>> Live from Toronto, Canada, it's theCUBE, covering Blockchain Futurist Conference 2018. Brought to you by theCUBE. >> Hello everyone and welcome back to theCUBE's exclusive coverage here in Toronto, Canada, in Ontario. We are here live breaking down what's going on in the Blockchain world. It's the Untraceables event here, Tracy and team doing a great job of Untraceable. They're putting on the Blockchain Futurist conference. This is about the future, bringing the industry together. All the luminaries are here; Bounds of Ethereum, Ackerson Ecosystem influencers, original gangsters- OGs-are here, of course theCube, we got 2018 coverage breaking it down, I'm John Furrier with Dave Vellante. Wrapping up day one Dave, I know you got to take off and head back on a flight home, let's break down and analyze what's going on in the industry. Yesterday we had the first annual ever, first inaugural Cloud and Blockchain summit, global Blockchain and Cloud summit, two worlds coming together. Here it's a little bit different this is all about cryptocurrency, it's all about blockchain. Big movements, speculators versus builders is my theme and everyone's recognizing the trend of price shifts billions lost in market gap that were gained last year but still some are up. But the focus is about entrepreneurship on a global scale, this is the focus here, right? It's a lot of VIPs, a lot of players coming together. I don't see people crying in their wine about the prices- although you can see it on Anthony Di Iorio's face, probably a setback or the Ethereum community on the price but still, the long game is what they're going after. Your thoughts and analysis? >> Well you definitely seeing a lot of talk about the boom and bust cycles. And we're hearing a lot from people -but by the way, there are a couple of guys who went big, maybe hedge fund guys or other fund guys that are taking a bath, maybe they got in big in January, December, not the best time to get in. So you are seeing some long faces there, but generally the sentiment is: hey, these boom and bust cycles they come and they go we've seen them before, now's the time to hunker down and innovate, execute, and figure out how to add substance and value. Now, first of all, I would say a couple things. One is those guys probably have... a store of fiat currency that they cashed out, number one, so they're feeling pretty good. Two is, the big difference to me John, is in 2018, crypto is much more in the mainstream news. You see it on CNBC, you see it in every medium po- every day you get a medium post, everybody's blogging about it, whereas obviously we've been blogging about bitcoin for five, six years but the mainstream media has picked up on it. >> Seven years. >> Seven years, there you go. So the mainstream media has picked up on it so it's much more front and center than it ever has been in the past. So I think that's a different dynamic. There seems to be still a lot of opportunistic sentiment, people are sanguine about the future and I think that's because we're seeing some real hardcore innovation going on in real use cases. Now, having said all that, the other scenario is there's just a lot of competition for quality projects, we're hearing too many coins out there, you're seeing all these ICOs tied to Ethereum in an oversupply right now, and you're clearly seeing that affect the price of Ethereum, which has dropped, on a percentage basis, much more than bitcoin. It's down considerably this year, whereas bitcoin actually is still up. Ethereum's trading about where it was last September, Bitcoin's up considerably since last September. So you know, a lot of cycles, a lot of instability still, but a lot of optimism. >> The bottom line for me is that the big question that's coming out of this event and this whole week here in Toronto is why do cryptocurrencies matter, the mass influence and adoption of Blockchain technology, where is that on the progress bar? This is the topic, and again, a lot of people that are "poo pooing" this revolution and I'm seeing on my Facebook feed all the time, "bitcoin's at zero," there's a lot of nonbelievers. Here's what I would say, here's my analysis. I think that the comparisons to the dot-com bubble with all the irrational exuberance that was part of that phase, this ICO phase, is crashing. No doubt about them. The ICOs in the United States are down, almost to nill. Certainly a lot of action going outside the United States, still unregulated, still wild, wild, east- or west depending how you call it. So yeah, that's happening and a lot of the bad stuff's being filtered out there's an emphasis on build which you mentioned. But here's the thing that no one might not see in the mainstream. During the dot-com bubble, there was all this companies that were started to it public and that was because the market wanted it. That's what happened with the cryptocurrency ICOs, the market wanted more products, then just manufactured it and then they realized, oh shit too many tokens. But if you look at the internet revolution, and I think this is the comparison with blockchain and crypto. You got blockchain technology, cryptocurrency, which is token economics are absolute gamechangers and the demand for that is very high and there are more people coming on every day in a mass adoption basis. The internet actually never stopped, if you looked at internet penetration rates, Mary Meeker would point out at Morgan Stanley, now she's at Kleiner Perkins, that the internet adoption rate of the internet during the bubble and then post-bubble continued to accelerate. That means more people got on the internet. So therefore the population of users became larger and larger every day. That really level-setted the reality that this was not a fad, not going away. I see blockchain and token economics having the same trajectory where there'll be more people adopting the technology then putting it into use than ever before. That's the tell sign. If that trend line continues to grow, the corrections will all take place, cycles will happen, but the entrepreneurs will follow the money, they're going to follow the user experience, they're going to follow the demand for opportunity. That to me is going to be the major tell sign. I think that's the general sentiment that I'm feeling here is screw the price of the tokens, yes there's too many tokens, clear out the dead wood, get back down to building companies, that's validated by the fact that there are more deals being done from a financing standpoint that are starting to look like traditional funding structures. Security tokens, equities, starting to see people talk and fundraising, lower rounds, not the big mega rounds. Money that's going to be around 7 to 30 million, 30 to 50, 50 to 100, 100 plus. This is going to be traditional structures, not the land grab utility token which gets you into the tailspin of basically managing coins distribution, managing all these things. There'll be a balance, but that's really kind of what's happening. >> So that's great analysis John, I would add to that that the fundamentals are still in place, blockchain attacks inefficiencies. Where there's a middle man and there's inefficiencies and there are waste, blockchain is being applied to attack those inefficiencies. I think the second thing is that new capital-raising vehicles have catalyzed massive investments and are catalyzing innovation and a whole new breed of developers. The third point is a global phenomemon. You don't have to be in Silicon Valley, or New York City, or Boston, or Austin, in the United states, or from an Ivy League school, it's happening around the world, you're seeing non-US countries and island countries invite developers in, giving them tax havens, and as a result, it's becoming much more of a global phenomenon than a lot of the internet startups were. There are a lot of adoption barriers. I mean you have the cyclicality and the volatility, you've got industries that are essentially entrenched: financial services, healthcare, lots of defense and aerospace industries, very much entrenched, it's going to take a long time for that collaboration to come together. And you also have a lot of scams. >> Yeah >> There's going to be a shake out, we predicted that I think in February in the Bahamas, we predicted the flight to quality, people are trying to figure out where that quality is right now. And to your point, you're also seeing more hybrid models, more traditional equity models combined with token models, and that's not a surprise. You're going to see more and more of that as a hedge. The token model still gives people the potential for liquidity, and as long as that fundamental remains in place, I think that dynamic will- is here to stay. >> And also, you and I have seen many cycles of innovation you talk about in the industry, many waves. The people that we talked to that have been through multiple waves like Brailey Rodder, (mumbles) and others, experience, they all know what's going on. The difference here that I think is interesting is that the smart contrast, the flight to quality, the companies that have buildable products, are going to get the attention. Now the difference now in this community that I think is interesting that makes the funding dynamic different is you have now community dynamics. You've got open source software, Cloud computing, and new technology with new capital formation dynamics. I think those three things are the perfect storm of innovation that's being overlooked. and the interplay between that is going to give us a look and feel of an industry that we've never seen before. So we can compare and contrast waves "oh, BC, Client-Server, blah blah blah," I don't think this is going to look like any of those waves, it's going to look different. And that's going to be really the shake out between the pundits who claim they know what's going on, or... predictions whatnot. Talking to the people, putting the ear to the ground in the communities, that's key. And for the companies, the ones that are going to win are the ones that can build community, tap into communities, and grow communities because they're now part of the ecosystem. It's not just selling products to them, they got to be a bidirectional, symbiotic relationship between communities at large, in this ecosystem. I think these are going to be new dynamics they're going to be- impact valuation, it's going to impact time to market, time to value, and ultimately give the entrepreneurs and the investors what they need, which is good outcomes in the process. >> You know it's interesting you were saying about the waves. And the waves in the past, and certainly looking back, were quite easy to identify, they tended to be architectural, you know centralized mainframe, and they went to client server, then you went to the sort of public internet, and then this cloud of remote services. The next wave is maybe not ... blatantly architectural, but it's this blending of digital services that's ubiquitous across all industries. And I think the key is, there's an automation layer on top of these digital services, which is powered by AI and machine intelligence, machine learning, and deep learning, and blockchain is part of that automation layer. And people are building new businesses on top of that and disrupting existing industries. I think there's no industry that's safe from disruption as I put it before, there are some entrenched, high-risk industries like financial services, healthcare, defense, aerospace, education, that are going to take longer but ultimately there's waste in all of those businesses and I will say I think a lot of the incumbents are going to hop on this trend and do very well picking up blockchain and defending against the disruptors. Not all will make it, but a lot of the big guys are going to put some serious resources into this and they're going to lead in to blockchain in a big way. >> Yeah and just to kind of wrap up, I think you're the fact that what we're seeing here is that engineering-led dynamics are happening, blockchain's going to lay down the plumbing, it's got to be stable, desensualized applications over the top with token economics is the business model of innovation. We got technology theater booming with innovation with engineering-led initiatives, that's got to accelerate, that's infrastructure, that's got to be more cloud-like, that's got to be much more stable, that's got to get laid down, got to put the roads down if you will, and then the business model innovation coming from the software this is the game changer so you're looking at all the smart money, smart money is saying okay, we see guys building product, let's see some unique IP, let's see some token economics that are nobel and different for what's happening, that to me is going to be the new investor algorithm if you will, for vetting. And it's been that way in a way, the smart money follows the smart engineers, what are you building? And then they vet that with other stands so again, big engineering-led focus. >> So what would you do now- okay, soyou were hearing this week, too many damn tokens, everything's tied to Ethereum, most ICOs, what would you do now if you're an entrepreneur, you have an idea, you have a potential to build a community, where would you focus, would you just try to float another token? Would you go overseas? What would you do in that situation? >> I would look at the regulatory frameworks as a way, as a guidepost to risk management, right. I think you're going to see some regulatory regimes try to manage the bridge between slow changing, old guard, to new fast, and loose. Crypto-'Cause look at it. It's fast and loose, but there's real people that are working on it. I would focus on the real people that have builders, I'd look at the mechanisms where they're domiciling, and what they do with the economics or the tokens. One thing I will tell you that is that, as an entrepreneur, this is like, a golden rule, your focus is everything: focus, focus, focus. If you're focused on managing distribution of coins, and the arbitrage of coin pricing, that takes away form the focus of engineering and building. I think that's going to be an easy binary test for an investor to say, "what are these guys working on?" Is the token working for the venture, or is the venture working for the token? That is a fundamental mindset, if that is... Not in the right position, it should be: the token works for the venture, not the venture working for the token. That to me, I would run for the hills, if I see someone working for the token, I'd say, "I don't want to fly at all at that deal." Because you could maybe pass up some money right in the short term, but you're going to miss the long game. That's the way I look at it. >> And again, I would add to that, I mean, yeah, okay, so there are a bunch of crypto-billionaires that got minted, and they got in early and good for them, but that doesn't mean there's not more opportunities. And when I think of a company like Dell Michael Dell wasn't the first in PC's, you know? Compact was the first, you know, Rod Canion, the back of the napkin, that urban legend. But what Michael Dell did is he improved on the system. He took inefficiencies out of the supply chain, and became the dominant player! So first move advantage, yes, okay, great, you missed being a billionaire potentially. But the wave tends to get bigger after the market matures. And as a result, I think my focus would be on building, to your theme, building that community, demonstrating value, and then, eventually, I think you're going to be able to use Block Chain, Crypto currencies, tokenization, crypto economics to power your business. But figure out a way to actually execute today and prove value; that's what I would do. >> Again, all great stuff, great analysis, Dave, Good to see you here, where again: this is theCUBE's coverage in Toronto for Block Chain Futurist Conference. Again, this is part of our 2018 initiating coverage of the Block Chain Industry with our video presence. Engaging the community is an upstream content project sharing the data with you, so you can make your decisions, and understand who to connect with. That's our model, we're going to do it. We've been covering BitCoin and Block Chain since 2011, on siliconangle.com, that's our journalism site. Go to theCUBE.net, that's where we have all the videos, and soon to be our CUBE token coming out, be part of our network. Join our community if you wannna get engaged, we're happy to have you. Thanks for watching Day 1 of the Futurist Conference here in Toronto, Ontario. Thanks for watching.

>> Narrator: Live from Las Vegas, it's theCUBE! Covering IBM Think 2018. Brought to you by IBM. >> Welcome back to IBM Think 2018, you're watching theCUBE, the leader in live tech coverage, my name is Dave Vellante, I'm here with my co-host Peter Burris. Gene Chao is here as the Global VP of IBM Automation and Jason Kelley, Cube Alum, is the GM of Blockchain Services. Gentlemen, welcome back to theCUBE. >> Thank you much. >> Great to see you. >> You guys, I call you heat-seeking inefficiency missiles, so, Jason's... Just a shout-out, take it from there. What are you guys up to, what are you doing? How are you helping businesses? >> Well, we're driving trust into transactions. The elusive things that we've been trying to-- >> Gene: Whoops, there goes heat-seeking. (laughing) >> Exactly. Or we're seeking the heat. It's coming after us, as soon as we say trust, someone wants to attack you. And so what we're bringing into business is that thought that, if I can add trust into transactions, I don't need a third-party to validate it. I can now say, look, you are who you are. We both know each other. All that we do, we go way back. We know each other, and what we're about to exchange is known as well. So if I can keep that validation from happening, I'm going to remove cost, labor, time, out of it. And I'm also going to then maybe avail new market opportunities of those who could not enter the system before because we didn't trust their identities. Or we didn't trust that their goods were their goods, and they were trying to exchange it. So think of that heat-seeking missile, we're trying to bring that capability and that heat is the energy in the system now going bigger, better, faster because there's trust. >> And your role is to bring those Blockchain services to market, is that right? >> That's correct, bringing the services as a whole, because see, Blockchain isn't a product. Blockchain, you know, I don't have under the table a bucket of Blockchain. >> Dave: Let me see your Blockchain. >> Sorry, no Blockchains here. So, if in fact, we're bringing this capability to the market, there's all types of services from what's the business value design? First, what's your outcome? Why say Blockchain? Believe it or not, it says it on my chest, so it means I get paid to do it, but maybe you don't need this? And so, quite simply, maybe you need to do something else. So the first thing is, let's understand the outcome that your business is running toward, and then let's understand if it's a Blockchain, and then can we bring some automation with Gene and team? >> Okay, that's the set-up for you Gene, so you're the automation piece of the puzzle. Explain. >> So, I love the commentary around the better, faster, but we're also bringing more scale. So automation has scale. What does that mean? We're really focused on two things, guys, the first thing is around taking advantage of the new technologies to enable what I'll call software-based labor. So there's a new concept of the digital workforce model that enables how transactions or how work gets done. Coupled with that is how that workflow or process, business process, IT process, whatever it is, how does that workflow fundamentally change through these technologies. Why that's important is as we look at Blockchain, as an example, as a pivot point for trusted transactions, I need to build trusted automation around it. Trusted ways to leverage these technologies in that workflow so those transactions are easily scalable, works at machine time, and runs through very quickly. >> This is fascinating stuff, 'cause look. The way that we like to characterize the big change in the industry is we say, for the first 50 years of computing, there was no process, accounting, HR, et cetera, on known technology. How do we implement? What technology do you choose to implement? The implementation choices are becoming clear. Cloud, et cetera. What's less known is the process. The unknown process, unknown technology. Now it's unknown process, known technology. And what you guys are talking about is one of the challenges when you think about processes. Who does what? Can we verify that we've done it? Did they do it right? Did they meet to do what they said they were doing? Et cetera, the whole range of issues. And the contracting process is extremely complex, but if you set it up in a Blockchain form, you've got a simple contract, a simple definition of who is trusted, simple definitions of roles, and now we can dramatically accelerate new process creation and then automate it. Have I got that right? >> I think you got it, when you think about dramatically, dramatically accelerated, you say that it means something different to everyone. But let's think about my friend Frank Yiannas at Wal-Mart, for example, where they're working on food trust. They're trying to make sure that from farm to fork, we know where that food came from. One-third of all food that's processed goes to waste. Because we lack food trust. Food is guilty until proven innocent, right? To keep that from being-- >> Spoiled. >> Spoiled, I'm... The humor is killing me. (laughing) So, no pun intended, food trust, right? So, Frank and team wanted to understand how fast they could move this thought of tracking, tracing, with transparency, this food through the system. Just as you said, there's certain contrast, think of the handshakes from getting, in their case, a mango from a farm all the way to your home, Well, it used to take them seven days. Actually, six days, twenty-some hours, in order to figure out that process. Put it on the Blockchain? 12 seconds. And then once they cured the lag and the technology, 2.2 seconds. So think of that. Now you're shrinking this to seconds versus days, what does that do to the process? What do you do when you say, now my system can go that fast. My people can go that fast. What do you do? Think of the automation that you're bringing in now, and things that you will now have to automate, out of not just necessity, but things you will say, wow, we've opened up a whole new ecosystem of possibilities in order to do business in a different way. >> Well, so let me build on that for a second. 'Cause one of the things that potentially means is that because you can handle more complex, newly designed, process, better, faster, more automated, that you can start to expand the scope of participants in a transaction? The range of characteristics of the transaction, or the type of work? That's how you build up to new businesses and new business models, right? >> Sure. >> Right, right. >> If I can jump in on that one. There's a concept in this one, and this is where Jason and I are connected at the hip. You know, we think in terms of a smarter product, we think in terms of a smarter contract, or transaction, that the guiding principle that we're using is the old way of thinking, and I carry this narrative all over with me is, the old way of thinking is you have people following your creating process, supported by that technology. So the things that you talked about, unknown technology, unknown process, continuously sourced by people? Fundamentally changed. We're now working in a world where the process is run by the technology and supported by the people. It's not that the people are going away, it's a fundamental retooling of the skills and understanding of how to support it, but that scalability, the ability to get to that exponential growth, is because the process is the king. At the top of the food chain, now. And that technology lets it expand. >> But we could do levels of complexity in that process and the number of participants in that process, unheard of! It's scale and scope. >> Yes. >> But doesn't that force... Look, we've had some conversations, Dave and I have had some conversations, with a number of big user organizations about this stuff and we keep coming back to the issue of that they can't just look at the technology, they have to focus on the design. That one of the most crucial features of this process is the design of the Blockchain. We got that right? >> You heard me use the phrase at the very beginning, if you didn't, I'll say it again, I said, business value design. Because in fact, that design is not just a UI or UX, but let's make sure that the business and technology are doing the right thing to get to the outcome. As we say, design doesn't stop until the problem is solved. And guess what, the problem's never solved. So design happens... Many people say, "Oh we're going to do some "design thinking at the beginning. "We did that," check the block, and then they run off and do something else. For us, design's like an infinity loop. You continue to do it. From the beginning all the way to the end, and then, what you're able to do, and hint-hint, this is something that we do in our services, we start with our clients, we get them started so they understand, then we help them accelerate, and then innovate. Three steps: start, accelerate, innovate. And that's a design process in and of itself. So if you start at, you know, the days of Blockchain tourism were a couple years ago, everybody wanted to kick the tires, and then last year was PoC PoV, this year's the year of production. And people are quick in saying, "How do I quickly start "production and keep moving?" >> So let's talk about some other examples. You mentioned Wal-Mart, we heard Plastic Mag this morning, I introduced somebody, I think Evercorp was the name of the company, Diamond Providence. Others that you're excited about, that have made a business impact. >> Well, I'd be remiss if I didn't mention Mike White and others at our JV with Maersk. And you know, you think of that, where you have the classic thought of a supply chain, this linear steps in the process, you know, these handshakes that have to happen. Now what we have is we have this process of thinking how we can bring transparency into all of that, and it's not just a supply chain, but a value chain. So you have where 80% of whatever you all are touching or have owned right now, with the shipping line. But not only through a shipping line, but then there was also ground and air, and ultimately to a retail location. Then you consumed it. Well, think of all of those processes now having the transparency where you can see from point of consumption all the way back to origin. Think of the supply chain visibility, that elusive thing called supply chain optimization. Now you can do that, but not only the supply chain, but the value chain. Someone's paying invoices under that big thing called a value chain. Someone's doing trade promotion management in that value chain. Now, if you have that visibility, what do you enable? How many more packages can go through the system? How much more shipping? And the estimate is 5% increase in GDP if we're able to get all of this shipping into the Blockchain. You start talking GDP? It opens eyes. >> Right now you're talking growth, right? >> Yes. >> Real growth. >> So, it's 20% of the four trillion associated with shipping? Is bound up in paperwork? >> Yes. >> So we're talking about 800 billion dollar change. >> And returning capital into the system. Returning capital. You think of this thought of opening up new opportunity, And I'll throw another example, another client, so we're not just talking, but you think of what's happening with We.Trade. Nine banks in Europe who compete. You think of Santander Bank and a Deustche Bank and those are now, they're all coming together, saying "How do we now share data and information "so that we can let small to medium size enterprises "into the system?" So now you're getting not just savings of cost and time, but now you're opening up markets. Getting greater throughput. High waters raise all boats. And that's what we're seeing in a lot of these examples with, it's not just taking out those old things, you're thinking of new processes running the business a different way. >> And Jason's a great lead guy. You asked for an example, our friends at DBS Bank. They are fundamentally looking at changing the business models within the bank across all different divisions of the bank, whether it's credit transactions, mortgages, personal wealth, and the way they approached it was, we know these new technologies are going to allow us to fundamentally look at the workflow and change it. But here's the question: Who will be looking at changing these things? What's going to enable these model changes, the workflow changes may not be human capital. It may be working alongside this sort of man plus machine element or formula-- >> Peter: Patterns. >> Right, to allow the technology to tell you where your efficiencies could be gained. Allow the technologies to make the correlations in those disparate business models, to fundamentally change how you do business. So that's happening today. >> So, phase one is what is this, phase two, POC, now you're sort of in real production, but you obviously doing a lot more POCs, you're scaling out. Where do you see this going over the next three or four years? >> Well, I think last year was a year of the PoC PoV. I think this year's a year of production. And when you think of some of the examples that we've given, we've talked about consumer trade with Wal-Mart, we talk about shipping trade with Maersk, we talk about trade finance with We.Trade. Each of those individual networks, where do we see it going? We see these networks becoming a network of networks. Where each one of them have their own ecosystems and they come together. And they come together with trusted data, with trusted information, access that's unparalleled. So that's where we see it heading. And you have to say then, okay, it sounds really simple in the way you've just described it, so where's the challenge? The challenge is going to be doing this from a business and technology perspective. There's a lot of things that have to be figured out here. How are you going to make those processes work at that speed? What do you rightfully automate and what things don't you automate? That's more than just a technology. You can't plug a technology in and solve this. It takes an end to end capability. And that's what we're seeing, becoming more of a differentiating capability for our teams, where they can say, "Gene, Jason, "can your teams talk to us together?" 'Cause, of course, they work together. That's a differentiating effect of moving at scale and at speed, and that's where we see it going. Scale and speed. >> So what Jason and the Blockchain frame does for us, is it's an accelerant. Okay, we talk about knowledge worker, automation, we talk about different areas of software-based labor, but that accelerant is doing one big thing, is it's forcing us into what I'll call vertically integrated processes or workflow. Gone are the days of segmentation of, "Oh, that's back office," or "That's front office." We now have to take that workflow and pivot that to vertical integration. Why? That accelerant is moving at the speed of light for trusted transactions, I have to make the systems supporting that. The process, the people, I have to keep up with that pace of change. If I don't vertically integrate those processes inter and intracompany? This doesn't work. It falls down. So that's our marriage. >> Tough to go to market. How do you go to market? >> How do we go to market? We go to market as fast as we can, and we go joined at the hip, with clear and simple understanding. >> Where's the Blockchain for going to market? >> Yeah, right? >> And is there partner ecosystem that... >> Absolutely. So we talk about a Blockchain, Blockchain's a team sport. And it is a true demonstration of Metcalfe's Law, you know, the network drives the value. And so we do. We go to market with this thought of, who's going to play in that network? And we have networks where its obvious value may have a founder network, like Wal-Mart, where you say look, we see the ecosystem, we have the ecosystem, we're the founding partner, or you have a consortium such as We.Trade, where they come in and they say, "Look, let's pull all this together "'cause we see the value." So we go to market with that ecosystem, knowing that they have to partner, they have to work together. >> Outstanding. >> There's three distinct chapters in our go to market strategy. One is the services architecture, the second one is software ecosystem, and the third is around platforms, like a Blockchain. So when we start-- >> No design? >> Sorry, say again? >> No design? >> No, there is absolutely design. Absolutely design. So at a service architecture's perspective, there is fundamental workflow design happening. At a platform level, that's an even further advancement of design, because of the frameworks and blueprints happening inside a Blockchain, inside the different next-gen technologies happening. So I have to be two things, I have to be an automation-led environment where I'm providing the way to do these things, differences in RPA versus other technologies, but I also have to be an automation-attached. I have to be attached into the Blockchain framework to make sure we're coupled in the different elements of that framework. So that's how we jointly go to market. >> Peter: RPAs, I'm sorry? >> I'm sorry, Robotic Process Automation companies, so these are the relatively new technologies that enable software-based labor components. They're replicating human activity. >> Software robots? >> Software robots. >> You have a path to automation anyway. >> Exactly right. Exactly right. >> And it's funny when you ask, you know, no design. Design's in there. And this is the way we work at IBM, I mean, we're past that calling it out. So if someone's calling it out, it's like you're going to buy a phone and say, "Oh yeah, we included the battery." Like, it's there now, right? So that's how we run. So is it in there? You mention IBM, anything that you're going to consume from us? Includes IBM design. By practice. >> Wow, you guys, today was Blockchain day. I mean, you must have been thrilled to see all the main tech-- >> You mean every day's not Blockchain day? >> Dave: Well, at IBM, thinks every day... >> Okay, alright, I was just checking. >> You guys sucked all of the air out of the morning. And we heard-- >> And by the way, I certainly hope not. (laughing) >> You hope not what? >> That every day is Blockchain day. >> I hope so. Jason here. >> Makes me not have to buy a new wardrobe. >> If every day's Blockchain day, it ain't working. This is going to be one of those technologies, the less we know about it, the more successful it's been. >> I agree, I agree. >> Well, gentlemen, thanks very much for coming on theCUBE. Always a pleasure. >> Thank you guys. >> Thanks very much. >> Appreciate it. >> Alright, keep it right there, buddy. We'll be back with our next guest right after this short break. You're watching theCUBE live from IBM Think 2018. Be right back.

>> Narrator: Live from Las Vegas, it's The Cube, covering IBM Think 2018. Brought to you by IBM. >> Hello everyone, welcome to the third day of live coverage here at IBM Think in Las Vegas. This is The Cube, our flagship program, we go out to the events, and extract a civil noise of the leader in live technology coverage. I'm John Furrier, with my co-host Dave Vellante. Our seventh, eighth year covering a bunch of IBM shows. With all now six of them rolled into one IBM Think, this is their big tent event, day three, keynotes just finished, it's blockchain day here at IBM, and as we said, on the opening, on Tuesday, this is like, the innovation sandwich. In the middle is the meat, is data, and then the bread is blockchain and AI. And really that is the architecture of IBM's future strategy, foundationally set up by cloud computing and a variety of other applications and whatnot, but really the future is about data, with blockchain and AI surrounding it. Today's blockchain day, your thoughts on the keynote? Keynote speeches? >> Mm-hm. >> IBM, blockchain, certainly we've seen a lot of advertising on TV. Your thoughts and reaction to the keynote. >> Yeah, and I like your innovation sandwich, I just want to add, that the substrate of all this is cloud. It's critical, if you're going to get network effects, you've got to have the cloud. Today, yeah, was blockchain day, we heard from Marie Wieck, who's the general manager of IBM blockchain. IBM has a tendency, as you know, John, to identify a hot trend, especially some in Open Source, they did this with Linux, they did this with Spark, and they kind of, elbow their way in, you know, maybe that's a pejorative, but they do that, and they say, "Here's some code, here's some resources." They spend money on it, and they give credibility to that Open Source effort. The Hyperledger project is the one they targeted here. It's the fastest growing project in the history of the Linux Foundation. IBM contributed lines of code, people, they've got 15 hundred blockchain experts on this, and they're going all in on blockchain. Which I think, John, is really positive for the blockchain, and even the crypto community, because it brings the credibility of a, you know, a Fortune 100 company to that world. They've announced the blockchain starter kit. All this stuff is available on the IBM cloud. They announced today PWC as an audit partner, which again, brings credibility to the table. Although, I think as you and I know, and we're going to have some guests on later today, there's some other tech emerging, that is going to maybe complement that. >> Yeah. >> And we heard from David Katz, who is the CEO of Plastic Bank, this is the company that's essentially creating currency out of plastic. Allowing disadvantaged people to turn collecting plastic into money. And, at the same time, help save the planet. >> I mean, this is a great example of blockchain as an enabling technology. New ways to do business. As you know, we've been hot on blockchain for the audience watching, you know, we've been covering big data, and AI, that's in our wheelhouse, do all those shows and events, cover that territory with our journalism, and TV and research. But blockchain is an adjacency to storage and infrastructure, and also decentralized applications. The fundamental thing that we're seeing, and we talked to Brian-- Brian Behlendorf, who's with the Hyperledger project, at the Open Source Summit, the Apache Foundation, which IBM is a big sponsor of, IBM needs to do well here. Because they're, again, innovations is essentially betting on blockchain. But it's not just the developers at Open Source, the business users are the ones that are going to create the value, and what I mean by that is, if you look at the blockchain world, and crypto currency and decentralized applications, that's essentially the three components to this market. The blockchain is the infrastructure, ledger, storage of data, et cetera, you know over simplified, but the cryptocurrency runs protocols and infrastructure that power that, and then the application's going to sit on top. We've reported and observed that the secret of success in this new world, is nailing the business logic, and the business model, efficiencies that take advantage of the underlying technology. And that the risk factors in making that success happen, is that business model, not the technology. Although the technology is super important, the technology can be switched out a reduced risk. So the real risk in blockchain and cryptocurrency, and decentralized applications is nailing the business model disruption. This is different than the old way of tech, which was the risk was technology selection. This is a big deal, IBM needs to up their game on that piece of it. I've heard a lot of tech, I've got some nice use cases, but on the outreach basis, they got to go to the business users, and say, "This is an opportunity to leverage the data, "leverage the software and AI with watts and other things." And then leverage the underlying technology, software defined storage, software systems that move to the blockchain, in a decentralized and distributed way. Distributed and decentralized is the future of infrastructure, this is the secret of success, this is where the winners are establishing the clear line of sight. >> Well, one of the things that you're hearing at this conference, Ginny set this up yesterday, was incumbent disrupters, and we were just, kind of, having fun at the open yesterday, but I think it's really smart for IBM. You know me, John, I'm a big fan of saying most of your business is going to come from your existing customers, and if you're chasing all this new business, and start ups, and developers, you're not going to be as productive as if you go to your core. And I think that you're seeing this. IBM back to the core, and they're bringing blockchain to that core as a way to disrupt existing business models, defend against disrupters. So you're absolutely right, companies need to look for inefficiencies where there's a third party taking a toll, and then attack it hard with blockchain. I actually think-- well no, so IBM is really talking business. How do we bring blockchain to the business? They're not really talking about what we talk about a lot, this crypto economy and this whole other mission driven initiative. >> Well, but I mean, if they want to talk business, they got to talk token economics. That's where the business model efficiencies will be rendered on the app side, and the money side. The killer wrap in blockchain and crypto is money. Okay, and marketplaces. IBM got to great marketplace, but it's not just about the developers, that's an organic one stakeholder. The stakeholders that matter is the business guys and the developers coming together. That is absolutely fundamental. If they don't understand that, that's going to be hard to be successful. You can't just throw money at developer programs and say, "Oh, when we win the developers, we win the day." Cloud was, kind of, that playbook, but this world is so fast, and accelerating in it's value creation, that the business users are fundamental in actually grokking what the capabilities are, and putting that into motion quickly, and the proof points is pilots converting to production. That's going to come from the business units. That's where the intellectual property is, is looking at the technology innovations that are possible on the business logic. Business logic is the new IP, this is where the action is, and I haven't heard IBM talk at all about token economics, they kind of talk about it, but that really is the business impact. >> Well, I mean, you sort of heard that today from Plastic Bank, although they didn't talk about a token, they didn't talk about coins, they did talk about monetizing plastic, but in using blockchain to do that, I assume there's tokens behind that, but maybe not. Maybe it's just Fiat currency. It's unclear to me, but I think you're right, the killer app is money. >> Look at it, this is simple. The equation in crypto, and not blockchain, is value creators create value, and they can capture the value. Capturing the value is where the money is, the creating the value is where the technology can happen. So you got to nail both of those as areas. And money is the killer app, so that's going to come from the business side, so the real benefit of decentralization is offering the value capture equation to look different and be different. That's token economics. That's where the action's going to be. So, it really is, it's not mutually exclusive, they're both things. >> Well I think that what you're hearing, so value comes from two places in the simplest form, increased revenue, cut costs. I'm hearing a lot from IBM of cut costs, now again, the Plastic Bank this morning was a really interesting example, I'm glad IBM uses it, but the vast majority of things you're hearing from IBM, like the IBM Maersk relationship, et cetera, are about cutting costs, taking out inefficiencies. >> Well, I mean, the bank thing is easy to look at in your mind, but it's any supply chain. The ICO market that's at a massive bubble right now, is because the supply chain of funding start ups and growth, used to come from private equity and venture capital, that is being disrupted because it certainly hyped up, but that's a supply chain. Any supply chain activities, set of activities, that make up a supply chain, can and will be disrupted by blockchain, crypto, and token economics. >> Yeah, so let's talk about that. Because again, you're not hearing a lot of that from IBM. But I think we have a perspective there. You know, the 1.0 was the wild west, a bunch of developers, blockchain developers, theory developers, doing stuff, building up protocols, making a lot of money. And disintermediating the VCs, right? The new form of raising capital. The VCs are now all in, right? We saw this in Bahamas, you saw this in Puerto Rico, at the two conferences, at four conferences that we covered. So explain that? >> Well, that's just one application, the VCs and these guys are inefficient in some way, but what's happening with crypto currency about access to capital. Now there's a lot of capital being thrown out there. That's mainly because of the hype and the bubble aspect of it, but the real disruption is access to capital, that value chain, value activities are being disrupted and being more efficient. That's a global phenomenon, and that's happening in financing of start ups. Anything with a supply chain, whether it's moving food from point A to point B, is what IBM also highlights as well, anything that's structural incumbent is at risk. And so, this is where, I mean IBM has a ton of supply chain business. They've been doing this for generations in the computer industry. They connect systems together, and create value with using technology. So this is not going to be-- this is a great opportunity for IBM. Again, if they can convert that business value into the blockchain with the value capture, the create capture model, they can run the table. >> But I want to come back to innovation equation. And part of that innovation equation is being able to raise capital. And last I checked, which was last month, about 6.5 billion had been raised in crypto investments. >> And 60% of the projects failed. >> For sure, okay. But failure-- Silicon Valley, fail fest, it's probably up to 10 billion now, much more is being raised through crypto in startups in blockchain than there is in VC. The VCs realized this, and they want a piece of the action, but we're seeing private equity, we're seeing hedge funds, we're seeing crypto billionaires. >> The path of least resistance for the entrepreneur is where the action is. They go right to the new money opportunity. Because they can raise more money. >> So, here's the question. You take Fiocoin, for example, smart guys, trying to go after S3 with peer to peer storage, they raised 250 million dollars in 30 minutes, okay? Is it too much too fast? >> Yes, I think so, but it's what the market's giving. I mean, Fiocoin doesn't even have a product. They're on a roadmap. That's essentially a series A financing. >> Dave: That's a series C. >> Well, no, in terms of the evolution of the startup, it's a seed financing as a series C or D or F financing. >> Yeah, 250 million. >> I mean, it's insane. >> David Scott told us that he needed 85 to start Three Par. I mean that's a storage company 10 years ago, 20 years ago. >> Yeah. >> What a change. At 250 million. >> Look, it's a bubble. But the reality is that it's a bubble that's not going to pop and destroy the sector, it's just a proof point that the efficiency of funding is going to be disrupted. It is being disrupted. >> No, we'll see if it's going to destroy this sector or not. This could, you know-- Warren Buffet says it's going to end badly, others are believers. >> I'm long on blockchain, obviously you know that. I'm pretty biased, but anywhere there's inefficiencies, there's an opportunity for entrepreneurs and business leaders to put new business logic in place to capture that value. That's where the action will be. That's the innovation. And if IBM's innovation sandwich could work, you got a blockchain AI, data in the middle, everyone's going to be full and hungry and eat up everyone's lunch. So, Dave, that's the blockchain day. I'm John Furrier, with Dave Vellante, day three wall to wall coverage here at IBM Think in Las Vegas. More live coverage after this short break. (futuristic music)