>> Announcer: From New York, it's theCUBE covering Blockchain Week. Now here's John Furrier. >> Hello everyone, welcome back. I'm John Furrier, the host of theCUBE. We're here in New York City for on the ground coverage for three days, wall-to-wall for Blockchain Week, New York's part of Consensus 2018. Sold out show, we're out in the open. Open (mumbles) to all the cons here. Next guest is Alex Mashinsky, Founder and CEO of Celsius. Seasoned entrepreneur, great debater on stage, great brawl recently at the Milk Institute. We'll talk about that. But more importantly, he's got a great project called Celsius, welcome to theCUBE. Thanks. >> Thanks for having us, John. >> So, I love we just chatted before the camera turned on about some of the things you've done. You've gotten into a little bit of a great heated panel discussion. With someone who actually doesn't even hold cryptocurrency. He's saying it's all bullshit. >> Yes >> Right, so tell about the story. It was written up by Bloomberg, what was this famous brawl in the Milk Institute? >> Yeah, so the Milk Institute, they've been having conferences for the last 25 years and they're trying to combine the making money with doing good in the world, right? So, it's doing well and doing good at the same time. And that's what crypto is all about, right? And so, they had a panel about crypto with me and Nouriel Roubini, who's like Doctor Doom who predicted the last 15 recessions. There were only two, but they were predicted all 15 of them. So, I was telling him, even a broken clock is right twice a day, you know? He was going at me, he was going at the community, he was calling it a scam. And when you don't own any coin and you have not come to an event like this and seen 8,000 people celebrate this innovation, power to the people, then what are you talking about? So, I was there to really defend the community. It wasn't about me or him. >> Yeah, you did a good job. Well, thank you for doing that. Also, you're on a great project. I've been talking about a lot of other things I want to get to in the industry that you have a view and opinion on I would like to get. But your project Celsius. Take a minute to explain that, because I think this highlights really what's going on. I chatted earlier today about token economics. This is a new way, a new infrastructure, a new capability, a new mechanism that's really becoming powerful, of a network effect. >> Yes. >> So, the old world was DNS. 30 years-old stack on ecommerce, search engines, they're not accurate for network effects, a new dynamic, new data source is happening and it's creating new value, new data. >> Yes. >> Talk about Celsius the project and your value proposition. >> Right, so Celsius Network is basically trying to create an algorithmic cloud-based solution that does everything in your best interest. So, you have to think of it as a basket of financial services that do simple things like give you a loan or allow you to earn interest, give you access to a lot of great financial products, insurance and other things, that altogether do everything in your best interest. And what we're doing is we're enabling 100 million new people to come into the cryptocommunity and enabling them to benefit from all these things both for the increase in the value of the coins but also allowing their money to earn money for them. And today, if you think about banks, right? They take your money, right? You make a deposit, they take your money, they'll lend it to me on my credit card, they charge me 25%, they give you 1%. So, they take all that margin that you talked about. They squeeze all of that and keep it to themselves. >> And they're representing two people. It's like a realtor, who do you represent, the buyer or the seller? >> They're a toll collector in the middle, exactly. They're not adding any value. >> So, the new shift is on user value-- >> Exactly. >> And you see real-world examples of this. The whole Facebook debacle, who owns your data, and Mark Zuckerberg was testifying in front of the Senate in Congress, saying, "No, we don't sell your data." But they license the data and they use it. >> They extract all the value from it. >> They don't actually sell the data, true. But they license the shit out of it, to target you. >> They squeeze every last penny out of it. >> This is now obvious to people. >> Yes. >> That problem. >> Yes. >> Talk about the cryptobenefits, where is this shift happening, users, the power to the people, I get the phrase, but where is it happening? The token level-- >> So for example, Yeah, let's take an example, so most of the people here on this floor, they take their coins, they put them in exchanges, they celebrate the fact that the coin went up 50, 100% or whatever, but they don't realize that they leaving a lot of money on the table, because these exchanges do shorting, front-running, all kind of other stuff that should be illegal, but they do it, so they announce these amazing earnings, Binance announced amazing earnings and a lot of that earnings comes from the money that should be given back to you and me. So, if you think about the credit card company giving you two percent back, this is kind of the same thing. We are basically taking all of that earnings and giving it back to the coin-holders and we're saying, "Don't keep your money on exchanges, keep your money in a wallet that represents your best interest." It extracts all that value and gives it back to you. >> And so, what's your value proposition? You know what, you should say, "Use our wallet, use our system." >> Right. >> And then you represent their currency? >> So, we huddle together, we create a giant pool of BTC, a giant pool of ETH, or other coins, and we lend against that. So, we can do loans to the community, we charge nine percent for asset-backed loans, basically, so you need a loan against your crypto. This way you don't have to pay taxes, you can defer your tax, you can get liquidity without triggering all the tax that today you have to-- or you can just earn interest. So, without selling the coins, you can basically generate five to nine percent income that's continuous on top of that appreciation, you still get all the appreciation of the coin, but you're also generating income. >> So, you can bring contextual services around the crypto-holder interest. >> Yeah, so we find people willing to pay that. For example, other crypto-holders who want a loan, and they pay us nine percent, we give five percent to the community. Hedge funds who short BTC or ETH, they pay us ten or 15%, we give most of it back to the community. But the beauty is that the coin-holder doesn't have to do anything. They don't have to move from this account to that account. They don't do transactions. All they have to do is decide if Celsius Network is doing everything in their best interest or not. And the point is is that the next 100 million people that are going to join crypto, they're not speculators or anarchists or libertarians like most of the people here on the floor. They're people who kind of look at all this, saying, "It's too complicated, I don't know what to do, I'm not going to get in at the right time, I'm not going to get out at the right time." They don't have anyone they can trust. >> So, I'm going to be able to ask the Average Joe six-pack question, "Hey that's all fine, I love what you're doing. Come on, sign me up. But wait a minute. If you put all this crypto in one spot, the frickin' hackers are going to get it. >> Right. >> Because, how do you protect me against-- I heard, see, Mt. Gox was in the-- and all this stuff's going on, I'm worried that it's going to get hacked. Even wherever I put it." >> Exactly. And then Nouriel basically asked me the same question. So, in 10 years since BitCoin was created, there hasn't been a single instance of anyone cracking the blockchain itself. All the theft, everything that happened was because we gave somebody our private key and we entrusted them with it, and they screwed up. Mt. Gox, it basically broke into the exchange and so on. So, we keep everything in cold storage. And it's not ours, we have a custodian that is a giant company that is willing to accept all that, keep it in cold storage and we lend against it. We lend against the pull. >> So the private key's going in cold storage? >> Everything is staying in cold storage, which is the safest way to keep your crypto. It's much safer than keeping it on an exchange or keeping it in a different place. >> And it's all through--it's encryption, it's never safe to--a private key's a private key. Right, I mean, we've seen this before. >> Exactly. >> It's not rocket science. >> But even if you keep it in your home, in your safe, that's not as safe as putting it in a facility that is resistant to nuclear attack and has four layers of security and no human can get into the last room. It's a physical connection. >> I've heard this problem, just estate planning, someone dies, where's his cryptokey? >> Exactly. >> Unlocking, say 30 to 100 million dollars' worth of crypto. >> Exactly. >> It's not obvious. Well, the guy was smart, he put it in lock boxes all around the country. Wait a minute, no one knows where they are. >> But as a custodian, if you show us that you are the ultimate heir and you have the legal representation, then we can handle it, right? We can transfer that. But really, you're protecting it against a hacker coming in and stealing it from you. All the legal ramifications still apply. >> So, let's talk about the industry. What do you like about the industry right now, and what do you think that needs more work on, faster, or behavior-wise, what's your general temperature-taking of the current community? A lot of back-end work being done. Some complaints I heard about the demos, where some people say the front end was pretty sucky. >> Yes. >> But I think that's because a lot of back end work's being done. >> Well, this reminds me of 95 through 2000, I wrote some of the original Void protocols and everybody told me it's not going to work, the Internet is too slow, you can't scale, it's not safe. >> Yeah. >> I hear the same arguments again and again. >> Exactly. >> Today a billion people use Void every day and they don't even know who created it or how it works. I go in a room, I do speeches, right? And I ask, "Who here knows how Void works?" Not a single hand goes up. So, we need to get to the point where blockchain and crypto works the same way, no one needs to understand how it works, they just need to use it and trust it. So, the biggest thing I think holding us up right now is actually not technical. Because there's over 130 different blockchains. And some of them solves the scalability issues and security issues. The problem is is that we kind of have the early adopter phase, but we cannot leapfrog into the mass adoption phase. Because we're still at the early phase of operation. >> Exactly, is this just evolution or is it something specific? >> Well, the applications that we have today are not things that most of the people on the planet can use. That's what I'm saying, like for example, lending and borrowing is much more attractive than trading coins with each other. >> Yeah, it's like the Web, and Web 1.0, I mean-- >> Exactly. >> Search was the first application, and then everyone went to there, check their stock quotes. >> Looking at travel-- >> Travel, buy your car-- >> Exactly. >> Basic Maslow's hierarchy of needs kind of things. >> Yes. >> So, but that was interesting, because it was a whole new way. And by the way, same arguments I heard in the Web. "It's so slow. A mini-computer's so much faster than this AOL thing at 9600 bot modem." But the apples weren't being compared to other apples. It was replacing direct mail where I used to put stamps on envelopes and mail things. >> That's right, look. The bank gives you one percent. We pay five percent. So, that is a very attractive reason to switch from the bank to Celsius. Also, most people don't realize that the power the bank has is because we make all the deposits there. We stop depositing money there, they will have to pay us five percent, because as the money leaves them, they will have to raise the rates, they're going to have to attract you with more interest. So, it's a win-win, the community wins on the crypto side, and we're forcing the banks to do the right thing. >> Alright, I want to get your opinion, Alex, on ICOs. Did you guys do an ICO? How much did you raise? And what's your general take of the ICO market? I mean, certainly, blockchain, I've said this before, takes inefficiencies and makes them highly efficient, and we know the capital markets are very inefficient, so it's a bubble, okay. I have a choice. Tokens or VC, it's a no-brainer, go tokens. >> So look, I've had coins since 2013, I've invested in over 30 ICOs myself, and then when I couldn't find what Celsius does, I decided to start a new company, this is my eighth company as a founder. And so, I raised a billion dollars on the VC side, I know how that world works, had plenty of exits, and here we went to the community, we excluded all the VCs, we did not take money from a single venture guy because this is all about building the community. So, we just closed our round, about a month ago, we raised $15 million. We had 15,000 people sign up, 95% men. And it just drove me crazy, because half of our company's women, I thought that at least half of the people would be female. And I realized how big the problem is that we do not-- I mean, if you look at the floor here, we do not include the stronger sex. So, she's female, exactly. >> I'm promoting it here. >> I agree, I'm a big supporter too, so, I think when you think about it, if we want to be inclusive and we want this revolution to take hold, we have to solve these problems. What is the killer app, where are the female participants, how do we make it global, how do we make it inclusive, and how do we make the user interface and everything else so simple that you don't have to understand anything to use it every day. >> And what's your vision on how the ICOs are going to trend? >> Right. >> More stability, obviously. It'll level out, the bubble will-- I don't think it'll be a massive pop, I think it's going to be a small squeeze, so I think there's enough community involvement that self-governance will kick, in my opinion, but what's your take on the ICO? >> So, we definitely, this is like a Cambrian explosion. So, we are throwing money at everything. So, we're throwing money at good projects, bad projects, it's like a spray-and-pray mentality of the old days in 95 to 2000, we've seen that before. But from this some great companies are going to be born and I think the winners here are going to be bigger than Google, bigger than Apple, because the market is bigger. Money is the biggest market in the world, right? There's nothing bigger than all the money in the world, by definition. So, it's bigger than advertising, it's bigger than the social networks and it's bigger than Apple and whatever they're making. So, I believe that out of these companies, there are several thousand companies here, 8,000 participants, there were 4,000 ICOs that already took place or that are coming to be and out of that you're going to have your giant winners. And obviously Celsius is hoping to be one of them, but it's whoever builds the biggest community is the one that's going to win. And for us, it's all about giving back everything to the community. >> Your mission is awesome, I love your mission, and I love your expertise, love your experience. I think the community really is great to have you being a champion, being a mentor, I know you're doing a lot of paying it forward, great job. What's your view for the young entrepreneur out there, or someone who's got a growing opportunity that says, "Hey, you know what? I'm actually tailor-made for decentralization, I have a network community, network effect, I have all these great things going on, I want to scale." >> That's a great question because-- >> What's the playbook? >> A lot of people come to me and say, Oh, I'm too late to the game." No one is too late to the game. The experts have a six month experience. So, you talk to most of the people here, this is the first event, this is the first show. So, what I say to a lot of entrepreneurs is that if you pick the right vertical, you can very quickly become the best in the world at it. And I think the first phase of evolution here in the blockchain is all about financial products and financial solutions. I wouldn't go after healthcare, I wouldn't go after-- so like, insurance, or solving financial problems that currently have giant toll collectors who collect all the value, like the banks, or like the financial service providers, the insurance and so on. So, if you can solve those areas, you can scale very quickly, because Interen already has six or seven billion people on it, so now you can just bring them all in and haggle on their behalf in the cryptocommunity. >> I feel like I should lie down on the couch and ask Dr. Alex for some more advice. So, I'm actually going to ask you some specific questions. >> No couch here, man! There's no off switch here. >> I'll pass out, so much action going on. I mean, the vibe here is amazing. So, theCUBE, we're doing an open token model, got a great community, we want to grow and be number one at digital media, covering events with a network effect, video and media. We see token as a great opportunity. What's your advice? You're on our advisory team, what do you tell us to do? >> So, the curation is excellent, I think you guys do a great job at pulling the content. And what's missing in this community is really an automated process that kind of asks the community, "What do you guys believe in?" It's very hard for most people here to figure out which ones of these thousands of projects are trending right now, for example. And we can all vote on our app, for example. If you could create an app that allowed all of us to vote during the show, on what's trending and you had those guys being interviewed instead of me, you would have the killer apps. All of us know what they are and are not, but we should vote on it. >> So, use collective intelligence of the data-- >> Yes. >> And make a content operating system-- >> Exactly, use your metadata that you're already producing to do real-time input and bring those guys here, interview them and ask them about why their projects are hot. Celsius, people ask me all the time, "How do I get involved? How do I get involved? I saw you on Rubena, I saw you on this show." And so, we manage to create a lot of buzz around us and there are a few other projects like that, the community needs to get around the good projects and support them, because when we spend a lot of money on bad projects, we're not giving enough support to the good projects. >> You got to close loop that data, make it a community brand. That's what you're doing, that's what we're trying to do here, covering the events. So, we're going to build a content operating system. >> There we go! >> Run-time assembly, whatever the votes-- >> Let everybody vote in real-time, yes. >> Give me 50 times I see the hashtag-- >> Right, and the size of the name grows based on the adoption. >> You would have to have, like, clips instantly available, you would have to have all the metadata-- >> It's all real-time. >> You'd have to have all that stuff available. >> And the community will post it for you, you just do the final interviews, just bring these guys and say, "Okay, you won number one, number two, number three, and you give them the awards. >> Awesome, I love this conversation, even though we're kind of riffing, having fun. But the point of it is-- >> It's a new start-up let's do an ICO. >> Let's do an ICO, we can (mumbles) with that. No, but this is really fundamental for the entrepreneurs at the tech culture, we're talking about basically dev ops. >> Yes. >> Using cloud computing, we can have unlimited-- >> You can spin it up in a few days. >> You can apply automation, AI, that's your point, trust the software. >> Yes. If you're doing it for the community, they will recognize it and adopt you very quickly. >> They'll apply a human curation layer on top of it. >> With full transparency, you've got to show that you're doing everything for the community, like what we're trying to do, right? We're showing, when we tell you you're going to earn 5.1%, you can dig in and see who's getting paid and why they're getting this much money, what's the allocation, every token that's being given to anyone, all the math behind it is fully transparent, right? >> Final question-- >> Try to ask the bank for that. See what they're saying. >> Transparency? Go find another bank. Final question, your summary of the show. What's your take, was it good? Good vibes? What was the content agenda? What was the most exciting thing you saw, what's your summary of Consensus 2018? >> So, Consensus, when they organized it, they were bragging that 4,000 people are going to show up, and that's why they moved to the Hilton from the Marriott. And then 8,000 people show up, the lines were outside the whole hotel, so it proves that the demand is there. Everybody wants to come and learn about it, they want to know why this is so hot, why this revolution is here to stay, so what I'm taking out of the show is that this innovation is just in its infancy and there's a lot of people who are still yet to join. And the best ideas, the winners, have not yet been decided. So, watch out for all those new ideas that we haven't heard about yet. >> And it's accelerated from other trends. >> Yes, it definitely accelerated. >> Alex Mashinsky, CEO of Celsius, former entrepreneur of multiple startups. See, he knows the old way, he sees the new way, he's been a successful entrepreneur, seasoned community member. Thanks for coming on, we appreciate it. >> Thanks for having us. I appreciate it. >> I'm John Furrier here with theCUBE on the ground out in the open, in the community, CUBE coverage here, Blockchain Week 2018 New York. Thanks for watching. (electronic-based music)