time, blockchain technology is relatively immature for some products to go, at least for the Fortune 500 today, for them to take a blockchain product out of R&D to the mainstream isn't going to happen right now. Right now the Fortune 500 is investing into blockchain tech but it's in R&D, and they're quickly training their employees to understand what is a smart contract?, who is Nick Szabo?, when did he come up with this word smart contracts? I was just privy to seeing some training information for multiple Fortune 500 companies training their employees on what are smart contracts. Stuff that we read four or five years ago from Nick Szabo's essays is now hitting what I would consider the mainstream, which is mid-level talent, VP-level talent at Fortune 500 companies, who know that this is the next wave. And so when we're thinking about fundraising it's the companies who raise enough money are going to be able to survive the storm, right? In this down-market, if you raised enough money in your ICO, for this vision that you have that's going to be revolutionary, a lot of times I read an ICO's white paper and all I can think is well I hope this happens, because if it does that's crazy. But the question is, did they raise enough money to survive? So that's kind of another reason why people are raising more money than they need. Do people need $100 million to do the project? I don't know. >> It's an arm's race. >> But they need to last 10 years to make this vision come true. >> Hey, so, I want to ask you about your whirlwind tour. And I want to ask in the context of something we've talked about before. You've mentioned on the CUBE that Solidity, very complex, there's a lot of bugs and a lot of security flaws as a result in some of the code. A lot of the code. You're seeing people now try to develop tooling to open up blockchain development to Java programmers, for example, which probably exacerbates the problem. So, in that context, what are you seeing around the world, what are you seeing in terms of the awareness of that problem, and how are you helping solve it? >> So, starting with Fortune 500 companies, they have floors on floors around the world full of Java engineers. Full Stack Engineers who, of course, know Java, they know C#, and they're prepared to build in this language. And so this is why I think IBM's Hyperledger went in that direction. This is why even some people have taken the Ethereum virtual machine and tried to completely rebuild it and rewrite it into functional programming languages like Clojure and Scala. Just so it's more accessible and you can do more with the functional programming language. Very few lines of code are equivalent to hundreds of lines of code in linear languages, and in functional programming languages things are concurrent and linear and you're able to build large-scale enterprise-grade solutions with very small lines of code. So I'm personally excited, I think, about seeing different types of blockchains cater more towards Fortune 500 companies being able to take advantage, right off the bat, of rooms full of Java engineers. The turn to teaching of Solidity, it's been difficult, at least from the cybersecurity perspective we're not looking for someone who's a software engineer who can teach themselves Solidity really fast. We're looking for a cybersecurity, QA-minded, quality-assurance mindset, someone who has an OPSEC mindset to learn Solidity and then audit code with the cybersecurity mindset. And we've found that to be easier than an engineer who knows Java to learn Solidity. Education is hard, we have a global shortage of qualified engineers in this space. >> So cybersecurity is a good cross-over bridge to Solidity. Skills matters. >> If you're in cybersecurity and you're a full sec engineer you can learn just about any language like anyone else. >> The key is to start at the core. >> The key is to have a QA mindset, to have the mindset of actually doing quality assurance, on code and finding vulnerabilities. >> Not as an afterthought, but as a fundamental component of the development process. >> I could be a good engineer and make an app like Angry Birds, upload it, and even before uploading it I'll get it audited by some third party professional, and once it's uploaded I can fix the bugs as we go and release another version. Most smart contracts that have money behind them are written to be irreversible. So if they get hacked, money gets stolen. >> Yeah, that's real. >> And so the mindset is shifting because of this space. >> Alright, so on your tour, paint a picture, what did you see? >> First of all, how many cities, how long? Give us the stats. >> I just did about 80 days and I hit 10 countries. Most of it was between Europe and Asia. I'll start with saying that, right now, there's a race amongst smaller nations, like Malta, Bermuda, Belarus, Panama, the island nations, where they're racing to say that "we have clarity on regulation when it comes to "the blockchain cryptocurrency industries," and this is a big deal, I'd say, mainly for cryptocurrency exchanges, that are fleeing and navigating global regulation. Like in India, Unocoin's bank has been shutdown by the RBI. And they're going up against the RBI and the central government of India because, as an exchange, their banks have been shut down. And they're being forced to navigate waters and unique waves around the world globally. You have people like the world's biggest exchange, at least by volume today is Binance. Binance has relocated 100 people to the island of Malta. For a small island nation that's still technically a part of the European Union, they've made significant progress on bringing clarity on what is legal and what is not, eventually they're saying they want to have a crypto-bank, they want to help you go from IPO to ICO from the Maltese stock exchange. Similarly also Gibraltar, and there's a law firm out there, Hassans, which is like the best law firm in Gibraltar, and they have really led the way on helping the regulators in Gibraltar bring clarity. Both Gibraltar and Malta, what's similar between them is they've been home to online gambling companies. So a lot of online casinos have been in both of their markets. >> They understand. >> They've been very innovative, in many different ways. And so even conversations with the regulators in both Malta and Gibraltar, you can hear their maturity, they understand what a smart contract is. They understand how important it is to have a smart contract audited. They already understand that every exchange in their jurisdiction has to go through regular penetration testing. That if this exchange changes its code that the code opens it up to vulnerabilities, and is the exchange going through penetration testing? So the smaller nations are moving fast. >> But they're operationalizing it faster, and it's the opportunity for them is the upside. >> My only fear is that they're still small nations, and maybe not what they want to hear but it's the truth. Operating in larger nations like the United States, Canada, Germany, even Japan, Korea, we need to see clarity in much larger nations and I think that's something that's exciting that's going to happen possibly after we have the blueprint laid out by places like Malta and Gibraltar and Bermuda. >> And what's the Wild West look like, or Wild East if you will in Asia, a lot of activity, it's a free-for-all, but there's so much energy both on the money-making side and on the capital formation side and the entrepreneurial side. Lay that out, what's that look like? >> By far the most exciting thing in Asia was Korea, Seoul, out of all the Asian tiger countries today, in August 2018, Seoul, Korea has a lot of blockchain action going on right now. It feels like you're in the future, there's actually physical buildings that say Blockchain Academy, and Blockchain Building and Bitcoin Labs, you feel like you're in 2028! (laughs) And today it's 2018. You have a lot of syndication going on, some of it illegal, it's illegal if you give a guarantee to the investor you're going to see some sort of return, as a guarantee. It's not illegal if you're putting together accredited investors who are willing to do KYC and AML and be interested in investing a couple of hundred ETH in a project. So, I would say today a lot of ICOs are flocking to Korea to do a quick fundraising round because a lot of successful syndication is happening there. Second to Korea, I would say, is a battle between Singapore and Hong Kong. They're both very interesting, It's the one place where you can find people who speak English, but also all four of the languages of the tiger nations: Japanese, Mandarin, Cantonese, Korean, all in one place in Hong Kong and Singapore. But Singapore, you still can't get a bank account as an ICO. So they're bringing clarity on regulation and saying you can come here and you can get a lawyer and you can incorporate, but an ICO still has trouble getting a bank account. Hong Kong is simply closer in proximity to China, and China has a lot of ICOs that cannot raise money from Chinese citizens. So they can raise from anybody that's not Chinese, and they don't even have a white paper, a website, or even anybody in-house that can speak English. So they're lacking English materials, English websites, and people in their company that can communicate with the rest of the world in other languages other than Mandarin or Cantonese. And that's a problem that can be solved and bridges need to be built. People are looking in China for people to build that bridge, there's a lot of action going on in Hong Kong for that reason since even though technically it's a part of China it's still not a part of China, it's a tricky gray line. >> Right, in Japan a lot going on but it's still, it's Japan, it's kind of insulated. >> The Japanese government hasn't provided clarity on regulation yet. Just like in India we're waiting for September 11th for some clarity on regulation, same way in Japan, I don't know the exact date but we don't have enough clarity on regulation. I'm seeing good projects pop up in Korea, we're even doing some audits for some projects out of Japan, but we see them at other conferences outside of Japan as well. Coming up in Singapore is consensus, I'm hoping that Singapore will turn into a better place for quality conferences, but I'm not seeing a lot of quality action out of Singapore itself. Y'know, who's based in Singapore? Lots of family funds, lots of new exchanges, lots of big crypto advisory funds have offices there, but core ICOs, there was still a higher number of them in Korea, even in Japan, even. I'm not sure about the comparison between Japan and Singapore, but there is definitely a lot more in Korea. >> What about Switzerland, do you have any visibility there? Did you visit Switzerland? >> I was Zug, I was in Crypto Valley, visited Crypto Valley labs... >> What feels best for you? >> I don't know, Mother Earth! (laughs) >> All of the above. >> The point of bitcoin is for us to start being able to treat this earth as one, and as you navigate through the crypto circuit one thing as that is becoming more visible is the power of China partnering up with the Middle East and building a One Belt, One Road initiative. I feel like One Belt, One Road ties right into the future of crypto, and it's opening up the power of markets like the Philippines, Thailand, Malaysia, Singapore. >> What Gabriel's doing in the Caribbean with Barbados. >> Gabriel from Bit, yeah. >> Yeah, Bit, he's bringing them all together. >> Yeah, I mean the island nations are open arms to companies, and I think they will attract a lot of American companies for sure. >> So you're seeing certainly more, in some pockets, more advanced regulatory climates, outside of the United States, and the talent pool is substantial. >> So then, when it comes to talent pools, I believe it was in global commits for the language of Python, China is just on the verge of surpassing the United States, and there's a lot of just global breakthroughs happening, there's a large number of Full Stack engineers at a very high level in countries like China, India, Ukraine. These are three countries that I think are outliers in that a Full Stack Engineer, at the highest level in a country like India or Ukraine for example, would cost a company between $2,000 to $5,000 a month, to employ full time, in a country where they likely won't take stock to work for your company. >> Fifteen years ago those countries were outsource, "hey, outsource some cheap labor," no, now they're product teams or engineers, they're really building value. >> They're building their own things, in-house. >> And the power of new markets are opening up as you said, this is huge, huge. OK, Hartej, thanks so much for coming on, I know you got to go, you got your event October 9th to 11th in Las Vegas, Blockchain Security Conference. >> The CUBE will be there. >> I look forward to having you there. >> You guys are the leader in Blockchain security, congratulations, hosho.io, check it out. Hosho.io, October 9th, mark your calendars. The CUBE, we are live here in Toronto, for the Blockchain Futurist Conference, with our good friend, CUBE alumni Hartej. I'm John Furrier, Dave Vellante, be right back with more live coverage from the Untraceable event here in Toronto, after this short break.

live from Las Vegas it's the cube covering IBM think 2018 brought to you by IBM hello everyone welcome back to the cube coverage here at IBM think 2018 in Las Vegas Nevada the Mandalay Bay it's a cubes exclusive covers three days of wall-to-wall interviews thought leaders experts entrepreneurs people making an impact and our next guest artists ani who's the co-founder of hosh io h OS h o de Ojo kayo advisor at the pink sky capital he's a cube alumni a walk in off the streets cuz he lives in Las Vegas but very instrumentals are connected to this community because of his pioneering work in in crypto blockchain and the future of money architects great to see you thanks for coming by thank you for having me it's good to be back on the cube great second time and second time yeah only couple we just saw each other the Bahamas the first security token conference yeah I bike on I I be on IBM's really big on supply chain this is their visitor old school you know generations of providing software for businesses b2b and now blockchains their big thing but blockchains yeah pretty straightforward yeah you know you get efficiencies but they're not talking about token economics because they talk about something execs here they're like well that implies the general public in their world thinks cryptocurrency they think Bitcoin so I want to connect the networks together our network IBM's network your network because the melting pot of this trend is really about blockchain cryptocurrency in the sense of the value around tokens and how tokens can be harnessed to capture the values I want to get your perspective as these worlds collide so I think that IBM is doing a great job by spearheading a blockchain movement and they're very they're focusing on the fortune 500 and the key with Fortune 500 companies right now is that they have rooms full of Java developers Java engineers and aetherium is the protocol right now that is most commonly found the majority of icos and token generation events that have occurred to date have all been on etherium x' network and etherium is the most and they found in blockchain however the etherium blockchain the language to build and launch token generation events on aetherium you have to write in a language called solidity and solidity is a new language and iBM has made a smart move by doing everything in Java and JavaScript similar to a lot of the new block chains that are aiming to compete with aetherium and the key distinction just to kind of put it out there when I get your reaction to and get some commentary around is IBM is not competing with public block chains they're looking at a in a different way they're saying hey you know you can have I guess private blockchains I mean it's not a really a dirty word they because they have a different use case correct I think it's very important especially when it comes to things like healthcare you look at the health care industry healthcare records will not be going on public block chains and so the hyper ledger fabric framework may make sense for things that need to be HIPAA compliant for example so reliability is key so what's their jannat like say hashed crafts got a lot of traction in their performance and their speed they got time stamps that's not a native blockchain yet that's kind of getting some traction IBM's got something similar for those markets that require the reliability the performance and the security so help the audience understand IBM's moves here because IBM's conservative so they don't really want to throw the word cryptocurrency out there because it might be misunderstood but this is gonna end up in token economics how are you explaining what the moves ibm's making to the average person that might not know the inside nuances in baseball for say the crypto market I think what's interesting is that iBM has a more mature focus on this space and you know they have direct ties historically to the fortune 500 companies the way others do not and so they've taken a much more sophisticated and a much much more conservative approach you don't see IBM throwing around the word cryptocurrency and that's a smart move because it's about the cryptography that secures block chains in a decentralized ecosystem and it's that the discussion of just tokens and token sales and leveraging tokens as a currency it's a premature time in this entire industry to be having that discussion so although it's going on it's a distraction for IBM you saying yeah because we but it's more interesting for smart contracts to be written that our functional smart contracts that for the first time ever white collared middlemen are being cut out of the picture in a new trustless decentralized ecosystem so talk about where IBM could take this with token economists obviously do you think that it's all leads to some sort of tokenization is that gonna be where the value capture is gonna be how does IBM get there in your mind I think they get there by having fortune 500 companies launch legitimate decentralized applications on their blockchain and that's just what Java JavaScript it's because most fortune 500 companies already have a plethora of Engineers globally that they can simply have start working on IBM's blockchain whereas you don't see that as a risk for IBM no that's that's IBM's advantage because today if the fortune 500 companies aren't building on aetherium whose blockchain mainly because of the learning curve it takes for a current full stack engineer to become a solidity engineer what's the etherium future now obviously they have they're working on lightning seeing some things going on that area the Lightning is Bitcoin is plasma yeah plasma sorry I got them confused so they got to go through the work this and some real work that's got to get done the theory of childs a big developer community the biggest the biggest so do those merge with the IBM communities downstream at some point or is it okay to be separate and does it matter I think they'll remain separate and in this case I I highly doubt that a theory IBM hyper ledger will go down the route that route stock has gone root stock essentially is the etherium virtual machine sidechain to the Bitcoin blockchain enabling smart contracts on the Bitcoin blockchain for the first time and rootstock is a very interesting project however IBM is its own ecosystem and the way in which they're catering to the fortune 500 is extremely intriguing and from Hojo's perspective we want to be auditing smart contracts that are functional that are written by more sophisticated players in the industry centralized ecosystem our main focus is just security auditing and there's gonna be a lot more smart contracts written by more sophisticated players on IBM's blockchain then possibly the other ones right now we have we have not seen a plethora of Fortune 500 companies by any means launching smart contracts on the theorems blockchain and blue chips banks or whatever as they try to disrupt themselves need to get us to partner governments okay so how about for a minute I just take a second to talk about your business I know we covered this at polycon and the Bahamas but for the sake of the context to IBM yeah talk about what you guys are doing we're specifically in the marketplace of partners would you sit if you were parting with IBM and and your role that you could possibly take with IBM so to take a step back quick host show the word itself hosho and means security in japanese and we started this company eight months ago my co-founder yo Kwon and I and our laser focus is blockchain security and being the global leader within the blockchain security space so as far as we see there's new blockchains being made new protocol tokens being launched as well as new tokens being launched as well as do smart contracts being written that are functional for the entire business and no matter what blockchain a smart contract is written on that smart contract is code that has been written and that code has to be audited by a professional third party and we are that professional third party that there's a line-by-line code review of the smart contract and finds all security vulnerabilities and we've been building proprietary tooling to find vulnerabilities faster and faster and faster we do a gas analysis to make sure that that blockchain is not being clogged we conduct the static analysis to find any hidden functionality within the framework of the smart contract and the last part which is very crucial is that yeah very uniquely qualified full stack engineer with a unique QA mindset and a security background who knows the language in which this is coded which currently most projects that were auditing our aetherium ERC 20 tokens written in solidity someone has to marry the source of truth which in the case of an ICO is a white paper and marry the white paper to the smart contract and make sure is the smart contract doing what the white paper says codify the white paper basically this process of auditing is gonna be ever more crucial within the the business that IBM does with Fortune 500 businesses because when a publicly traded company launches a smart contract for a decentralized application security is the highest priority and abilities is where the hackers could come in just be on a time to market getting those smart contract codes written it was fully baked it's irreversible once the smart contract is launched and millions of dollars are gonna go through this smart contract it's been regular practice in the cybersecurity world to type up code and to have it reviewed by a third party auditor we're simply applying the exact same logic to the blockchain space and it's exciting to see more blockchains by sophisticated players like IBM come to fruition and we're looking forward to actual projects from big players around the world launch on IBM's blockchain and hosho is looking to be a preferred partner of IBM's to do all their security work whether it's smart contract auditing or penetration testing and real quick on penetration testing that's our other core service that we provide and penetration testing is both for websites and for crypto currency exchanges in which we're making sure there's no security vulnerabilities within your website and finding every way possible to penetrate your website or your exchange and every time code is changed you open up the doors to more vulnerabilities and so in the crypto currency exchange space right now we're seeing that new exchanges are being made but sophisticated investors don't know if this is a safe place to trade hundreds of millions of dollars or not yeah and so when you got commerce being John I mean IBM as folk as you mentioned is legit and they're doing a great job by the way props to IBM for doing what they're doing they've been in for multiple years now and they're supporting the Apache project they're putting their their weight behind it but these are real-world examples granted supply chain might be boring to some audiences but not to others I mean you're moving real product around this is commerce with digital fingerprints and code and potentially tokens that's a highly gonna accelerate the payment process I mean the notion of clearing goes away it's instant yes this is a highly accelerated money transfer value capture value Tran for environment you can't take me chances yes and security is primal concern and we're excited that companies like IBM value security and this space is one that the dust has yet to settle and what's gonna help the dust settle within the blockchain ecosystem is more priority on security so what's your take if you are gonna give a talk here we're doing talking here in the cube so it's awesome it's gonna be alive and on-demand as well your advice to people saying you know we got a tokenizer our business I need to start with blockchain I can see some areas to create some efficiencies around some inefficient processes and create new business models I got to get started your thoughts my thoughts are take a step back and first evaluate do you have a business what problem are you solving once your business is actually generating some revenue and you've evaluated why the concept of a blockchain could be interesting for your business then pick a blockchain and stick to it and then when you start building on that block chain you've figured out that a token could actually be leveraged within this decentralized application that you're building then you can start figuring out what the token economics of it would actually be I think what people are doing nowadays is rushing to create a token because of their excitement about the fundraising mechanism that an ICO is and an ICO is democratizing to some extent at least global capital raising and I think that fundraising mechanism is not going anywhere that that fundraising mechanism is here to stay however the majority of ICO projects that we're seeing occurring today I don't think these companies will be around in the next couple of years which shows how immature to some extent the industry actually is whereas maybe the projects that are built and launched on IBM's block chains that they develop maybe they're more sophisticated and will be companies that have gone through a more rigorous process of making sure security was a primary concern and they wrote quality code for quality businesses that are actually leveraging decentralization in the appropriate way not the other way around of we want to raise capital so let's invent a reason to have a token or you have a big case right now in Silicon Valley at least is you have companies that are very serious a and B and decided let's do an icy overseer you see and that that's tricky it's not always the right solution when you're saying is don't confuse the ico crazy fundraising arbitrage and new new model to applying supply chain tokens and blockchain to a durable business agreed and on the same token we have people in the space whether they're investors they're lawyers PR firms exchanges they all need to mitigate their risk by keeping security as a concern for them both in-house and for the companies that they're working with yeah lawyers don't want to be doing lawyer work for a company that will turn out to be a scam coin and someone has to do a security audit of that token the same goes for a PR firm a marketer and in exchange exchanges should not be listing tokens that have not gone through a smart contract audit well it's good to know we got a cube alumni here in the cube to help us with our security audit yeah well the answers the life were in a cube interview so do we got one right here I want to just get into in topic you and I were talking of dinner the other night when we had we saw each other a few nights ago about the problem of picks and shovels and tools and maturity in this new emerging area can you um can you just take a minute to explain what that we were talking about there and I thought you had a good point I mean maturity of the space is not mature it's growing it's embryonic but moving fast and there's need for tools let's unpack that just share your thoughts vision so I think that a lot of people have been more excited to join in an IC o---- a token generation event and do more quick money grabs but to me what's more exciting is the infrastructure that's needed for this industry to actually grow and mature an infrastructure is infamously known as picks and shovels because when the gold rush happened the people who made the real money or the people selling the shovels to the gold diggers and what's included in that is businesses like our own hosho which is selling security audits of smart contracts doing penetration testing bringing maturity and making making things less risky for for everybody in this space so we start we see ourselves as selling picks and shovels on the other hand I'll give you an example Goldman Sachs has a trading desk today it's not 24/7 stock market Oh at 9:00 closes at 5:00 what happens tomorrow when a 24/7 crypto currency trading desk is turned on at Goldman Sachs do the traders that are now 24/7 have the appropriate tools and the governance built into software to manage a team of 24/7 traders at Goldman Sachs today when you have traders trading in the stock market they have a plethora of tools that make them snipers and you have certified market technicians telling hedge funds that this isn't gonna go up two points here in three points they're reading candlesticks in the cryptocurrency space it's like poking a stick you go from being a sniper to having a stick find by Wars like a blind man so companies there's a dozen companies that can be made building the infrastructure for just what I just said the governance with four trading floors this is a really good point and I wanted to bring it up because in these emerging markets these white spaces for tools and technology to help the overall trend grow faster has always been a successful man however you mentioned something about the goldman sachs trading this and that is it literally could be turned down overnight right so that's the problem you can accelerate things too fast and not be prepared that seems Oldman honest I'd know Goldman's done a great job at being very much forward-thinking they've been at every money 20/20 since the beginning of that FinTech conference and they're definitely in this pickle this exercise the analogy is a company can turn on a new model fairly quickly faster than the old days which we're taking months and then now you can do it really on a much shorter timeframe that means they potentially could be exposed if they go too fast yeah this is where the ecosystem has to help yeah I think the bulge bracket banks are treading the water very carefully JPMorgan is doing things they're involved with aetherium Z cash - JPMorgan has a lot going on on this front but these are publicly traded monster banks they're not going to take any risks these are they have a they have stockholders to to answer to they have the US government we have over 150 regulatory arms just regulating the finance industry in the United States and so I think it the American citizen citizen is quick to point fingers to bulge bracket banks and those banks are answering to too many regulatory arms this is one of the downsides of the United States right now in general is the increasingly coercive environment of the government ybm certainly got the blue chip company got the the fortune 500 but they also have a marketplace and that's where they could really kind of change the game feeling in those white spaces yeah IBM's marketplace sounds very exciting and my mind just goes to who's handling the security for everything to do with IBM blockchain we're hoping at Osho arch edge thanks for joining us thanks for sharing your your insight here in the queue with an IBM think conference breaking down all the top news that's really around blockchain at AI would date at the sin of the value proposition all being disrupted by new decentralized technologies blockchain being the beginning and a lot more is happening and certainly we're in and bring it to you on the cube no matter where it is will be there I'm John furrow here and Las Vegas for IBM think coverage we'll be back with more coverage after this short break [Music]

>> Narrator: Live from Nassau in the Bahamas. It's The Cube! Covering PolyCon 18. Brought to you by PolyMath. >> Welcome back everyone, we're live here in the Bahamas with The Cube's exclusive coverage of PolyCon 18, I'm John Furrier with my co-host Dave Vellante, both co-founders of SiliconANGLE. We start our coverage of the crypto-currency ICO, blockchain, decentralized world internet that it is becoming. It's the beginning of our tour, 2018. Our next guest is Hartej Sawhney who's the advisor at Pink Sky Capital, but also the co-founder of Hosho.io. Welcome to The Cube. >> Thank you so much. >> Hey thanks for coming on. Thanks for coming on. >> Thanks guys. >> We had a great chat last night, and you do some real good work. You're one of the smartest guys in the business. Got a great reputation. A lot of good stuff going on. So, take a minute to talk about who you are, what you're working on, what you're doing, and the projects you're involved in. >> So first of all, thank you so much for having me, it's really exciting to see the progress of high-quality content being created in the space. So my name is Hartej Sawhney. We have a team based in Las Vegas. I've been based in Las Vegas for about five years. But I was born and raised in central New Jersey, in Princeton. And my co-founder is Yo Sup Quan. We started this company about seven months ago and my co-founder's background was he's the co-founder of Coin Sighter in Exchange out of New York, which exited to Kraken. After that he started Launch Key which exited to Iovation. And prior to this company, my previous company was Zuldi, Z-U-L-D-I .com where we had a mobile point of sale system specifically for high volume food and beverage companies and businesses. So we were focused on Fintech and mobile point of sale and payment processing. So both of us have a unique background in both Fintech and cyber-security and my co-founder Yo, he's a managing partner of a crypto hedge fund named Pink Sky Capital. And he was doing diligence for Pink Sky, and he realized that the quality of the smart contracts he was seeing for deals that he wanted to participate as an investor in, and I'm an advisor in that hedge fund, we both realized that essentially the quality of these smart contracts is extremely low. And that there was nobody in this space that we saw laser focused on just blockchain security. And all the solutions that would be entailed in there. And so we began focusing on just auditing smart contracts, doing a line-by-line code review of each smart contract that's written, conducting a GAS analysis, and conducting a static analysis, making sure that the smart contract does what the white paper says, and then putting a seal of approval on that smart contract to mitigate risk. So that the code has not been changed once we've done an analysis of it, that there's no security vulnerabilities in this code, and that we can mitigate the risks for exchanges and for investors that someone has done a thorough code analysis of this. That there's no chance that this is going to be hacked, that money won't be stolen, money won't be lost, and that there's no chance of a security vulnerability on this. And we put our company's name and reputation on this. >> And what was the problem that is the alternative to that? Was there just poorly written code? Was it updated code? Was it gas was too expensive? They were doing off-chain transactions. I mean what are some of the dynamics that lead you guys down this path? I mean this makes sense. You're kind of underwriting the code, or you're ensuring it or I don't know what you call it, but essentially verifying it. What was the problem? And what were some of the use cases of problems? >> I would say that the underlying problem today in this whole industry, of the blockchain space, is that the most commonly found blockchain is Ethereum. The language behind Ethereum is called Solidity. Solidity is a brand new software language that very few people in the world are sufficient programmers in Solidity. On top of that, Solidity is updated, as a language on a weekly basis. So there are a very limited number of engineers in the world who are full-stack engineers, that have studied and understand Solidity, that have a security background, and have a QA mindset. Everything that I just said does exist on this Earth today and if it does, there's a chance that that person has made too much money to want to get out of bed. Because Ethereum's price has gone up. So the quality of smart contracts that we're seeing being written by even development shops, the developers building them are actually not full-stack engineers, they're web developers who have learned the language Solidity and so thus we believe that the quality of the code has been significantly low. We're finding lots of critical vulnerabilities. In fact, 100% of the time that Hosho has audited code for a smart contract, we have found at least a couple of vulnerabilities. Even as a second or the third auditor after other companies conduct an audit, we always find a vulnerability. >> And is it correct that Solidity is much more easy to work with than say, Bitcoin scripting language, so you can do a lot more with it, so you're getting a lot more, I don't want to say rogue code, but maybe that's what it is. Is that right? Is that the nature of the theory? >> Compared to Bitcoin script, yes. But compared to JavaScript, no. Because Fortune 500 companies have rooms full of Java engineers, Java developers. And now the newer blockchains are being written, are being written on in block JavaScript, right? So you have IBM's Hyperledger program, you have EOS, you have ICX, Cardano, Stellar, Waves, Neo, there's so many new projects that are coming, that all of them are flexing about the same thing. Including Rootstock, RSK. RSK is a project where they're allowing smart contracts to be tied to the Bitcoin blockchain for the first time ever. Right, so Fortune 500 companies may take advantage of the fact that they have Java developers to take advantage of already, that already work for them, who could easily write to a new blockchain, and possibly these new blockchains are more enterprise grade and able to take more institutional capital. But only time will tell. And us as the auditor, we want to see more code from these newer blockchains, and we want to see more developers actually put in commits. Because it's what matters the most, is where are the developers putting in commits and right now maximum developers are on the Ethereum blockchain. >> Is that, the numbers I mean. Just take a step there. So the theory of blockchain. Percentage of developers vis-a-vis other platforms percentages-- >> By far the most is on developed on Ethereum. >> And in terms of code, obviously the efficiencies that are not yet realized, 'cause there's not enough cycles of coding going on, it's evolution, right? >> Yes. >> Seems to be the problem, wouldn't you say? So a combination of full-stack developer requirements, >> Yes. >> To people who aren't proficient in all levels of the stack. >> Yes. >> Just are inefficient in the coding. It's not a ding on the developers, it's just they're writing code and they miss something, right? Or maybe they're not sufficient in the language-- >> It's a new language. The functions are being updated on a weekly basis, so sometimes you copied and pasted a part of another contract, that came from a very sophisticated project, so they'll say to us, well we copied and pasted this portion from EOS, so it should be great. But what that's leading to is either A, they're using a function that's now outdated, or B, by copying and pasting someone else's code from their smart contract, this smart contract is no longer doing what you intended it to do. >> So now Hartej, how much of your capability is human versus machine? >> Yeah I was going to ask that. >> ML, AI type stuff? >> So we're increasingly becoming automated, but because of the over, there's so much demand in the space. And we've had so much demand to consistently conduct audits, it's tough to pull my engineers away from conducting an audit to work on the tooling to automate the audit, right? And so we are building a lot of proprietary tooling to speed up the process, to automate conducting a GAS analysis, where we make sure you're not clogging up the blockchain by using too much GAS. Static analysis, we're trying to automate that as fast as possible. But what's a bit more difficult to automate, at least right now, is when we have a qualified full-stack engineer read the white paper or the source of truth and make sure the smart contract actually does it, that is, it's a bit longer tail where you're leveraging machine learning and AI to make that fully automated. (talking over each other) >> But maybe is that, I'm sorry John. Is that the long term model or do you think you can actually, I mean there's people that say augmented intelligence is going to be a combination of humans and machines, what do you think? >> I think it's going to be a combination for a long time. Every single day that we audit code, our process gets faster and faster and faster because once we find a vulnerability, finding that same vulnerability next time will be faster and easier and faster and easier. And so as time goes on, we see it as, since the bundle of our work today is ICOs, token generation events, there are ERC 20 tokens on the Ethereum blockchain. And we don't know how long this party will last. Like maybe in a couple years or a couple months, we have a big twist in the ICO space that the numbers will drastically go down. The long tail of Hosho's business for us, is to keep track of people writing smart contracts, period. But we think they are going to become more functional smart contracts where the entire business is on a smart contract and they've cut out sophisticated middle men. Right and it may be less ICOs, and in those cases I mean, if you're a publicly traded company, and you're going from R&D phase where you wrote a smart contract and now actually going to deploy it, I think the publicly traded company's going to do three to five audits. They're going to do multiple audits and take security as a very major concern. And in the space today, security is not being discussed nearly as much as it should. We have the best hedge funds cutting checks into companies, before the smart contract is even written, let alone audited. And so we're trying to partner with all the biggest hedge funds and tell the hedge funds to mandate that if you cut a check into a company that is going to do a token generation event, that they need to guarantee that they're going to at least value security, both in-house for the company and for the smart contract that's going to be written. >> How much do you charge for this? I mean just ballpark. Is it a range of purchase price, sales price? What's the average engagement go for, is it on a scope of work? Statement of work? Or is it license? I mean how does it work? >> So first it depends is it a penetration test of the website or the exchange? Penetration testing of exchanges are far more complex than just a website. Or if it's a smart contract audit, is it an ICO or is it a functional smart contract? In either case for the smart contract audit, we have to build a long set of custom tooling to attack each and every smart contract. So it's definitely very case-by-case. But a ballpark that we could maybe give is somewhere around the lines of 10 to 15 thousand dollars per 100 lines of functional code. And we ask for about three weeks of lead time for both a smart contract audit and a penetration test. And surprisingly in this space, some of the highest caliber companies and high caliber projects with the best teams, are coming to us far too late to get a security audit and a penetration test. So after months of fundraising and a private pre-sale and another pre-sale, and going and throwing parties and events and conferences to increase the excitement for participating in their token sale, what we think is the most important part, the security audit for a smart contract is left to the last week before your ICO. And a ridiculous number of companies are coming to us within seven days of the token sale, >> John: Scrambling. >> Scrambling, and we're saying but we've seen you at seven conferences, I think that we need to delay your ICO by two or three weeks. We can assure you that all of your investors will say thank you for valuing security, because this is irreversible. Once this goes live and the smart contract is deployed. >> Horse is out of the barn. >> It's irreversible. >> Right right. >> And once we seal the code, no one should touch it. >> It's always the case with security, it's bolted on at the last minute. >> It's like back road recovery too, oh we'll just back it up. It's an architectural decision we should have made that months ago. So question for you, the smart contract, because again I'm just getting my wires crossed, 'cause there's levels of smart contracts. So if we, hypothetical ICO or we're doing smart contracts for our audience that's going to come out soon. But see that's more transactional. There's security token sales, >> Yes. >> That are essentially, can be ERC 20 tokens, and that's not huge numbers. It could be big, but not massive. Not a lot transaction costs. That's a contract, right? That's a smart contract? >> People are writing smart contracts to conduct a token generational event, most commonly for an ERC 20 token, that's correct. >> Okay so that's the big, I call that the big enchilada. That's the big-- >> Right now that is the most important, the most common. >> Okay so as you go in the future, I can envision a day where in our community, people going to be doing smart contracts peer-to-peer. >> Sure. >> How does that work? Is that a boiler plate? Is is audited, then it's going to be audited every time? Do the smart contracts get smaller? I mean what's your vision on that? Because we are envisioning a day where people in our audience will say hey Hartej, let's do a white paper together, let's write it together, have a handshake, do a smart contract click, click. Lock it in. And charge a dollar a download, get a million downloads, we split it. >> I envision a day where you can have a more drag and drop smart contract and not need a technical developer to be a full-stack engineer to have to write your smart contract. Yes I totally envision that day. >> John: But that's not today. >> We are very far from that today. >> Dave, kill that project. >> We're so far, we're very far from that. We're light years far from that. >> Okay well look. If we can't eliminate the full-stack engineers, I'm okay with that. Can we eliminate the lawyers? At least minimize them. >> We can minimize them possibly, but we have five stacks of lawyers for our company, I don't see them going anywhere. We need lawyers all the time. >> I see that in the press sometimes, yeah it's going to get disrupted. I don't see it happening. Okay we were having a great conversation off-camera about what makes a good ICO. You see, you have a huge observation space. And you were very opinionated. A lot of companies are out there just floating a token because they're trying to raise money. And they could do the same thing with Ethereum or Bitcoin. >> That's correct. >> Your thoughts? >> My thoughts are that it's very important for companies who are sophisticated, I think, to start by giving away a little bit of equity in the business. And that if you want to be in the blockchain space, and you really firmly believe you have a model to have a token within a decentralized application, I would still start by finding quality investors in the space, in the world. They might be still in Silicon Valley. Silicon Valley didn't just disappear overnight now that the blockchain is out. I am all for the fact that Silicon Valley no longer has as much of a grip on tech because of their blockchain world. And they're not seeing as much deal flow, and there's not as much reliance on venture capitalists, that's exciting to me. But let's not forget the value, that top-tier VCs like Andreessen Horowitz and Vinod Khosla. and Fintech VCs like Commerce Ventures and Nyca Partners in New York, Propel VC, these are good Fintech VC arms that continue to time and time again add immense value to companies. >> And they have networks. They add value. >> They have strong-valued networks, but they're just not going to disappear. And those VCs, if they've invested into a company, took a board seat, fostered their growth, taught them what it means to actually be a real business that's growing at 7-15% week over week, maybe two years down the line, after they've given away a board seat to someone like Nyca Partners, I would be interested in understanding what your token economics look like. Now that you have a revenue generating business, how you've placed a token model into this already running business that makes 25 to 50 grand a month and you have a team of 10, self-sustaining themselves off of revenue. Much more intriguing of a conversation. What's happening today in the space is, hey my buddy Jim and Steve and I came up with an idea for this business. There's going to be a token, and we're starting a private pre-sale tomorrow. I'm going to give you 300% bonus and will you be my advisor? And they're going to start raising capital because of an idea. You know what we used to say in the Silicon Valley startup world, you can raise on just a PowerPoint. I think in the blockchain world, you could raise on just an idea? And then maybe a white paper? And the white paper is one page? And so you've raised a bunch of capital, you have a white paper. >> Now you got to build it. >> Now you got to build, you got to write a smart contract, you got to build it, you got to do it, and then everyone loses excitement and it goes back to our previous conversation the development talent. So, another thing not being discussed in the space is company employee retention, right? So if you have a growing number of ICOs, that have very large budgets because investors have found a way to sink millions of dollars into a company early, you've got $5 million in the hands of a company to start, well this company can afford to pay someone a very ridiculous salary to come join them to write the smart contract now. So they could offer an engineer 500 Eth a month to come join them for three months. So you have good engineers just bouncing from one ICO to the next and as soon as the ICO goes live, they quit. This is a problem to companies who are-- >> It's migration, out migration. >> How do you retain, even capital? >> Companies like Hosho, ShapeShift, companies that are selling picks and shovels of the industry, that want to be household names in the space, we have to really think about how we're going to retain our employees in the space. >> So the recruitment and bringing on the new generation, we were also talking off camera about Bill Tye and the younger generation and kind of riffing on the notion that, because there is a new set of mission-driven developers and builders, on the business side as well. Your thoughts and reaction to what you see and what you see that's good and what you see that we need more of? >> So the most powerful thing in the blockchain space that I think is so exciting is that you have a lot of people between the age of 25 and 35 that don't come from money, that didn't go to Stanford, didn't go to Y Combinator, they're probably not white, from-- >> John: Ivy League schools. >> Ivy League schools. I'm not trying to make it about race, but if you're a white male and went to Stanford and went to Y Combinator, chances of you raising VC money on sand hill are a lot higher, right? And you have a guy looking like me who didn't go to Stanford, doesn't come from money, running up and down sand hill, I have personally faced that battle and it wasn't easy. And we were based in Vegas and so being based in Vegas, I'd also have to deal with so why do you live in Vegas? When are you going to move to Silicon Valley? And if we invest in you, you're going to open an office in sand hill right? And now in the blockchain world, what's exciting is you have so many heavy-hitters running as founders, some of the most successful companies in the space, who don't come from money and a big prestigious background, but they're honest, they're hard-working, they're putting in 12 to 15 hours of work every single day, seven days a week. And to space, six weeks is like six years. And we all have a level of trust that goes back to times when we were all running struggling startups. And so our bond is, to me, even more significant than what must have been between Keith Rabois and Peter Thiel in the PayPal Mafia. We have our own mafias being formed of much stronger bonds of younger people who will be able to share much more significant deal flow so if the PayPal Mafia was able to join forces to punch out companies like eBay and Square, wait 'til companies in this space, we have young, heavy-hitters right now who are non-reliant on some of the more traditional older folks. Wait 'til you see what happens in the next couple years. >> Hartej, great conversation. And I want to get one more question in. We've seen Keiretsu Forum, mafias, teams more than ever as community becomes an integral part of vetting and by the way trust, you have unwritten rules. I mean baseball, Dave and I used to do sports analogies. >> Self-governance. >> Reggie Jackson talked about unwritten rules and it works. If you beam the batter, the other guy, your best star, your side's going to get beamed. That's an unwritten rule. These are what keeps things going, balanced through the course of a season. What are the unwritten rules in the Ethos right now? >> Honesty, transparency, and that's the key. We need self-governance. This is a very unregulated market. There's rules being broken by people who are ignorant to the rules. The most common rule I've seen being broken is by people who are not broker dealers, running around fundraising capital, they don't even know what an institutional advisor license is. They don't know what a Series 7 and a Series 63 is. I asked a guy just last night, he said I'm pooling capital, I'm syndicating, let me know if you want in on the deal. And I said when did you take your Series 7? He goes what's that? Get away from me. You're an American, you need to look up what US securities laws are and make sure that you're playing by the rules and if someone who doesn't know the rules has entered our inner circle of investors, of advisors, of people sharing deal flow, we have a good network of people that are closing the loop for companies, whether it's lawyers, investors, exchanges, security auditors, people who write smart contracts, dev shops, people who write white papers, PR marketing, people who do the road show, there's a full circle-- >> So people are actually doing work to put into the community, to know your neighbor if you will, know the deals that are going down, to identify potential trip wires that are being established by either bad actors or-- >> KYC, AML, this is a new space that's also attracting people that have a criminal background. Right? And that's just a harsh reality of the space. That in the United States if you have a felony on your record, maybe getting a job has become really difficult and you figured let's do an ICO, no one's going to check my record. That is a reality of the space. Another reality is the money that was invested into this entire ICO clean. Right, that's a massive issue for the US government right now. It's been less than 15 hours since the SEC has issued actually subpoenas to people on this exact topic, today. >> This is a great topic, we'd like to do more on. >> Dozens of them. >> We'd like to continue to keep in touch with you on The Cube. Obviously you're welcome anytime, loved your insight. Certainly we'd love to have you be an advisor on our mission, you're welcome anytime. >> For sure, let's talk about it. Come out to Las Vegas. Hosho's always happy to host you. >> John And Dave: We're there all the time. >> The Cube lives at the sands. >> It's our second home. >> Come by Hosho's office and let us know. Vegas is our home. We are hosting a conference in Vegas after DEFCON. So DEFCON is the biggest security conference in the world. You have the best black hats and white hats show up as security experts in Vegas and right on the tail end of it, Hosho's going to host a very exclusive invite-only conference. >> What's it called? Just Hosho Conference? >> Just Blockchain. It'll be called the just, it'll be by the Just Blockchain Group and Hosho's the main backer behind it. >> Well we appreciate your integrity and your sharing here on The Cube, and again you're paying it forward in the community, that's great. Ethos we love that. That's our mission here, paying it forward content. Here in the Bahamas. Live coverage here at PolyCon 18. We're talking about securitized token, a decentralized future for awesome things happening. I'm Jeff Furrier, Dave Vellante. We'll be back with more after this short break. (upbeat music)

(orchestral music) >> Hello there and welcome to this special CUBEConversation. I'm John Furrier, here in theCUBE Studios, in Palo Alto, California. I'm here with special guest, Shawn Douglass, who's the Founder and CEO of Amberdata, Amberdata.io. It's a hot blockchain-based analytics startup kind of taking a different approach. I obviously would like to highlight some of the startups that are doing pretty amazing things. Shawn welcome to this CUBEConversation >> Great, thank you very much for having me here. >> So you have an enterprise background. You're entrepreneur, technical, been a CTO at EMC. You've helped EMC run their venture capital firms over the years. Helped them build it up from scratch. Done a variety of startups. Kind of cloud, kind of like large-scale. Now doing the blockchain startup. That's, I find super interesting. I think you might have more there than you think, but that's my opinion seeing the demo. Folks watching Amberdata.io is the site. Let's talk about that, I mean obviously blockchain, we've been covering pretty heavily recently with theCUBE. We've been covering Bitcoin since 2010 on our blog SiliconANGLE.com But you're seeing a renaissance in software development, with cloud computing, but now you start to see a new wave coming. We've been documenting. We've been calling it, you know, the future of money, the future of work, the future of infrastructure, because what blockchain and decentralized applications are doing is changing the stack a bit. And you've been in, in many, involved in those waves, so you're at the heart of it. So I got to ask you, you know, as an entrepreneur, before we get into what your company does, I want to just get your take on, you know, I mean, you kind of look at this market and say, it's a wide-open space. >> Right. >> As an entrepreneur who's doing a start-up, what's it like? What's your view? And how do you see the marketplace evolving? >> Yeah, that's a great question, there's a lot there. Let me try to unpack that the best that I can. So having gone between startup to big company to investor, helped buy, build, sell, in companies and operating for as long as I have in Silicon Valley. I think, as you said, technology and innovation happen in waves. And I think that waves are mini-revolutions, if you will. And I think that revolutions are about addressing a fundamental human need. If we look at, look to history, to see where the future is going. If you look at the Industrial Revolution, it was about automation and supply, I mean, uh production chains, and to be able to produce things at scale. If you look at the Information Age it was about the ability to communicate, and the servers and the networks and the web 2.0 companies that arose out of that, was around communication. That was another major wave. If you look at what's happening with AI right now, and self-driving cars, that's about the ability, for the need to think, right? And you're starting to see algorithms and machine learning applied to Google self-driving cars, and you know, just about every facet of our life AI is touching, you're using Siri at home, whatever you're using. I think what we're seeing with blockchain is that next wave. It's that next revolution, and that revolution I believe is about trust, and about decentralization. So, coming out of web 2.0 we saw participatory and non-participatory consolidations, in creation of juggernauts of technology. The Facebooks of the world, the Amazons of the world. On the other side, the Equifaxes of the world, where you didn't opt-in, in exchange for being the product, to use their platform, they just got your data. We've seen violation of that trust in data breaches, you know, at every major player, you know. Equifax being the bad guy in this case, where they've lost every single citizen in the United States data, and we never benefited from that, but we carry the liability forward. And what we're seeing with blockchain is the ability for people to leverage decentralized platforms and smart contract platforms, specifically, as mechanisms to easily deploy with zero barrier to entry. These, you know, these smart contract vending machines, if you will, into a world where people are taking back trust. So I, that's what we see, and we see that opportunity across both the enterprise space, 'cause we're hard core enterprise people, that we're building member data, but we're also seeing new enterprises being created on chain and that list is really long. So it's pretty, it's definitely a big wave. >> Well, the one, blockchain's an infrastructure, I think people getting all crazy over that, which I think it's legit. And there's some people out there saying, "Oh, blockchain's not legit." They don't really know what they're talking about in my opinion, and that's just, and a lot of people are confused. So there's a lot of people who are, you know, obviously don't see it, some people do. But I think the phenomenon that's interesting is, you know, taking a tech stack approach is, if you look at the decentralized application market, >> Shawn: Right. >> Where Ethereum for instance has got a lot of, the most developers. And they're working fast on some technical challenges they had but they're making progress. The D applications, the distributed, I mean the decentralized applications, that's like an application server on the blockchain. >> Yeah, exactly. >> So what that happens, is the things are happening, so you almost think of it, and you and I were talking about this, is that, you know, the vending machine of the future or the transaction service layer is that decentralized smart contract. >> Absolutely. >> 'Cause that's where the value is going to be captured. >> Shawn: Absolutely. >> And created and captured. >> Let me unpack that, because that's spot-on, I 100% agree with what you're saying there. Is that, what is a blockchain? A blockchain is effectively a decentralized database and network put together. What I think is interesting, is smart contract platforms that put a virtual machine on top of that. Like Ethereum has the EVM. Where it's your application server. And what are smart contracts? Smart contracts, like you said, are vending machines. They're a vending machine that has the appropriate level of security, the appropriate level of service, and allows you to have an autonomous transaction with that. When you walk up to a Pepsi machine, you put in a dollar, you expect to get back a Pepsi, it works, you go away, you don't think anything about it. What blockchain is allowing anybody to do, is to publish a smart contract on chain and monetize that at the most elemental level. It's analogous to, if Amazon allowed you to deploy a lambda function and monetize that. It's analogous to, if E-Business Suite allowed you to monetize your plugins from an Oracle world. It's analogous to if SAP with, when Shai Agassi was still there doing composable applications, allowed you to, as a vendor, anybody publish into that SAP ecosystem and monetize that. This is a massive, massive transformation and it reduces barriers to entries for people to come in and compete with juggernauts like an Amazon or an Oracle because at the barrier to entry is, they're publishing into a globally available, decentralized, platform, right. >> And the thing too that's interesting, and just to tie that together with what's happening in the cloud world, is if you look at like Kubernetes containers, and micro-services, the ability to be efficient with micro-services, allows for that IT infrastructure to completely be re-platformized. >> Exactly. >> So what you're getting at, is with the smart contracts and the atomic nature of the transaction, you can be laser-focused and scale transactions, >> Right. >> and be efficient, so the efficiency is a big part of this. >> It is, there's efficiency, and there is the ability to decompose things, and that's been a trend, for as long as I've been in technology right. It's, first it was, you know, cloud services, then it was SOA, then it was cloud, and now it's serverless, it's blockchain, it's just on that spectrum. There's not a lot new here actually, right. It's a continuum of technology, and I think all of these waves are enabled by different revolutionary forces. >> Operational change and software drives it obviously And you got the characteristics of blockchain, immutability et cetera, et cetera and DApps is just a new way to kind of write the software for that. They create those vending machines or transactional services So I got to ask you, so with what you guys are doing, I want to tie that together, because one of the things we've been reporting on theCUBE is, the piece of action that's most hyped up is, ICOs. These blockchain apps that are changing, and the old guard and disrupting incumbents. But there's not a lot of tooling around it, so, you know, if you think about like trading platforms, >> Right. 24/7 traders have access to stuff. Now the world's a 24/7, 365 global. There's not a lot of tooling, not a lot stuff. So this instant industry's created. This new wave is coming. You're building some tooling, so I want to get your thoughts on the support needed to do this. >> Shawn: Right. >> Say I put my business on the blockchain >> Shawn: Right. >> And with, use developers to do decentralized applications. >> Yeah, so, >> I need tools. >> Aboslutely, that's exactly, so, you know, got a little gray hair here, and I grew up building internet software at scale, right. Whenever you run anything in production, you always have your network operations center. You have your AppD, you have your Splunks, you have your New Relics, you have all of this. You've instrumented your infrastructure. You've instrumented your application transactions. You've instrumented search for operational log data. You need to be able to triage a security instance. You need to be able to respond to performance or production issues. You need to be able to communicate with your customers. None of this existed when I looked at the blockchain space, and I'm like I don't get it. This is a massive opportunity, because if you look at the enterprise space, 'cause public right now, sure, it's very interesting. ICOs are the killer use case. There's 300 million dollars per hour traversing in the public at their IMNetwork, 50% of those are going to smart contracts. A lot of that is actual transactional trading volume. But step back from the hype for a second, and you look at IBM, you look at VMware, you look at Cisco, you look at Microsoft, you look at, you know, all these guys. JP Morgan with Quorum. You look at, they all have major bets that are starting to evolve around taking things and removing intermediaries, just like public chain, but they're doing it with things like swaps, credit default swaps, interest swaps, currency swaps. They're talking about removing escrow services, they're talking about, >> So pre-existing companies are going to take the efficiency side of this and drive it. >> It's going to, it is a massive transformation right, and especially when they're working with their trading partners, there's almost a, what, a 2006 VMware data center consolidation play. Remember when the data centers were full of servers, and then all of a sudden, you know, they started pulling back the number of servers and turning off the A/C because they were able to take entire data center floors and consolidate them inside of VMs where they had three and four virtual machines in a server. And I think that you're going to get those same types of efficiencies over time once they get to pass some scaling issues around blockchain where you don't have to have seven copies of your data across your front office, your back office, across your trading partner. You can have one single source of truth and operate in an open transparent world where you can reduce some of those inefficiencies. And then there's a whole business transformation play that, you know, there's there's just, I think it's a, >> It's a perfect storm. You have a consolidation piece, which is more efficient operationally, and then you got the top-line revenue opportunity with disrupting kind of industries with new transactional models, business models and token economics. So we've talked a lot about it in theCUBE. I want to talk to you about your company, Amberdata. So you guys are trying to make sense of what's happening because if you're going to put a business on the blockchain, >> You need this. >> and use decentralized applications as a transactional application server if you will, for lack of a better description. You got to know what's going on, and there's gas involved, you got to pay the mining fees, so where there's costs, you need visibility. >> Right. So the old school, the old model was, you'd have KPIs, set some alerts, dashboarding, you're doing that right? >> That's what we've done. >> So take a minute to explain what Amberdata's doing. Did you do a round of funding? What's going on with the company? You got the product up there Amberdata.io >> Right, yeah, so let me unpack, there's a lot there. So uh, we started the company end of August. We raised a round of funding with traditional enterprise venture capital firm Hummer Winblad. Lars Leckie, amazing investor, really understands enterprise software and how to enable companies to grow. Amazing partner to work with. We've been heads down building a product. About 45 days ago we launched our platform live, and what we have today, is we have instrumentation for blockchain infrastructure, decentralized applications, transactions, and an ontology-based search, that gives a clean user experience where you can be search-driven to drill into a smart contract, a transaction, into a block, and you know, if you're building on top of chain, I mean, we're a classic picks and shovels play, It's pure, it's enterprise software, we built this for enterprises. Today our platform supports public Ethereum, but it was really to demonstrate, if we can do this for the entire Ethereum network and we can do this for its scale, of course we can do this for any enterprise. And today we support public Ethereum and Quorum, which is private Ethereum, it's a JPMorgan project, that I think is the one of the leaders in private blockchain, and that's a project that's being supported by the Enterprise Ethereum Alliance. We will also in our working with IBM, I was just on the Hyperledger technical steering committee this morning, I participate in that. So, we will support Hyperledger in the future, we will support multiple other public and private chains so the private ecosystem today is, you know, Enterprise Ethereum à la Quorum. It is Hyperledger. It is Corda. On the public side, it is Ethereum, it is Stellar, it is, you know, things like Quantum that are emerging, Neo, or emerging. >> So is your business model SaaS? Yes, it's a SaaS model and today we support public chain as a demonstration of it, but we're also working on allowing people to, just like a data dog, or what have you, where we have a connector, we can pull your data in, and it's private, it's only visible for you, for your private blockchain. Or we could deploy into their private cloud or into (talking over each other) >> John: So is Amberdata.io like a demo site, or is that more of, >> It's a demonstration of the ability to instrument blockchain infrastructure, applications, transactions, with search, the ability to set alerts on every single panel, which are your KPIs. If you're going to run a business, you either have explicit or implicit service level agreements, and you need to be able to instrument those service level agreements with KPIs, and those KPIs you need to be able to set alerts and events, receive emails, you know, all of those. >> I love the demo, the demo, I think the demo will be a great freemium model, because it showed, just my notes here, smart contracts on the decentralized application, top 50 sorted transaction volume, token velocity change in price, because you know gas you're still paying the gas to get the transaction written. I mean this is kind of like spot pricing for Amazon almost. You need to understand what am I paying for, if there's an SLA involved in a smart contract? >> Absolutely. >> You got to know the policy involved right? So, again, this is like old-school, like enterprise thinking, >> Shawn: Right. >> The world is now a global enterprise if you think about it. >> Shawn: Yeah, you absolutely need transparency into your operating costs. Those are your transactions costs of either, for your customers to consume your service or for you to provide your service. And, prior to this, there was very little transparency. It's ironic, is that, the most trustless, transparent platform, had no real view into it. And that's what we've built. We've built transparency and are enabling you to trust the trustless platform, to get transparency into your DApp KPIs, and so for example, if you're building, like you look at like EtherDelta's, EtherDelta's is one of the non-custodial smart contract based exchanges. They're doing 70 million dollars a month in transaction value. I don't know what they did before. We've talked with people that are consumers of that. We've talked to people on pretty much all of the decentralized exchange platforms. But the ability to understand, what are the number of transactions per hour, per second, per minute, that are hitting my smart contracts? What are the token transfers, if I've tokenized my unit economics. Who are the top 10 callers to my contract? Is my smart contract calling other contracts? What are my pending transactions? What is my book of trades? What is market depth of my gas prices? What, I need to be able to search if I've got failure. Show me transactions between this date, that date, to, from, where, that is all mission-critical stuff that you need if you're going to operate any business. >> So a lot of operational data and that's phenomenal, but are you worried that people aren't going to adopt? Blockchain I mean. >> I'm not worried about that at all. I actually think that there's an entire, when we started this, we were focused on enterprises exclusively, and we saw what we were doing on public Ethereum as a marketing ploy. We're like "Hey we'll go instrument "the whole public Ethereum Network". I'm a big data guy, we've built high-throughput, four terabytes a day of social graph ingestion platforms. We're like, public Ethereum, you know, not that transactionally intensive. We're going to do this for the world. Now, after building the platform and seeing 300 million dollars an hour, with 50% of those transactions going to smart contracts, we're seeing a new Enterprise emerge. You can look at companies like, you know, Sia, Storj coin, IPFS. >> So can actually see the activity (slurred) it's encrypted, but you can look at the metadata and get the patterns. I mean you're essentially looking at the transactional volume, almost like a stock exchange. We can, we have full transparency into every transaction, that's happening on chain, and we can see, like the other day, I did a tweet on, there was a token that's traded, I don't know, we're not interested in the trading side but it's the use case that has the most buzz, and we have transparency, so we see it, we're like, "Hey, this smart contract went "from two thousand transactions, to 40 thousand "transactions. What is going on?" Right, and we actually saw that. >> You can see the pump-and-dump scams too. >> Oh you can totally see that. In providing transparency, is now, it's becoming easy for anybody to search for anything. >> Well that's a great free service, and I appreciate you, and I've been playing with that over the weekend, I love it, I'm like, "Hmm, I might get some trades on this thing." >> Thank you. Check it out. We'd love feedback from anybody that's seeing this, Amberdata.io and I can be reached at Shawn@Amberdata.io >> So, I mean obviously funding you must have a ton of VCs throwing money at you, is that the case? Are you thinking about an ICO? What's the thoughts on the capital expansion? Yes obviously got a great, hot startup here, so what's the funding strategy? >> We've been heads down on building things, and we're obviously getting inbound, but you know, we're well funded, we're in as, I think we're in a position of strength. What we're focused on is taking the mountain, and defining and being the category leader. I think right now, we have defined it. >> There's no one else doing it. >> Yeah, exactly. >> So you're like the solo, you're the only one doing it. >> So, we are going to define the space for operational monitoring analytics for public and private blockchain, and be that single pane of glass that allows enterprises to build on or around, you know, decentralized smart contract platforms, or, you know, private smart contract platforms. And we're going to take that hill, and we're going to stay out in front. So right now, we're heads down. We'll eventually, (talking over each other) >> Can I get an API to the data set? Can you just give me an API? Like a fire hose opportunity there? >> So we are enabling this as a platform, to drive network effects, and we're working with several exchanges, we're working, you know, some of non-custodial exchanges. We've got a lot of inbound interest from people more on the trading side. We're evaluating whether we do that, and we want people to be able to build on top of our platform, other analytics tools, you know, connect to exchanges, connect what have you, right and create that marketplace, create those APIs, inroads, and then allow people to drive that. And on the ICO front, we're really not focused on that. We're enterprise software. >> Well theCUBE team would love to have an API and program with it for theCUBEInsights, we'd love to look at that. >> That would be great right. >> That's something we can work together and collaborate on that. I got to ask you about the data 'cause this is fascinating, coming from the search background that I come from, it's almost like the Google crawler. You went out, >> It's a Google for blockchain. >> Is it true that you guys crawled all the Genesis nodes on Ethereum, so you got into the Genesis nodes? >> Shawn: That's correct. >> So from the Genesis nodes to today, you've essentially gotten all those instrumented, >> Shawn: Right >> And have real time data coming in. >> Yes, that is correct. So as far as I know, we're the only people that have done this. It's computationally intensive and from the data structure perspective pretty difficult to do. But what we've done is, and it has to do with the data structures in the way Ethereum works whether that be public or private, is that there's an account-based blockchain that has transactions, but then the smart contracts and transfers of tokens happen in messages. So what we've done is, we have the ability to, or we have done and we have the ability to do in perpetuity moving forward, we instrument every transaction, every internal transaction, every token transfer, with time series data, indexed, searchable, we also have graph as well as relational views into the data, to be able to give the transparency, enable trust, enable you to triage an issue. Like, you know, I think about having worked at, you know, other enterprises in the past. Where you have a, you know, a security incident, that you need to respond to. We're currently under attack we need to find out who, what are they doing, what have they done, what is our exposure, how do we contain that, how do we, you know, deal with that? Without what we have, you can't do that. You got to like right Python scripts, and do API (talking over each other) >> You're chasing a ghost basically, and by the time you get it, it's over. >> Right, and then for enterprises, they've got hard core regulatory compliance considerations that you need to deal with. Ad-hoc queries from an auditor, you need to be able to show "Hey, I've got confidentiality, I have availability, "I have integrity" >> Well, even these smart contracts are still software. They, and you know, we've interviewed Hartej Sawhney, who's got a company that's doing just that auditing, >> He's killing it right. >> Auditing, the smart contracts because someone's going to write the code, and the code's back vulnerabilities. >> Absolutely. >> So there's a compliance aspect coming, quickly. >> Yes, yes absolutely. Yeah, I mean, so there's, it's an amazing space. There's a tremendous amount going on. It's moving super fast. >> Picks and shovels for the new miners, literally miners. Shawn, great to have you on. Congratulations >> Thank you. >> On your new startup. I think you've got a great product. I've been playing with the data, I love it. I think it's fascinating. If you could summarize the data that you've learned from the tool that you've built and platformed, what's the summary? What if you had to kind of tease it out, what's actually happening right now in the market, on the Ethereum network, with the apps and blockchain? >> Right, so, there is, so at the end of the day, Ethereum is a smart contract platform, and it pans out, that 50% of the transactions are actually going to smart contracts, which is a great validation right. Two: the actual value being transferred and interacting with smart contracts is 300 million dollars an hour. That is, it's, on an enterprise software perspective, it's not huge, but it's definitely a validation. >> It's legit. >> It's legit. The number of smart contracts that have been created in the last three months, is 400%. It is just going through the roof. Some of this, there's a lot of junk, but there's a lot of stuff that are people are building new enterprises, and on the enterprise side, we're seeing real business cases going into production, working with a few large customers now, on instrumenting real, you know, removing, you know, instrumenting real, over-the-counter type use cases. It's very, very interesting times. >> Well, you know my rants. I've been ranting about some of these bankers that have come from an old-school bank, and they're young kids too, so they're not, they're younger than me but they're trying to valuation mechanisms around, you know, companies and tokens, and they're using like discounted cash flow. Now I mean I get how they could go there, 'cause they learn that in school. >> Shawn: Right. But the reality is there's a new school going on. The school's in session. If you know the data, you have very interesting valuation variables that could be constructed on these new models that need to be looked at. I mean, how do you value a company? Certainly velocity. >> Shawn: Yeah, volume. >> Who's actually doing the transactions? Are they real smart contracts? So there's a lot of gamification and, I won't say scams, but I would say the investors want the transparency too. >> Yeah, I think it's amazing is that, we have that transparency, we provide that transparency as free service to the community right now and the ability to have transparency into transaction volume for smart contracts, token velocity, number of unique callers, market capitalization, the change in price, this gives you the ability to value that. That's something that, you know, we've thought about extensively is, maybe we should just provide valuation as a service, on just these assets that are publicly available? Yeah, I don't know. >> You had a lot of opportunities, so great job. Congratulations, good work. You guys have really done the work on this project, love it. And again, it validates the reality of the smart contracts, the application side of the business changing. Shawn Douglass here, inside theCUBE for CUBEConversation here at Palo Alto. I'm John Furrier. Thanks for watching. (orchestral music)

>> Announcer: Live from Nassau in the Bahamas. It's the Cube, covering Polycon 18. Brought to you by Polymath. >> Hey, welcome back everyone. We're here, live in the Bahamas for Polycon 18. It's the Cube's exclusive coverage for day one, wrapping up the segment here. I'm John Furrier with my coach Dave Vellante, co-founder with me at SiliconANGLE media at the Cube. Our guest wrap-up, old co-host. Anthony Di Iorio, co-founder of Ethereum also CEO of Jaxx and Decentral. We had a great chat yesterday. Welcome to joining our wrap-up for day one. >> Thanks for having me on again. >> Yeah, we do live this time. >> Alright that's a lot better. >> Kay, got it, genies out of the bottle on everything so we had bloopers on the last segment, little water break but on serious note, Dave and I want to wrap up the show. We do this every time. Day one, a lot of excitement from the panels. People in the hallway were buzzing, people doing deals. A lot of intimate conversations, Dave we see this early on at these shows. Anthony you've been out hallways, in sessions, talking to people in meetings, getting things done. What's the day one wrap-up for you like? What's happened here? >> So I'm a little bit different at events, I don't attend many of the sessions, I never have. This is more of a way for me to connect with people that I haven't seen for a while. I try not to do too many conferences anymore. I've been doing this for six years now, in the Blockchain space and I realized a couple years ago, it's really about focusing on what I need to do. So this was a little bit different. I did the keynote here yesterday and I'd asked if I could send my hologram instead but they're like, no, you got to come. We can't do that. So generally at my conferences, I don't really do many of the sessions. I'm, you know, just chilling out and kind of use them as vacation times too but it has been pretty busy. It has been good, I've had a number of meetings and yeah it's quite a good buzz. >> What are some of the things you're talking with your friends and colleagues and partners in the business and the industry? Is it tech? You talking tech, you talking personal? What are some of the things going on here? Because these events have a mishmash of all that. >> Yeah, I try to keep them both ways. There's business and personal stuff. I think, business I'm just going to get drained too much and it's nice to make things a little bit lighter. A lot of my meetings have been with people that are, they're looking to know what's going on. People, you know think about security tokens now and it's a change from the traditional utility tokens and it's a lot of just trying to pick my brain about what's happening, what am I seeing, what am I investigating, what are the different things that I'm looking for. It's that. Meeting people that I haven't been able to connect with for a while which is always good. Aligning other events and things coming up and then also spending quite a bit of day by the pool and catching up on emails. You got to make sure you do that stuff. >> Good, I wish I could have been there. We're doing interviews all day but we're doing whatever it takes get the videos out there. We had some interesting guests on, We'll get your reaction to. We had Hartej Sawhney who's, Oshi.io, co-founder, they do audits on smart contracts. >> Yeah. >> And some other folks. But the general observation, I don't think he said this but he was kind of validating and other things that Ethereum is by far the most developer-oriented chain. It has a lot more traction and smart contracts are getting better and better. We've been trying to get, kind of an answer, just kind of order-of-magnitude relevant to developer communities, what is a ballpark order-of-magnitude percentage in your mind of developers on the platforms? Is it is the Ethereum the largest? >> Yeah I'd say so, it was really interesting. We were really good at setting up the communities and we really were focused on devs. There was a lot of setup in the initial structures that was more business oriented but after the crowd sale, everything was down to developers building up communities because that's what we needed. People to actually develop on the platform. >> John: Yeah, of course. >> And Ethereum just had a way, I think it's mostly because of Italic, because of Gavin. They just was a developer project and I think that's what attracted a lot of the people to start building smart contracts, building things on it. And yeah, it's tough to raise the community with developers and I think a Ethereum has done a super job of that and it really is is that developer focus. I mean their event is DevCon right? Or the event is for developers. That's what they're focused on, on their massive conferences that they do. It's all for the developers. So that's definitely been the focus for them. >> It's still tons of upside right? I mean, you said yesterday, that you really don't look for Blockchain developers, you look for good devs >> Mm-hmm and I said to you afterwards, it's probably 'cause there aren't enough of Blockchain devs. >> That's not it really, for us it's that, I didn't... We've already solved a lot of our problems. We've created a platform that goes across many platforms. It syncs very easily, it integrates many platforms in. We don't work on the protocol level of the platforms. Like we're not actually trying to solve problems and create those, creating a platform from scratch that maybe will be valuable a few years. We're letting all of our partners and platforms do that. We're an app that is a... It's something that's not necessarily requiring Blockchain devs to integrate. We do connect to Blockchains, that's fine but we're looking for more traditional stuff that we're doing that actually going to monetize right now and it's based on stuff and technology that doesn't have to be created yet. So we're not looking for those massive problem solvers to develop protocols that need to solve major problems. So we can have good JavaScript developers that's what we require and we need and we can teach them internally what the skills they need on Blockchain. So actually we don't necessarily need Blockchain or we'd be looking for Blockchain devs. We're looking for good JavaScript developers. >> So guys like in traditional enterprise is that right? >> Yeah that's right. That's why it's easy for us to get those in but if you're looking to solve a problem, you're looking to do this core stuff, working on protocol level stuff then you need someone who's been in the Blockchain space for a number of years that can actually help you with that stuff and they're very hard to find right now. >> Yeah and they're also full-stack developers. It's really a unique skill set. New language, full-stack, they've got jobs. >> Yeah they're working tons of projects. They're demanding tons of money. Guys that have been developing on protocol stuff for five years. There's very, very few. There's so much more and they're so high in demand and also they want a lot more, you know, a lot more freedom in the work they're doing because they're so high in demand and I have one guy that's that's it that's a rock star. He works just a few hours a week and when we do have critical issues or critical problems, he's our like consultant that can help us 'cause he's been in the space for a while. He teaches, he's got an Ethereum developer meetup that he runs in Toronto. So he's our go-to guy but we're also just not about Ethereum. We develop, we work with 75 different projects. It's a wide range of things and we can also tap their communities, when we have problems. We go directly to you know the Dash community, hey, there's something going on here. Can you make sure that we're in the loop with this and we'll go right with them and find the >> You should run your, Dave's got a, we always talked about digital transformation. Dave talks about a unique perspective. Share your digital transformation, the role of the developer because that in the impact and get his reaction because we think that the developer on the district line applications is probably the most important trend that I don't think mainstream is talking about. Because it also doesn't really conflict with any other developer movement. It just adds more headroom but we see it from a transformation standpoint. >> Our scenario is that you know, you talk with Cloud, SAS, big data, mobile, social, Web 2.0. That stuff's yesterday's news right and in Blockchain and the developments going on in conferences like these really underscore that momentum and we see that organizations that are succeeding today and taking advantage of that momentum, they have data as their foundational, it's at their core. And there's so many traditional companies where human expertise is the core and data sort of bolted on and that's a big gap so we see Blockchain and this digital transformation converging and developers building this, new web, whatever you want to call it but this matrix of digital services which they tap to build new companies and so the role of the developer is, it's always been critical but now it's >> They got to build it up. >> Their stakeholders and in ways that we've never seen before globally. >> Yeah and they're also, I look at it as these technologies are still very new. They're going to take a long time to displace and disrupt other sectors and I think some people are thinking that they're doing, you know we're going to go from A to Z right away. I've taken the approach that we're going to use a lot of traditional stuff right now and we're going to build and make sure that we can monetize and make sure it's growing. We're going to slowly be adding things in. Where I think if you take a too long approach, you're not be able to actually last. So a lot of stuff is doing what, you're actually building traditional stuff right now too. That's what we do, like we use AWS quite a bit in the stuff that we do. We're not going to centralized storage for how we're storing it's just not proven yet, it's not scalable yet. It's good take a long time to let stuff is and until then you have to make sure that you're actually staying in business, you make sure you doing well. So it's a using a mixture of both things and not going right to the end game. >> You have to de-risk that yeah and take advantage of cloud economics that are that are there today. >> Yeah I mean, if you think about in the space right now. What sector has been disrupted by Blockchain? What has been made faster, better, cheaper? Right now in Blockchain. I can't think of anything. >> Crypto kitties (laughs) >> Yes that's a really important point. >> There hasn't been much value. >> But that's why I bring it back to digital transformation because you think about what's been transformed by you know, digital. Obviously you know publishing, books, you know, ads and I thought well is it bits versus atoms? >> Well is it digital or is it information transfer? >> Well its information transfer that has disrupted that. Now it's value transfer, that's what is coming right? >> Yes and so, but then you'd assume that Blockchain, banking but banking hasn't been disrupted yet? >> Not yet, it's going to take a lot of time. >> And so insurance, healthcare and these industries. >> Well I would say VCs have been disrupted. >> But that's >> I get it. >> Here's my premise, is that risk is the factor that will determine disruption. Maybe it's a little bit of bits versus atoms but it's the risk factors associated with banking, healthcare, insurance, defense, government stuff. The high risk, highly entrenched businesses, organizations but eventually they will be disruptive. >> There'll be signals. >> Yeah but it' a lot of, when we first started Ethereum, there was, we had shirts, at the back would say, Dropbox in five lines and that's just not true. You know at the time this was the goal but when you realize when you try to do it, this isn't scalable this, isn't going to be a done-it, it's going to be too expensive to actually do it if you're actually paying for Ether' to do it. It doesn't make any sense, so that was actually, even I was thinking that's what we're going to be able to do. We're a ways off for that. A problem need to be solved, scalability, biggest problem. Interoperability between all the different chains and how they're all going to work together that needs to be solved. How you going to stop these forking operations that happen at split communities when it went actually a coin forked or something happens you get these battles. Those are problems need to be solved now. So we solved the problem with smart contracts. Now that's the second generation. Now we're looking for other things like Cardan says they're looking at the third generation stuff. It's solving those problems and we're a ways off. So that's why until then you got to still do things with tradition and don't be afraid to use things that are that are proven and work right now in order to get there, yeah. Aright Anthony, well great to have you on the wrap-up. That's day one,we're seeing a lot of great stuff. We had Halsey Minor on, another industry pro. You seeing pros come into this business, you see you know the old dogs, the new dogs, the young guns. I mean, it's a really an amazing community. I got to say reminds me of a lot of trends kind of coming together and that's awesome work that you guys have done. Thanks for coming on. >> Thank you of having me on again. >> We appreciate it. That's the wrap-up a day one, here at the Polycon 18. Token Economics, Cryptocurrency, Blockchain. All the players are here, doing deals, making making it all happen. It's the Cube, it's a wrap up. Thanks for watching. (techno music)