(Upbeat music) >> From the Hard Rock hotel in Las Vegas, its theCUBE! Covering the Hosho Con 2018, brought to you by Hosho. >> Okay, welcome back every one, this is theCUBE's exclusive coverage here live in Las Vegas for Hosho Con, the first inaugural event where security and block chain conferences is happening, it's the first of its kind where practitioners and experts get together to talk about the future, and solve some of the problems in massive growth coming they got a lot of them. Its good new and bad news but I guess the most important thing is security again, the first time ever security conference has been dedicated to all the top shelf conversations that need to be had and the news here are covering. Our next guest Greg Pinn who's the head of strategy and products for iComply Investor Services. Great to have you thanks for joining us. >> Very nice to be here >> So, we were just talking before we came on camera about you know all the kind of new things that are emerging with compliance and all these kind of in between your toes details and nuances and trip wires that have been solved in the traditional commercial world, that have gotten quite boring if you will, boring's good, boring means it works. It's a system. But the new model with Block Chain and Token Economics is, whole new models. >> Yeah I think what's so exciting about this is that in the Fiat world, from the traditional financial market, everyone is so entrenched in what they've been doing for 20, 30, 40 years. And the costs are enormous. And Block Chain, Crypto coming in now is like we don't have to do it that way. We have to do compliance. Compliance matters, it's important and it's your legal obligation. But you don't have to do it in the same sort of very expensive, very human way that people have been doing it in the past. >> And Cloud Computing, DevOps model of software proved that automations a wonderful thing >> Right >> So now you have automation and you have potentially AI opportunities to automate things. >> And what we've seen is huge increases in technology, in around machine learning and clustering of data, to eliminate a lot of the human process of doing AML, KYC verification, and that's driving down costs significantly. We can take advantage of that in the Crypto Space because we don't have thousands of people and millions of millions of dollars of infrastructure that we've built up, we're starting fresh, we can learn from the past and throw away all the stuff that doesn't work, or isn't needed anymore. >> Alright let's talk about the emerging state of regulation in the Block Chain community and industry. Where are we? What's the current state of the union? If you had to describe the progress bar you know with zero meaning negative to ten being it's working, where are we? What is the state of >> I think if you'd asked me a year ago I think negative would've been the answer. A year ago there was still a big fight in Crypto about do we even want to be part of Compliance, we don't want to have any involvement in that. Because it was still that sort of, Crypto goes beyond global borders, it goes beyond any of that. What's happened now is people have realized, it doesn't matter if you're dealing in Crypto Currency or traditional currency, or donkeys or mules or computers or whatever, if you're trading goods for value, that falls under Regulatory Landscape and that's what we're hearing from the SCC, from FinCEN, from all the regulators. It's not the form it's the function. So if you've got a security token, that's a security, whether you want it to be or not. You can call it whatever you want, but you're still going to be regulated just like a security. >> And I think most entrepreneurs welcome clarity. People want clarity, they don't want to have to be zigging when they should be zagging. And this is where we see domicile problem. Today it's Malta, tomorrow it's Bermuda. Where is it? I mean no one knows it's a moving train, the big countries have to get this right. >> A hundred percent. And beyond that what we're seeing, what's very, very frustrating for a market as global as this is it's not just country-level jurisdiction, the US you've got State-level jurisdiction as well. Makes it very, very hard when you're running a global business if you're an exchange, if you're any sort of global, with a global client reach. Managing that regulation is very, very difficult. >> You know I interviewed Grant Fondo who's with Goodwin Law Firm, Goodwin Proctor they call it Goodwin now, he's a regulatory guy, and they've been very on the right side of this whole SCC thing in the US. But it points to the issue at hand which is there's a set of people in the communities, that are there to be service providers. Law Firms, Tax, Accounting, Compliance. Then you got technology regulation. Not just financial you have GDPR, it's a nightmare! So okay, do we even need GDPR with Block Chain? So again you have this framework of this growth of internet society, now overlaid to a technical shift. That's going to impact not only technology standards and regulations but the business side of it where you have these needed service providers. Which is automated? Which isn't automated? What's your take on all of this? >> I agree with you a hundred percent, and I think what's helpful is to take a step back and realize while compliance is expensive and a pain and a distraction for a lot of businesses. The end of the day it saves people's lives. And this is what, just like if someone was shooting a gun as you were running down the street, in your house, you're going to call the police, that is what financial institutions are doing to save these industries and individuals that are impacted by this. A lot of it from a Crypto Currency perspective, we have a responsibility because so much of what the average person perception is, is Ross Ulbricht and Silk Road. And we have to dig our way out of that sort of mentality of Crypto being used for negative things. And so that makes it even more important that we are ultra, ultra compliant and what's great about this is there's a lot great opportunities for new vendors to come into the space and harness what existed whether that's harnessing data, different data channels, different IDDent verification channels and creating integrated solutions that enable businesses to just pull this in as a service. It shouldn't be your business, if you're in exchange, compliance is something you have to do. It should not become your business. >> Yeah I totally agree, and it becomes table stakes not a differentiator. >> Exactly >> That's the big thing I learned this week it's people saying security's a differentiator, compliance is a, nah, nah, I have standards. Alright so I got to ask you about the, you know I always had been on the biased side of entrepreneurship which is when you hear regulations and you go whoa, that's going to really stunt the growth of organic innovation. >> Right. But in this case the regulatory peace has been a driver for innovation. Can you share some opinions and commentary on that because I think there's a big disconnect. And I used to be the one saying regulation sucks, let the entrepreneurs do their thing. But now more than ever there's a dynamic, can you just share your thoughts on this? >> Yeah, I mean regulators are not here to drive innovation. That's not what their job is. What's been so interesting about this is that because of regulations coming to Crypto along with these other things, it's allowing businesses to solve the problem of compliance in very exciting, interesting ways. And it's driving a lot of technologies around machine learning, what people like IBM Watson are doing around machine learning is becoming very, very powerful in compliance to reduce that cost. The cost is enormous. An average financial institution is spending 15 percent. Upwards of 15 percent of their revenue per year on compliance. So anything they can do to reduce that is huge. >> Huge numbers >> And we don't want Crypto to get to that point. >> Yeah and I would also love to get the percentage of how much fraud is being eaten into the equation too. I'm sure there's a big number there. Okay so on the compliance side, what are the hard problems that the industry is solving, trying to solve? Could you stack rank the >> I think number one: complexity. Complexity is the biggest. Because you're talking about verifying against sanctions, verifying against politically exposed persons, law enforcement lists, different geographical distributions, doing address verification, Block Chain forensics. The list just stacks and stacks and stacks on the complexity >> It's a huge list. >> It's a huge list >> And it's not easy either. These are hard problems. >> Right, these are very, very difficult problems and there's no one expert for all of these things. And so it's a matter of bringing those things together, and figuring out how can you combine the different levels of expertise into a single platform? And that's where we're going. We're going to that point where it's a single shop, you want to release an ICO? You're an exchange and you need to do compliance? All of that should be able to be handled as a single interface where it takes it off of your hands. The liability is still with the issuer. It's still with the exchange, they can't step away from their regulatory liability, but there's a lot that they can do to ease that burden. And to also just ignore and down-risk people that just don't matter. So many people are in Crypto, not the people here, but there's so many people in Crypto, you buy one tenth of a Bitcoin, you buy a couple of Ether, and you're like okay that was fine. Do we really need to focus our time on those people? Probably not. And a lot of the >> There's a lot big money moving from big players acting in concert. >> And that's where we need to be focused. Is the big money, we need to be focused on where terrorists are acting within Block Chain. That's not to say that Block Chain and Crypto is a terrorist vehicle. But we can't ignore the reality. >> And I think the other thing too is also the adversary side of it is interesting because if you look at what's happening with all these hacks, you're talking about billions of dollars in the hands now of these groups that are highly funded, highly coordinated, funded basically underbelly companies. They get their hands on a quantum computer, I was just talking to another guy earlier today he's like if you don't have a sixteen character password, you're toast. And now it's twenty four so, at what point do they have the resources as the fly wheel of profit rolls in on the hacks. >> You know, one of the interesting things we talk about a lot is we have to rely on the larger community. We can't, I can't, you can't solve all of the problems. Quantum computing's a great example. That's where we look for things like two-factor authentication and other technologies that are coming out to solve those problems. And we need to, as a community, acknowledge That these are real problems and we've identified potential solutions. Whether that's in academia, whether it's in something like a foundation like the Ethereum Foundation, or in the private sector. And it's a combination of those things that are really driving a lot of it's innovation. >> Alright so what's the agenda for the industry if you had to have a list this long, how do you see this playing out tactically over the next twelve months or so as people start to get clarity. Certainly SCC is really being proactive not trying to step on everybody at the same time put some guard rails down and bumpers to let people kind of bounce around within some frame work. >> I think the SCC has taken a very cautious approach. We've seen cease and desist letters, we've seen notifications we haven't seen enormous finds like we see in Fiat. Look at HSBC, look at Deutsche Bank, billions of dollars in fines from the SCC. We're not seeing that I think the SCC understands that we're all sort of moving together. At the same time their responsibility is to protect the investor. And to make sure that people aren't being >> Duped. >> Duped. I was trying to find an appropriate term. >> Suckered >> Suckered, duped. And we've seen that a lot in ICOs but we're not seeing it, the headlines are so often wrong. You see this is an ICO scam. Often it's not a scam, it's just the project failed. Like lots of businesses fail. That doesn't mean it's a scam, it means it was a business fail. >> Well if institutional investors have the maturity to handle they can deal with failures, but not the average individual investor. >> Right, which is why in the US we have the credit investor, where you have to be wealthy enough to be able to sustain the loss. They don't have that anywhere else. So globally the SCC care and the other financial intelligence units globally are monitoring this so we make that we're protecting the investor. To get back to your question, where do I see this going? I think we're going to need to fast track our way towards a more compliant regime. And this I see as being a step-wise approach. Starting with sanctions making sure everyone is screened against the sanction list. Then we're going to start getting more into politically exposed persons, more adverse media, more enhanced due diligence. Where we really have that suite of products and identify the risk based on the type of business and the type of relationship. And that's where we need to get fast. And I don't think the SCC is going to say yeah be there by 2024, it's going to be be there by next year. I was talking to Hartej, he was one of the co founders of Hosho and we were talking on TheCUBE about self-regulation and some self-policing. I think this was self-governed, certainly in the short term. And we were talking about the hallway conversations and this is one of the things that he's been hearing. So the question for you Greg is: What hallway conversations have you overheard, that you kind of wanted to jump into or you found interesting. And what hallway conversations that you've been involved in here. >> I think the most interesting, I mentioned this on a panel and got into a great conversation afterwards, about the importance of the Crypto community reaching out to the traditional financial services community. Because it's almost like looking across the aisle, and saying look we're trying to solve real business problems, we're trying to create great innovative things, you don't have to be scared. And I was speaking at a traditional financial conference last week and there it was all people like this Crypto is scary and it's I don't understand it. >> You see Warren Buffett and Bill Gates poopooing it and freak out. >> But we have an obligation then, we can't wait for them to realize what needs to be done. We need to go to them and say, look we're not scary, look let's sit down. If you can get a seat at a table with a head of compliance at a top tier bank, sit down with them and say let me explain what my Crypto ATM is doing and why it's not a vehicle for money laundering, and how it can be used safely. Those sorts of things are so critical and as a community for us to reach across the aisle, and bring those people over. >> Yeah bridge the cultures. >> Exactly. Because it's night and day cultures but I think there's a lot more in common. >> And both need each other. >> Exactly. >> Alright so great job, thanks for coming on and sharing your insights. >> Thank you so much. >> If you have a quick plug on what you're working on, give the plug for the company. >> Sure, so iComply Investor Services is here to help people who want to issue ICOs, do that in a very compliant way. Because you shouldn't have to worry about all of your compliance and KYC and Block Chain Forensics and all that, you should be worried about raising money for your company and building a product. >> Alright final question since I got you here 'cause this is on my mind. Security token, has got traction, people like it 'cause no problem being security. What are they putting against that these days, what trend are you seeing in the security token? Are they doing equity? I'm hearing from hedge funds and other investors they'll want a little bit of equity preferred and or common, plus the token. Or should the token be equity conversion? What is some of the strings you're seeing? >> You know I think it' really just a matter of do you want paper or do you want a token? Just like a stock certificate is worth nothing without the legal framework behind it. A security token is the same way. So we're seeing where some people are wanting to do equity, where some of their investors want the traditional certificate. And some are fine with the token. We're seeing people do hybrid tokens where it morphs from security to utility or back. Where they're doing very creative things. It's what's so great about the Ethereum Network and the Smart Contracts, is there are all of these great options. The hard part then is, how do you fit those options into regular framework. >> And defending that against being a security, and this is interesting because if it converts to a utility, isn't that what security is? >> So that's the question. >> Then an IPO is an, again this is new territory. >> Right, and very exciting territory. It's an exciting time to be involved in this industry. >> In fact I just had an AE3B Election on tokens, first time ever. >> Yeah it's an amazing state that we're in. Where serious investors are saying yeah token's great for me. Give me the RC20 I'll stick it in my MetaMask Wallet, it's unbelievable where we are. And only more exciting things to come. >> Greg Pinn, thanks for coming on and sharing your insights. TheCUBE covers live here in Las Vegas, Hoshocon, the first security conference in the industry of its kind where everyone's getting together talking about security. Not a big ICO thing, in fact it's all technical, all business all people shaping the industry, it's a community it's TheCUBE coverage here in Las Vegas. Stay with us for more after this short break. (Upbeat music)

>> From the Hard Rock Hotel in Las Vegas, it's theCUBE covering HOSHO CON 2018. Brought to you by HOSHO. >> Hello everyone, welcome back to theCUBE special live coverage here in Las Vegas for the first ever, Blockchain Security Conference. Really discussing security as an industry, it's called HOSHO CON, put on by HOSHO. We're here with the Co-Founder and CEO of HOSHO and main supporters of sponsoring this project or event HOSHO CON. We have Yo Sub Kwon, who is the CEO and Co-Founder. Good to see you. >> Good to see you, good to be here. Hey thanks for putting this on. I've interviewed Hartej, your Co-founder, in Toronto the Futures conference. We've had many great conversations on theCUBE. But when we talked about HOSHO CON, this conference, he really wanted to do it as an industry conference. Not as just a HOSHO event. >> (Yo agrees) >> This is really key to you guys culture here at HOSHO your company. >> Yeah. >> Take a minute and explain the event. Why this event? Why the format? And that it is open? >> I mean basically, you know, like we've been to just so many events over the, like I think we've done like 80 events this year, and the topic of conversation is, you know, around investing, it's around ICO's, it's around all these things and security touches all of those and I just feel like, and we all felt it and like the other security companies felt it too, that it just wasn't a topic that was discussed in great enough depth especially given the increasing amounts of hacks and theft and all these problems that relate directly to security. And I just feel like it's really important for us as an industry to discuss, you know, what security practices are good? What should be done? How you should do them? What resources are available to companies to learn more about security? And what resources don't exist and need to be developed? And that needs to be done in a collaborative way. Well congratulations and props to you guys for really sponsoring this and taking the leadership role in the industry but again you guys are humble and it's a good way to do it. Is to have these conversations. So thank you for doing that, appreciate it and thanks for having theCUBE here. We really appreciate it. The question I want to ask you is: I've noticed a trend here, first of all a lot of smart people here, so it's like, it's not a massive, no IPO, ICO pitch competitions, this is really down and dirty security. >> Yeah. >> Okay, black hat, white hat but it's kind of a intercultural vibe it's the community. >> Yeah. >> Coming together. But also two kind of tracks are developing there's the crypto security and then there's cyber security threats coming up. Because you said it's touching on all these points. And you're hearing, even hearing a little bit of IOT and hardware, we had Rivetz on earlier the CEO Steven Sprague so a lot of different solutions and a lot of different opportunities, a lot of different vulnerabilities. Can you explain the landscape of how the players are here, where are they coming from? >> Okay, yeah. >> What's their backgrounds? >> Absolutely I mean there are definitely, a lot of brilliant minds here and that was one of the goals of HOSHO CON is to bring people that are of all different, you know, parts of the industry whether they're, they're layers or they're information security experts or they're, you now, regulators or they're it just, developers bring them all into the same room and to kind of discuss these problems that you know, plague all of us and you know a developer's going to have a much different perspective and solution than a lawyer and but those thing can work together and the problems might still be the same. And so we've been in the industry for just like, even though HOSHO's a young company, the people that are on our team, myself, I've been in, I got into Bitcoin eight years ago, like we just have this network of people that are in the industry, have seen the kind of like cyclic nature of, you know, like a gigantic influx of people come in, these problems arise where, you know, entrepreneurs are like really focused on like growing, getting traction and then they focus less on their security, it goes to the wayside and then these big hacks happen and then the industry kind of smartens up and everything you know starts getting a little bit closer to what seems you know maybe safe or like approachable for a growth trajectory and then another gigantic influx happens and then the same thing. And so what we really need to do is like when that next big influx happens is to have standards in place to have things that an entrepreneur can just turn to and be like: "Okay, this is what I need to do "if I want to be considered credible in this industry "and I want to protect my users and my investors." >> Can you talk about some of the top conversations that are going on here, because I think that's a great point? People want you know legitimacy, they want solutions that work, that are credible and then maintain kind of, I won't say enterprise grade, but commercial grade reliable so that people can focus on building up their companies and or preparing for the growth. What is some of the top conversations? >> A lot of it's just learning about what other people do, like even with like Rivetz, we're putting, they're using the trust executions based on like what's already on billions of devices and you know basically letting people know that that space exists on this hardware and that they can be used for all these different purposes to validate you know data going in. And, you know, there's been conversations around custody. I was on a panel earlier today about custody and basically the way I felt like it left off and the conclusion was that there is a long way to go on custody but it is incredibly crucial. Big institutional players that want to enter the markets and want to put their money into a regulated custodian they're, it's difficult to do so even with registered custodian's existing because the limitations that they have in understanding the technology and being able to provide support for all the different digital assets that exist. >> So we're reporting this morning the SEC herein the US has tightened the noose on the ICO-funded startups. I think the story originated out of Decrypt Media but essentially the SEC, Securities and Exchange Commission, is cracking down and they're going back and saying: "You got to refund some of that money." >> Yeah. >> Because of violations. That's one regulatory thing but there's also, there's software that writes these smart contracts. You guys are in that business. The software is software money, security is critical. How stable is this becoming in your mind? What's the to do items? How should a company who want's to either use the ICO process or and or use token economics to fuel their business model they got to be secure on the business front? >> Yeah. So basically smart contracts were so new when we first got in to it that people just didn't know how to develop securely in them and so there were just critical mistakes being made all over the place. We've seen over the last year a lot of improvement on that front, more libraries are being developed and people are writing consistently more secure contracts. But now what we're seeing is contracts are getting increasingly complex and with additional complexity, because it's software there's room for, you know more problems and I think that it's going to, it's going to be an interesting challenge going forward, there's thing like formal verification I think that has a huge place in the future regarding smart contracts but it's there's a lot of tools that need to be developed that's one of the things that we worked on and we're really excited about is Meadow Suite because that's software that let's you develop smart contracts. We built it intentionally with security analysis in mind and then we made it more full featured to become a development tool for writing smart contracts and developing a protocols. And so I think the more of those type of things that you see come out that bring it more to feature parity to what software developers are used to if they're say building a web application it makes it a lot easier to adhere to good practices and write secure code. >> And also kind a not have to do manual audits? >> Yeah. >> I mean at the end of the day you want to get to some sort of automation. >> Absolutely. >> Framework. >> I mean we've already automated a lot of the things that we do. But and there's still a lot left to do but we know that there is a lot left that can be automated and we hope that eventually the tools are just put into developers hands were they can do most of that work themselves. >> Yo Sub take your CEO hat off from HOSHO for a minute put your industry hat on. >> Okay. >> What are some of the names here that, and conversations, topics that you find interesting personally? >> Okay, I mean. >> (John laughs) >> A lot of people that we brought here are like our friends, we know them right? And so like I was talking to. >> Your kind of celebrities. >> I was talking with like TokenMarket earlier and like, you know, we're partners with them and they really, they're really great guys and like some of the stuff that they are trying to do and you know just listening to what other companies are trying to do with like security tokens that seem to be the thing that really moving forward. And I'm kind of fascinated like, we try to stay agnostic you know like when we're like looking at all these different technologies. But then like someone explains something to you and you're awe man that's really cool. >> Yeah. (both laughs) >> And there's some good minds here. What's the coolest thing you've seen so far? >> Well I've been locked in, I've been locked behind doors in a lot of meetings so far but the, let's see, I think what Unchained Capital is working on is really sweet. They basically, I mean like I think their business model makes a lot of sense. Like basically they hold your crypto's so you maintain exposure to it and then they'll issue you a loan. They can like turn around a loan like in 24 hous, you just hand then a bunch of Bitcoin and then they'll just give you cash and then you can you know you have that cash and then you still maintain exposure through crypto if you pay it all back you get your crypto back. (laughs) >> So it's collateralized crypto? >> Exactly I mean like that makes perfect sense to me. Like you know it's just like as long as you can liquidate that crypto and Bitcoin or Ethereum like those are big enough markets now where you can easily liquidate. Well that's awesome. Thanks for putting on this event and I want to get back to HOSHO. How's business going? You're the CEO, Commander in Chief, what's going on with the company? How's things going? >> Yeah. >> Quick update. >> Well everything's crazy right, like we're moving quickly and the next steps are Asia. We really want to basically penetrate those markets. Only, we don't have as much coverage there as we would like but having spent some time there earlier this year doing some reconnaissance it's a crazy, crazy space over there. There's a lot of action happening, there's a lot of adoption. People are really enthusiastic about it but security almost seems like six months to a year behind North America and Europe as far as what exchanges are requiring, what investors are demanding of their portfolio companies. And so I think that now that they've had such major hacks happen over the last six months they're starting to realize. >> Major hacks talking about 60 Million. I mean I heard numbers up to 300 plus million. >> Yeah. >> I mean these are it's not like five dollars out of your wallet. >> Yeah. >> This is massive. >> Like over a billion dollars has been stolen in some capacity and like it's been pretty crazy yeah, so. >> Where's the big vulnerability? Exchanges, is it the DApps, where's the holes? >> They're all over the place but the biggest numbers definitely come from exchanges. Exchanges just need to be far more responsible and just, I feel like a lot of it is just negligence. They're growing so quickly that they don't pay attention to, you know, putting resources into educating their staff on really simple security practices. You know things like phishing and social engineering, like things that were good security practices still are good security practices. And a lot of those attacks are not even anything like some new exploit of a new technology it's the same kind of thing of like phishing, social engineering, sims swapping, you know, poor user access control, bad passwords. >> I mean the basics. >> Yeah. >> But this is what growth does to you you've point earlier. As more people start feeling growth there's more exposure service area wise. >> Yeah. >> New dynamics are kicking in. >> Well I'm starting to see new exchanges that are popping up that are you know taking security very seriously and the way they're treating it is that is their differentiator but in my mind like security shouldn't be a differentiator. Everybody should. >> (John laughs) >> If you're an exchange and you're holding massive amounts of other people's assets you should take security very seriously. That should just be a default, a standard. >> You have to be differentiating strategy with security it's not, it doesn't make sense. >> Marketing 101 you shouldn't be different, it should be standard. (both laughs) >> I mean if that's the state of the art, this is the problem. This highlights the problem. >> It does yeah. >> Alright so what's, what's the future for this event? How do you guys see this unfolding? Obviously this is the first inaugural event here HOSHO CON, How do you see it evolving? >> I think a lot of conversations should hopefully spur from this and we want to make this a yearly event. So we're definitely going to take a lot of the feedback from people that attended and see what they want, what they really enjoyed, what they really want to talk about. And even I think, a lot, since we're recoding all of the talks we'll be putting them up online at some point and I think it'd be really good to see like what the transition is like next year from like, where we were in some of these problems and addressing those problems you know a year from now. Like I think that will be really exciting. >> You guys are expanding in Europe, HOSHO good job with that. Who's the kind of clientele that you guys have? Is it ICO's? Is it companies? It is enterprise? Who are your target customers? >> So we have a lot of companies that are ICO's for sure. We have more exchanges and protocols joining those ranks. And then we are trying to move into enterprise as well. We made a partnership with Telefónica and developed a partnership with them to be able to sell to more enterprise clients and what they need. >> And what's your value proposition that you guys are offering? >> We are, well, we do smart contract audits, we do penetration testing. Those are things that a lot of companies in this space need. And then also we've been helping with security architecture and cryptocurrency assessments. >> And tooling, tools for development. >> And tooling, yeah we're trying to do our part. I mean we can't and won't do it alone but we try to develop things that, if we develop anything that's useful from a security perspective, we try and make it available for everyone. >> Yo Sub thanks for coming on theCUBE, appreciate your time and congratulations, it's a great event. >> Thank you. >> HOSHO CON sponsored by HOSHO and other's in the industry, it's an industry event, it's not just their company, it's their friends all coming together to solve the major problems with security, making it standard, making it safe and supporting the growth with the community. It's theCUBE covering live here in Vegas. I'm John Furrier stay with us for more CUBE coverage after this short break. (upbeat electronic music)

(upbeat techno music) >> From the Hard Rock Hotel in Las Vegas, It's theCUBE, covering HoshoCon 2018. Brought to you by Hosho. >> Hello everyone, welcome to this special Cube coverage. We are here, live in Las Vegas, for HoshoCon. I'm John Furrier, the host of theCUBE, and this is part of our continuing coverage and our initiating coverage of the blockchain crypto world, been doing it since January, covering it on our journal site siliconangle.com since 2011, covering Bitcoin and all blockchain stuff, but this is the first security conference dedicated around block chain and crypto put on by Hosho, and it's called HoshoCon. It's an industry conference, and we are here covering it. And this is an open, small kernel of smart people, really trying to have a top level conversation around security . And our next guest is Christopher Forte He's the CTO of 3BX, welcome to theCUBE. Thanks for joining us. >> Yeah, pleasure to be here. >> So, before we get into some questions about security, what do you guys do? What's the company do? You guys have a unique approach. Take a minute to explain what you guys do. >> 3BX is essentially a marketplace. It's a digital asset marketplace. We're trying to build a community around trading digital assets. We're really trying to focus on pulling away from the term 'cryptocurrency,' because we think it'll expand into much a much broader term. So we're structuring our platform on the support of any kind of digital asset, whether it be a cryptokitty or a an e-book, a concert ticket, you know, something that has a digital form that can be traded person to person. >> So, basically, you're expanding the definition, or actually, depositioning crypto, because it's kind of narrow, relative to how you guys see it. >> Yes, it's pretty narrow. >> Digital assets, I mean, look at gaming. >> Yep, absolutely. >> Gaming culture is not new. >> Yeah. >> I mean, they trade stuff all the time. >> Yeah, sure, even like in game tokens, they don't exist on a block chain yet. They're not cryptographically secured, so those are the types of things that I expect to see hitting a lot of these marketplaces soon. >> Well, that's smart, I mean, I think if you look at it, certainly we at (mumbles) blockchain, our entire media company's been moving to blockchain, and crypto, and token economics, but really the blockchain piece has been very limited. It's got very poor functionality, and all the top blockchain implementations are either private block chain, low latency, and fast, and developer friendly. >> Sure. so Ethereum's great for smart contracts, but just as a scale, relative to what most people need. >> Yeah. >> If you're running, you need a million IOPS, you've got a marketplace. >> Yeah. Some of these large scale, hyperscale networks, they're massive marketplaces. >> Yeah, they're huge. >> How do you guys fit in there? What problem are you trying to solve? Let me just start with that. >> You know, we're trying to pull away from the complexities of an exchange. We're trying to give the community a good tool to trade without a lot of knowledge of tokenomics. One of our unique assets, or unique features, is that you can trade with no market impact. You don't have to worry about price slippage, or the complexities behind order books, so we give a familiar interface to trading. Something you'd see on a traditional e-commerce platform. So we're trying to kind of introduce it to a wider range of people. We've talked to a lot of people who have a lot of difficulties, especially with the decentralized exchanges. >> Yeah. What are their problems? Just, like, reliability? >> Reliability. >> Black box- >> Liquidity, there's a lot of issues with liquidity around them, which causes problems when you try to trade any significant amount of coin. So, we're trying to give traders and the coin companies another outlet to trade without having to worry about liquidity. Or the risks of liquidity associated with it. >> So what's the status of the company? How many people do you guys got? What's the size? Do you have any deployments? Are you guys engaging certain communities? >> We are live. We released a kind of invite only beta about two months ago. So we've been out there having traders for about two months. We're a very small team, we're based out of Las Vegas. There's a development team of three people. We're just now broadening into more partnerships, more marketing- >> So you guys are hardening the platform, basically. >> Yep. >> By jamming and coding- >> Yeah, we went kind of product first, and then took a step back and are now approaching the market. So yeah, we're really excited. >> That's smart, you didn't hype it up first. >> Yeah, we didn't hype it up. >> But you could have definitely hyped it up, I mean, a lot of people who are winning right now are quality deals that had opportunities to do an ICO. >> Yeah. >> just, people are throwing money around. Just go back to February, the numbers are just off the charts. The, kind of, bubble burst in February, and certainly the SEC announced today, I'm covering the news, a major crackdown on all those ICOs, on violations right here in the United States, It just causes a distraction. I brought this up with Hartej last time I interviewed him in Toronto at The Futurist, which is exactly what you guys are doing, and this is the core trend and I want to get your thoughts on it. A lot of the alpha entrepreneurs, the ones that are building companies, don't want to get distracted from stuff that's not optimized on building a company. For instance, if I do an ICO, or you get involved in domicile issues outside the United States, you're optimizing all your energy, they're on an airplane, or market dynamics that aren't building a company. Yeah. >> This is kind of, almost a distinction at this point, you can almost look at opportunities, startups, entrepreneurs, inventures, and say, "Okay, we can almost see who's doing what." >> Yep. >> You do agree. >> Yeah, I think it's important to have something before you go and you spend a lot of energy raising money, building a pipe around the company. I think we're going to see a huge trend towards product first, having something, having a development team, a concept, a patent. Not just based on a theoretical white paper, so it'll be very interesting to see how it goes. We decided to go product first, so, no one had heard of us until we went live with our product. >> Good approach, I like it, I think it's solid. Good, we'll see how it turns out. I got to ask you, and I want to dig into the product a little later in this interview, but I want to ask you specifically, around some core trends I'm seeing, and patterns. >> Sure. >> It's pretty clear that when these emerging markets develop, total activity on the entrepreneurial side, a lot of people build and developing, attacking the market, but it's a trend, everyone's throwing out a common thing, I need to have community, and I need a two-sided marketplace. So the common thread's- and people don't have those- you can't just buy a community. >> Yeah. Communities aren't bought. >> Sure. You can't just say, "Hey, I need a community." Put a telegram channel, write some bots, >> Yeah. >> the next thing you know you got 25,000 people in telegram. >> Yep. >> That's not a community. >> That's not a community. >> That is AI bots looking like a community. >> Sure. >> And then a two-sided marketplace, you got to have a value proposition. So these are things that people are putting into their plans. >> Yep. >> That they don't have answers for. >> Sure. >> What's your thoughts on that, around community, 6and about marketplace? What are you seeing in the market, in market developing right now? >> I mean, building a strong community is very difficult. They have to align with your product, they have to align with your vision, they have to understand what you're doing, and at least have a use case for it. So, we're really trying to kind of have the community drive our development road map. So, we've done a lot of outreach, trying to get what people are interested in, what's lacking in the industry currently, what they want to see, what they're unhappy with. And we're trying to build a community around allowing people to have input and influence into the product that we're building. So, we're really early into the process, so it's difficult for me to really say that it's easy or difficult to build the community. >> So you're engaging the community to help. >> We are engaging the community. >> What are the number one things you guys are solving? Problems that you see are immediate, low hanging fruit that you're knocking out right away? What are the core things? >> I think some of the big things are simplicity, the usability of these interfaces. Kind of the knowledge around it, trying to do a knowledge transfer to our customer base. And trying to help people realize that there's a company behind these coins. I think that's a huge thing that we have to kind of push towards, is, it's not just a token. It's a token produced by a company with a cause. >> So how does your product work? >> It's like a basic marketplace that you would see in kind of a eBay or an Amazon, where someone posts an offer, posts a listing, and other people can buy from it. So, it's a buy and sell kind of- >> And you have your own native token? >> We have a native ERC-20 token that we use for fees. Because we're targeting the digital asset generally, we've externalized fees from traded goods. So, we want to make sure we can handle something that may not be divisible by, as Bitcoin is. So if you trade a book, for example, a lot of these exchanges would take a page out of it. If you use the current model of fees, they're kind of coin shaving off of your trades. So we're trying to eliminate that so we can expand into non-fungible, or non-breakable assets. We're also developing a wallet that basically encapsulates cryptocurrency into smaller assets to be traded off chain. So, we plan on kind of revolving around our internal token to handle fees of those assets. >> So it's a blend of on/off chain dynamics. >> Yep. >> So you can do a lot of stuff, and not have to do a lot of writing to the chain, if you're going to be doing a lot of re-re-writes. >> Yeah. >> All right, so the question I want to ask you that I think is important and in everyone's mind is, okay, Hosho Con is the first, inaugural- we love going to inaugural events because, you don't know, it could be the last one. >> Sure. >> Or, it's going to be big. I think this is a big trend, and one of the things we heard last night at dinner was, when we were having a conversation about it was, is no real conference, these conferences don't put security in the front. >> Yep. >> They really kind of have it as a side panel. It's always kind of an adjunct to something bigger, pitch competition, you know, big sponsor driven kind of programs. This is a security conference. What is the impact, in your opinion, of this Hosho Con, and security in the blockchain, that's going to shape the industry? What is your opinion? What is your commentary on that? >> I mean, obviously it's important to focus on security. I think a lot of people had a lot of, kind of assumptions that blockchain-specific, or blockchain-based technologies were unhackable. You know, the decentralization of something makes it secure, and I think that's a myth that they're going to have to debug, and we're seeing it with hacks. There's a lot of, I think, assumptions even around the hacks that are incorrect. So, bringing the idea to people that blockchain still needs to be managed, you still need to be careful. The smart contracts still have vulnerabilities and risks involved, it's not- >> Software is software. >> Software is software. It's unavoidable, when you start writing code, that there's going to be- >> You don't want a blue screen of death, certainly, you don't want to have to reboot, I mean, move fast and break stuff was great for webscale, but when you're talking about security and currency, you need rock solid, hundred percent reliability. >> Yeah. >> Otherwise, you lose your cash. Or your e-money. >> Yeah, it's something of value that you're going to lose. >> It's not a social media account, it's not something like that, you know, you're losing money. And it's very interesting, I think the more people know about the security around blockchain, cryptocurrency, the more they're going to realize that it's not an end all solution to everything. It takes time to evolve. Standards will probably have to be put in place. >> There's a lot of people, I remember when I was your age, and the web was coming around, everyone was afraid to put their credit card down on basic e-commerce transactions. >> Sure. >> And that was natural, because like, oh my god, it's online, it almost felt like a black box, and then they got over that pretty quickly, you saw PayPal and those kinds of companies came out. You mention eBay, these online sites are now secure. Crypto, there's almost like an unknown, a lack of education in the mainstream. And so we got to get to that point where, you know, wallets are wallets, and they actually do a good job, and you don't forget, and leave your wallet at the restaurant. There's some hygiene, and practices that are needed. Older generations, maybe, might not get it, but the younger generations, they're getting it, right? >> Yeah >> What's your opinion of this? Because, this is a generational shift. >> Yeah. >> This crypto, blockchain market, it's really generational. >> Sure. Anyone under the age of thirty pretty much loves it. >> Yeah. >> So, it's happening, right? >> Yep. >> So, what is the views around security, generally, in the mainstream? >> I mean, I don't think there are too many. Like I said, I think people kind of put a lot of assumptions in the inherent security of blockchain stuff. And I think they don't realize that we're trying to make it easier through mnemonic sequences, or passwords, so we're hosting wallets online now. It's not necessarily a pure wallet in the sense that it sits on a piece of paper. So we're going towards usability, which we're sacrificing security for. So the more usability we get with a lot of these mainstream products, the more we're going to have to realize we're getting back to a place of existing security vulnerabilities, with passwords, or stuff you would see with your bank account. So it'll be interesting to see the balance between the raw security inherent with Bitcoin, or a traditional cryptographic wallet, and then usability, whether it be cloud based stuff, or these exchanges. >> You know, Chris, one of things you're doing, that I think's interesting, and kind of points to the- if you connect the dots- the trend of, really, levels of granularity getting down to the micro level. >> Yeah. >> It's microeconomics. >> The beautiful thing about this market, is that, you could take a page out of a book, you can track it, and how you use that page like a pay for, all kind of digital rights stuff, digital assets. So you look at the world as a digital asset. This brings up the question of, okay, there's going to be software that's going to have to be written to manage this level of microtransaction, or microassets. So, how do you view, in your opinion, this whole notion of token economics? Because we've used tokens for years on all the stuff we program, on authentication. >> Yep. Tokens are used in computer science- not a new concept. >> Yep. But if you think about tokens as a currency, and as a mechanism for computer science, software, >> Sure. >> do you see a multi-token world? Why wouldn't everyone have their own token? >> Sure. And then there's going to have to be software- >> Sure. to manage the tokens. >> Yes. If you have a token and I have a token called a Cube Coin- >> Yeah. >> and you have your token, there's probably going to have to be some interaction between coins. Do you see that day happening sooner than later, or do you even see it happening? >> It's going to really depend on the use cases that they find. Whether a single platform is going to come out, and kind of take over the standardization of managing it, or, who knows, you see some of these transactional bridges, like between Dogecoin or Ethereum. So you can see that happening between tokens, or, everything being built on the same chain, or, having these bridges between chains, whether it be like an EOS to Ethereum token chain bridge. I don't know, I mean, we really have no idea. >> (mumbles) multichain, it's interesting, right? This is an interesting conversation. My vision is, I think multichain is a good trend. Why wouldn't you want to have multiple chains, if the use cases are not overlapping? I just don't feel comfortable about a monolithic approach of tokens. I'm just uncomfortable, generally, with that philosophy. >> I think it'll be important, and like you said, it'll be very important to have a good solution to manage them. People aren't going to want a hundred programs on their computer to manage their tokens. They're not going to want multiple apps on their phones. There's going to have to be some kind of standardization so that people can manage it easily. Otherwise, it's going to be impossible to keep up with. And kind of the interchangeability between tokens will be important. >> Chris, final question for you. What's this event like here? Describe for the folks who aren't here, what's the vibe, who are the people, what are some of the conversations in the hallways so far. What kind of person is here? What is this event about? What's the relevance of Hosho Con? >> Well, it seems like it's a lot of technically minded people, kind of hoping to push forward the security in the blockchain world. We've had conversations about everything from educating the masses, so kind of the average person, who doesn't understand the complexities of Bitcoin, and how do you inform them of what we're doing, all the way up to, what's the next step in security auditing. Hosho is really pushing forward, how do audit your code on the blockchain, or on a lot of these platforms, and I think it's really important to have these conversations, cause it's opening up new worlds of new thought habits for each of these companies. Everyone has their expertise, Hosho specializes in smart contract auditing, and we may not have that in depth knowledge of how to audit the contracts, so it's nice to kind of share the knowledge, and see that there's other solutions out there than everyone doing it on their own. >> What do you hope to be known for, for your company? If you could have that vision down the road, three years from now, when you look back, what do you want to be known for? >> I think it would be best if we were known as a platform to bring newcomers into the space. Informing, caring about the community, making sure that they understand what they're doing before they do it. As you know, Bitcoin is very unforgiving. A lot of these cryptos are very unforgiving. So I think it's very important for us to be known as someone who helps bridge that kind of intimidation. >> All right, Chris Forte, for 3BX, CTO, entrepreneur, building a company, doing it the right way, plans to use tokens, You guys, did you raise any money? >> No raised money. We're privately funded. >> Nice. >> So, we're going that route. >> Good. >> Bootstrapping, getting it done. Taking a different approach, which is the classic approach, of building a company the right way. TheCUBE, we are here in Las Vegas for Hosho Con. I'm John Furrier. Stay with us for more coverage after this short break. (upbeat techno music)