(upbeat music) >> Announcer: Live, from Nassau, in the Bahamas. It's theCUBE, covering Polycon '18, brought to you by Polymath. >> Hello everyone, welcome. We're live here in the Bahamas. This is theCUBE's exclusive coverage of the crypto-world, blockchain, bitcoin, all kinds of tokens, token economics. I'm John Furrier, with my co-host and co-founder of SiliconANGLE and theCUBE, Dave Vellante. We're here to cover the securitization of tokens, as well as all the action in the ecosystem. What's going on with token economics? What's going on in the ICO world? Who's investing in what? Who are the players? That's our job this week. We're going to get it done in two days. Our first guest to help us kick it off is Bradley Rotter. Crypto investor for five years, been in the securities, hedge funds, financing business, over the years great perspective to kick off, from an investor point of view, what's going on. Bradley, welcome to theCUBE. >> Thank you. >> Thanks for coming on. >> Thanks for being a guest analyst to help us break down what's going on, obviously, you've got a lot of investments. You've got portfolio companies, one which you wear on your shirt on Rivetz, they've done token sale around cyber security, but as an investor in general, you're long on this game. Are you long on crypto, are you doing deals? What's going on? >> I've been very long in crypto from a very early, early time, five years ago. I heard about crypto from a 15 year old, which got my interest. I had been one of the pioneers in an Aztec class that reminds a lot of bitcoin, and that was financial futures. Remember when those came out? It was controversial, people were saying, it'll never work. I was thrown out of some of the finest banks in Chicago and New York, trying to explain to those institutions how they could use financial futures to hedge interest rate risk. It kind of reminds me now of bitcoin, but you can see the tide turning now, and it's in all the headlines. >> Yeah, I mean, we, Dave and I talk all the time about this, and that is, is that, and I'll get your thoughts on this, and get your reaction. You're seeing startups, really startups, doing token raises, and ICOs, initial coin offerings, and they need to grow. They got to build their product, then there's a roadmap. Then you got the companies that are pivoting, hey, let's just reboot with crypto, and raise a bunch of cash, and hope for the best. And then you got businesses that are growing, that really are aligned with token economics, most of the investors we talk to say that's where the action is, that okay, if they're going to be startup, then go with a hedge fund, and that's more nurturing, a lot more of a classic, you know, venture, capital-backed investment, but it's the growth companies that they're looking for. >> Yes. >> Do you see it that way, too, and what's your reaction to that? >> I think the issuance of tokens as securities is going to be a pretty big deal. And it's primarily, what I'm extremely interested in is using tokenization for infrastructure, for gigantic projects. It hasn't happened, yet, but I think I have ideas on how very large projects could be tokenized, and that gives some real advantages to the individual investor. >> Dave: You mean, like, what big projects, smart cities? Give me some examples. >> Well, this is my favorite example is that someday you'll be able to buy, you'll be able to buy a three mile stretch of a toll road in Texas. And as the owner of that three mile stretch, you'll get 25 cents a car credited every minute of the cars that are going down your stretch of toll road. You see what I'm saying. If you tokenize that infrastructure, you can then, it makes it more available to individual investors, but if you tokenize it, you can borrow against your token, your shares, if you will, you could hypothecate it, borrow against it. The tax credits for your infrastructure investment, could be tied to the token itself, and vary depending on, on the need for that particular infrastructure project and I think this administration, more than any I've ever seen, you know, is going to be very open to those kinds of ideas, and I think it's transformational. >> So that is transformational, being able to address our infrastructure problems with blockchain, (laughs) right? That's your vision. >> Exactly. >> So I want to get, Dave, your reaction. You were just in the keynote. We're here at the Polycon '18, it's put on by Polymath and Grit Capital. Two Canadian organizations, but bringing kind of the world together. You were in the keynote, they're selling a security token platform, so people can raise money with security tokens, which is really good, because SEC regulation in the US, it's a lot cleaner than the utility token, and for folks who want to learn more, go to YouTube, watch some of the videos that we've done on ICO 101. But Dave, what did you see in there? And then, Bradley you're going to get your thoughts on how you see it. >> Well a couple things. One is, and now it's biased, but the consensus in that audience, was that security tokens are going to dwarf the value of utility tokens, over time. Like massive dwarfing, number one. Number two is you're seeing a real mix of companies that are tokenizing their business. New companies, companies trying to solve problems, you know, this new internet we're building out, existing companies that are looking to transform, and have a logical reason to tokenize their business, so there's a lot of diversity going on. >> Your perspective as an investor. Security tokenization as opportunity for businesses to use and raise money and use capital. I mean, you got to secure something, I mean, security token is (laughs) >> Well this market has been so hot that investors have swayed a little bit from their typical diligence, and so forth. I think they'll soon start to realize by buying these utility tokens. In many cases, there's not much utility. In fact, you know, I ask everybody I see, have you used a utility token today? No one's really using utility tokens now. And so, we've got to keep that in mind. The carts a little bit in front of the horse. Will we use them? You know, I believe so, but we're going to have to make it really easy to use. Do we need 2000 tokens? I don't think so, it's going to be complicated. >> Dave: So what do you look for as an investor? As a reasonable profile, or an attractive profile, is it equity in the company, is it a rev share, or is it the utility of the function? >> I have done both. My first utility token was a company called MaidSafe. And I heard about MaidSafe from a 14 year old bitcoin miner, I always listen to 14 year olds, also. (all laugh) This young man said, this young man had approached me after I was giving a speech on cryptocurrency. We went out for a drink, in this case Diet Coke, and he told me about this company called MaidSafe. I went home and started looking at it, I was up til 4:30 in the morning, and a week later I was climbing on a plane to Troon, Scotland to go meet the developers. What was MaidSafe, what caught my eye? MaidSafe was a distributed, decentralized, peer-to-peer, self-authenticating, self-managed network that runs on math and logic, all the data's encrypted, shard-ed, sent around to the nodes around the world, and then the map of where those shards go is then encrypted again. It's NSA-proof. >> Beautiful. Dave you brought this up the other day, and we talked about it at the pool, we did a segment on a kick off about this event. We've been talking about digital transformation, vis-a-vis some of the old guard companies, the either central authorities, and/or incumbent laggards, or leaders. This token economics is part of the digital transformation that a lot of people aren't seeing. Right, so, you know, you said you'd been kicked out of many banks, you've still got these crazy ideas that are actually the ones that might actually be the best. And we think they are. Your thoughts, Dave, as you look at, you know, the digital transformation. Oh you got to have a digital business. You need to use the power of data. Data's the new oil, you know, cloud computing. Now you got this new variable coming in, decentralized, distributed data, what's your thoughts? >> I mean, I see, you know, we talk on theCUBE, we talk about SAAS, and cloud, and mobile, and social, and big data, that's yesterday. That's yesterday's news. To me, the future is, you know, machine intelligence, it certainly starts with data, and it starts with, And crypto, launching it plays a key part of building out that next wave of technology. And I see every industry being disrupted at different paces, as a function of, maybe, the risk within that industry. You've certainly seen it publishing, media, music. You really haven't seen it yet in banking, healthcare, but these are the industries that need the most transformation. What are your thoughts, Bradley? >> Well the banks better be paying attention to this. I think, if we're right about cryptocurrency, banks will become as plentiful and as useful as Blockbuster Video stores. >> I mean, I got to tell you, in my experience, the old guard, the disruption is going to come really fast. I think, and my prediction is that, and again, this is based on my history in the computer industry, is if you look at the billion dollar ideas, they're the dumbest ideas, at first. >> Yeah (laughs) >> I mean you go down the line. Google, we don't need another search engine, we want portals. Keyword navigation, the one I did, no, who would ever pay for a link on a search result? That's the dumbest idea. Airbnb, you're going to sell out your home? That's the dumbest idea I ever heard of. The dumbest ideas actually might be the best if you look at them. And when I say dumbest, it might be ones that don't make sense. Like you mentioned that one about Scotland, that technically makes sense, I get that. But someone in the mainstream would be like, huh, what? I got to do all this stuff? It's just. So it's kind of what's going on right now, isn't it? >> And if there's any fabric that connects all of those different ecospheres that you were talking about, I think it's going to be cybersecurity is extremely important. It's not generally discussed at these kind of events, but I view this just as much as a cybersecurity play, as I do a digital currency play. And let me expand on that. The most valuable data in the world used to be in the Pentagon. No longer. Two reasons basically, one-- [John] They've been hacked (laughs) >> All the data's already gone. But, two, if you steal the plans for the next generation F-39 joint strike force fighter, good for you, there's only two buyers for that. I believe the most valuable data in the world right now is a bitcoin private key. And people are coming for them. Members of the bitcoin community are being hunted, singled out and hunted to try to get their bitcoins. It's a real distinct phenomena. >> I like that term you used, fabric, because we kind of envision this fabric emerging where you've got industries which are sort of vertical-sliced, and then you've got these horizontal technologies, whether it's cloud, security, there's a data layer, and people are building businesses on top of them, and obviously tokenizing those businesses. We talked last night a little bit, and you guys are networking guys. You understand the challenges of distributed apps, distributed database, the latency challenges. You're a little bit bearish on the market right now. Is it because of those technical challenges, is it because there's so much Bubbalicious, you know, attitude going on? What are your thoughts? >> I've been a little bit bearish on bitcoin for the very short run, and of course it's, it's been in the headlines. At year end, it was the front headline in every journal you read. The reason I've been a little bit negative is purely for a tax perspective. And these, Let me explain why, these millennials that I collect, and I keep them around me just to guide me and, and give me a glimpse of the future. Most of the people at this conference, believe that when they buy bitcoin and sell it, and buy Ethereum and sell Ethereum and buy Cardano, that those are all like kind exchanges and no tax will be due, until they ever come back into Fiat dollars. They're absolutely incorrect. Absolutely incorrect. And so-- >> So they're exposed? >> They're really exposed, that's why I believe cryptocurrencies in general, bitcoin specifically have been very weak this year and probably will remain weak until April 16th. People are getting their tax bill which is difficult to calculate with thousands of transactions, in some cases. They're getting their tax bill, and they're going to have to sell some of their crypto holdings to pay Uncle Sam. It's a US phenomena, but-- >> But it's like people who exercised their options in, you know, 2000-- >> Exactly. >> And held on to the shares and then got crushed. >> The tax liability is fixed at December 31, but now the value of their collateral has gone down. It's a problem. >> Bradley, thanks for coming on, kicking off the show with us, getting your vision on investing. Dave good to hear about the keynote. More live coverage coming here from Polycon '18. The stampede is on, this is the show around security tokens in the Bahamas, theCUBE. We'll be right back with more live coverage after this short break. (upbeat music)