(techno music) >> Announcer: Live, from New York, it's theCUBE. Covering Blockchain Week. Now, here's John Furrier. (techno music) >> Hello and welcome back. this is the exclusive coverage from theCUBE. I'm John Furrier, the co-host. We're here in New York City for special on the ground coverage. We go out where all the action is. It's happening here in New York City for Blockchain Week, New York, #BlockchainWeekNY Of course, Consensus 2018 and a variety of other events, happening all over the place. We got D-Central having a big boat event here, tons of events from Hollywood. We got New York money, we got Hollywood money, we got nerd money, it's money everywhere, and of course great deals are happening, and I'm here with two friends who have done a deal. Al Burgio is a CEO of DigitalBits co-founder, and Nithin who's the partner at Arcadia Crypto Ventures. You guys we've, you know, we're like family now, and you're hiding secrets from me. You did a deal. Al, what's going on here? Some news. >> Yeah, well first John, thanks for having us. We always love coming on the show, and really enjoy spending time with you and so forth. We, you know previous conversations that we've had, we were not out there fundraising. But really had the opportunity to meet a lot of great people Nithin and his firm being definitely one of them. And as a result of that, really building this, say, following, these relationships within the venture community, more specifically the crypto venture community. When we were ready to actually go out and do, let's say a first round, for us it happened very quickly, and it was a result of being able to leverage those relationships that we had. For me, it was kind of remarkable to see that support come and happen so quickly. Normally venture, it's just a process. Many many months. >> John: Long road. >> Then a month to close. >> John: Kiss all the frogs. >> Yeah, here it's like, you know, people can do due diligence on the fly, You have an opportunity with events like this. >> John: They're smart. >> They're smart, and and there's an opportunity to really foster these relationships in this really tight-knit community. And, you know, Nithin and his firm being obviously one of those. And so when we were ready to go out and do our first round, it happened quickly, and I'd like to think that in a lot of ways, it happened amongst friends. >> Well, you're being humble. We've been covering you, you've been on theCUBE earlier, when you just started the idea, so it's fun to watch you have this idea come to fruition, but you're in a, you're hitting a TAM a Total Available Market that's pretty large. And that's one of the secrets, to have a TAM. Aggressive bold move, we'll how it turns out for you, but you know, you got to have the moonshot, you're going after the loyalty market, which is completely run by the syndicate, what do you want to call it, the mafia of loyalty. >> Yeah, well, I would say that in some cases, those that are supporting us see that as really just one use case. Because we built this general-purpose blockchain, one of the use cases and one of the first use cases that were out there to support, happens to be the loyalty space. >> John: Big. And it's massive, highly fragmented but massive market, and we can solve a lot of liquidity issues with our technology. But then it goes beyond that. So it's a big market at the start, and then that can scale even greater from there. and I think that's part of what, I mean obviously, I'm not going to speak for Nithin. >> Nithin, let me weigh in here, pass the mic over. Nithin talk about the deal, why these guys? I know you met 'em, you like Al, and the feedback I've heard from other folks is he's a classic entrepreneur and that obviously, the entrepreneur gets the deal, but obviously you don't just give money 'cause you like someone. What about this deal is it that you guys like? You guys been there early, you got some great people on your team, what about this deal is it that you like? >> Sure, for us, Al met pretty much most of, almost all the criteria that we had, okay. That we had when we go, the thesis before we go fund someone. We don't get so many deals like that. Usually we get you know, they made 50% of the criteria, we might still put money because you can't get the 100%. So one thing, Al as a founder, he's experienced, he has done it multiple times before, he sold companies. Tech guy, which is very key for us. A tech project is very key. Okay, second thing, he's built the whole thing. It's not like he's raising the money to go and build it. He built it, now he's raising money to go for go to market strategies, which makes sense. He's shown it, and we tested it out. So like, we were completely blown away. He has a team behind 'im. He's built a team on every side, on the marketing side, on PR, events. And the idea, this is a general blockchain, but he's addressing a very specific issue. It is a real problem. Loyalty points, or rewards points, or gift points. Or whatever you call them. It is segmented, it's fragmented, and this is a chance. And there might be many people who are trying to solve this problem, but I think Al has the greatest possibility, or probability, of becoming the winner. >> You and I have talked on theCUBE before, both of you guys are CUBE alumni, I know you both, so I'll ask you, 'cause I'll just remind everyone, we've talked about token economics. One of the things that's coming up here at the Consensus 2018 event in New York, onstage certainly, and some fireworks in one of the sessions, is like if you're not decentralized, why the hell are you doing a decentralized model? So one of the criterias is, the fit for the business model, has to fit the notion of a decentralized world, with the ability of tokens becoming an integral part. What about this deal makes that happen? Obviously, fragmentation, is that still decentralized? So, how are you sorting through the nuances of saying, okay, is it decentralized the market for him, and this deal? Or does it fit? >> See no, decentralize is one thing okay, in here, more than decentralized, I would say there was the platform, so that all the companies can come in, use this common platform, release it, and as a user you're getting a chance to atomically swap it if you don't like something. Most of the reward points or loyalty points go waste. Maybe the companies want it to go waste, I don't know if that is. >> It's a natural burn at equilibrium going on anyway right? Perfect fit! >> So that is the only, that was the only doubt that we had. Would companies want this, because do they want their customers' loyalty points going waste rather than swapping it for something else? That was the only question that we had. Well, that's a question that will get answered in the market. But otherwise we hadn't seen something like this before. >> What's your take of the show so far? We saw each other in the hallway as we were getting set up for theCUBE, for two days of coverage, in New York, for Blockchain Week, New York, what's your take? Obviously pretty packed. >> Oh my god, it's so packed, and it's great, the show is going on. It is bringing a lot of money in, it's bringing all the investors in a new money, old money, traditional money, nerd money as you said. >> It smells like money! >> Everybody's coming in. See the beauty about those things coming in is, you're going to get a lot of people from other fields that are going to come into this field to solve problems. 'Cause earlier, if there is no money coming in, you're going to have very smart people, or very intelligent people stick with physics or whichever was their field. Now, they're going to look into the space because they're getting paid. See that brings more people who are intelligent, and who can solve problems. That is very key for me. >> Al, I want to ask you as an entrepreneur, one things you usually have to struggle with, as any entrepreneur, is navigating the 3-D chess you got to play, whether it's competitive strategy, market movement, certainly the market's moving and shifting very quickly, but you've got growth, big tailwind for you. What's your takeaway? Because now you have new things coming on. Every every day it seems like a new shoe is dropping. SEC's firing a warning on utility tokens, security tokens are still coming, are now coming online, but that looks very promising, and then ecosystems become super important. You guys just announced news this morning around the ecosystem. >> Yeah, tomorrow we have some. We had some news today, but we have more tomorrow. >> John: Well talk about the news. >> Yeah, so we have a multi-tiered go to market strategy. Obviously in the loyalty space, again I want to emphasize, it's just one use case, but it's a massive one. You have brands, the enterprise. And many of those those enterprises or brands may operate their loyalty program internally, in terms of like back offices systems, in some cases they're outsourcing the app to a SAS provider, some application provider, that's kind of hidden in the background. But let's just say like Hilton. I use Hilton, it's the location for the event, but Hilton, you have this user experience using this app, but maybe that technology, the SAS application that's powering that, is actually not Hilton technology. And so let's just say, there's 30 million people in the Hilton program and there may be 30 million of them on the Marriott, coexisting on some SAS application. And so that's another important category for us. SAS providers and so forth, supporting that industry. And then last but not least, today, whether enterprise or SAS company, many cases not touching their own hardware, right? They're using the cloud. >> So they're outsourcing the backend. >> Yeah, and so you have managed cloud providers. >> So what does it mean for the market? I don't understand, I'm not following you. >> Well, I guess what I'm saying is that there needs to be a common standard, across enterprise application provider, in global cloud community, cloud is the new hardware. >> True. So horizontally scaling loyalties as we were (mumbles). >> Exactly, so we have, we're basically securing partnerships on all three levels, to make sure that, if you want to use new technology, you want to ensure that it's widely supported, across a variety of partners you may want to work with if you're an enterprise. Whether, a software company, cloud company, and so forth. You want to be able to ensure that it can back up the truck. So we've basically signed partnerships at all of these tiers. You're going to see news in the morning. It's late here on a Monday evening. So tomorrow 9:00 a.m, major cloud company, one of the major cloud companies, and there's more to follow, making an announcement that they've joined our ecosystem partner program, and supporting this open source technology in a number of different ways. Which we're really excited about. >> You see ecosystem as a strategic move for you. >> Absolutely, this is, for us, this is, it's all about helping the consumer, but it's not about one consumer at a time for us. It's very much an enterprise play. It's one enterprise at a time. And with each enterprise we basically add to the ecosystem millions if not tens of millions of consumers instantly. >> Nithin I want to ask you a question, because what he just brought up is interesting to me as well. As a new thing, it's not new, but it's new to the crypto world, new to the analog world, that's not in the tech field. Tech business, we all know about global system integrators, we know about ecosystems, we know the value of developer programs, and community, all those things, check, check, check. But now those things are coming to new markets. People have never seen an ecosystem play before. So it's kind of, not new, it's new for some people, it's a competitive advantage opportunity. >> True, it is. See the whole thing is so new, that you can't even define it at this point. It's very hard to define. It's like, see, as an example I would say, none of us thought that when the iPhone came, there would be a 60 billion dollar taxi sharing economy that comes out of it, right? Same thing. Blockchain comes, we just don't know. And it's very hard to predict. >> New brands are going to emerge, I mean if you look at every major inflection point, I point to a couple that I think are relevant, TCP/IP was created, internetworking. >> Yep. >> That essentially went after proprietary networks, like IBM, Digital, Stacks, but it didn't replace, it wasn't a new functionality, it was interoperability. >> Yes. >> The web, HTTP, created a whole new functionality. >> Yep. >> Out of that emerged new brands. >> Yeah. >> So I think this wave's coming is a, new brands are going to emerge. >> Here, what's the brand, I don't know what's going to emerge. There it was interoperability. >> John: Well, new players. >> It's here, it's more, the collaboration. The collaboration is so huge, it's the scale is so huge, in the sense you can collaborate across the world. You're cutting those borders, there are no borders that can hold you. Even though interoperability happened in internet, There were the Googles, and the Facebook, that still had those borders. >> Well, don't put it, Cisco came out of that, 3Com, and those generations, but the hyper-scalers came out of the web. >> Yep. >> So I'm saying, well I'm saying, I want to get your reaction to, is I think that is such a small scale relative to blockchain and crypto because it's global, it's every industry, it's not just tech it's just like everything. So there's got to be new brands. Startups going to come out of the woodwork, that's my point. >> It's not yet time for the brands to come in. See that's the whole thing. So let's put it this way, the internet was there from 1978, if you really look at it, ARPANET or DARPA, those things were there. Email was there, but it was by 1997, or by the time we all came to know Google it was 2001. There is that gap between the brand forming, because it has to permeate first, more people have to use it, like what is the user-- >> Everything was was a bubble, but everything happened. I got food delivered to my house today, right? It happened, people were saying that's a crazy idea. >> It's now it's going on, right. So it's the timing and they know the time for it to permeate so here, how many people are using Bitcoin, and to do what? Most of them are just speculating right? There's very few real use case of remittance or speculative trading, that's what's happening. See that's what I said. The other use cases, it has to permeate. And that comes with more user adoption. And the user adoption initially is going to come from the speculation. >> I think it's a good sign, honestly I think it's a tell sign, because I remember when the web was new, I was in coming out right and growing in the industry. People were poo poo, oh that's just for kids. The big company's said, we wouldn't, who the hell is going to use the World Wide Web? Enter the search engines. >> I remember that like it was yesterday. I forget that I'm not a kid anymore, and I had the opportunity to be an entrepreneur during that era. One of the things I want to add is that, we had, I think what Nithin is really pointing out, it started with the infrastructure, you had network engineers and ISPs, you know, and email. But what was the enterprise application here? What was that consumer application, and that followed right? So it started infrastructure, then it evolved. Once we saw these applications, enterprises started to go crazy. Whether it was the Ubers of the world surfacing, or enterprises reinventing themselves, that's kind of the next wave. >> Well, this is why I think you're a good opportunity. 'Cause I remember licking stamps and sending out envelopes to get people to come to a seminar, held at a hotel. That's how you did it in the old world. The web replaced that with direct response. >> But there's some, there's something else-- >> The mainframe ran faster than the web. You're replacing an old loyalty, that's like licking the stamps. It's not about comparing what you're doing to something else. >> There's also something that helps, that we're not acknowledging, that really helped take internet from 1.0 to 2.0, it's Linux. You know I remember websites were insanely expensive. It was Windows servers, it was Sun Solaris, all of this crazy, expensive, server systems, that you needed to have, so the barrier of entry was extremely high. Then Linux came along, and you still needed to have your own data center space, and so still high, but the licensing fees kind of went away. >> And now with containers and Kubernetes-- >> Exactly. >> I made a bet I was going to get Kubernetes in a crypto show. >> Anybody from a bedroom could start a company, right? You could do it with your pajamas still on. >> John: Well orchestration's easier. >> Absolutely. So this has started, this really, revolution. Now you have blockchain and you start to introduce enterprise-grade blockchain technologies, it's the next wave, you know, it's not VoIP, it's value over IP. >> Okay, I'm going to ask both you guys a final question, to end this segment here at the block event. I know you guys want to get back, and I'm taking you anyway from the schmoozing and networking and the fun out there, deejay. Predictions, next year this time, what are we going to be? What's the we're going to look like? What's going to evolve? I mean we had a conversation with Richard, who partnered with you guys at Arcadia Crypto Partners, saying the trading things interesting, the liquidity has changed. What's your take? I want you guys both to take a minute to make a prediction. Next year, what's different, who's out, who's in, what's happening, is it growing? >> So I, you know, I would say this, surprisingly, CTOs, I love CTOs, but many CTOs, I would say that well above 50% of CTOs, still can't spell blockchain. Really, and what I mean by that, really understand the transformational power what this is, in terms of how this is really web 3.0. This is going to change so many industries, create so much value for consumers, help businesses and so forth, and we're going to cross that 50% mark. >> Next year. >> With CTOs-- >> 50% of what? Be clear on-- >> Basically, we're going, in terms of the net, that blockchain's going to capture, and really enterprises and not just enterprises, service providers and so forth-- >> 50% of the mind share or 50% of the projects? >> Yeah no, I'm talking it's, people aren't going to be saying, oh, blockchain, isn't that Bitcoin? They're going to really understand, and they're going to understand that impact. And over the course of the next 12 months, we're going to see that. And it starts, obviously in many cases, with the CIO, CTO of many companies. There are definitely a lot of CIOs and CTOs on the forefront of innovation that get it, but what I'm saying is that more than 50% don't. >> So you're saying-- They're very busy in doing what they're doing today, and it hasn't hit them yet. >> To recap, you're saying by next year, 50% of CTOs or CTO equivalents, will have a clear understanding of what blockchain is-- >> Absolutely. >> And what it can do. >> Absolutely. >> Nithin, your prediction, next year, this time, what's different, what's new, what's the prediction? >> So, one of the key things that I think is going to happen is there's going to be a lot more training, and knowledge that's going to spread out, so that a lot more people understand, what blockchain is and what bitcoin is. Even now, as Al said, he was telling about CTOs, if the CTOs are, that's the state, that they can't spell blockchain, imagine where the real common man is. You've got people like Jamie Dimon coming on TV and saying he doesn't like Bitcoin, but he likes blockchain. I'm like, what the heck is he saying? That he likes a database? >> He was selling it short 100% (chuckles) >> Yeah, he likes a database. And then you have Warren Buffett coming over there-- >> Rat poison. >> And then this is rat poison. And like my question is, does any of his funds buy gold? Do they buy gold? He was telling that this is only worth as much as the next buy buying at a higher price. >> What's Warren Buffett's best tech investment? >> I don't know, I think he bought Apple, he started buying Apple now, right? When it's reached a thousand bucks? Or it reached a trillion dollars or close to that, or 750 billion? >> The Apple buy was 2006. If you were there, then you were good. >> Yeah, but-- >> So, your prediction? >> Market wise I don't know, what's going to happen? I'm expecting this, the crypto, the utility token, or the crypto market, to be at least a six trillion dollar business. But it'll happen next year? Definitely not. But I've been proven wrong, like I was expecting it to happen by 2025, but then it went to 750 billion by December. Well, it's not too far. >> You did get the prediction right, in the Bahamas at POLYCON18, about the drop around the tax consequences of the-- >> Right. >> People slinging trades around, not knowing the tax consequences. >> Right, right. We don't know because, who knows? Because what is going on over there, is IRS is still saying it's a property. That's what the last (slurs) is. SEC is saying it is all equity, and the CFTC was saying it's commodity. So what tax do I pay? >> Okay, lightning round question, 'cause I want to, one more popped in my head. The global landscape, from an investor standpoint, the US, we know what's going on in the US, accredited, SEC is throwing, firing across, bullets across the bow of the boats, kind of holding people in line. What percentage of US big investors will be overseas by next year? >> Percentage of-- >> Having, meaning having deals being done, proxy deals being down outside the US, what percentage? >> It's still going to be low though. That is going to be low, because that, I don't think the US investor, means the large scale of those investors-- >> You don't think the big funds will co-locate outside the US? >> There will be some, but not enough. >> Put a number, a percentage. >> Percentage-wise I think it's still going to be less than 10%. >> Al, your prediction? >> In terms of investment? >> Investment, investors saying hey, I got money here, I want to put it out there. >> Outside of the United States? >> Share money, not move their whole fund, but do deals from a vehicle. >> Do deals outside. I think I agree with Nithin. >> Throwing darts at the board here. >> No, I'm going to clarify. There's definitely massive investment happening overseas. In some respects probably bigger than the United States. So that's not going away. If anything that's going to grow. But your question is, in terms of US entities, making abroad investments, overseas investments, versus just domestic? I think that trend doesn't necessarily change. You have the venture community, there are certain bigger venture funds that can have global operations 'cause at the end of the day, they need to have global operations, to be able to do that, and most venture funds aren't that massive, they don't have that infrastructure. So they're going to focus on their own backyard. So I don't necessarily think blockchain changes the venture mindset. It's just easier for them logistically to do due diligence on their own backyard and invest in those. >> Guys, always a pleasure. Great to see you. You guys are like friends with entourage here, great to get the update here at Blockchain Week. We get to Silicon Valley week, we'll connect up again. I'm John Furrier, here in New York, theCUBE's continuing coverage of crypto, decentralized applications, and blockchain of course, we're all over it. You'll see us all over, all of the web, all the shows. Thanks for watching. (techno music)

(upbeat music) >> Narrator: Live from Nassau, in the Bahamas it's theCUBE. Covering POLYCON18. >> Hello welcome back everyone this is theCUBE's exclusive coverage from the Bahamas, we are here at POLYCON18 Put on by Polymath and Grit Capital This is an amazing event, it's really the cryptocurrency, blockchain, token economics, the decentralized future-internet is happening now. The industry if forming, CUBE is starting its 2018 run. We'll cover all the top events this year, in the cryptos. As you know, we know cloud, big data, we do all those other events, we'll start covering in a big way because the ecosystem is formed, you're seeing people making money. The early whales, the big guys, now you've got institutional investors coming in, a real ecosystem dynamic. This is what industries look like when they're formed. Our next guest is Carlos Domingo, founder of and managing partner at SPiCE VC, and the founder and chairman at Securitize. One of the tell-signs of a maturing ecosystem that's growing very fast is companies that are adding value. You're one of them, Carlos. >> Thank you. >> Welcome to theCUBE. >> Thank you, thank you guys for having me here. >> So, you know Dave Vellante who just had to jump on a plane 'cause the snowstorm in Boston would comment, he would say, 'cause we talk about this all the time, "You know you look "for the big waves, and you see what's happening. "But How do you know when there's a tipping point "in a new industry?" And that when there's stuff being created, value being captured, industry being formed with an ecosystem, and a community, this is absolutely happening. >> Correct. >> You're bringing a very valuable service to market. You guys self-funded this operation, Securitize. You're automating other value chains that were old guard businesses in a new way. >> Correct. >> Take a minute to explain Securitize, why the idea, what you guys have built, what you've got going on, and, What's the disruption of that product? >> Good, so the idea came originally 'cause last year me and my partners, we wanted to tokenize a VC fund. And basically show a security token that contains the economic rights of the fund as a way to provide liquidity to the investors because liquidity on the VC space is one of the biggest problems, right, you invest money and it takes like seven to 10 years and then you can actually get your money back. So we had that idea, at that time Blockchain Capital had done one security token, was the first security token, for a 10 million dollar offering, and we wanted to kind of build on that, so we went out and looked for people that could actually do the issuance of the security token in a regulated way, so the KYC, the AML, the accreditation process per country, not just for the US. And basically ran the ICO in a secure way with secure wallets for different cryptocurrencies, and then also have the smart contract issuing the token, but also smart contract managing what happens with the token on the secondary market, which is very important, right? 'Cause see, in the secondary market the tokens can actually move from a wallet to a wallet, and suddenly you're outside the regulatory framework that you protected at the beginning Right, so we went out and talked to Polymath and many, the few companies that were doing that and no one was actually ready with a platform last year, so, we are all tech entrepreneurs and product people, so we did what we know how to do, we hire a CTO, hire engineers and went and built our own platform for SPiCE VC, for tokenizing the fund. And then when we announced the project around September, October last year, I posted a Medium about the investment process, and the screenshots of the path and how it works, all the features that it has, we also integrated Bancorp as the central exchange to provide liquidity. And then started of getting flooded with people saying, wow, this is very cool yeah, we wanted to do security tokens, think this is the future, and no one actually is ready with the platform and you guys seem to have one, so who has built it? And I told people, we built it, this is our platform. And then we took the decision last year to basically separate the platform from the fund. And the fund becoming the first customer, and we created Securitize. Which is basically an end-to-end issuance platform for security tokens. >> And so this is really filling a void for people who want to either raise money for a startup-like venture, And then also maybe want to raise cryptocurrency in capital for growing a business that they're tokenizing. That's a big trend, so you've got the startup, hey I've got a great idea with a whitepaper, we're going to revolutionize the world, People are interested, some people call it the dumbest idea they've ever seen, which turns into a billion-dollar idea, because that's the way it works. (laughs) So got to raise some cash. And then there's the businesses that are growing saying, you know, I can grow with working capital in a tokenized environment, 'cause the business model shifts for that. >> Correct, I think that what people don't realize is that you know, getting actual liquidity in a market, like doing an IPO is either very difficult, or very expensive, or both things. >> John: Yeah, and the hurdle's very high. >> Yeah, the hurdle is very high, the cost could be like 10 to 12% of the money you raise you know paying the underwriters and paying everyone to get it done, so I think that what tokenizing real assets, like asset-backed tokens or security tokens, this basically allows for two things. One is the network of investors you can actually reach is anyone with an internet connection that within the regulation in their country are allowed to invest. So suddenly you've multiplied by 100 the reach you have of potentially finding investors. And second, is it's cheaper to do it. There's less friction. Third, is managing all of these thousands of investors would not be possible in the traditional financial system, right? Because you have investors from many countries, with different currencies, different bank accounts, different banks, and with the smart contract and tokens you can automate the entire process, >> And from your accent you're obviously not in the US, not an american but you're from? >> I'm from Barcelona. >> Barcelona, so you're really laid back, you're chill about this, but you're hardcore techie, right? >> (laughs) Yes. >> Okay, so let me just go through the process here, so what's interesting to me is, first of all, I love cloud computing and I think what DevOps has done in software with open-source that's clearly, in line with crypto market scene, mission. Automation is a really big deal, when you can automate something down to efficient process, you're doing it, you guys are doing this different, it's well not different it's automated, great, but the investment piece is accredited investors, right? Am I getting it right? >> It depends on the jurisdiction. So, most countries have security laws, so what our platform does, is we'll actually identify through the KYC on the name of the investor, and depending on the jurisdiction where you're from, we will apply a different rule, because in the US it is accredited investors only but in other countries you can take the small portion of retail. Also the meaning of accredited investor is different, how you actually comply with that, the documentation you need to collect or not collect for validating that someone's an accredited investor is not the same in the US and in other jurisdictions. >> Alright so, here's the problem that I see you solving, correct me if I'm wrong, if I'm a company XYZ Corporation, we're growing like crazy and we can tokenize our business, and we say hey, we could raise a token, 'cause we actually have a product and security token is a great vehicle, and so they go their lawyer well you're in the US, you can only use accredited investors, if you want to go outside the US you got to go to the Cayman Islands or somewhere else, set up a new company and do all that stuff, 'cause they have to manage the process, and they got to go find investors, that's hard! >> That's hard. >> Okay, do you solve that problem for them? >> We streamline the problem, so basically, first the fact that you setup a company in Cayman doesn't actually prevent you from, you know, the regulations in each country because the regulators care about where the investor sits, not where the company is. So what we solve the problem, is basically allow them to provide a liquidity event through fundraising and provide liquidity for the investors on the secondary market, so we basically will save them the trouble of having to figure out how to do all these processes country-by-country. >> So it's a liquidity value, too, so it's also getting the process done, streamlined, and then managing some liquidity challenges that the company would have to put cycles into managing it. >> Exactly. >> Okay so here's a question, so this is like a consulting hour for the people watching. I'm a company, XYZ Corporation I want to tokenize my business, now, we've been up and running for a few years and say hey, Securitize is really interesting, these guys are amazing, the same ethos as us, they're cloud guys, they're automating. Let's just go through them. We sign up, we apply to yo. What we do, do we have to set up a new company, is there risk issues, what's your advice on the playbook? >> So the fact, because you're using a security you don't actually have to go through all the jurisdictions, right? You can just do it from wherever you are, because you're issuing a security that assigns some economic interest on you your business, right? Now in terms of us, we're trying to become kind of like a quality security token ICO place, so we create a lot and decide which ones we bring on board or not, first, because we have so many, we have hundreds of leads coming to us all the time. And secondly, because we want to make sure that people who we're securitizing, that those are quality companies that we've vetted, and our lawyers have checked that the company's interesting, that the company is going to do well not only and the fundraising, but later down the road, so, >> What about the legal and regulatory challenges? So again, most people do a new code because they want to protect their corporate shield, there's a corporate shield to protect themselves, you know investors are always are gun-shy or trigger-happy when it comes to suing people. Especially in this economy. How does an entrepreneur or business manager protect against that, do you guys handle some of that, or is it just a buyer beware kind of thing? >> No, so we work with our attorneys, Colten in New York they specialize in securities, and we basically will advise the customer that actually uses our attorneys because they are very experienced in doing this, and in terms of protection, in a security token you're not just getting the token, you're actually signing a subscription agreement which is a legal binding document that explains exactly what the token is going to do, and there's and information memorandum which is basically describing what the business is going to do. So there's a legal framework, off-chain if you want alongside the on-chain token and the smart contract side. >> So all that stuff's happened, so awesome. Alright so we're going to change gears here, Carlos. Talk about, talk about you, why, why do this? What drove you here, are you scratching an itch or are you serial entrepreneur, how did you get here, what's the story? >> So the story is I've been, this is like the third phase of my career. My first 10 years of career, I was at the middle of the dot-com boom, I took company public in Inashik, Japan. And then went through years of corporate companies and then everything crashed so I lived both the up and the down. The second part of my career started in 2006 and then lasted another 10 years, which is during Telefonica, one of the largest telcos in the world, and I lived through all the mobile boom with the iPhone coming out in 2007 and 2008 and all the excitement happening in the industry but to me it was the opposite, I was looking for what is the next thing I do, because all these industries are now not as exciting anymore. So I came across blockchain and crypto, two things. One is I was doing a project in small cities and Dubai, where I live, where we started looking at blockchain and ran some pilots and then one of my colleagues, and friend, Brendan Eich who is the founder of Mozilla and he actually did an ICO for a company called Brave in March last year, when I saw that-- >> Brave browser? >> Yeah, yeah. >> Very familiar, great, great offering. >> He's a great entrepreneur, the guy's invented JavaScript and when I saw he did that, I met him actually a year ago and I met him this week as well in Barcelona at Mobile World Congress and when I say what he did I was like wow this is very revolutionary, right, so this is a completely different way of raising money and it's also a great way for investors because you get liquidity so why not get there and find a project. So, I started with one and then-- >> Serial entrepreneur, great story, lot of experience coming into cryptos, you got some young guns who are inventing, and making some cash, and doing well, also starting funds. You've got developers and business entrepreneurs who are successful and they're becoming investors and then you got the pros coming in, alpha geeks, serial entrepreneurs, pros on the banking side, all think differently, and they see the vision, so I got to ask you, what is your vision of the decentralized internet? You've seen how telcos work and you know their challenge is over the top content, centralized organization, you see what Brave's doing, you've lived the dot-com up and down, what's your vision of decentralized internet, how would you describe how big the wave is, and what's the opportunity? >> So I think that if you think of why people were excited in 1994 1995 over the internet, it was precisely because the internet promised decentralization back then, right? So there were all these protocols that allow you to move voice, move data, move webpages that we're going to disintermediate people. And what happened is that a lot of traditional players got disintermediated but then the weight shifted into players which are now high concentrated and centralized, right, everything on Facebook or Google. So I think that the excitement around crypto's about making a reality, the decentralized internet that didn't happen the first time. And I think that because the protocols have a way to monetize, and there's an economic incentive to be part of the network, this time will be different. >> Cloud computing has also helped a little bit, too. Because with open source and cloud computing you have a great creative environment on technology's side. >> Correct, this is like open-source money if you want to think about like crypto. So I think yes, the fact that the maturity of some adjacent technologies is helping this move faster. >> And open-source has been a proven formula, one, second tier citizen when I was growing up in the open-source community, I remember people were poo-pooing Linux back in the day, and all of the sudden now it's tier one powering the world, and now you have community modeling around how that worked, how would you compare and contrast? And you have other things coming into this, too. You've got cryptography systems you've got gamers and cryptocurrency and you got cloud, how would you tease out the industry and describe the cryptocurrency and the blockchain communities, I mean it's kind of a confluence of a lot of-- >> I think it's a very interesting industry and it has forced myself also to have to learn about adjacent topics, right, because you've got to understand about technology, but you've got to understand about software, cryptography, you've got to understand about finance and economy to understand what a monetary policy is and how you're going to define that into your token. You've got to understand about finance if you do security tokens, you know securities laws, so it is fascinating because of this confluence of different things. >> We were having a joke on one of our broadcasts, I said to my co-host, these startups will soon have a CTO, a CEO, and a Chief Economic Officer, I mean this is kind of token economics! >> Makes all the sense. >> I mean you're going to have to say, hey do we increase the coin rate, do we drop this down? >> A legal counselor. >> I mean it's a big human dynamic there. >> I think this is for me why I am so excited about it. 'cause I was kind of bored of being in an industry for 10 years, you feel that you already know more or less everything, and yet there's new things coming, but are kind of like incremental improvements. This feels like an exponential improvement, something is going to really change things, and as you said it forces you to understand more disciplines than just software technology. >> I mean to use a California example, to end the segment, you know you see the waves coming and the surfers grabbing their boards, and they're on the wave hangin' 10. And that's what's going on, you see the best people attracted to this space because there's problems or opportunities, there's challenges and there's a social impact, mission-driven impact. And I think people are seeing that, and it's attracting new entrants into the space, from banking, all sectors now coming in, they're seeing the ecosystem develop, how would you see that going, because, you do agree that the ecosystem is forming pretty quickly. >> It is forming very, very quickly, surprisingly quickly. And I think that one of the things you mentioned is the fact that, people like me or other people that come from you know long-standing backgrounds in tech are moving into this industry who are also making the industry kind of grow faster, because the industry is a bit immature if you want, in terms of everything technology. This is why there's so many hacks, the usability of the products is still not there, so as more people from a traditional tech industry move here, and start building good products, this will actually change very quickly. >> Great leadership, Carlos, on your end, congratulations. You're seeing an opportunity and you're making a difference. You're putting out a great product service I think people are going to use a lot of, and looking forward to chatting more about it and of course you got to VC fund, and you're doing some investments, you put some skin in the game as well, with your companies, congratulations. This is theCUBE live coverage we'll be back with more, here in the Bahamas, and our friend from Barcelona here. Great entrepreneur, looking forward to chatting more about the decentralized economics, the technology, how the value will be captured, the technology that's going to enable that and the impact to society. It's theCUBE, more live coverage after this short break. (upbeat music)

(energetic electronic music) >> Narrator: Live, from Nassau, in the Bahamas it's theCUBE covering POLYCON18. Brought to you by, Polymath. (attendees chatting indistinctly) >> Crew Member: So, go, we're live. >> Okay, we're live, welcome back! This is day two of our exclusive CUBE coverage of the Bahamas' POLYCON18 It's a security token conference. It's where the world of cryptocurrency, Blockchain, Bitcoin and everything comes together around powering a new value economy. A new kind of decentralized internet. This is the biggest wave that I've seen in my lifetime. It's really bigger than all the other waves, combined. I'm here with Dave Vellante. We have two days of wall-to-wall coverage. And the bottom line is, Dave, we are seeing historic, massive, wealth creation. We're seeing crypto-billionaires here. I mean, people are new money, they're old money and a massive new landscape is emerging. And the tell-sign of this is, institutional money is coming in, real professionals are coming in. It's moving from a culture of Burning Man and cult of the personalities to real industry formation. You see that with companies coming out with real commercial opportunities. You're seeing ecosystems developing, and you're starting to see biz dev. And it's been probably at least a couple decades since I've gone to a conference where this kind of computer-industry movement is happening where the players are doing deals in the hallways. You're hearing people having substantive conversations around how they can work together to create tons of value. This is a dynamic that is absolutely happening. And we're seeing a lot of wealth involved, from people who have made tons of money, billions of dollars in Bitcoin, to kind of, new migration coming into the sector from Wall Street, from other global markets. We're seeing a sea change of democratizing, with an open-source ethos. To me, this is something that we've never seen before. It has all the elements of the modernization, business model modernizations, technology modernizations, real, disruptive, enabling, technology at the heart of it. And some people ask questions like, "How do we make money?" Bottom line is, there is money being made. How and with who, is the real question. So Dave, day one's over. We were out 'til one in the morning last night, working the hallways, having great conversations. I probably talked to at least six whales as they're called, billionaires in the business, and the vibe is the same. We're here to play the long game, we love this market. There's a culture of ethos, of partnership, and openness, and unwritten rules, and tons of activity. Sure there's bad actors! But there's a lot of great players here, and they are starting to crack down on behavior that's not right, because this is a funding dynamic. It's a funding growth companies dynamic. It's a liquidity dynamic. All these things, classic, business model modernization, happening with a massive wave, your take. >> So, let's share with our audience. Well, first of all, this is an investor conference. It's the first conference built around the topic of security tokens. And we can, maybe, explain that in a moment. But, I have, John, I have never seen at an investor conference, which I guess this is, but it's more than that, Blockchain, technology, etc. But, I've never seen such diversity. Like you said, there's new money, there's old money. There's tons of millennials. 100% of the people here are doing deals. >> Yeah. >> And the conversations in the hall, it's all about ICO's, security tokens, utility tokens, protocols, white papers, business models. So, a lot of diversity. Some super smart millennials. Developers that really understand this stuff, and a lot of money. >> And, more women in tech here than I had thought. >> Yeah, I think it's slightly higher proportion. But, you're also seeing, just really interesting, you're seeing VC's who aren't going to sit back and wait and get disintermediated. You're seeing developers who have made a ton of dough, that are now sprinkling the wealth. You're seeing private equity, you're seeing hedge funds. You're seeing, like I say, traditional VC's, new types of VC's. And, very importantly, you're seeing a major diversity in cultural impact, nationalities. And this is a heavily Canadian show, because the organizers of POLYCON, the folks who started Ethereum. But, a lot of diversity in terms of where people are coming from. It's not just U.S. based, you know, MBA's-- >> Silicon Valley. >> Yeah. >> I mean, the game's changing. The other thing I observed is, we're seeing validation of my premise, a couple weeks ago when I was in Washington D.C. with Theresa Carlson, the most powerful woman in D.C. She's also the chief, and head of, Amazon Web Services' global public sector. Is that the global national stage, the nation building, the digital nation transformation, is part of it. Two, the validation that societal change and entrepreneurship, that was used to be involved in non-profits that never went anywhere, you know, these philanthropy projects. Social entrepreneurship, or societal entrepreneurship, as I call it, is absolutely real. And, in this culture, you're seeing people with Bitcoin, and crypto-currencies funding mission based activities. Now, the younger demographics, I think, lean towards that. That's pretty clear in our reporting and our data. That the younger generation wants to work for companies and communities that have an ethos of mission base. But, mission base is not about changing the world, it's about saving the world. And, this is real, you're looking at Blockchain ventures that track water supply. You're looking at Blockchain ventures that track, you know, food supply. You're looking at solving world hunger kind of challenges. And I think the tell here is, Blockchain is used to identify markets and incumbents, or opportunities where there's idle resource. So, whether that's using compute in a P2P way or solving the world hunger problem, anywhere there's an opportunity to be efficient, Blockchain is being used to solve those problems. And, the creative talent is the technology providers. This is a completely new dynamic. One that Silicon Valley pays lip service to. 'Cause they don't actually do societal change. They say they do, but, they build apps and platforms. So, I think this is a nuanced, but an important game changer for the industry, and the global economy and global entrepreneurship, because you can do things now that can be global impact based investing, and technology investing, in one shot. So, you get a double down effect for change. This is not just cloud computing, have more power, faster, better apps, more monetization. Sure, but now you have over the top, impact to users. The community dynamic, and the societal change is very, very real. That's a big driver of this ecosystem in terms of market selection, human capital, technology, leverage, and now financial. So, it is pretty intoxicating here. People are geared up, they're energized, and it's just pretty phenomenal. >> So, many people in our audience are still probably saying, I just don't get it. So, let's go back to 2008 when Satoshi, whoever that person was, writes this, I think it was an eight page white paper. And, remember what 2008 was like, banks were blowing up, too big to fail, the economic system was melting down, and guess who paid for it? The taxpayers. So, some libertarian minded people said, screw that, we're going to change the world. We're going to create a virtual currency and we're going to take back what the government is taking from us. Essentially, okay. So, that started people like, what, I don't really get it. That has formed a whole new, and people often say, it's not about Bitcoin, it's about Blockchain. Blockchain is building out this whole new internet. And we've talked about that all week. But, what you're seeing now is this concept of a value store a virtual value store, and people leveraging that in so many different ways to build out this new internet. And, they're building protocols, they're building apps, they're building new capabilities that we haven't seen before. That brings state to the internet, a state of communications. Now, let's talk about the investor profiles that we see here. I want to start with developers. So, developers built the internet, and most of them didn't really get paid huge money. Here, many of the developers are like multi, multi-millionaires flying in on private jets. Okay, so why? Because they've developed a new token that they, basically, invested in with their sweat and their money, and the price has gone through the roof. Bitcoin, Ethereum, etc., VC's. VC's, you know, they elbowed out, well they're elbowing their way back in. Private equity, hedge funds, big money. And there's two paths there, one is, guys that read white papers, real hard core technical guys who say, I'm going to invest in just this infrastructure token, utility token. Other guys who say, You know what, I've got big money, I don't really understand the technology, but, I'm going to sprinkle my money around and try to get a big hit. You got angels, you got entrepreneurs, you got superstars that have become billionaires, that are mission based. All these, and here's the thing John, and I want you to sort of explain this to the audience. You have these investor ecosystems forming. It's like the PayPal Mafia, and they're basically buying up all the tokens early, elbowing other people out. You know, one investor told us, We're fighting steel with steel. Steel beats steel, you have to form, it's like Survivor Baha Mar, right? And they're forming groups, and they're eyeing each other, attacking opportunities, elbowing each out, and it's really interesting. >> I mean, it's happening, big time. And, this is healthy, I think, in my mind. Emerging ecosystems have this behavior. The early days of Silicon Valley was very much the same. And it became very much war, now in Silicon Valley. See, people don't syndicate deals as much as they used to. Some are and some aren't, but the notion of teamwork has always been part of Silicon Valley. The old saying is, venture capital is a team sport. That is very much what's going on here. Now, they team up because they have to, but, steel on steel implies art of war. You know, we're going to take more allocations down. That's because the new pro persona of the investor, Dave, is the billionaire developer who captured value from the technology that they built, not someone else, not some central organization, they're the players. Developers, and or the actors who were making money in the early days of Bitcoin, cryptocurrency and Blockchain actually are also starting funds themselves. So, that is a new dynamic. We've never seen that before, where you see a wealthy developer become rich and then also start investing at the same time. You have a smarter investor there, but they're doing it in packs and herds. You have a tribe mentality and people are starting to recognize that, okay, this group here loves Burning Man, this group here is more commercial oriented, this group here, like Polychain is much more technical, and BlockTower's much more Goldman Sachs like. So, you're starting to see the formation of categorical roles in the ecosystem. This is very healthy. Now, in the short term there's some jockeying, right? So, you're starting to see people syndicate together. You buy my coin, I'll buy your coin. So, there's a healthy, robust equilibrium going on where the market of insiders is very much the story. The insiders of this industry are the players. They are the ones, not just building the technology, they're funding technology, they're also recruiting, the talent issue, human capital role, mission based. These are all new dynamics. This is going to be a hard nut to crack if you're an incumbent, venture capitalist, or hedge fund, trying to walk into this ecosystem, throw your weight around and compete on a frontal basis, money for money, steel on steel, if you don't play by the rules of engagement that's emerging. Such as, open source communities, unwritten rules, certain kinds of syndications, eliminating bad behavior. This is a dynamic that's real, and you'll either win or lose if you're an investor, win or lose if you're an entrepreneur if you don't recognize that, kind of, big picture. So, you get down and dirty, you got to pull back and say, okay, what's going on, how do I engage? This is where the true money making is going on. >> That's great analysis, John. You mentioned the word dynamics several times. The other underpinning dynamic is, we are going to take control of our own destinies. I've heard things all week like, I might move out of the U.S. Ya know. (laughs) Do you have a bank account overseas? (laughs) >> Estonia's looking good right now. >> Right, because I'm going to move to a place that's more friendly to this kind of concept. And the U.S. is anti-competitive. And this is the ethos of this community, We are going to control our own destiny. And we're going to go live in places and work in places that are friendly. >> This, to me, is perfect capitalism at work. You know, some would criticize Barack Obama or other folks that might have more of a socialistic bent around having government do redistribution of wealth. This is actually an example where I see redistribution of wealth going on in a capitalistic way. Where the enabling technology, Blockchain, and or new business models with cryptocurrency, which is money, basically open sourced money, as Miko Matsumura would say, and that is the dynamic. That is actually creating real value and redistribution of wealth. And the premise of Blockchain and cryptocurrency, although Bill Tighe pointed out, investor, and leader in the area, money's a concept, right? A dollar's a dollar, it has money value because it's a concept. But, if you look at things like what we learned in business school, the value chain of a organization, value chain, Blockchain, cryptocurrency money, is that this redistribution of wealth is going on in context to redefining business, redefining how people work. And again, I said earlier, the human capital component is very much a real dynamic, it's not just machines taking over the world. Some poopoo AI, some poopoo all this technology, but, human capital, a big force in this market. And, it is a big issue, and you got to learn protocols. We're all developers. So, again, zoom out, opportunity is right there. I think I'm long on this sector. I'm long on this game because the actors are going to self organize, Steel on steel turns into handshakes, or, steel on steel in the right areas, eliminating bad actors. FCC makes some regulations, that's only in the U.S. What about the opportunities for digital nations to say, hey, we're going to be the Wall Street of crypto. There are country opportunities right now where whoever builds that system, taking in crypto, converting it to fiat, will win everything. It's like, I'm surprised no one's done that yet. >> Yeah >> This is coming. >> I can't tell you what the price of Bitcoin is in August, but I agree with you, longterm, there's no question in my mind that this is going to be a key contributor to the digital economy. The build out of the next internet. Remember the fundamentals, you got Bitcoin, it's essentially, you know, a virtual Fort Knox. You got Ethereum, which is a horizontal infrastructure that's much more easily programmed by developers. And then you've got a zillion other protocols and tokens. I want to talk about risk factors. Like what could blow this up, what have we heard? Tax exposure, all these people, all these Bitcoin millionaires and billionaires that think, I don't have to pay taxes, well, guess what? (laughs) You do have to pay taxes. And so, one theory is that's why the price has moderated lately, 'cause people are saying, Wow, it's like I exercised the option, but I don't have cash to pay my taxes. 'Cause we saw a pullback recently. Regulation's the other one we heard. Too much regulation could put some brakes on the momentum here, your thoughts. >> Talent, talent. >> Yep, skill sets, and developer talent, right? >> Yeah, well, the top talent, in the protocol area is going to be at a premium. This is a global issue, so, you know, the old days when cloud, old days, when cloud computing came around, full stack developers were all the rage. Now protocol developers are all the rage. So, if you're a full stack developer and a protocol developer, you can have a lot of leverage. So, the danger, in my opinion is the job hopping nature of some of these ICO's. Hey, I made a bunch of dough on this ICO, they paid me in Ether and or Bitcoin whatever, I'm off to the next one and make a couple million bucks there, and move on to the next one. And so the job hopping factor for top talent is an issue. We heard that loud and clear. The tax thing, I'm bullish on Bitcoin, post April 16th. I think, buy Bitcoin right now and look for it to pop in April. Because I think people are going to realize, Oh shit, I should have sold some and had a tax carry over. >> Well, be careful, be careful. They might have to sell more to meet their tax bill. They might be holding on for a little bit, but I don't know. >> File the extension. (laughs) But anyway, I love the opportun-- >> No, you owe your taxes on the date. Extension doesn't remove you from paying the taxes. >> Yeah, but the issue Dave, is, that what's a scam and what's not a scam? So, you know, if you ask Joe Six Pack on the street, throw crypto and Bitcoin, it's a scam. There's a lot of stuff going on. This industry is absolutely, acutely aware of that dynamic. The risk on the wealth creation opportunity. They know it, so they're creating mechanisms to kind of weed that out. You're seeing PR firms having internal, called, in baseball and in sports it's like, clubhouse issues. There's a clubhouse issue going on in this industry. And they're going to take it amongst themselves. And I think that is going to be the tell sign if this ecosystem succeeds or not. >> Do you think there's more scams, or less scams going on there? >> There'll be less scams because, obviously there's too much money to be made right now. >> Right, and in terms of the percentage of the activity that's going on, in my opinion, the smallest percentages is the scams. The challenge is, anyone could be a scam so you have to sort that out, you got to do-- >> Due diligence. >> As always, you got to do homework. >> Alright, well, day two Dave, we're going to drill into. We got a great line up of guests. We'll be talking to investors, entrepreneurs, some whales coming on, we're going to get their opinion on the future of this market. What's the liquidity, how do you get paid? Who's making the money? How is the value that's being created ultimately captured? And, who's going to get that value? It's theCUBE coverage, from the Bahamas, exclusive coverage of the cryptocurrency, tokenization, here at POLYCON18. We'll be right back. (electronic music)

(energetic electronic music) >> Narrator: Live from Nassau in the Bahamas, it's theCUBE! Covering POLYCON18, brought to you by Polymath. >> Hey, welcome back everyone. This is exclusive live CUBE coverage here in the Bahamas for POLYCON18, it's a crypto event. Just talking economics. It's all the players in the space really discussing the future. I'm John Furrier with my co-host Dave Vellante. Our next guest, Bill Tai, friend, Facebook friend, industry legend, venture capitalist, kite surfer. His Twitter handle is @kitevc. Follow him. He's also involved in Bitfury and a lot of Bitcoin-related activities. Been a mentor to others. Great to have you, Bill. >> Thank you, John. I really appreciate you having me on the show. >> You tweeted in 2010, "This Bitcoin thing is interesting. "Check out this white paper." Can? >> Yeah, that was a >> Seminal moment. >> You know, back then I didn't know it would be, maybe a seminal moment. I was just lonely. (laughing) So, and the back story there, a very good friend of mine is Philip Rosedale, and he had approached me when he was starting a site called Second Life, where you basically create a digital avatar, maybe of yourself, maybe not, and you have this kind of, you know, world where you have people in an unstructured environment. And in the very early days of Second Life, when people were kind of just milling about, I said to Philip, I said, "Hey, Philip. "You know, maybe we should create a currency." I said, you know like, "If you think about it. "Think about what is Las Vegas? "Las Vegas is this pile of sand "but there is this metropolis on it. "How did that happen?" I said, "You know, if you took ten people, "sat them in a circle, and you put one poker chip "in the system, and said 'Pass it to the right,' "and everybody did that a million times a year. "Everybody would have a million dollars of income. "And then you could take chunks off "and build a casino, and build a resort, "and you'd have Las Vegas." So I said, "Let's do that." And so the Linden dollar was born. And so, soon, there was this thriving economy in Second Life that just, it was quite amazing to see. And so, when Bitcoin came out in 2009, as soon as I heard about it, I wanted to see what it was. So I went to the site and I read the paper, and it just seemed really cool. And so I started to play with it a little bit, and by 2010, I just thought it was really cool, but no one else had seen it. >> Yeah. >> So I took to Twitter to say, (laughing) "Is anyone out there "using this P to P digital currency?" You know, and >> It's funny. Our first web, You know, I started SiliconANGLE in 2009. David and I partnered in 2010. Our first website, the developer didn't want PayPal. He wanted Bitcoin. It was 22 cents, I think, at the time and we used the site for about half a year, and then we changed it and went back paid fiat. But if you think about where these come from, you brought up Second Life. Okay, online virtual world, really ahead of its time, but really set the stage for what we're seeing now. Gaming people who know virtual currencies, thrive on crypto. >> Yeah. Yes. >> So I'd like to get your perspective. Because, I know you've done a lot of investing in mobile and gaming, and what not. Where does that cross over? Because there's been a lot of virtual currencies going on in games. >> Yes. >> For a long, long time. >> Yes. >> How is that influencing and impacting this industry? >> Well, you know it's, I guess you have to ask, when you ask, you know, where does the real and where does the digital, like do they cross? And what are they? What is currency? Is the U.S. dollar real, right? And actually, let me pause for a second and reach down to my phone, because did you see a tweet today from Sheila Bair? I have to read this. Okay, so I just saw a tweet from @zerohedge earlier today. Sheila Bair, on Bitcoin, Quote, "I don't think we should ban it. "The green bills in your pocket don't have "an intrinsic value either." >> Well, look, the government wants to get rid of paper money. The people want to get rid of paper money. Why not? >> What is it really? Right? I mean so >> Backed by the U.S. military maybe, I don't know, I mean what >> What is it? >> What is it? Right. >> That's a good question. >> So I don't really see a difference. You know, they're kind of the same thing. You know, it's just something that people believe in, as the embodiment of value exchange. Whatever it is. So if it's a green piece of paper, or it's not. If it's shell, if it's a pebble. There is a fascinating book that you can read called The Ascent of Money by Niall Ferguson. He's at Stanford now at the Hoover Institute, but he got widely known after the great financial crisis unfolded. He basically wrote a book called The Ascent of Money which tracks the history of value exchange across civilized communities, for thousands of years, from pebbles to shells, to feathers, to credit, to default swaps. And coined the term "Cimerica," which is sort of the interdependence of the cash flow. And what became apparent to me when I read that, was that the world of ICOs is actually no different than anything we've experienced in civilized humanity. You know, if you think about, even in the United States, in the 1800s, at one time there were over 200 currencies circulating at the same time. If you think about the formation of the United States as colonies, a bunch of guys get off the boats. They draw lines around the forest. Here's Connecticut, here's Vermont, here's New York, here's Virginia. Let's do an ICO. They all did an ICO. If you think about it, they created their own unit of currency per their community and geography, no different than what's happening today. >> When Lincoln was shot, there was a five dollar confederate bill in his wallet, right? I mean, the confederates had their own money. >> Yeah, and also you brought a point up in the conference you were in in Dubai, which I thought was really intriguing, and provocative, but also kind of real. The Oil Dollar Association post-World War II, >> Yeah >> Essentially wasn't actually securitizing oil That was an ICO. >> It was the tokenization of oil, right. Yeah, so, you know, the modern currency system that we have today, that is commonly known as the Petrodollar, so it's actually a relatively recent phenomenon. So if you think about, of course, the quote "U.S. dollar" was around a little bit longer than 1944, but it was really at Brett Woods that the dollar had its sort of birth to become the world's standard currency. And, you know, this is maybe a little bit of an over-simplification, but think about the picture after World War II. So, you basically have every major productive economy have war, destroy themselves. The U.S. enters late, finishes it all off completely, and you basically have 100 million people milling about. A little bit like Second Life, right? So, what do you do? Got to make them productive. Create a currency, set of currencies. So for every community of interest, like every token community of interest, you say, "Well, here's a lira, here's a franc, "Here's a pound, here's a mark. "Let's take gold, "reference the dollar to gold, and reference "every one of these currencies against the dollar. "Gentlemen, start your engines." Right? >> There you go. >> So how is that different than an ICO? Okay, so that was fixed to gold for a long time until people started to game it. And when the French accumulated a lot of dollars and they realized, whoa, there's more dollars than there is gold, I'm just going to go cash all this in. So they literally came over to take all the gold, and then the president took it off the gold standard. >> Dave Vellante: That's right. >> So it had to couple with something. So what it the utility token that that became? That became referenced to petroleum because the U.S. had basically forced everybody in the Middle East to accept dollars as payment and what that did was it created the dollar as a storage of energy. So you could basically take a token of oil and, as a separate nation, you could store that through your trade, if you had sort of a surplus, and you provided yourself energy security. >> Well, most currencies, right, historically have had a pretty short shelf life. Presumably the same will be true in the Blockchain world. >> Don't know. >> The crypto world. >> Yeah, it's, if you look at the history of humans over six million years, and it's arguable it's at four or six, or whatever it is, you're right. Like there have always been multiple currencies all the time. And very rarely have they ever become sort of like super-dominating currencies. That is also a very recent phenomena. I think, driven by the industrial revolution, and a combination of the Petrodollar and scale economics and manufacturing. So, so that >> Yeah, and overwhelmingly here, at this event, people feel like security tokens, as an asset class, are going to vastly overtake utility tokens. >> You know, actually, securities are a whole, I mean regular securities, (laughing) that's an interesting subject altogether. Right, okay, so there was a time, in my lifetime, when I was a securities analyst at Alex Brown in the '80s, and in that period of time, everything traded at ten times earnings, right? So you had a barometer for, a stock should be valued at this, because is should have a PE of actual real earnings. >> Dave Vellante: Independent of its growth or anything else, right? >> Yes, and if it grew, you had a PEG ratio, so you'd have a little bit higher growth, and so a little higher PE, but what's happened to securities over time, of that ilk, okay, you had to get these companies profitable to get them public in that era, and then over time the sort of like network effects have come in, and communities of interest have formed around companies. So, and the structure of securities has moved from give me something with earnings multiply it by a number to get the value, to give me a share of something that has no voting rights and no earnings. Does that sound like a token? That's Snapchat, right? (laughing) >> So you literally have, you know, Google, Facebook, all these companies now issue shares that don't have the characteristics of equity shares. They don't vote. What are they now, right? So tokenization is sort of a natural extension of that. >> Dave Vellante: Do you see that as a >> They don't have dividends either >> You see that as a fundamental shift in the value equation, the perceived value equation? Both? Is it sustainable? >> I think it's basically, so, you know, I go back and forth on this, because is it a trend line or is it a return in the past? Right? So what is a confederate dollar that was in Abraham Lincoln's pocket? It's a belief. So what is a share of Snapchat? It's a belief. It doesn't have earnings >> John Furrier: And a token is a belief. >> Right. >> But the trend is securing something, right? So the trend we're seeing is, obviously the ruling, first of all the ruling in Switzerland was interesting. You now have a trading so an asset, so security, asset, and then trading. So they kind of went a little bit deeper, which I think is helpful. >> Yeah. >> For the community. But what are they securing? So the trend, as we see, is percentage of revenue, non dilutive and equity in the classic sense, so kind of a token. And then some sort of either buyback options, people are doing things like that. Do you see patterns like that? What are you seeing for? >> Well. >> I mean a security token makes sense. It's all credited. The paperwork's known. >> Yeah, so, you know, it feels like, so some people refer to sort of Bitcoin as digital gold, you know, and in that sense, like gold is a commodity but is the root of securities, you know, whether it's gold ETF's or something, because you perceive a limited supply, and you perceive a storage of value, so that is where I think Bitcoin sits. But then I think this whole other category of utility tokens, that may be considered security tokens by definition of law, that resembles the petrodollar. And as we were talking about earlier, you know gold used to represent or a dollar used to represent a share of gold, but it didn't anymore. So what was underpinning it? It was basically, in my opinion, the ability for that token to have utility as an instrument to purchase oil for your energy security. And so, I think that's kind of where the utility tokens are today. >> You're a leader in the industry, and you're well-known. Communities need to thrive. And factions form, curriencies form, and can be very productive, and also can be counterproductive. >> Yeah. >> So what is the unwritten rules that you guys are putting forth. Are people meeting? Are you talking? And sometimes, as people make money, which a lot of people are making a lot of money right now. I mean, for some people, it's the first time. Didn't have money, make money. You know, egos kind of come in. So all of these are normal things. But again, this is a societal community dynamic, >> Yes. >> But super important. Institutional investors are coming in. >> Right. >> Big money. This isn't Burning Man. This isn't. Burning Man's cool, but you can't model this industry after Burning Man. Maybe you could. I don't know. What is your take? >> Well, you know, it's, I think that the guiding principle really needs to be looking out for the greater good, because I think that is the issue that everyone is trying to solve for. And it's not just endemic to Bitcoin and Blockchain. It's a societal issue that's been with us since the creation of civilization. And I don't know how to solve for that, but I think you need people to stand up and just make sure that people are thinking about that all the time. You know, and I think, over my career, I think I started as kind of like a geek hacker, sitting in the back of the room, working on little microchips and building stuff, and I still do that on weekends sometimes, but, you know, for whatever reason, I've been thrust into this role now where I do have a set of communities of interest that started actually around kiteboarding, but it became sort of a larger community around entrepreneurship. And we've actually, I have a 501(c)(3) that supports ocean causes and entrepreneurial things, and it's called ACTAI Global, and we have a couple value statements. We actually, we're codifying it, so we actually have a little pin, you know the ACTAI stands for Athletes, Conservationists, Technologists, Artists and Innovators, and all of us collectively, we combine our energy to work on causes. Some of the things that we support are around ocean conservation and the preservation of ecosystems, but we also work on a lot of other entrepreneurial efforts to help each other. But the thing that I've realized with our group is we've been very productive as a community, and you see a lot of companies that are born in our community, funded in our community, like, you know, whether it's Canva or Zoom, or any number of projects that turn into community-based companies because the group of people, they think and they stand for something greater than themselves. So that's kind of one principle. It's sort of like, how do you, how do you place your values as something to support the greater community, and that's something that I think, if everybody would just think about that a little bit, and stand for something greater than themselves, the world would be a better place. And on that note, the second ethos that we operate to is that we strive to leave every person or place we touch better than before we touched it. So when you see us like kiting at a beach, you'll see us picking up garbage, too. You know? We don't go someplace without trying to improve it a little bit. And I think we help each other on the companies, too. And I think the last thing that people really should try to do, everybody in this world of technology, has a little bit of a superpower, whatever that is. You know, they wouldn't be doing the things that they're doing if they weren't totally insanely focused on a piece of technology. They know something that other people don't. And if everybody would just try a little bit to use the powers the universe has granted them, to empower others, to unlock other people, the world would be a better place. So I think, you know, I think all of these factions, if we could just get people to stand for something greater than themselves, work to make people and places better off than before they touched them, and empower other people, I think we'll have some great outcomes. >> You know, empathy, empathy is a wonderful thing. And also you mentioned, know your neighbor. You know, that's a big thing. We're doing our part here in theCUBE, bringing our mission content. Bill, been great to have you on. And we'll get that clip out on the network about your mission. Great stuff. >> Thank you, thanks. >> And great to see you >> It's an awesome philosophy. >> be successful, you're a great leader. People look up to you, and certainly we're glad to have you on theCUBE. Thanks for joining us. Hey, more live coverage after this short break here on theCUBE in the Bahamas for crypto currency, token economics, POLYCON18. We'll be back with more after this short break.