>> Live from Toronto Canada, it's The Cube, covering Global Cloud and Blockchain Summit 2018, brought to you by The Cube. >> Hello, everyone welcome back to The Cube's live coverage here in Toronto for the first Global Cloud and Blockchain Summit in conjunction with the Blockchain futurist happening this week it's run. I'm John Fourier, my cohost Dave Vellante, we're here with Cube alumni, Bradley Rotter, pioneer Blockchain investor, seasoned pro was there in the early days as an investor in hedge funds, continuing to understand the impacts of cryptocurrency, and its impact for investors, and long on many of the crypto. Made some great predictions on The Cube last time at Polycon in the Bahamas. Bradley, great to see you, welcome back. >> Thank you, good to see both of you. >> Good to have you back. >> So I want to just get this out there because you have an interesting background, you're in the cutting edge, on the front lines, but you also have a history. You were early before the hedge fund craze, as a pioneer than. >> Yeah. >> Talk about that and than how it connects to today, and see if you see some similarities, talk about that. >> I actually had begun trading commodity futures contracts when I was 15. I grew up on a farm in Iowa, which is a small state in the Midwest. >> I've heard of it. >> And I was in charge of >> Was it a test market? (laughing) >> I was in charge of hedging our one corn contract so I learned learned the mechanisms of the market. It was great experience. I traded commodities all the way through college. I got to go to West Point as undergrad. And I raced back to Chicago as soon as I could to go to the University of Chicago because that's where commodities were trading. So I'd go to night school at night at the University of Chicago and listen to Nobel laureates talk about the official market theory and during the day I was trading on the floor of the the Chicago Board of Trade and the Chicago Mercantile Exchange. Grown men yelling, kicking, screaming, shoving and spitting, it was fabulous. (laughing) >> Sounds like Blockchain today. (laughing) >> So is that what the dynamic is, obviously we've seen the revolution, certainly of capital formation, capital deployment, efficiency, liquidity all those things are happening, how does that connect today? What's your vision of today's market? Obviously lost thirty billion dollars in value over the past 24 hours as of today and we've taken a little bit of a haircut, significant haircut, since you came on The Cube, and you actually were first to predict around February, was a February? >> February, yeah. >> You kind of called the market at that time, so props to that, >> Yup. >> Hope you're on the right >> Thank you. >> side of those shorts >> Thank you. >> But what's going on? What is happening in the capital markets, liquidity, why are the prices dropping? What's the shift? So just a recap, at the time in February, you said look I'm on short term bear, on Bitcoin, and may be other crypto because all the money that's been made. the people who made it didn't think they had to pay taxes. And now they're realizing, and you were right on. You said up and up through sort of tax season it's going to be soft and then it's going to come back and it's exactly what happened. Now it's flipped again, so your thoughts? >> So my epiphany was I woke up in the middle of the night and said oh my God, I've been to this rodeo before. I was trading utility tokens twenty years ago when they were called something else, IRUs, do you remember that term? IRU was the indefeasible right to use a strand of fiber, and as the internet started kicking off people were crazy about laying bandwidth. Firms like Global Crossing we're laying cable all over the ocean floors and they laid too much cable and the cable became dark, the fiber became dark, and firms like Global Crossing, Enron, Enron went under really as a result of that miss allocation. And so it occurred to me these utility tokens now are very similar in characteristic except to produce a utility token you don't have to rent a boat and lay cable on the ocean floor in order to produce one of these utility tokens, that everybody's buying, I mean it takes literally minutes to produce a token. So in a nutshell it's too many damn tokens. It was like the peak of the internet, which we were all involved in. It occurred to me then in January of 2000 the market was demanding internet shares and the market was really good at producing internet shares, too many of them, and it went down. So I think we're in a similar situation with cryptocurrency, the Wall Street did come in, there were a hundred plus hedge funds of all shapes and sizes scrambling and buying crypto in the fall of last year. It's kind of like Napoleon's reason for attacking Russia, seemed like a good idea at the time. (laughing) And so we're now in a corrective phase but literally there's been too many tokens. There are so many tokens that we as humans can't even deal with that. >> And the outlook, what's the outlook for you? I mean, I'll see there's some systemic things going to be flushed out, but you long on certain areas? What do you what do you see as a bright light at the end of the tunnel or sort right in front of you? What's happening from a market that you're excited about? >> At a macro scale I think it's apparent that the internet deserves its own currency, of course it does and there will be an internet currency. The trick is which currency shall that be? Bitcoin was was a brilliant construct, the the inventor of Bitcoin should get a Nobel Prize, and I hope she does. (laughing) >> 'Cause Satoshi is female, everyone knows that. (laughing) >> I got that from you actually. (laughing) But it may not be Bitcoin and that's why we have to be a little sanguine here. You know, people got a little bit too optimistic, Bitcoin's going to a hundred grand, no it's going to five hundred grand. I mean, those are all red flags based on my experience of trading on the floor and investing in hedge funds. Bitcoin, I think I'm disappointed in Bitcoins adoption, you know it's still very difficult to use Bitcoin and I was hoping by now that that would be a different scenario but it really isn't. Very few people use Bitcoin in their daily lives. I do, I've been paying my son his allowance for years in Bitcoin. Son of a bitch is rich now. (laughing) >> Damn, so on terms of like the long game, you seeing the developers adopted a theory and that was classic, you know the decentralized applications. We're here at a Cloud Blockchain kind of convergence conference where developers mattered on the Cloud. You saw a great developer, stakeholders with Amazon, Cloud native, certainly there's a lot of developers trying to make things easier, faster, smarter, with crypto. >> Yup. >> So, but all at the same time it's hard for developers. Hearing things like EOS coming on, trying to get developers. So there's a race for developer adoption, this is a major factor in some of the success and price drops too. Your thoughts on, you know the impact, has that changed anything? I mean, the Ethereum at the lowest it's been all year. >> Yup. Yeah well, that was that was fairly predictable and I've talked about that at number of talks I've given. There's only one thing that all of these ICOs have had in common, they're long Ethereum. They own Ethereum, and many of those projects, even out the the few ICO projects that I've selectively been advising I begged them to do once they raised their money in Ethereum is to convert it into cash. I said you're not in the Ethereum business, you're in whatever business that you're in. Many of them ported on to that stake, again caught up in the excitement about the the potential price appreciation but they lost track of what business they were really in. They were speculating in Ethereum. Yeah, I said they might as well been speculating in Apple stock. >> They could have done better then Ethereum. >> Much better. >> Too much supply, too many damn tokens, and they're easy to make. That's the issue. >> Yeah. >> And you've got lots of people making them. When one of the first guys I met in this space was Vitalik Buterin, he was 18 at the time and I remember meeting him I thought, this is one of the smartest guys I've ever met. It was a really fun meeting. I remember when the meeting ended and I walked away I was about 35 feet away and he LinkedIn with me. Which I thought was cute. >> That's awesome, talk about what you're investing-- >> But, now there's probably a thousand Vitalik Buterin's in the space. Many of them are at this conference. >> And a lot of people have plans. >> Super smart, great ideas, and boom, token. >> And they're producing new tokens. They're all better improved, they're borrowing the best attributes of each but we've got too many damn tokens. It's hard for us humans to be able to keep track of that. It's almost like requiring a complicated new browser download for every website you went to. We just can't do that. >> Is the analog, you remember the dot com days, you referred to it earlier, there was quality, and the quality lasted, sustained, you know, the Amazon's, the eBay's, the PayPal's, etc, are there analogs in this market, in your view, can you sniff out the sort of quality? >> There are definitely analogs, I think, but I think one of the greatest metrics that we can we can look at is that utility token being utilized? Not many of them are being utilized. I was giving a talk last month, 350 people in the audience, and I said show of hands, how many people have used a utility token this year? One hand went up. I go, Ethereum? Ethereum. Will we be using utility tokens in the future? Of course we will but it's going to have to get a whole lot easier for us humans to be able to deal with them, and understand them, and not lose them, that's the big issue. This is just as much a cybersecurity play as it is a digital currency play. >> Elaborate on that, that thought, why is more cyber security playing? >> Well, I've had an extensive background in cyber security as an investor, my mantra since 9/11 has been to invest in catalyze companies that impact the security of the homeland. A wide variety of security plays but primarily, cyber security. It occurred to me that the most valuable data in the world used to be in the Pentagon. That's no longer the case. Two reasons basically, one, the data has already been stolen. (laughing) Not funny. Two, if you steal the plans for the next generation F39 Joint Strike Force fighter, good for you, there's only two buyers. (laughing) The most valuable data in the world today, as we sit here, is a Bitcoin private key, and they're coming for them. Prominent Bitcoin holders are being hunted, kidnapped, extorted, I mean it's a rather extraordinary thing. So the cybersecurity aspect of if all of our assets are going to be digitized you better damn well keep those keys secure and so that's why I've been focused on the cybersecurity aspect. Rivets, one of the ICOs that I invested in is developing software that turns on the power of the hardware TPM, trusted execution environment, that's already on your phone. It's a place to hold keys in hardware. So that becomes fundamentally important in holding your keys. >> I mean certainly we heard stories about kidnapping that private key, I mean still how do you protect that? That's a good question, that's a really interesting question. Is it like consensus, do you have multiple people involved, do you get beaten up until you hand over your private key? >> It's been happening. It's been happening. >> What about the security token versus utility tokens? A lot of tokens now, so there's yeah, too many tokens on the utility side, but now there's a surge towards security tokens, and Greg Bettinger wrote this morning that the market has changed over and the investor side's looking more and more like traditional in structures and companies, raising money. So security token has been a, I think relief for some people in the US for sure around investing in structures they understand. Is that a real dynamic or is that going to sustain itself? How do you see security tokens? >> And we heard in the panel this morning, you were in there, where they were predicting the future of the valuation of the security tokens by the end of the year doubling, tripling, what ever it was, but what are your thoughts? >> I think security tokens are going to be the next big thing, they have so many advantages to what we now regard as share certificates. My most exciting project is that I'm heavily involved in is a project called the Entanglement Institute. That's going to, in the process of issuing security infrastructure tokens, so our idea is a public-private partnership with the US government to build the first mega quantum computing center in Newport, Rhode Island. Now the private part of the public-private partnership by the issuance of tokens you have tremendous advantages to the way securities are issued now, transparency, liquidity. Infrastructure investments are not very liquid, and if they were made more liquid more people would buy them. It occurred to me it would have been a really good idea if grandpa would have invested in the Hoover Dam. Didn't have the chance. We think that there's a substantial demand of US citizens that would love to invest in our own country and would do so if it were more liquid, if it was more transparent, if the costs were less of issuing those tokens. >> More efficient, yeah. >> So you see that as a potential way to fund public infrastructure build-outs? >> It will be helpful if infrastructure is financed in the future. >> How do you see the structure on the streets, this comes up all the time, there's different answers to this. There's not like there's one, we've seen multiple but I'm putting a security token, what am i securing against, cash flow, equity, right to convert to utility tokens? So we're starting to see a variety of mechanisms, 'cause you have to investor a security outcome. >> Yeah, so as an investor, what do you look for? >> Well, I think it's almost limitless of what these smart securities, you know can be capable of, for example one of the things that were that we're talking with various parts of the government is thinking about the tax credit. The tax credit that have been talked about at the Trump administration, that could be really changed on its head if you were able to use smart securities, if you will. Who says that the tax credit for a certain project has to be the same as all other projects? The president has promised a 1.5 trillion dollar infrastructure investment program and so far he's only 1.5 trillion away from the goal. It hasn't started yet. Wilbur Ross when, in the transition team, I had seen the white paper that he had written, was suggesting an 82% tax credit for infrastructure investment. I'm going 82%, oh my God, I've never. It's an unfathomable number. If it were 82% it would be the strongest fiscal stimulus of your lifetime and it's a crazy number, it's too big. And then I started thinking about it, maybe an 82% tax credit is warranted for a critical infrastructure as important as quantum computing or cyber security. >> Cyber security. >> Exactly, very good point, and maybe the tax credit is 15% for another bridge over the Mississippi River. We already got those. So a smart infrastructure token would allow the Larry Kudlow to turn the dial and allow economic incentive to differ based on the importance of the project. >> The value of the project. >> That is a big idea. >> That is a big idea. >> That is what we're working on. >> That is a big idea, that is a smart contract, smart securities that have allocations, and efficiencies, and incentives that aren't perverse or generic. >> It aligns with the value of the society he needs, right. Talk about quantum computing more, the potential, why quantum, what attracted you to quantum? What do you see as the future of quantum computing? >> You know, you don't you don't have to own very much Bitcoin before what wakes you up in the middle of the night is quantum computing. It's a hundred million times faster than computing as we know it today. The reason that I'm involved in this project, I believe it's a matter of national security that we form a national initiative to gain quantum supremacy, or I call it data supremacy. And right now we're lagging, the Chinese have focused on this acutely and are actually ahead, I believe of the United States. And it's going to take a national initiative, it's going to take a Manhattan Project, and that's that's really what Entanglement Institute is, is a current day Manhattan Project partnering with government and three-letter agencies, private industry, we have to hunt as a pack and focus on this or we're going to be left behind. >> And that's where that's based out of. >> Newport, Rhode Island. >> And so you got some DC presence in there too? >> Yes lots of DC presence, this is being called Quantum summer in Washington DC. Many are crediting the Entanglement Institute for that because they've been up and down the halls of Congress and DOD and other-- >> Love to introduce you to Bob Picciano, Cube alumni who heads up quantum computing for IBM, would be a great connection. They're doing trying to work their, great chips to building, open that up. Bradley thanks for coming on and sharing your perspective. Always great to see you, impeccable vision, you've got a great vision. I love the big ideas, smart securities, it's coming, that is, I think very clear. >> Thank you for sharing. >> Thank you. The Cube coverage here live in Toronto. The Cube, I'm John Furrier, Dave Vellante, more live coverage, day one of three days of wall-to-wall coverage of the Blockchain futurist conference. This is the first global Cloud Blockchain Summit here kicking off the whole week. Stay with us for more after this short break.