>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCube and ETR, this is Breaking Analysis with Dave Vellante. >> When a piece of digital art sells for $69.3 million, more than has ever been paid for works, by Gauguin or Salvador Dali, making it created the third most expensive living artists in the world. One can't help but take notice and ask, what is going on? The latest craze around NFTs may feel a bit bubblicious, but it's yet another sign, that the digital age is now fully upon us. Hello and welcome to this week's Wikibon's CUBE insights, powered by ETR. In this Breaking Analysis, we want to take a look at some of the trends, that may be difficult for observers and investors to understand, but we think offer significant insights to the future and possibly some opportunities for young investors many of whom are fans of this program. And how the trends may relate to enterprise tech. Okay, so this guy Beeple is now the hottest artist on the planet. That's his Twitter profile. That picture on the inset. His name is Mike Winkelmann. He is actually a normal looking dude, but that's the picture he chose for his Twitter. This collage reminds me of the Million Dollar Homepage. You may already know the story, but many of you may not. Back in 2005 a college kid from England named Alex Tew, T-E-W created The Million Dollar Homepage to fund his education. And his idea was to create a website with a million pixels, and sell ads at a dollar for each pixel. Guess how much money he raised. A million bucks, right? No, wrong. He raised $1,037,100. How so you ask? Well, he auctioned off the last 1000 pixels on eBay, which fetched an additional $38,000. Crazy, right? Well, maybe not. Pretty creative in a way, way early sign of things to come. Now, I'm not going to go deep into NFTs, and explain the justification behind them. There's a lot of material that's been published that can do justice to the topic better than I can. But here are the basics, NFTs stands for Non-Fungible Tokens. They are digital representations of assets that exist in a blockchain. Now, each token as a unique and immutable identifier, and it uses cryptography to ensure its authenticity. NFTs by the name, they're not fungible. So, unlike Bitcoin, Ethereum or other cryptocurrencies, which can be traded on a like-for-like basis, in other words, if you and I each own one bitcoin we know exactly how much each of our bitcoins is worth at any point of time. Non-Fungible Tokens each have their own unique values. So, they're not comparable on a like-to-like basis. But what's the point of this? Well, NFTs can be applied to any property, identities tweets, videos, we're seeing collectables, digital art, pretty much anything. And it's really. The use cases are unlimited. And NFTs can streamline transactions, and they can be bought and sold very efficiently without the need for a trusted third party involved. Now, the other benefit is the probability of fraud, is greatly reduced. So where do NFTs fit as an asset class? Well, they're definitely a new type of asset. And again, I'm not going to try to justify their existence, but I want to talk about the choices, that investors have in the market today. The other day, I was on a call with Jay Po. He is a VC and a Principal at a company called Stage 2 Capital. He's a former Bessemer VC and one of the sharper investors around. And he was talking about the choices that investors have and he gave a nice example that I want to share with you and try to apply here. Now, as an investor, you have alternatives, of course we're showing here a few with their year to date charts. Now, as an example, you can buy Amazon stock. Now, if you bought just about exactly a year ago you did really well, you probably saw around an 80% return or more. But if you want to jump in today, your mindset might be, hmm, well, okay. Amazon, they're going to be around for a long time, so it's kind of low risk and I like the stock, but you're probably going to get, well let's say, maybe a 10% annual return over the longterm, 15% or maybe less maybe single digits, but, maybe more than that but it's unlikely that any kind of reasonable timeframe within any reasonable timeframe you're going to get a 10X return. In order to get that type of return on invested capital, Amazon would have to become a $16 trillion valued company. So, you sit there, you asked yourself, what's the probability that Amazon goes out of business? Well, that's pretty low, right? And what are the chances it becomes a $16 trillion company over the next several years? Well, it's probably more likely that it continues to grow at that more stable rate that I talked about. Okay, now let's talk about Snowflake. Now, as you know, we've covered the company quite extensively. We watched this company grow from an early stage startup and then saw its valuation increase steadily as a private company, but you know, even early last year it was valued around $12 billion, I think in February, and as late as mid September right before the IPO news hit that Marc Benioff and Warren Buffett were going to put in $250 million each at the IPO or just after the IPO and it was projected that Snowflake's valuation could go over $20 billion at that point. And on day one after the IPO Snowflake, closed worth more than $50 billion, the stock opened at 120, but unless you knew a guy, you had to hold your nose and buy on day one. And you know, maybe got it at 240, maybe you got it at 250, you might have got it at higher and at the time you might recall, I said, You're likely going to get a better price than on day one, which is usually the case with most IPOs, stock today's around 230. But you look at Snowflake today and if you want to buy in, you look at it and say, Okay, well I like the company, it's probably still overvalued, but I can see the company's value growing substantially over the next several years, maybe doubling in the near to midterm [mumbles] hit more than a hundred billion dollar valuation back as recently as December, so that's certainly feasible. The company is not likely to flame out because it's highly valued, I have to probably be patient for a couple of years. But you know, let's say I liked the management, I liked the company, maybe the company gets into the $200 billion range over time and I can make a decent return, but to get a 10X return on Snowflake you have to get to a valuation of over a half a trillion. Now, to get there, if it gets there it's going to become one of the next great software companies of our time. And you know, frankly if it gets there I think it's going to go to a trillion. So, if that's what your bet is then you know, you would be happy with that of course. But what's the likelihood? As an investor you have to evaluate that, what's the probability? So, it's a lower risk investment in Snowflake but maybe more likely that Snowflake, you know, they run into competition or the market shifts, maybe they get into the $200 billion range, but it really has to transform the industry execute for you to get in to that 10 bagger territory. Okay, now let's look at a different asset that is cryptocurrency called Compound, way more risky. But Compound is a decentralized protocol that allows you to lend and borrow cryptocurrencies. Now, I'm not saying go out and buy compound but just as a thought exercise is it's got an asset here with a lower valuation, probably much higher upside, but much higher risk. But so for Compound to get to 10X return it's got to get to $20 billion valuation. Now, maybe compound isn't the right asset for your cup of tea, but there are many cryptos that have made it that far and if you do your research and your homework you could find a project that's much, much earlier stage that yes, is higher risk but has a much higher upside that you can participate in. So, this is how investors, all investors really look at their choices and make decisions. And the more sophisticated investors, they're going to use detailed metrics and analyze things like MOIC, Multiple on Invested Capital and IRR, which is Internal Rate of Return, do TAM analysis, Total Available Market. They're going to look at competition. They're going to look at detailed company models in ARR and Churn rates and so forth. But one of the things we really want to talk about today and we brought this up at the snowflake IPO is if you were Buffet or Benioff and you had to, you know, quarter of a dollars to put in you could get an almost guaranteed return with your late in the game, but pre IPO money or a look if you were Mike Speiser or one of the earlier VCs or even someone like Jeremy Burton who was part of the inside network you could get stock or options, much cheaper. You get a 5X, 10X, 50X or even North of a hundred X return like the early VCs who took a big risk. But chances are, you're not one of these in one of these categories. So how can you as a little guy participate in something big and you might remember at the time of the snowflake IPO we showed you this picture, who are these people, Olaf Carlson-Wee, Chris Dixon, this girl Sono. And of course Tim Berners-Lee, you know, that these are some of the folks that inspired me personally to pay attention to crypto. And I want to share the premise that caught my attention. It was this. Think about the early days of the internet. If you saw what Berners-Lee was working on or Linus Torvalds, in one to invest in the internet, you really couldn't. I mean, you couldn't invest in Linux or TCP/IP or HTTP. Suppose you could have invested in Cisco after its IPO that would have paid off pretty big time, for sure. You know, he could have waited for the Netscape IPO but the core infrastructure of the internet was fundamentally not directly a candidate for investment by you or really, you know, by anybody. And Satya Nadella said the other day we have reached maximum centralization. The main protocols of the internet were largely funded by the government and they've been co-opted by the giants. But with crypto, you actually can invest in core infrastructure technologies that are building out a decentralized internet, a new internet, you know call it web three Datto. It's a big part of the investment thesis behind what Carlson-wee is doing. And Andreessen Horowitz they have two crypto funds. They've raised more than $800 million to invest and you should read the firm's crypto investment thesis and maybe even take their crypto startup classes and some great content there. Now, one of the people that I haven't mentioned in this picture is Camila Russo. She's a journalist she's turned into hardcore crypto author is doing great job explaining the white hot defining space or decentralized finance. If you're just at read her work and educate yourself and learn more about the future and be happy perhaps you'll find some 10X or even hundred X opportunities. So look, there's so much innovation going around going on around blockchain and crypto. I mean, you could listen to Warren Buffet and Janet Yellen who implied this is all going to end badly. But while look, these individuals they're smart people. I don't think they would be my go-to source on understanding the potential of the technology and the future of what it could bring. Now, we've talked earlier at the, at the start here about NFTs. DeFi is one of the most interesting and disruptive trends to FinTech, names like Celsius, Nexo, BlockFi. BlockFi let's actually the average person participate in liquidity pools is actually quite interesting. Crypto is going mainstream Tesla, micro strategy putting Bitcoin on their balance sheets. We have a 2017 Jamie diamond. He called Bitcoin a tulip bulb like fraud, yet just the other day JPM announced a structured investment vehicle to give its clients a basket of stocks that have exposure to crypto, PayPal allowing customers to buy, sell, and Hodl crypto. You can trade crypto on Robin Hood. Central banks are talking about launching digital currencies. I talked about the Fedcoin for a number of years and why not? Coinbase is doing an IPO will give it a value of over a hundred billion. Wow, that sounds frothy, but still big names like Mark Cuban and Jamaat palliate Patiala have been active in crypto for a while. Gronk is getting into NFTs. So it goes to have a little bit of that bubble feel to it. But look often when tech bubbles burst they shake out the pretenders but if there's real tech involved, some contenders emerge. So, and they often do so as dominant players. And I really believe that the innovation around crypto is going to be sustained. Now, there is a new web being built out. So if you want to participate, you got to do some research figure out things like how PolkaWorks, make a call on whether you think avalanche is an Ethereum killer dig in and find out about new projects and form a thesis. And you may, as a small player be able to find some big winners, but look you do have to be careful. There was a lot of fraud during the ICO. Craze is your risk. So understand the Tokenomics and maybe as importantly the Pump-a-nomics, because they certainly loom as dangers. This is not for the faint of heart but because I believe it involves real tech. I like it way better than Reddit stocks like GameStop for example, now not to diss Reddit. There's some good information on Reddit. If you're patient, you can find it. And there's lots of good information flowing on Discord. There's people flocking to Telegram as a hedge against big tech. Maybe there's all sounds crazy. And you know what, if you've grown up in a privileged household and you have a US Education you know, maybe it is nuts and a bit too risky for you. But if you're one of the many people who haven't been able to participate in these elite circles there are things going on, especially outside of the US that are democratizing investment opportunities. And I think that's pretty cool. You just got to be careful. So, this is a bit off topic from our typical focus and ETR survey analysis. So let's bring this back to the enterprise because there's a lot going on there as well with blockchain. Now let me first share some quotes on blockchain from a few ETR Venn Roundtables. First comment is from a CIO to diversified holdings company who says correctly, blockchain will hit the finance industry first but there are use cases in healthcare given the privacy and security concerns and logistics to ensure provenance and reduce fraud. And to that individual's point about finance. This is from the CTO of a major financial platform. We're really taking a look at payments. Yeah. Do you think traditional banks are going to lose control of the payment systems? Well, not without a fight, I guess, but look there's some real disruption possibilities here. And just last comment from a government CIO says, we're going to wait until the big platform players they get into their software. And so that is happening Oracle, IBM, VMware, Microsoft, AWS Cisco, they all have blockchain initiatives going on, now by the way, none of these tech companies wants to talk about crypto. They try to distance themselves from that topic which is understandable, I guess, but I'll tell you there's far more innovation going on in crypto than there is in enterprise tech companies at this point. But I predict that the crypto innovations will absolutely be seeping into enterprise tech players over time. But for now the cloud players, they want to support developers who are building out this new internet. The database is certainly a logical place to support a mutable transactions which allow people to do business one-on-one and have total confidence that the source hasn't been hacked or changed and infrastructure to support smart contracts. We've seen that. The use cases in the enterprise are endless asset tracking data access, food, tracking, maintenance, KYC or know your customer, there's applications in different industries, telecoms, oil and gas on and on and on. So look, think of NFTs as a signal crypto craziness is a signal. It's a signal as to how IT in other parts of companies and their data might be organized, managed and tracked and protected, and very importantly, valued. Look today. There's a lot of memes. Crypto kitties, art, of course money as well. Money is the killer app for blockchain, but in the future the underlying technology of blockchain and the many percolating innovations around it could become I think will become a fundamental component of a new digital economy. So get on board, do some research and learn for yourself. Okay, that's it for today. Remember all of these episodes they're available as podcasts, wherever you listen. I publish weekly on wikibon.com and siliconangle.com. Please feel free to comment on my LinkedIn post or tweet me @dvellante or email me at david.vellante@siliconangle.com. Don't forget to check out etr.plus for all the survey action and data science. This is Dave Vellante for theCUBE Insights powered by ETR. Be well, be careful out there in crypto land. Thanks for watching. We'll see you next time. (soft music)

>> Live from Barcelona, Spain, it's theCUBE! Covering KubeCon and CloudNativeCon Europe 2019. Brought to you by Red Hat, the Cloud Native Computing Foundation, and ecosystem partners. >> Welcome back. This is theCUBE's live coverage of KubeCon, CloudNativeCon 2019 here in Barcelona, Spain. 7,700 here in attendance, here about all the Cloud Native technologies. I'm Stu Miniman; my cohost to the two days of coverage is Corey Quinn. And to help us break down what's happening in this ecosystem, we've brought in Jason Bloomberg, who's the president at Intellyx. Jason, thanks so much for joining us. >> It's great to be here. >> All right. There's probably some things in the keynote I want to talk about, but I also want to get your general impression of the show and beyond the show, just the ecosystem here. Brian Liles came out this morning. He did not sing or rap for us this morning like he did yesterday. He did remind us that the dinners in Barcelona meant that people were a little late coming in here because, even once you've got through all of your rounds of tapas and everything like that, getting that final check might take a little while. They did eventually filter in, though. Always a fun city here in Barcelona. I found some interesting pieces. Always love some customer studies. Conde Nast talking about what they've done with their digital imprint. CERN, who we're going to have on this program. As a science lover, you want to geek out as to how they're finding the Higgs boson and how things like Kubernetes are helping them there. And digging into things like storage, which I worked at a storage company for 10 years. So, understanding that storage is hard. Well, yeah. When containers came out, I was like, "Oh, god, we just fixed it for virtualization, "and it took us a decade. "How are we going to do it this time?" And they actually quoted a crowd chat that we had in our community. Tim Hawken, of course one of the first Kubernetes guys, was in on that. And we're going to have Tim on this afternoon, too. So, just to set a little context there. Jason, what's your impressions of the show? Anything that has changed in your mind from when you came in here to today? Let's get into it from there. >> Well, this is my second KubeCon. The first one I went to was in Seattle in December. What's interesting from a big picture is really how quickly and broadly KubeCon has been adopted in the enterprise. It's still, in the broader scheme of things, relatively new, but it's really taking its place as the only container orchestrator anybody cares about. It sort of squashed the 20-or-so alternative container orchestrators that had a brief day in the sun. And furthermore, large enterprises are rapidly adopting it. It's remarkable how many of them have adopted it and how broadly, how large the deployment. The Conde Nast example was one. But there are quite a number. So we turned the corner, even though it's relatively immature technology. That's the interesting story as well, that there's still pieces missing. It's sort of like flying an airplane while you're still assembling it, which makes it that much more exciting. >> Yeah, one of the things that has excited me over the last 10 years in tech is how fast it takes me to go from ideation to production, has been shrinking. Big data was: "Let's take the thing that used to take five years "and get it down to 18 months." We all remember ERP deployments and how much money and people you need to throw at that. >> It still takes a lot of money and people. >> Right, because it's ERP. I was talking to one of the booths here, and they were doing an informal poll of, "How many of you are going to have Kubernetes "in production in the next six months?" Not testing it, but in production in the next six months, and it was more than half of the people were going to be ramping it up in that kind of environment. Anything architecturally? What's intriguing you? What's the area that you're digging down to? We know that we are not fully mature, and even though we're in production and huge growth, there's still plenty of work to do. >> An interesting thing about the audience here is it's primarily infrastructure engineers. And the show is aimed at the infrastructure engineers, so it's technical. It's focused on people who code for a living at the infrastructure level, not at the application level. So you have that overall context, and what you end up having, then, is a lot of discussions about the various components. "Here's how we do storage." "Here's how we do this, here's how we do that." And it's all these pieces that people now have to assemble, as opposed to thinking of it overall, from the broader context, which is where I like writing about, in terms of the bigger picture. So the bigger picture is really that Cloud Native, broadly speaking, is a new architectural paradigm. It's more than just an architectural trend. It's set of trends that really change the way we think about architecture. >> One interesting piece about Kubernetes, as well. One of the things we're seeing as we see Kubernetes start to expand out is, unlike serverless, it doesn't necessarily require the same level of, oh, just take everything you've done and spend 18 months rewriting it from scratch, and then it works in this new paradigm in a better way. It's much less of a painful conversion process. We saw in the keynote today that they took WebLogic, of all things, and dropped that into Kubernetes. If you can do it with something as challenging, in some respects, and as monolithic as WebLogic, then almost any other stack you're going to see winds up making some sense. >> Right, you mentioned serverless in contrast with Kubernetes, but actually, serverless is part of this Cloud Native paradigm as well. So it's broader than Kubernetes, although Kubernetes has established itself as the container orchestration platform of choice. But it's really an overall story about how we can leverage the best practices we've learned from cloud computing across the entire enterprise IT landscape, both in the cloud and on premises. And Kubernetes is driving this in large part, but it's bigger picture than the technology itself. That's what's so interesting, because it's so transformative, but people here are thinking about trees, not the forest. >> It's an interesting thing you say there, and I'm curious if you can help our community, Because they look at this, and they're like, "Kubernetes, Kubernetes, Kubernetes." Well, a bunch of the things sit on Kubernetes. As they've tried to say, it's a platform of platforms. It's not the piece. Many of the things can be with Kubernetes but don't have to be. So, the whole observability piece. We heard the merging of the OpenCensus, OpenTracing with OpenTelemetry. You don't have to have Kubernetes for that to be a piece of it. It can be serverless underneath it. It can be all these other pieces. Cloud Native architecture sits on top of it. So when you say Cloud Native architecture, what defines that? What are the pieces? How do I have to do it? Is it just, I have to have meditated properly and had a certain sense of being? What do we have to do to be Cloud Native? >> Well, an interesting way of looking at it is: What we have subtracted from the equation, so what is intentionally missing. Cloud Native is stateless, it is codeless, and it is trustless. Now, not to say that we don't have ways of dealing with state, and of course there's still plenty of code, and we still need trust. But those are architectural principals that really percolate through everything we do. So containers are inherently stateless; they're ephemeral. Kubernetes deals with ephemeral resources that come and go as needed. This is key part of how we achieve the scale we're looking for. So now we have to deal with state in a stateless environment, and we need to do that in a codeless way. By codeless, I mean declarative. Instead of saying, how are we going to do something? Let's write code for that, we're going to say, how are we going to do that? Let's write a configuration file, a YAML file, or some other declarative representation of what we want to do. And Kubernetes is driven this way. It's driven by configuration, which means that you don't need to fork it. You don't need to go in and monkey with the insides to do something with it. It's essentially configurable and extensible, as opposed to customizable. This is a new way of thinking about how to leverage open-source infrastructure software. In the past, it was open-source. Let's go in an monkey with the code, because that's one of the benefits of open-source. Nobody wants to do that now, because it's declaratively-driven, and it's configurable. >> Okay, I hear what you're saying, and I like what you're saying. But one of the things that people say here is everyone's a little bit different, and it is not one solution. There's lots of different paths, and that's what's causing a little bit of confusion as to which service mesh, or do I have a couple of pieces that overlap. And every deployment that I see of this is slightly different, so how do I have my cake and eat it, too? >> Well, you mentioned that Kubernetes is a platform of platforms, and there's little discussion of what we're actually doing with the Kubernetes here at the show. Occasionally, there's some talk about AI, and there's some talk about a few other things, but it's really up to the users of Kubernetes, who are now the development teams in the enterprises, to figure out what they want to do with it and, as such, figure out what capabilities they require. Depending upon what applications you're running and the business use cases, you may need certain things more than others. Because AI is very different from websites, it's very different from other things you might be running. So that's part of the benefit of a platform of platforms, is it's inherently configurable. You can pick and choose the capabilities you want without having to go into Kubernetes and fork it. We don't want 12 different Kubernetes that are incompatible with each other, but we're perfectly okay with different flavors that are all based on the same, fundamental, identical code base. >> We take a look at this entire conference, and it really comes across as, yes, it's KubeCon and CloudNativeCon. We look at the, I think, 36 projects that are now being managed by this. But if we look at the conversations of what's happening here, it's very clear that the focus of this show is Kubernetes and friends, where it tends to be taking the limelight of a lot of this. One of the challenges you start seeing as soon as you start moving up the stack, out through the rest of the stack, rather, and seeing what all of these Cloud Native technologies are is, increasingly, they're starting to be defined by what they aren't. I mean, you have the old saw of, serverless runs on servers, and other incredibly unhelpful sentiments. And we talk about what things aren't more so than we do what they are. And what about capabilities story? I don't have an answer for this. I think it's one of those areas where language is hard, and defining what these things are is incredibly difficult. But I see what you're saying. We absolutely are seeing a transformative moment. And one of the strangest things about it, to me at least, is the enthusiasm with which we're seeing large enterprises, that you don't generally think of as being particularly agile or fast-moving, are demonstrating otherwise. They're diving into this in fascinating ways. It's really been enlightening to have conversations for the last couple of days with companies that are embracing this new paradigm. >> Right. Well, in our perspective at Intellyx, we're focusing on digital transformation in the enterprise, which really means putting the customer first and having a customer-driven transformation of IT, as well as the organization itself. And it's hard to think in those terms, in customer-facing terms, when you're only talking about IT infrastructure. Be that as it may, it's still all customer-driven. And this is sometimes the missing piece, is how do we connect what we're doing on the infrastructure side with what customers require from these companies that are implementing it? Often, that missing piece centers on the workload. Because, from the infrastructure perspective, we have a notion of a workload, and we want workload portability. And portability is one of the key benefits of Kubernetes. It gives us a lot of flexibility in terms of scalability and deployment options, as well as resilience and other benefits. But the workload also represents the applications we're putting in front of our end users, whether they're employees or end customers. So that's they key piece that is like the keystone that ties the digital story, that is the customer-facing, technology-driven, technology-empowered story, with the IT infrastructure stories. How do we support the flexibility, scalability, resilience of the workloads that the business needs to meet its business goals? >> Yeah, I'm really glad you brought up that digital transformation piece, because I have two questions, and I want to make sure I'm allowing you to cover both of them. One is, the outcome we from people as well: "I need to be faster, and I need to be agile." But at the same point, which pieces should I, as an enterprise, really need to manage? Many of these pieces, shouldn't I just be able to consume it as a managed service? Because I don't need to worry about all of those pieces. The Google presentation this morning about storage was: You have two options. Path one is: we'll take care of all of that for you. Path two is: here's the level of turtles that you're going to go all the way down, and we all know how complicated storage is, and it's got to work. If I lose my state, if I lose my pieces there, I'm probably out of business or at least in really big trouble. The second piece on that, you talked about the application. And digital transformation. Speed's great and everything, but we've said at Wikibon that the thing that will differentiate the traditional companies and the digitally transformed is data will drive your business. You will have data, it will add value of business, and I don't feel that story has come out yet. Do you see that as the end result from this? And apologies for having two big, complex questions here for you. >> Well, data are core to the digital transformation story, and it's also an essential part of the Kubernetes story. Although, from the infrastructure perspective, we're really thinking more about compute than about data. But of course, everything boils down to the data. That is definitely always a key part of the story. And you're talking about the different options. You could run it yourself or run it as a managed service. This is a key part of the story as well, is that it's not about making a single choice. It's about having options, and this is part of the modern cloud storage. It's not just about, "Okay, we'll put everything in one public cloud." It's about having multiple public clouds, private clouds, on-premises virtualization, as well as legacy environments. This is what you call hybrid IT. Having an abstracted collection of environments that supports workload portability in order to meet the business needs for the infrastructure. And that workload portability, in the context of multiple clouds, that is becoming increasingly dependent on Kubernetes as an essential element of the infrastructure. So Kubernetes is not the be-all and end-all, but it's become an essentially necessary part of the infrastructure, to make this whole vision of hybrid IT and digital transformation work. >> For now. I mean, I maintain that, five years from now, no one is going to care about Kubernetes. And there's two ways that goes. Either it dries up, blows away, and something else replaces it, which I don't find likely, or, more likely, it slips beneath the surface of awareness for most people. >> I would agree, yeah. >> The same way that we're not sitting here, having an in-depth conversation about which distribution of Linux, or what Linux kernel or virtual memory manager we're working with. That stuff has all slipped under the surface, to the point where there are people who care tremendously about this, but you don't need to employ them at every company. And most companies don't even have to think about it. I think Kubernetes is heading that direction. >> Yeah, it looks like it. Obviously, things continue to evolve. Yeah, Linux is a good example. TCP/IP as well. I remember the network protocol wars of the early 90s, before the web came along, and it was, "Are we going to use Banyan VINES, "are we going to use NetWare?" Remember NetWare? "Or are we going to use TCP/IP or Token Ring?" Yeah! >> Thank you. >> We could use GDP, but I don't get it. >> Come on, KOBOL's coming back, we're going to bring back Token Ring, too. >> KOBOL never went away. Token Ring, though, it's long gone. >> I am disappointed in Corey, here, for not asking the question about portability. The concern we have, as you say: okay, I put Kubernetes in here because I want portability. Do I end up with least-common-denominator cloud? I'm making a decision that I'm not going to go deep on some of the pieces, because nice as the IPI lets things through, but we understand if I need to work across multiple environments, I'm usually making a trade-off there. What do you hear from customers? Are they aware that they're doing this? Is this a challenge for people, not getting the full benefit out of whichever primary or whichever clouds they are using? >> Well, portability is not just one thing. It's actually a set of capabilities, depending upon what you are trying to accomplish. So for instance, you may want to simply support backing up your workload, so you want to be able to move it from here to there, to back it up. Or you may want to leverage different public clouds, because different public clouds have different strengths. There may be some portability there. Or you may be doing cloud migration, where you're trying to move from on-premises to cloud, so it's kind of a one-time portability. So there could be a number of reasons why portability is important, and that could impact what it means to you, to move something from here to there. And why, how often you're going to do it, how important it is, whether it's a one-to-many kind of thing, or it's a one-to-one kind of thing. It really depends on what you're trying to accomplish. >> Jason, last thing real quick. What research do you see coming out of this? What follow-up? What should people be looking for from Intellyx in this space in the near future? >> Well, we continue to focus on hybrid IT, which include Kubernetes, as well as some of the interesting trends. One of the interesting stories is how Kubernetes is increasingly being deployed on the edge. And there's a very interesting story there with edge computing, because the telcos are, in large part, driving that, because of their 5G roll-outs. So we have this interesting confluence of disruptive trends. We have 5G, we have edge computing, we have Kubernetes, and it's also a key use case for OpenStack, as well. So it's like all of these interesting trends are converging to meet a new class of challenges. And AI is part of that story as well, because we want to run AI at the edge, as well. That's the sort of thing we do at Intellyx, is try to take multiple disruptive trends and show the big picture overall. And for my articles for SiliconANGLE, that's what I'm doing as well, so stay tuned for those. >> All right. Jason Bloomberg, thank you for helping us break down what we're doing in this environment. And as you said, actually, some people said OpenStack is dead. Look, it's alive and well in the Telco space and actually merging into a lot of these environments. Nothing ever dies in IT, and theCUBE always keeps rolling throughout all the shows. For Corey Quinn, I'm Stu Miniman. We have a full-packed day of interviews here, so be sure to stay with us. And thank you for watching theCUBE. (upbeat techno music)

(Upbeat music) >> From the Hard Rock hotel in Las Vegas, its theCUBE! Covering the Hosho Con 2018, brought to you by Hosho. >> Okay, welcome back every one, this is theCUBE's exclusive coverage here live in Las Vegas for Hosho Con, the first inaugural event where security and block chain conferences is happening, it's the first of its kind where practitioners and experts get together to talk about the future, and solve some of the problems in massive growth coming they got a lot of them. Its good new and bad news but I guess the most important thing is security again, the first time ever security conference has been dedicated to all the top shelf conversations that need to be had and the news here are covering. Our next guest Greg Pinn who's the head of strategy and products for iComply Investor Services. Great to have you thanks for joining us. >> Very nice to be here >> So, we were just talking before we came on camera about you know all the kind of new things that are emerging with compliance and all these kind of in between your toes details and nuances and trip wires that have been solved in the traditional commercial world, that have gotten quite boring if you will, boring's good, boring means it works. It's a system. But the new model with Block Chain and Token Economics is, whole new models. >> Yeah I think what's so exciting about this is that in the Fiat world, from the traditional financial market, everyone is so entrenched in what they've been doing for 20, 30, 40 years. And the costs are enormous. And Block Chain, Crypto coming in now is like we don't have to do it that way. We have to do compliance. Compliance matters, it's important and it's your legal obligation. But you don't have to do it in the same sort of very expensive, very human way that people have been doing it in the past. >> And Cloud Computing, DevOps model of software proved that automations a wonderful thing >> Right >> So now you have automation and you have potentially AI opportunities to automate things. >> And what we've seen is huge increases in technology, in around machine learning and clustering of data, to eliminate a lot of the human process of doing AML, KYC verification, and that's driving down costs significantly. We can take advantage of that in the Crypto Space because we don't have thousands of people and millions of millions of dollars of infrastructure that we've built up, we're starting fresh, we can learn from the past and throw away all the stuff that doesn't work, or isn't needed anymore. >> Alright let's talk about the emerging state of regulation in the Block Chain community and industry. Where are we? What's the current state of the union? If you had to describe the progress bar you know with zero meaning negative to ten being it's working, where are we? What is the state of >> I think if you'd asked me a year ago I think negative would've been the answer. A year ago there was still a big fight in Crypto about do we even want to be part of Compliance, we don't want to have any involvement in that. Because it was still that sort of, Crypto goes beyond global borders, it goes beyond any of that. What's happened now is people have realized, it doesn't matter if you're dealing in Crypto Currency or traditional currency, or donkeys or mules or computers or whatever, if you're trading goods for value, that falls under Regulatory Landscape and that's what we're hearing from the SCC, from FinCEN, from all the regulators. It's not the form it's the function. So if you've got a security token, that's a security, whether you want it to be or not. You can call it whatever you want, but you're still going to be regulated just like a security. >> And I think most entrepreneurs welcome clarity. People want clarity, they don't want to have to be zigging when they should be zagging. And this is where we see domicile problem. Today it's Malta, tomorrow it's Bermuda. Where is it? I mean no one knows it's a moving train, the big countries have to get this right. >> A hundred percent. And beyond that what we're seeing, what's very, very frustrating for a market as global as this is it's not just country-level jurisdiction, the US you've got State-level jurisdiction as well. Makes it very, very hard when you're running a global business if you're an exchange, if you're any sort of global, with a global client reach. Managing that regulation is very, very difficult. >> You know I interviewed Grant Fondo who's with Goodwin Law Firm, Goodwin Proctor they call it Goodwin now, he's a regulatory guy, and they've been very on the right side of this whole SCC thing in the US. But it points to the issue at hand which is there's a set of people in the communities, that are there to be service providers. Law Firms, Tax, Accounting, Compliance. Then you got technology regulation. Not just financial you have GDPR, it's a nightmare! So okay, do we even need GDPR with Block Chain? So again you have this framework of this growth of internet society, now overlaid to a technical shift. That's going to impact not only technology standards and regulations but the business side of it where you have these needed service providers. Which is automated? Which isn't automated? What's your take on all of this? >> I agree with you a hundred percent, and I think what's helpful is to take a step back and realize while compliance is expensive and a pain and a distraction for a lot of businesses. The end of the day it saves people's lives. And this is what, just like if someone was shooting a gun as you were running down the street, in your house, you're going to call the police, that is what financial institutions are doing to save these industries and individuals that are impacted by this. A lot of it from a Crypto Currency perspective, we have a responsibility because so much of what the average person perception is, is Ross Ulbricht and Silk Road. And we have to dig our way out of that sort of mentality of Crypto being used for negative things. And so that makes it even more important that we are ultra, ultra compliant and what's great about this is there's a lot great opportunities for new vendors to come into the space and harness what existed whether that's harnessing data, different data channels, different IDDent verification channels and creating integrated solutions that enable businesses to just pull this in as a service. It shouldn't be your business, if you're in exchange, compliance is something you have to do. It should not become your business. >> Yeah I totally agree, and it becomes table stakes not a differentiator. >> Exactly >> That's the big thing I learned this week it's people saying security's a differentiator, compliance is a, nah, nah, I have standards. Alright so I got to ask you about the, you know I always had been on the biased side of entrepreneurship which is when you hear regulations and you go whoa, that's going to really stunt the growth of organic innovation. >> Right. But in this case the regulatory peace has been a driver for innovation. Can you share some opinions and commentary on that because I think there's a big disconnect. And I used to be the one saying regulation sucks, let the entrepreneurs do their thing. But now more than ever there's a dynamic, can you just share your thoughts on this? >> Yeah, I mean regulators are not here to drive innovation. That's not what their job is. What's been so interesting about this is that because of regulations coming to Crypto along with these other things, it's allowing businesses to solve the problem of compliance in very exciting, interesting ways. And it's driving a lot of technologies around machine learning, what people like IBM Watson are doing around machine learning is becoming very, very powerful in compliance to reduce that cost. The cost is enormous. An average financial institution is spending 15 percent. Upwards of 15 percent of their revenue per year on compliance. So anything they can do to reduce that is huge. >> Huge numbers >> And we don't want Crypto to get to that point. >> Yeah and I would also love to get the percentage of how much fraud is being eaten into the equation too. I'm sure there's a big number there. Okay so on the compliance side, what are the hard problems that the industry is solving, trying to solve? Could you stack rank the >> I think number one: complexity. Complexity is the biggest. Because you're talking about verifying against sanctions, verifying against politically exposed persons, law enforcement lists, different geographical distributions, doing address verification, Block Chain forensics. The list just stacks and stacks and stacks on the complexity >> It's a huge list. >> It's a huge list >> And it's not easy either. These are hard problems. >> Right, these are very, very difficult problems and there's no one expert for all of these things. And so it's a matter of bringing those things together, and figuring out how can you combine the different levels of expertise into a single platform? And that's where we're going. We're going to that point where it's a single shop, you want to release an ICO? You're an exchange and you need to do compliance? All of that should be able to be handled as a single interface where it takes it off of your hands. The liability is still with the issuer. It's still with the exchange, they can't step away from their regulatory liability, but there's a lot that they can do to ease that burden. And to also just ignore and down-risk people that just don't matter. So many people are in Crypto, not the people here, but there's so many people in Crypto, you buy one tenth of a Bitcoin, you buy a couple of Ether, and you're like okay that was fine. Do we really need to focus our time on those people? Probably not. And a lot of the >> There's a lot big money moving from big players acting in concert. >> And that's where we need to be focused. Is the big money, we need to be focused on where terrorists are acting within Block Chain. That's not to say that Block Chain and Crypto is a terrorist vehicle. But we can't ignore the reality. >> And I think the other thing too is also the adversary side of it is interesting because if you look at what's happening with all these hacks, you're talking about billions of dollars in the hands now of these groups that are highly funded, highly coordinated, funded basically underbelly companies. They get their hands on a quantum computer, I was just talking to another guy earlier today he's like if you don't have a sixteen character password, you're toast. And now it's twenty four so, at what point do they have the resources as the fly wheel of profit rolls in on the hacks. >> You know, one of the interesting things we talk about a lot is we have to rely on the larger community. We can't, I can't, you can't solve all of the problems. Quantum computing's a great example. That's where we look for things like two-factor authentication and other technologies that are coming out to solve those problems. And we need to, as a community, acknowledge That these are real problems and we've identified potential solutions. Whether that's in academia, whether it's in something like a foundation like the Ethereum Foundation, or in the private sector. And it's a combination of those things that are really driving a lot of it's innovation. >> Alright so what's the agenda for the industry if you had to have a list this long, how do you see this playing out tactically over the next twelve months or so as people start to get clarity. Certainly SCC is really being proactive not trying to step on everybody at the same time put some guard rails down and bumpers to let people kind of bounce around within some frame work. >> I think the SCC has taken a very cautious approach. We've seen cease and desist letters, we've seen notifications we haven't seen enormous finds like we see in Fiat. Look at HSBC, look at Deutsche Bank, billions of dollars in fines from the SCC. We're not seeing that I think the SCC understands that we're all sort of moving together. At the same time their responsibility is to protect the investor. And to make sure that people aren't being >> Duped. >> Duped. I was trying to find an appropriate term. >> Suckered >> Suckered, duped. And we've seen that a lot in ICOs but we're not seeing it, the headlines are so often wrong. You see this is an ICO scam. Often it's not a scam, it's just the project failed. Like lots of businesses fail. That doesn't mean it's a scam, it means it was a business fail. >> Well if institutional investors have the maturity to handle they can deal with failures, but not the average individual investor. >> Right, which is why in the US we have the credit investor, where you have to be wealthy enough to be able to sustain the loss. They don't have that anywhere else. So globally the SCC care and the other financial intelligence units globally are monitoring this so we make that we're protecting the investor. To get back to your question, where do I see this going? I think we're going to need to fast track our way towards a more compliant regime. And this I see as being a step-wise approach. Starting with sanctions making sure everyone is screened against the sanction list. Then we're going to start getting more into politically exposed persons, more adverse media, more enhanced due diligence. Where we really have that suite of products and identify the risk based on the type of business and the type of relationship. And that's where we need to get fast. And I don't think the SCC is going to say yeah be there by 2024, it's going to be be there by next year. I was talking to Hartej, he was one of the co founders of Hosho and we were talking on TheCUBE about self-regulation and some self-policing. I think this was self-governed, certainly in the short term. And we were talking about the hallway conversations and this is one of the things that he's been hearing. So the question for you Greg is: What hallway conversations have you overheard, that you kind of wanted to jump into or you found interesting. And what hallway conversations that you've been involved in here. >> I think the most interesting, I mentioned this on a panel and got into a great conversation afterwards, about the importance of the Crypto community reaching out to the traditional financial services community. Because it's almost like looking across the aisle, and saying look we're trying to solve real business problems, we're trying to create great innovative things, you don't have to be scared. And I was speaking at a traditional financial conference last week and there it was all people like this Crypto is scary and it's I don't understand it. >> You see Warren Buffett and Bill Gates poopooing it and freak out. >> But we have an obligation then, we can't wait for them to realize what needs to be done. We need to go to them and say, look we're not scary, look let's sit down. If you can get a seat at a table with a head of compliance at a top tier bank, sit down with them and say let me explain what my Crypto ATM is doing and why it's not a vehicle for money laundering, and how it can be used safely. Those sorts of things are so critical and as a community for us to reach across the aisle, and bring those people over. >> Yeah bridge the cultures. >> Exactly. Because it's night and day cultures but I think there's a lot more in common. >> And both need each other. >> Exactly. >> Alright so great job, thanks for coming on and sharing your insights. >> Thank you so much. >> If you have a quick plug on what you're working on, give the plug for the company. >> Sure, so iComply Investor Services is here to help people who want to issue ICOs, do that in a very compliant way. Because you shouldn't have to worry about all of your compliance and KYC and Block Chain Forensics and all that, you should be worried about raising money for your company and building a product. >> Alright final question since I got you here 'cause this is on my mind. Security token, has got traction, people like it 'cause no problem being security. What are they putting against that these days, what trend are you seeing in the security token? Are they doing equity? I'm hearing from hedge funds and other investors they'll want a little bit of equity preferred and or common, plus the token. Or should the token be equity conversion? What is some of the strings you're seeing? >> You know I think it' really just a matter of do you want paper or do you want a token? Just like a stock certificate is worth nothing without the legal framework behind it. A security token is the same way. So we're seeing where some people are wanting to do equity, where some of their investors want the traditional certificate. And some are fine with the token. We're seeing people do hybrid tokens where it morphs from security to utility or back. Where they're doing very creative things. It's what's so great about the Ethereum Network and the Smart Contracts, is there are all of these great options. The hard part then is, how do you fit those options into regular framework. >> And defending that against being a security, and this is interesting because if it converts to a utility, isn't that what security is? >> So that's the question. >> Then an IPO is an, again this is new territory. >> Right, and very exciting territory. It's an exciting time to be involved in this industry. >> In fact I just had an AE3B Election on tokens, first time ever. >> Yeah it's an amazing state that we're in. Where serious investors are saying yeah token's great for me. Give me the RC20 I'll stick it in my MetaMask Wallet, it's unbelievable where we are. And only more exciting things to come. >> Greg Pinn, thanks for coming on and sharing your insights. TheCUBE covers live here in Las Vegas, Hoshocon, the first security conference in the industry of its kind where everyone's getting together talking about security. Not a big ICO thing, in fact it's all technical, all business all people shaping the industry, it's a community it's TheCUBE coverage here in Las Vegas. Stay with us for more after this short break. (Upbeat music)

(upbeat music) >> Live from Toronto, Canada. It's The Cube, covering Blockchain, futurist conference 2018. Brought to you by, The Cube. >> Hello, everyone, welcome back. The Cube's live coverage here in Toronto, Ontario, for Untraceable's Blockchain futurist conference. Two days, this is day one of two days, of Cube coverage. I'm John Furrier, your host. Our next guest is, Azam Shaghaghi, who is the director of public relations, and strategy for Shivom.io. Really interesting story, raised a bunch of money in 15 seconds in an ICO. Really interesting story, welcome to The Cube. Thanks for coming in. >> Yeah, thank you so much for having me. >> So we were just talking on camera, you studied at NASA in Northern California, where I live, and you've got this really cool venture. Before we get into it, talk about what you guys did with the ICO, then talk about what the company does. >> Sure, the project Shivom is about owning your own DNA. So, we are sequencing DNA, and storing it on the patient-friendly platform on Blockchain. Which actually give the power back to the donors, and the people that have the... I mean, and the users, basically. So basically, you can monetize, manage and... >> Control your data. >> Control your own data. >> How much did you guys raise? You did 15 seconds, give us the numbers. What happened? >> So we raised the 35 million. We reached the hard-cap, our public sell was sold out under 15 seconds. >> 15 seconds? - 15 seconds. >> And what month was that? >> It was, actually, on May, the third. >> So it was post, after, I mean, a lot of these actually just went out last year. Still, that's really a good signal, given the climate at that time. >> Exactly, and I think it's about what your actually, your intention is, in order to disrupt. We're talking about genomic information. We're talking about healthcare. At a very highly regulated industry, right? A lot of things have been untapped in that sector. So, hopefully, with the help of Blockchain, A.I., and advanced technology, we can disrupt. >> Now I...Crystal Rose, who's the CEO of Sensay Token, when I interviewed her, in Puerto Rico, she had a comment, which I love, I still use to this day. She makes kind of like A.I. chat boxes, really cool things, your brain and the Blockchain. Similar concept that you're doing, you're DNA on the Blockchain, that you can own and manage, for your own personal benefit, and/or value. >> Exactly. >> That's kind of the concept, if I get that right? >> That it is. >> Okay, who does the genoming? >> Oh, you mean the sequencing? >> Yeah, the sequencing. >> So, I mean, right now, there are companies out there that they do the, I mean, the... >> So, I've got to get it done, and then I bring it to the platform? How does that work? >> So what we, actually, we do, we have created the marketplace, for the industry players, right? For the donors, for the users, for the governments, hospitals, insurance companies, and research labs. So, basically, after you sequence your DNA, we can, you can give it us and we sequence, we manage it, and secure it, store it on the Blockchain. Obviously, we are doing a lot of partnerships with different companies and different ventures. We have an alliance, with different partners out there, that we do, we're trying to promote that, in terms of also helping to develop the kits. >> So I get this right, so a variety of touchpoints, with stakeholders, service providers would do the service, >> Exactly. >> and the users themselves...so if I get my DNA sequence... >> Why? >> If I get my DNA sequence... >> Right... >> Do I direct the provider to put it on the Blockchain, or do I take it myself and put it on the Blockchain? >> So, when you sequence, well, okay, so you just sign up in our platform, >> Got it. >> and after that you sign up in order to sequence your DNA. The kit will be sent out to you. So, it's all through Spark contract. >> So I use your marketplace and you do all the work? >> We do all the work. >> Got it, and how does the tokens work? >> So, basically... >> The better the DNA, the more tokens you get? I wish. Whoops! >> I wish it was like that. I don't think that there is a discussion of a better... >> Okay, I know I'm kidding. >> like DNA. >> I'm afraid you get my DNA sequence, I've got all of these diseases, who knows what I have. Alzheimers or, you know. >> Well that's maybe why you should figure that out, right? Why don't you just sequence your DNA? But, what was the question again? I'm sorry, I forgot. >> So I use your marketplace, and I instruct the service provider to put the DNA. How does the tokens work? >> Oh yes, so the token is OMX token. So, per transaction there is kind of like the token economics that actually has, is kind of like being managed. For example, you donate your DNA to a research lab, you get a certain amount of OMX, and each OMX is going to be worth, you know, some fraction to a varium. >> So some people might know 23 and me. >> Right. >> And do the mail-order kit, same thing. I think some other folks have, I think Ancestry.com does something similar. How do you guys differ from them? Just, decentralized, or they are centralized, obviously. >> They're very centralized, and there is also, there has been research going on, and that they even don't know what is going on, after they sequence your DNA, where that information is going, how is it being stored, so it is all, kind of like, company's property after it is... then you, kind of like, basically sign an agreement that you will give out all the authority to them, and they can do whatever they want to do with it. So basically you are on chain, and we are creating this economy of precision... so, we are promoting precision medicine, we're promoting advanced healthcare, and how we can tackle rare disease, for example, like cancer. We just kicked off, two projects, one in India, and one in Africa. So, we partner with EMQT, a not-for-profit organization, in Africa, in order to sequence 100 people that has Sickle Cell Disease. >> If I want to team the company, how big are you guys, what are you going to do with the funding, where's the product? Take us to a quick update on where you guys are at. >> Sure, we just actually, we had a shuffle in our management team after the ICO, obviously. Now we are moving towards the product development. So, we are hiring a lot of developers, we are working on product development. We are on our roadmap, and are on track. Obviously, we have initiation, re-initiated some of the partnerships, and some of the projects. We are on our marketing, get innovative, kind of like PR, strategy right now, and with a new team... >> And what's the PR strategy, you're in charge of that, is there an outreach, is it promoting the service provider, does it get the marketplace out there? >> It's everything, literally. So we are at the first thing, that our first pillar is the community. So, we want to have the community, you know, engaged in everything that we do. We keep updating them, we get them involved. That's what matters, you know, with us, and we have an organic, kind of like, community. We've already great support in Asia, in India, I mean all over the world, but we are like, very kind of like, you know, some industries favorite...market's favorite. >> Community's super important, well I love your mission. I'd love to keep in touch. It's getting loud in here, but I'd love to follow up with you guys. >> Yeah, obviously, thank you so much for your time. >> People, it's a great project, I mean, it's one of those things where this is a real example of de-centralization, where you can use your own information, and broker that for value. Be part of studies, I'd imagine. >> Exactly. >> Engage with community. >> And create an impact. >> Great, so thanks so much for coming out, appreciate it. It's The Cube coverage live, here, in Toronto, Ontario, for the Blockchain Futurist conference, John Furrier, day one, coverage. Thanks for watching. (digital music)

>> Announcer: From New York, it's theCUBE, covering Blockchain Week. (light, upbeat music) Now, here's John Furrier. >> Hello everyone, I'm John Furrier. We're here on the ground in New York City for consensus 2018's Blockchain Week. I'm here with David Siegel who's the CEO of the Pillar Project, also the author of the Token Economics Handbooks, entrepreneur, mentor to companies. Thanks for coming on. >> Sure. Thank you John. Great to be here. >> So, I'm excited to talk with you, because I've been saying all week I love token economics. It's a core part of the business model, disruption. >> Right. >> It's part of the key formula where Blockchain shines. It's where the rubber meets the road as some say. So, let's jump in. >> Sure. >> In a, how much is being discussed here about that. I mean, obviously ICOs are well known and people are looking at that road, but token economics, the importance of it. >> First, I think it's important to understand we're at the very beginning of this. It's a steep learning curve. We have these old model T tokens called the ERC20 Token, which we will get rid of and build better things. We have models that are mostly based on old, you know whenever there's a new technology, we first imitate the old stuff until we see what the new. So one of the really exciting new things that's come out of this is effectively the Ethereum model, where you raise some money. You build a system, and it's open source. It's free. Anyone can take it and do anything with it, but it requires its own token to work. And the people who sell those tokens, you sell about 70% to your funders. And that creates the economy, but you hold about 30% back, and as the value goes up, as the network affect kicks in, and as these things rise in value, your 30% funds the project indefinitely after you run out of the first. So that's a pretty exciting model. That's what I call sort of basic Tokenomics. You have no business model. You have no income model. You're totally open source, but your token powers your platform, and you have some tokens in your back pocket. >> Yeah, and the general form that you see is 70 30, roughly. Is that just a pattern? >> That's about, that's normal. Now, that in a single sale, and what we see now in ICO land is pre-sale and then the big sale. I think we'll go to a more staged model, because I think too many companies are over-funded, too many projects are over-funded. 240 million dollars for status, maybe we don't need that much to start a project with a white paper. So, I think we're, I hope we'll go to a staged model. >> Explain stage model. >> You might sell 20% and raise what do you need to get to first base, three million to show a minimum viable product and get traction. >> Yeah, it makes sense. >> You know, what projects need more than three, maybe four? I mean, you don't need 20 million. And then you do that, but now you've got 80% of tokens in reserve. so now things are going well. Your token has gone for let's say five cents to 20 cents. You can sell another 20%. >> So the funding of the platform is that token economics kick in, per your other example, that 30% 70 goes raise and 30% funds the platform indefinitely. >> Yeah, that's typical. >> If you do the staged approach, what you're saying is there's more power in reserve to fund the platform. Cause if you can, if you get to first base, you might get to second. >> I think investors have been too gullible. And they're looking at these 50, 80, hundred million dollar raises and going oh me too. I have fear of missing out. I want to get in on that too. That's the big deal of the day. That is the one that's probably going to have lousy returns, right. These things are over-funded and not, there's no real give and take with the market. >> Yep. >> You know to get, like, nothing ever really works the way you plan. No business plan is ever worth anything. Think of, you know, Google, Apple, Microsoft. Their first business plans are for something else. (John laughs) So, find groups of people that you can give money to, not too much, get to first base, get some traction. Make something, listen to the market, continue to, you know, build what people want. And then your token will rise, and then you sell the next-- >> So I got to ask you. >> You know what. It's very much like venture capital, right. We do it in stages. >> It's pragmatic. It's the right way, I think an investor and the entrepreneur, by the way, your point is also valid, because like in venture capital, if you take on too much money, you could actually fail. You're not optimized, and we've seen that before. >> It's not good allocation of capital now. We've got a lot of innovation to do. Wouldn't it be great if we could do a thousand projects at like two or three, four million dollar level and see which ones come out of that? And then give them more. >> David, let's walk through a use case. So I'm a entrepreneur or I'm a growing business, and I maybe bootstrapped it or maybe took a little bit of the seed funding and did some cloud technology, open source, and whoa I've got a product. And I go, you know what, the growth strategy for me as a company is use token economics, because I got to decentralize use fit there. >> Sure. >> And I see a way to scale and grow with tokens. How should I set up my token economics? I got security tokens. I got utility tokens. Do I do a (crosstalking) purpose vehicle? It just sounds so complicated. >> I'm making funny faces John, because I see too many tokens, where you know, we always say, and I'm a token designer, well, what does a token do. Well the answer is it raises money. That is the number one answer. It raises money. Well, does it actually do anything for the token holders? Well, I'm not sure. >> Maybe down the road. >> It gives you access to the system. Is that a good answer? So, I think actually we should be turning most of these token sales into equity sales. And that's a different kettle of fish. So, I honestly think people misunderstand the ICO concept. And they should, we should think of ICOs as we know them today as project finance, not corporate finance, not company, not start up finance. Start up finance should be done with equity. >> That's a great point. >> Equity is something you hold very dear. There's only a hundred percent of it. You sell it only if you need to to get to the next level. And equity means your shareholders are along for the ride. They may have to vote you out of your job at some point. >> it's happened to me before. Happened to me before. That's venture capital. >> You may be acquired. You may, any number of things can happen to equity. And project finance is different. So, the Pillar Project is an open source project. It's a non-profit foundation in Switzerland. No one owns it. It can't be bought. Our goal is to do one project that we said in the white paper. We are on track to do that, but if for some reason we couldn't do that, I think the money should go back to the people who funded your white paper, not some random ride off in the hay. >> David, take a minute to talk about the Pillar Project. I was going to get to that. Let's go to that. What's the Pillar Project about? How did this come to life? >> Sure. >> What's the current status? >> So the Pillar Project is a good example of an open source non-profit project that uses Tokenomics and is not a company and has no equity. We have a token that will give you access to our wallet, which is coming this summer. And the wallet's meant to be, initially just a cryptocurrency wallet, like many others, but with so many differences John. So, for example there will be a name look up, an address book, and you'll find me by name, and you'll send me tokens, currencies by name, or you'll trade with me by name. You'll never see an ether address. You'll never see a Bitcoin address, no fishing, no hacking, no whacky cut and paste errors and mistakes. For example, the Blockchain Explorer will be built into our wallet, so as you send me something or trade something, you'll be getting status information all the time. You'll never go to a Blockchain Explorer. All these nice things are built in. We have lots of features for your mom to make it easy for her to understand and keep it very simple. >> So you've abstracted away some of the complexities. >> We've added complexity on the back end to do the services that make the front end very simple. >> Okay, got it, and what's current status of the project funding wise. >> We'll be shipping the first. Well, we raised money last July. We had a 20 million dollar funding last July. That has gone up, because ether has gone up. We got about 50 people full time. We're in London. >> So you're at first base or second base? >> We'll be on first base in July. We've got to get our product out the door. >> It's the wallet. >> It's a wallet to start with, but also it will help you manage your personal data. It will help you be GDPR compliant. We'll have an exchange, and we'll be doing equity ICOs. We'll be doing, in the wallet, we'll be doing, for example, with the utility ICO, you'll issue your token, you'll sell it to people. They'll buy it in the wallet, and then trading will be immediate. You'll be listed, everything right there. Don't move stuff around. We're trying to create a place that's safe for consumers. >> Got it. Alright, I love this concept about open source. And, it's kind of threaded. Some people are open source guys, like me and you who have seen that movie go from in a radical second tier citizen to primary tier power in the world. As Blockchain takes a community focus, we're seeing the same business model that made Red Hat very famous, that's powering the Linux Foundation. This notion of projects. >> Yeah. >> And in open source, it's a distinction between project and product, upstream projects, a community, downstream products. Downstream activity is where people productize the project. >> Yes. >> I see a pattern happening in this world where we're starting to see some of that. >> Interesting, okay. >> Your thoughts on this, because that's Ethos has proven, this world has got a lot of growth to it. Are we seeing this open source ethos and principles, architecting in some of the successful crypto projects? >> I would take this productization analogy pretty far, because it's true in the profit world too. It's true with startups often do this as well. It's a service. You get better at it. You productize it. That's pretty common. So I think that's part and parcel of just solving customer needs and then scaling, right. The non-profit thing or the open source thing is different, because you can't make money on your open source thing. You've got to find another way, right. And here in Blockchain world, we're using scaling effects and tokens. So let's go to Tokenomics, where you can start an ecosystem fresh with a token that has no value. And Ether had no value on day one, right, almost no value. And through network effect and use and the fact that it's a limited number. The limited number's important. The limited number makes it so that it's scarcity, right. It's got value to people who can see oh later it might be worth more. So you got both natural buyers and speculators coming into a system. And this is what's giving the SEC a hard time, because they can't see whether it's... >> They don't understand it. >> Is it a security or is it a gym membership? >> It's a serious problem, because they don't understand it. And they're causing a lot of, they're stunting a lot of growth in my opinion. But the thing about token economics is what you're getting at, and this is where I trying to squint through the noise. I understand in an infrastructure web one dot O. You got URLs. You got DNS. You have infrastructure. >> Yeah. >> Google has cost per click. All that apparatus doesn't work for network effects. So if you look at network effects as being the main value proposition in most of these opportunities, why were we using E-commerce stack, an old model, because how do you measure networks? Tokens are becoming and wallets are becoming a key infrastructure. I see this coming. >> Yes. >> And I see the network effect tokens becoming both an instrumentation vehicle and a transactional currency opportunity. So, this is a dynamic that Blockchain could really and tokens... >> So I think the huge opportunity John is that instead of fake news and fake everything and fragile DNS systems and things that are centralized, we can decentralize things now with a token at the center that puts skin in the game. And a great example is science. You know we do science pretty badly. It's whoever can get budget for whatever whacky project. And if we had a betting, a side bet system, where people could bet on the outcome of projects, even when you propose them, the people who make the decisions of whether to fund these things could look at the odds first of what the crowd thinks. And if the crowd is right about the outcome, the winners take the money from the losers. And this skin in the game concept is being used... >> Yeah, it's a marketplace. The market dynamics of what you just said I think is very important. This changes the evaluation structure based upon new information. >> So, the price of fake news is almost zero. And we saw that in the last election. We see that in Facebook everyday. We see that on the front page of the New York Times. The price of fake news is close to zero. If it costs you money that it, when it, turns out your stuff is fake, if you have to put up money alongside your news, and then we find out it's fake, and you lose it, that will change things. >> Yes. >> So the skin in the game tokens, and you can actually google skin in the game tokens and learn a bunch of interesting models is what's coming next. >> Well, we have to bring you on board theCube project that we're starting. We're tokenizing our platforms, and we think about this all the time. >> Yeah. >> It's very cutting edge. David, really great to have you on. Talk about the book. Where can we find it? Are you on Medium? >> One quick thing. You know, we're going to have token camp coming up in Lithuania. We've got a one week workshop and un-conference in Vilnius, Lithuania. I know that sounds like nowhere. >> What is that? What's the date? >> It's July 15th to 22nd. It's free. Pillar's paying for it. It's at a resort. We're taking over a resort with crazy crypto people, skin in the game tokens, token camp. We've got a business agility camp for entrepreneurs, for investors, for coders. We're going to do, in fact we're, I can just announce right now that we're doing a hackathon with Radix, an incredible new Blockchain and a bunch of interesting people. Lex Okland will be there, Venay Gupta. We're going to have learning, learning for seven days. >> That's at a resort. >> It's at a resort in Lithuania. >> So it's all one compound. >> Yeah, we're taking it over. And there will be a little golf. But it's good for families. We did it last year. >> I checked it out. It's got a lot of lake there too. You got a lake. You got golf courses. >> It's going to be really fun. And we did it last year, and people were learning until one o'clock in the morning. >> What's the capacity you're looking at for that event? >> 500 people. >> So intimate. It's a very intimate event. >> It should be perfect. We're going to be blasting out. You should come. We're going to be blasting out on 4K. We've got enough bandwidth to send to YouTube and to wherever else you want to distribute video. You could be part of the media center. >> Awesome, well David Siegel, great to have you on. Final question, your take away from Blockchain Week. Obviously, new entrants are going to, new actors are coming into the system, community's booming. It's still tight knit, but now you have finance. You have tech and you have developers all coming together. Your thoughts of the show this week, Blockchain Week. >> Yeah, one thing, the demos are pretty lame in general, I think. We still aren't paying much attention to user experience at all. >> Yep. >> I think the enterprise guys have a lot to learn, because they're kind of playing their normal enterprise game. And it doesn't look so good here. >> Yeah, Jace was talking about the Blockchain washing. (David laughs) Basically, putting a Blockchain-- >> We added Blockchain to this enterprise project and look. >> Yeah, is that a real dynamic in your opinion? >> I think they're figuring it out. I think some of the academic and some of the white paper stuff I've seen is okay and commercializing it. They're on the path to learning how to commercialize it. But they're not part of us. They're not, they'll never be crypto-anarchists, okay fine. But they don't really seem to get us and to be part of it. They're, it's amazing to see a conference where IBM, Microsoft, you know these other big names, are deloyed, are, like, in their own little pockets on the side, and no one's paying. >> John: It's a toe in the water for them. >> They're not paying much attention, because you go in there, and it's the normal marketing jargon and brochures. And it doesn't feel like they're really engaging. >> Yeah. >> I'd love to see more engagement with our community. >> And I think they got to really get engaged in. The good news is, for IBM at least, they're part of the Linux Foundation and Hyperledger Project. So, we're seeing some open sourcedness there, I mean. >> I'd like to see more thought leadership, more real, you know, publish some papers. Come to our conferences and give us some substance. >> Well, I mean, I talked to Michael Dell and Pat Gelsing for instance, and, you know, they are into Blockchain. Michael Dell's watched watched Oslo's videos. He'll probably watch this video. They're learning. And the statement is what they're doing is they're giving it to their R and D teams, so office of the CT. They're not really, so it's very academic, to your point. They haven't really operationalized the ethos and product. >> You know what? >> It's time for experiments. There's no way you're going to blockchain your whole company, your whole supply chain. It is time for experiments, and it is time for guys like Michael Dell to jump in and say we are-- >> What's your advice to Michael? What would you tell him to do? >> It's time for experiments. We're going to do some things. We're going to try some things. We're going to partner up. The Hyperledger stuff, you know, try more than that. Don't just be, go into meetings and summits and top down. Try some bottom up stuff of empower your employees, Michael. You're not Michael, but I'm telling you (John laughs) Michael empower people to try some things. They might even not be... They might be quasi-legal, but if it's an experiment, you're going to learn something. And then you can talk to the lawyers. Don't have the lawyers and the management say what the program is. >> Cause that'll put it in a box. >> They won't get it. >> They won't get it. They'll stop the action. >> They won't find that-- >> Ask for forgiveness, not permission. >> Ask for, go do it. Go build. Get, hire some crazy crypto people, and tell them to look for inefficiencies in your whole operation and cut them down by 90%. >> David, great conversation. We could go for another hour. You're going to be a regular, I can tell, on theCUBE. When we do our live format, we're going to certainly have you back. Keep in touch. >> Sure. >> I'm John Furrier here at Blockchain Week in Consensus as wrapping up the day three of coverage. I'm John Furrier. Thanks for watching. Be right back. (light, upbeat music)

(upbeat music) >> Hello there and welcome to a special Cube conversation here at The Cube's Palo Alto studios, I'm John Furrier. Join with me for this special Cube Conference, Stu Miniman with Wikibon and The Cube co-host as well just up at Amazon Web Services Summit. Stu, great to see you again. Our next guest is Ben Golub, who's the executive chairman and interim CEO of Storj, pronounced storage. So it's a really hot cryptocurrency, blockchain based storage solution. I should say decentralized storage, not necessarily cryptocurrency, but tokens are involved, encryption. Great to see you. >> Great to see you, it's good to be back. >> Formerly Docker CEO and now advising at Mayfield Fund as a venture partner and also interim CEO of a hot-- >> Yeah really exciting company. And I'm really excited to talk to you about it today. >> So let's just jump into it. So obviously the ICO craze is awesome and we've always speculated that the blockchain and the decentralized applications are coming is going to be the real action. But yet it's going to create efficiencies where there's inefficiencies. >> Sure. >> Venture capital is one of them and that's why the ICO craze is going. People are raising a boatload of money that they probably wouldn't have gotten that amount. >> Wouldn't have gotten, yeah no dilution, things like that. It's interesting yeah. >> So give us an update on Storj or storage. How much in ICO did they raised, whitepapers out there? It's peer to peer, give a quick, take a minute to explain what the company's doing. >> Yeah well I guess that I should probably start by saying that I think that blockchain is bigger than just cryptocurrency, and decentralized is bigger than blockchain, and Storj is primarily a decentralized storage company. So we're about decentralized apps and the whole thing would absolutely work even if we were just using dollars. But I think it does make it a whole lot more exciting. And so the company, kind of unique in the crypto space in that we actually had a running service that was providing real value, before we did the large token sale. And the token sale raised about $30 million. Fortunately they took about 10 of that in Ethereum and Bitcoin which rose up. So there's a good deal more than that in the bank account right now. >> John: Hopefully they converted to fiat currency. >> And then they converted to fiat along the way. >> It's at an all-time high of $20,000 right now. It's like $7,000, something like that. >> Yeah, so you know, didn't sell everything at the peak, but didn't sell at the-- >> Yeah, so we've been having many blockchain and crypto or token-based economic kind of things. But the real question is what's happening? Now we know the action's been on the infrastructure side. We look at all the top hedge funds, Polychain, amongst others. They love these deals because it's infrastructure. Is that where the action is and how are you guys looking at that because at the same time, there's a wave of decentralized applications also known as Dapps coming on. So there's a relationship going on between how fast the infrastructure can go, and then how applications are going to work with either on chain or off chain dynamics. >> Sure, sure. So maybe it would be helpful to give you a sense of what it is that we do. 'Cause I think that if you do that, then I think it makes sense in the context of decentralized infrastructure, decentralized apps, but also actually traditional infrastructure as well. I've always been searching for a company that I could describe at Thanksgiving. I've never succeeded, so I always end up saying that I'm in computers, and fixing somebody's printer. (laughing) But I guess if I were to describe Storj at Thanksgiving, I'd say it's basically the Airbnb of storage, or the Airbnb of disc drives. So Airbnb, people have lots of condos or vacation properties that aren't being used all the time, and so Airbnb brings them together with people who want to rent those, and they're the largest hotel company in the world, without owning a single property. And we're kind of doing the same thing with Storj, in that there is, first of all, this explosion in the amount of data that's getting created. It would fill a stack of CD-ROMs to Mars and back this year. Yet the price of cloud storage hasn't come down. And 90% of all the disc drives that are out there are only about 10% utilized. So seems like a problem that needs a solution. And that's what we've done. We've basically brought together a very large network of individuals and companies that have spare storage capacity and matched them up with people who need storage. The really cool aspect, there are many cool aspects about it, but one of them is that basically if you want to store on the Storj network, we take your file, you encrypt it, so we never hold the keys. You encrypt it, it's all scrambled up, we break it up into between 20 and 80 pieces, and we spread those out across 150,000 or so nodes that we have in our network. So it's super cheap, but it's also super secure. Great performance because the data's way out at the edge. And super available because there's no storm or power outage or idiot tripping over a power cord that can take out your storage. >> So, Ben, you touched on, first question I was going to ask, of course, trust and security. Storage I absolutely have to worry about, so it sounds like that's at the core, but there's a number of dynamics going on in the industry. Object storage was great, let's spread it out, let's make it more decentralized, but most of the core storage industry is speeds and feeds and latency's super important, and even when you start getting to distributed architecture, I worry about that latency. So what are kind of the use cases, what are some of the key customer issues? Is price a big piece of it? Or what solutions does Storj solve that others can't? >> I always said when I was at Cluster, which was a storage company that there were four things that mattered in storage. There's certainly price; there was security; as in I don't want anybody to be able to access it; there's availability, I never want to drop or lose files; and finally there's performance, how fast I can get it. And so for a huge range of use cases that involve files, basically everything that object storage is kind of used for today, the design of our system is actually much better because we've encrypted it locally and then spread it out, you really can't attack it. First of all, you'd have to figure out... So a would-be attacker who wanted to find one of your files in the storage network would have to figure out which of the 80 or the 20 nodes out of 150,000 it's located on. If they found one of those, and they got the small portion of the file that's there, they wouldn't be able to do anything with it 'cause it's encrypted. Even if they were somehow able to decrypt it by stealing the key from you, not from us... >> So encryption and immutability... >> And immutability, right. So you get all of that. So for the security piece, it's great. For the availability piece, I never lose a file. It's really, really good, because if you just look at the math, the chances that somehow... You can basically lose 10 out of 20 nodes and still be able to recover your files. And all of our nodes are run by different people, different power supply. >> So let's take a step back. How many nodes are on the network now, you said? >> 150,000 now, run by 70,000 farmers, is what we call them. They're not miners, 'cause they're not just solving that problem, they're just producing something of value. 70,000 farmers, and then we have on the network right now, over 50 petabytes of data, which is a really large amount, and yet, we don't run a single data center. >> Have you guys raised any venture at all, or is it all ICO proceeds? >> There was a small seed round that was done, before the ICO craze. But other than that, it's all-- >> And how many people are working on the company? >> 25. >> So you guys are a classic startup. The working product, how does that look now? Is it on the blockchain, is it off the chain, how's it working, Bitcoin? >> So I've described to you what the product does. So far nothing I've described to you involves blockchain. The way the economics work is that as a user, somebody who wants to store on our network, we quote a price in dollars. You can either pay us in dollars or in the Storj token, and as a farmer, you get compensated with a Storj token. And that's done, of course, using blockchain we're actually part of Ethereum. >> Is that ERC-20 token? >> ERC-20 token, yeah. There are also interesting things that we are working on using blockchain for things like you just mentioned, data integrity, so I can make sure that if I'm doing a snapshot of a database, and I want to make sure that it's exactly what it is, nobody can tamper with it, et cetera, then that's a perfect use of blockchain. But using blockchain for the stuff I was talking about before, like figuring out where the shards are and making sure that they're uptime and reliable, that's actually stuff where blockchain isn't the best answer. >> Ben, tell us a little bit about the customers that you find there, 'cause storage administrators, that role's been changing a lot, but the typical storage administrator, if you tell them, "Oh yeah, I'm doing some distributed thing, "somewhere else, and paying in crypto-currency," they'd be like, are you kidding me? I want this thing that I can lock and hold and guard with a gun. >> This is like anything else, there's an adoption curve, and right now it's clearly very much early adopters. And actually similarly to Docker and similar to the cloud in general, it's developers who are leading the way. Developers are saying, oh, wow, I can write to the storage network in the same way that I would have written to S3, only it's cheaper, for many use cases, more performing, and not centralized, so I'm not trusting one cloud provider. So for certain use cases, this is fantastic. >> Are there certain cloud native apps that you're finding have strong affinity here? >> Yeah, so basically what we have affinity with right now, and let's be clear, this is early days. I wouldn't recommend that people store their most sensitive data on this, but-- >> Not Oracle certified yet, is what you're saying? >> We're not Oracle certified, no. (laughing) Basically anything involving a large file that you're not writing to very frequently, but you're reading a lot, or that's getting read by lots of people around the world, we're a really good solution. It's one of the things I think I mentioned to you. So we've got 150,000 nodes. They're located in I think it's now 180 countries, and all over the U.S. So if you want to get your data close to the edge, the people who are consuming your data are really close to the edge, this is actually really good. And because it's spread across so many, you get the benefit of parallelism, so it's super fast, in addition to being super safe and super secure. >> How does it work for the farmers? Because we have video files, so we would love to spread our video files on the Storj network. So let's just say... >> I'd do a special deal for you, too, you know. >> Of course, yeah, get a little token action going on both sides, Cube coins. But the availability thing is concerning. Whose computers is it being stored on? Is it extra capacity? Is it servers? Is it people's home computers? What's the, is it that kind of model? >> Sure, so basically yeah, we, just as Airbnb measures reputation, we measure reputation, too. And so if you don't have a good reputation, certain characteristics, we won't send data to you. What it basically means is you've got to have dedicated hardware and a dedicated connection. So we do have people who are running things in their home, but it's not a laptop, it's not on your phone. But if you have a disc drive that's connected with reasonably high capacity and reasonably well connected, then you'll establish good reputation. But what we are seeing is we are seeing a lot of universities, a lot of small businesses, some data center operators who have spare capacity or just want to use us as like, be both a farmer and a user. So backup and get stuff on their capacity as a good idea. And interestingly enough, we also are getting a lot of people who were Bitcoin miners and bought equipment, which is good quality equipment, but there's such an arms race in doing that. >> So they abandoned, because it was too hard for them to get coins. >> It's too hard to make money, right, and very expensive, specialized equipment, and in our case, basically general high quality equipment works well. >> What's the profit model? How do the farmers make money? Take our Cube videos, as an example, so I'm paying you guys, and you're distributing those tokens? >> You're paying us and you're paying us either in dollars or tokens. And then farmers get compensated in tokens. Right now, about 60 cents on every dollar goes to farmers. And farmers get more storage based off of their reputation. We charge people based on both how much you're storing as well as how much bandwidth egress that you're doing, and we compensate farmers exactly the same way. >> It's handled through a consensus protocol that you guys have? >> Yeah, yeah, so the payment and assessing reputation we actually use good distributed blockchain as well there, right, so you're not counting on Storj to be in the middle there. Now, with the remaining 40 cents, which I think is actually the really interesting part, we keep some of that, we put some back into the network, but what I'm really excited about is that this is now a way for us to economically empower demand partners as well. The first thing we announced was FileZilla, but we have lots of other open source projects waiting in the wings, and we're happy to share with them. So as opposed to centralized cloud, where it's really hard to make money as an open source company, we're not an open source project in our case, right? We're happy if you're sending us users and data, to give you a really meaningful percentage. >> Any kind of freemium model you guys are playing with? I can imagine this being pretty interesting, because S3 democratized and lowered the cost barrier, obviously with cloud. >> S3 has been great for many things. >> How low are you in terms of the disruption? You guys are probably going to have to come in and undercut S3, is that the strategy? Or is that the price value? >> I think what I learned from my time in storage, is price is important but you have to be really safe and available and reliable, 'cause people's data is really important. But we looked across a pretty broad set of use cases, in comparing us to the traditional cloud providers we're probably a third. And we could go lower. What I think is really interesting in our case is that the economics just work really well. So from our perspective, if you're a farmer, you've already got, it's spare capacity, you don't need any more electricity to run this thing, you've got bandwidth, right? You don't need to hire any more people. So it's almost pure margin for a farmer, which is great for them. And so we can give economic value to farmers, we can give economic value to our customers, we can give economic value to partners. >> Any kind of economic models you can share in terms of what someone would make? Let's just say that I had this big music library that's not being used anymore, and I had a-- >> Well, as a customer of course, if you've got data that you want to store on our network, you'll save a lot of money, and it's probably a third of what you might pay. >> But is there any kind of, if I'm a farmer, I want to join the network? >> But if you're a farmer. >> How much am I going to make? >> It really depends on how much you're storing and how good your connection is, but as a farmer, I think you can make decent money. This could probably be I don't know off the top of my head, $20, $30 a month per drive, which isn't bad, and certainly much easier than making money-- >> So it kind of depends like the Airbnb model, depends how well you're using-- >> How well you're used. So some people earn less, some people earn more. And again, for most of the farmers, this is pure margin. >> Great, we got a couple back to back rooms, Stu. We should get some drives up there and get on board. We could pay for the cameras. >> And look, I think for videos, you guys would actually be a perfect use case with a lot of the stuff that's going to be coming out later this year. You get both storage and CDN like things for free, in the sense that because-- >> I'm really glad you brought that up, 'cause I want to ask you about Videocoin, 'cause Halsey Minor has Videocoin, another ICO, he raised $50 million. We covered that on Silicon Angle. But he's trying to democratize Acromi. Is that similar to what you guys are doing? >> I guess you could say yeah, we're further democratizing object storage, democratizing S3, but I think we can also democratize Acromi, we can democratize Isilon, there's certain other really exciting things that are-- >> What other services, you mentioned CDN, so it's not just storing the information, but that global dispersion, what does that enable? >> It used to be that people had a really big difference between archival which is slow, hard to get at, and CDN, right? And but actually, given the way that we're doing this thing, we can be pretty seamless. Pay archival for stuff that's staying in archival, but go up market if you're going to be having a lot of people read it. >> So I got to ask you about the, obviously, security. You're looking at it for additional services around redundancy, I can see that being a nice headroom for you. On a personal note, you've been involved in a lot of industry companies that have done very well, entrepreneurial success. >> Ben: Why am I doing this? (laughing) >> I can tell you're having fun. How could you not have fun, it's a whole 'nother generation of innovation, disruption coming, a whole 'nother price point. So what's it like, are you having fun? And if you could talk to your 22-year-old self right now, 'cause I wish I was 22 right now in this market-- >> Are you saying I'm not 22? >> How do you explain this? And when you go to parties, even in the Valley, and people say, "Man, you're crazy, it's a fricken' "scam out there," how do you explain to 'em this revolution? Because this is like a special, unique wave. How would you talk about that? >> Actually I describe it the same way to people in the Valley the same way that I described at the beginning, which is that blockchain is bigger than cryptocurrency, and decentralized is much bigger than blockchain. And Storj is first and foremost decentralized. It's about decentralized computing, decentralized storage, supporting decentralized apps, keeping the internet from ending up in the hands of just three people, three companies, which I think is really important. But also I feel very good that, to the extent that Storj does touch on cryptocurrency, that we've done it the right way. We had the service working first before we did the token sale. We raised what now appears to be a modest amount in the token sale, tried to be very transparent and at the forefront. >> You probably could've gotten more if you wanted to. >> Probably, right? But we were trying to be forefront in terms of governance and transparency, and I think that it'll probably be a good thing, just as it was kind of a good thing that the bubble burst in the late '90s and you got rid of a lot of such not great companies and not such great operators. I think that the current corrections, or whatever, in the crypto market I think will-- >> Like pets.com is gone, but DogeCoin still exists. (laughing) >> So I'm sure that somebody has a crypto base pets.com or webvan lurking in the wings somewhere. Kodak just did it. >> I got to ask you, you're super smart. You went to some really good schools, I think Princeton, Harvard Business School. So you got a good education, so I got to get your take on the whole token economics vision. 'Cause this is, if you look at outside the tech trends, there's actually new economic models that are coming out. Have you looked at token economics? New liquidity on the one side, you've got sovereignty, you've got consensus. These are not just tech issues, these are society issues. What's your vision around that? How are you viewing it? What's the upside? How is this shaping the future? >> Yeah, I think if you're a token network, you sort of have to have some central bank chops as well, right? And we actually have a central banker. >> John: So you have a chief economic officer? >> So we don't, no, we have an advisor-- >> John: Public policy. >> I actually had a degree in public policy at one point. But we need to think about the token supply in the same way you'd think about the money supply. We're backed by something real, so it's sort of like having currencies backed by gold. We need to make sure that the market grows and the network grows. And my fundamental belief is that the more the network grows, the more people use it, the more value that we're able to provide, that'll be good for token economics in the long run. In the short run, though, what we've done, is again, we price based off of dollars, and we compensate farmers based off the token based off of the spot price. So for farmers, we've tried to remove any need to worry about volatility or things like that. >> So I want your reaction-- >> Or the price. >> I've said on The Cube multiple times that in the old days of venture startups, the CTO was everything. You had to have a great CTO or VP of engineering and great senior executive team on the entrepreneurial team. Now it's almost like the chief economic officer is a critical piece, 'cause you've got public policy intersecting with economics. You've got new kinds of math that's not technical algorithm but it's kind of business algorithms. >> It is, business algorithms. Just like any economy, the money supply matters. And people's trust in that money matters. And the supply matters. All that stuff like that, and stability matters. So I think absolutely this new breed of network based token companies will have to worry about that, and probably should think about a chief economics officer, but it doesn't mean that you don't also have to have a great CTO and great technology, 'cause that's how you make the network valuable and grow. And one of the reasons that gave me both excitement and comfort about going to Storj is that the economic model works, fundamentally, even if the crypto's not there. >> John: 'Cause technology is decentralized. >> Decentralized storage makes sense even if you're buying and selling it with dollars or pounds or rubles, or whatever. >> Ben, great to see you, thanks for coming in and sharing the Ben Golub School of Economics, Public Policy for Tokens. You can give a class at Stanford on that soon, although that's the competition's school. >> Maybe, yes. Slightly different. We still like them. >> Great to see you, congratulations. Storj, pronounced storage. Great, successful ICO, hot startup, really, an example of the infrastructure opportunities of a new decentralized infrastructure that can be and will soon, we think, it will be critical infrastructure in a whole new way. Great to see you. >> Ben: Really good to see you, great to be back with you. >> It's the Cube Conversation, I'm John Furrier, Stu Miniman, thanks for watching. (upbeat music)

(Caribbean music) >> Narrator: Live, from San Juan, Puerto Rico. It's theCUBE, covering Blockchain Unbound. Brought to you by Blockchain Industries. >> Hello, welcome back everyone. I'm John Furrier, co-host of theCUBE. Exclusive coverage here in Puerto Rico for Blockchain Unbound, it's a global conference where a lot of the leaders are coming together. It's our second day of wall-to-wall coverage. Talking to all the top people: government officials, entrepreneurs, investors, and tons of great action here. Our next guest is Marcus Levin who's the co-founder of XYO Network, xyo.network is the URL. Interesting opportunity really built from the ground up. No outside funding, although it does some interesting things with their community. Great IoT example, great use of the cloud, great example of how real entrepreneurs are working with crypto and blockchain to actually grow. Welcome to theCUBE. >> Thank you, John. >> So, tell me a little bit about what you guys do. Take a minute to explain to the audience what XYO Network is, how did you get here, what is it all about? >> Yeah, sure. So, XYO Network is the world's first decentralized location oracle. "Oracle" means data input into smart contracts. Now you have the problem that a lot of data sources are centralized and hackable or spoofable. So, if you make a bet, for example, you need to look at the results of the bet at a website, the website could be hacked, it could collude with someone to provide wrong data. The same problem exists with GPS. GPS is easily spoofable and hackable, like during the Pokemon Go craze, for example, all the kids just downloaded GPS spoofing apps, they get all the rare Pokemons. Or, allegedly the Iranians took down an American drone a few years back sending up a wrong GPS signal. The drone just landed. So, because of that, you can't do transactions based on location data. Today, most applications for location, GPS location, are navigational but not transactional. We solve this by providing a decentralized location data or network. We do this though IoT devices, mobile phone apps, and other types of partnerships. We are around since 2012. Started as an IoT company which provided location beacons, we call it XY Findit. We have about a million of them out there, and they can recognize each other's location. It's like us two taking a selfie together, we print out two copies, put our signatures on there. When we leave each other, we can prove that were here together. And it's the same thing with those devices. Our own devices but also with partnerships we build this mobile app distributors and IoT companies. What can you do with this? You could, for example, do payment up and delivery for e-commerce. So, you could put a chip, a small chip like an RFID chip into Amazon packaging tape. Once the package arrives at your doorstep, or even in your house, the payment gets triggered. It works by the doorbell, your Tesla in the driveway, your neighbor's cell phone, any type of connected device recognizing that the package is there. The payment automatically gets triggered. One third of Americans experienced porch theft in 2016. You don't know if it was a UPS driver, for example, scanning the package but taking it, or your neighbor took the package, or someone random came by. This way, you can prevent porch theft, or you can discover it. Or you could make sure your kids arrived safely at school, they arrived there with their friends and they took the path you wanted them to take. Or hotel review sites, for example, have the problem that they lose their users because they don't believe that the reviews are real anymore. But if you could prove someone flew from San Diego, that's where we're based, to Puerto Rico, has stayed at this hotel for tonight, and then flew back and wrote the review about it, suddenly you have a location-verified review. So, that's all today, but in the world, in five to ten years, full of AI, robots, self-driving cars, drones, smart cities, you need transactional location data and nobody's providing that today and we want to be the center of the future. >> Awesome. So, that's super-exciting, I got to ask you about the IoT piece because, do you need physical devices out there? Are you going to be deploying sensors? Are you leveraging pre-existing infrastructure? I love that selfie example. I can imagine we do a selfie, share it, it's a location-based opportunity. The phone's got location base. How do you guys interface with this? How does it work? >> Right now the network builds on top of our own devices. We are around since 2012, as I said, so we have a large network already. We are an existing company, it's a little rare in the blockchain space. >> Yeah. >> And we build partnerships now with IoT companies like certain light bulb division company, or fridges, all connected devices, mobile app distributors. >> So, you're providing your customers the IoT device folks who are proliferating out there. >> Yeah, we put our code basically out there. We can-- >> Open source? >> Open source, yeah. >> Okay. >> And you can plug it as an SDK into, let's say, your mobile app. Or you can use it as a monetization tool as well, because you earn tokens as you verify location, and this data is part an answer, and so you could earn XYO tokens, as you become-- We call them "sentinels", location verification device in our network. >> So, how do you guys tie this together on the token side? So, you reward, what behavior do you reward with a token? >> There are four components in our network. There's the sentinel, as I spoke about, which are the IoT devices or mobile phones which verify the location. Then you have bridges which relay the data. They relay it into something we call the archivist, which is a distributed computer system, if you are familiar with storage here in this space, for example, or the old system, like Sentient home from Berkeley, it works like that. So, the data's on people's personal computers. And then we have something we call the diviner algorithm, which provides the answers. It works like mining. So, you might want to ask, "Where's my package right now?" And the question gets sent to the network, a bunch of diviners, which works like mining, Ethereum, transactional things. A bunch of diviners will take the data from the archivist, the distributed computer system, and try to find the best answer and try to find as close as possible the consensus as they can. >> What about spoofing? I mean, people might want to spoof the location. >> Yes. >> How do you prevent spoofing? >> Yeah, that's a good question. So, we two could collude pretty easily. But if this entire room of people is who you usually don't know, it's very difficult to collude. So, one of them is scale. Then we build reputation over time. So, as your answers are probable, you build reputation. For example, if all us say we are here at this hotel right now, but you say, "No, we are in Shanghai," your answer is improbable and your reputation goes down. In addition to that, we disincentivize lying-- >> You're very data-driven. >> Extremely. >> This is big time analytics. >> Extremely data-driven. >> So, what are you guys doing for analytics and what chain are you using? 'Cause performance becomes an issue. >> Yep. >> How's the plumbing work? What's the analytics look like? Take a minute to explain that. >> Yeah, it's very beautiful. We have our own chain: the XYO main chain. So, we are an oracle which plugs into any type of smart contract. You know, you have Ethereum and about 19 other coins which have smart contracts. So, we build on our chain to lower the transaction costs, transaction times, and build a more reliable network for ourselves and then it plugs into all other smart contracts. >> So, you have your own chain to manage this? >> Yes. >> So, that's one of the reasons why you, from an operational standpoint, you want to lock that down. >> Yes. >> So you can control performance. >> Exactly. >> Latency, timestamps, security, whatnot. >> Exactly, that's right. >> The openness is for the smart contracts. Is that what you're saying? >> Yeah. >> I can do any smart contract I want. >> This is basically for old site developers it's like an API, you can plug into it-- >> Got it. >> We connect the real world with the blockchain. So, right now you have very limited applications for blockchain in a lot of cases because you can't take offline things and connect them to the chain. What we allow to do is, we call it the API to the real world, where you take location data, put it into the chain and make it transactional. >> So, I got to ask you a question. This is interesting, I love this, I want to get into more of the token sale and what you guys are doing raising money. In the IoT world, certainly with cloud computing, the big debate is, do you move compute to the edge where the data is, or do you move the data back to the centralized cloud? Here, since you're decentralized with the IoT device, is the data coming back to your central network, or-- >> No, it's not. >> Where is the processing at? At the edge? What's the edge equation? Explain that. >> So, everything is decentralized. We believe that our company doesn't need to necessarily exist in a few years and the network will live on and grow as we grow the community, so the community is very important to us. The devices are decentralized, you own your cell phone. The data storage is decentralized. So, you can define, like, 3% of my personal computing power goes to this, for example, you earn XYO tokens. The mining is decentralized like any mining is decentralized today, so us as a company, once people start to build on the platform, we don't need to exist, which makes it beautiful, right? This is what blockchain is all about. Decentralizing and building this platform layer where people can build on top of. >> So, there's a ton of Bluetooth and GPS out there. >> Yep. >> Talk about where you guys have got your traction. I want you to take a minute to explain. We kind of went off on a tangent on some IoT rant, there, I was interested in. But I want to take it back to mainstream. >> Okay. >> There's GPS out there, you've got Bluetooth, everyone's got Bluetooth devices. So, it's not like this is massive new, it's a requirement. >> Yeah. >> You guys did some interesting things how you funded your first token sale. >> Right. >> You have customers. You've been around for how long? >> 2012. >> 2012. You've been successful. No outside capital. >> Yeah. >> So, you bootstrapped. You made things happen. Had some revenue come in. How'd you do it? Take us through that progression. >> Yeah, so we co-founders worked in various ventures together previously and one of our co-founders, the main founder I would say, Arie Trouw, he started this company in 2012, and we bootstrapped it with seven million dollars of our own cash and one and a half million in venture debt. We really believe in what we do. >> You guys put up a lot of capital. >> Yes. >> Congratulations. >> We believe in what we do. We believe in our capabilities to attract the right teams, we have an amazing team. >> That's skin in the game. >> It's skin in the game and it's actually a low-risk investment for me because I know what we are capable of. >> You are underwriting your own competence. >> Exactly, exactly. >> Okay, so, you had seven million of your own cash. Did you pass the hat around, you all kind of contributed money in, or? >> It was mostly from Arie, actually. (laughs) But we all have skin in the game there. >> So, you have a community, then you launch your idea, what happened next? >> Exactly. So, then the VCs started to come. We did some outreach, VCs started to come, they're interested in our idea, you know, they love what we do. Platform is right, quite sexy right now. In blockchain we are a platform and you can build a lot on top of it. We pushed off the VCs and we said we want to take community money first. The reason is, we believe in building this strong community of evangelists, people who believe in us, who want to code with us. We went to all the developer conferences, not to, like, investor conferences, or something like that. And, so, we marketed to about 2,300 people, our token sale and a little under 500 people put some Ethereum into our token sale and 95% were under 5 ETH. That was a very global community. >> Was that a utility token sale? >> Yes. >> Outside the US, 'cause there's credited investors involved, or what was the-- >> It's clearly a utility token, because you can build on top of it. Last weekend, the city of San Diego and 120 hackers, a IoT company, were in our office to build on top of our chain, traffic flow and parking solutions for the city of San Diego. So, it's clearly a utility token but because of the uncertain regulatory environment we are actually running it like it's a security, so, we have a Reg A, Reg D, Reg S, whatever, we have 115 different jurisdictions we look at, I spoke during the whole process, I'm not lying, it's-- >> That's a lot of work. >> Yeah. 23 lawyers I spoke with. It's a lot of hours with lawyers on the phone. The most aggressive on of them, she suggested to me a structure with no taxes but 20% prison potential, I think. (laughs) On the other side-- >> It's a good cause. You're doing it right. So you spent a lot of money to make sure that your community was involved. >> Yes. And they weren't throwing a lot of money, like they're millionaires, they're like, let's throw a thousand dollars? >> Yep. >> That kind of numbers. >> Yes, exactly. >> So, it's not like you're breaking the bank but they feel ownership. >> Absolutely. If you look at our telegram channel-- >> And you've raised, what, a million, two million, three million, from that? >> One point seven. >> From the community? >> Only community, those 400 people. We had it open for five to six days. We closed it down. We didn't take any money anymore. And since yesterday, I started talking with institutionals again and now we are a sexy story so now they come again, right? (laughs) >> Platforms are sexy. >> Exactly. >> We know, we have one, too. >> (laughs) That's awesome. Love your project. >> Well, the thing about platforms is that, as you know, we talked about last night, is that the platform wars and the platform entrepreneurial thinking has radically changed. In the old days, it was, I've got a platform and I'm going to monetize my platform for my application. Look at Facebook. >> Right. >> They monetize their platform data for advertisers, not users. I am a Google search engine, I need to make the best search result so I can get better advertising. And search results, thats a part. But the new order is the platform value goes to the users or customers. >> Right, right. That's right. >> So not... >> We are not rent-seeking. >> This is an open model with platforming. >> 100% open. There is a lot of the platforms are rent-seeking, where a certain percent of each transaction goes to the company or to some founders or something. We don't have that at all. So, what we do, for every token we sell, we allocate one to the company and after the token sale there is not going to be ever more XYO tokens ever again. And we use our portion to build this network but we don't take any fees or anything there. >> How do you make money? >> Building partnerships with companies, helping them to build on top of the chain, building the community. >> At some point you need to take a small cut of something, right? >> Yeah, if we own half the tokens, hopefully there is some value. >> They could be-- okay, so you'll get the token opportunity? >> Yes. >> So, on the security token, do the investors, the community and now token holders, is that an equity security token, so they own the company through the tokens, right? Non-dilutive, non-voting equity, is that what you're thinking? >> Yeah, it's not an equity token. It's still in our mind a utility token but we do something very interesting. During the token sale event, we are going to launch an equity sale at the same time. So, you can decide if you are comfortable in the blockchain space, you know, all you want to be an equity investor. The disadvantage is you have less liquidity there but you have all the protections an equity gives you. We are a California-based company. It was audited financial since 2012. SEC-qualified and regulated, so equity in our case is a kind of sexy kind of thing. >> Yeah, and they have the long game. They're betting on acquisition or something else. >> Basically. >> Oh, well, they've got to get some revenue going. Well, what's next? What are you guys doing? Token sale done, is it working? What, is it going on now, let me just check it out. You've completed it? >> No, it's going to start on March 20th. It's going to run for two months until May 20th and so now it's a lot of travel, speaking with people, engaging. >> (laughs) >> Yeah, that's next. >> Well, congratulations. >> Thank you. >> So glad that Carrie on Facebook notified me of you guys. Super-impressed with what you're doing and we had a great conversation last night at the monetize roof party. Great to know you guys. I think IoT really needs this kind of model because there's a lot of real critical challenges around the role of data, the role of immutability. There's all kind of sensor devices out there, cameras, you can't go anywhere, digital cities are coming, smart cities. >> Right. >> Self-driving cars. It's going to be wired up, big time, so I think you guys got a good opportunity. Thanks for coming on theCUBE. This is John Furrier here in Puerto Rico for exclusive coverage of Blockchain Unbound. More after this short break. (electronic beats)

>> Announcer: Live from San Juan, Puerto Rico, it's theCUBE, covering Blockchain Unbound. Brought to you by Blockchain Industries. (Caribbean music) >> Welcome back, everyone. We're here for exclusive CUBE coverage in Puerto Rico for Blockchain Unbound, a great conference where entrepreneurs and leaders are all here, coming together at a global level. You've got investors, you've got entrepreneurs, you've got the ecosystem developing. We've got it covered for you, I'm John Furrier, your host of theCUBE. Next guest, Joe Mohen, CEO of Chimes, industry executive, a lot of experience doing an ICO, doing some great work, Joe welcome to theCUBE. >> Thank you, it's a pleasure to be here. >> So, tell us first what Chimes is doing. You've got an interesting approach with music. What are you guys doing? Is there an ICO in the future? Have you done an ICO? Give the quick update. >> Okay, sure. Chimes is a digital media company, and we are consolidating music-related search results on Google in a similar way to what Amazon did with IMDB, consolidating film and television results many years ago. Amazon built an audience of about quarter of a billion to half a billion monthly users, and we expect we can create an audience on that order of magnitude over time. Just like IMDB is the third largest entertainment website in the world, it is our objective to create the fourth largest one. >> What's the value proposition there? Acquire audience, use that audience to tokenize? How does the token economics fit into all this? >> Well, first, like any media company, the first thing you have to get is an audience, right? I remember I interviewed for a job at CBS when I was out of college, and in the interview they said, "Do you know what we make here?" And I said, "You make TV shows." They go, "No, we make audiences." So we have to make an audience with a good product. The audience will be driven primarily by search, okay? But we also do have a double ICO in our future. First, we monetize the big audience. You can monetize with advertising, but that's not enough to make big money anymore, right, we all know that. So we have a layer of crypto products over and above that that we're going to be launching, including, for example, inter-country commerce, hiring producers in another country, hiring songwriters, et cetera, but automating that so we can do it on scale with smart contract. So we are creating a micro-currency that we can use on the website. We're doing an ICO for that but that's not for the purpose of raising capital. >> That's more part of the business model. >> That's part of the business model. >> That's not the financial aspect of it. >> Correct, and that's done so we can scale international commerce with automation. We're doing an actual ICO for the equity, for securities tokens as well. I've done a full IPO myself. My first company, I had Microsoft and Novell as my shareholders and it was a full S1, full registration. >> Interviewer: You went through the whole process. >> Yeah, but I also did a Form 10 once, ten years ago, for another reason. So what we're doing is possibly the first, certainly one of the first, but I think the first registration with the SEC of a company actually doing an ICO. And we're doing that using, I don't want to call it a loophole in securities laws, but there is a provision in the 1934 Securities Act called Section 12G. And what this does is it allows us basically to go public by telling the SEC we're doing it without having to delay it to wait for their permission. A Form 10 looks just like an S1, but when you file it, it's automatically effective 60 days after you file it, period. And so what we're doing is-- >> Period, full stop, no issues, no questions. >> Joe: No issue, right. >> So do you have to fill out all the same paperwork, the S1, >> Correct. >> the normal format, do the business plan, the normal paperwork? >> Joe: No, right, in 1930-- >> But there's no comments coming back? You just chip it to them? >> Comments come back and you have to clear them, just like with a prospectus, just like with an S1, however that doesn't delay it becoming effective. It's effective 60 days later. >> So they can be commenting during the 60 day time clock going on, but after 60 days, you're in. >> It's effective. So we'll continue to clear comments, but the thing is, with tokens, who knows how long that'll take? Is the SEC going to shepherd something through with crypto, or are they going to make it take five years? I don't know! Who knows? So, the thing is, we are complying with all of the laws for registration, but 60 days after we file it, it's effective. What we're doing is, in the pre-sale for the tokens, we're not issuing the tokens themselves to the buyers of the pre-sale for six months. The reason for that is they will have met the statutory holding period. So once the Form 10 is effective, those buyers can sell freely on token exchanges-- >> And what's the statutory holding period, six months? >> Generally six months. There's a few exceptions for affiliates, like an insider like me. >> I'm confused, a holding period kicks in before or after six months? >> After six months, the statutory holding period is satisfied. >> So you're going to wait to delay them anyway six months. >> Joe: Yes. >> So that covers the holding period. >> Correct, and then we file the Form 10, and 60 days later, they can trade and anybody can buy them. >> So do you file a Form 10 before the six month holding period? >> It'll be at about the same time. The reason being is because we have to get all the ducks in a row to be a public company. >> Cutting edge advice here, this is fantastic. So you're basically going to be the first ICO that actually files with the SEC. >> Correct. >> I mean, who does that, nobody. You! >> Watch us! >> John: That's awesome. >> Basically, we're using a provision, it's like we went back in time to 1934, got them to put something in the 1934 Securities Act for the purposes of ICO's, and then we came back to 2018 with the time machine-- >> Are you from the future? Back to the future! You went back and jerry rigged it. Hey, we should put this Form 10 in there! >> Joe: There you go! That's right. >> It could come in handy some day during the crypto bubble. >> Joe: That's right. >> So let's back to the cryptocurrency thing. I think you're onto something that I think is a tell sign that I haven't seen yet. I've been seeing some formation of it. You are using two types of tokens. Your business model is do security token for funding, trade that puppy through the Form 10. Utility token, a separate ICO for the product, and that's going to have one token, two tokens? >> There's one utility token, so to speak, one currency token, and that has its own regulations that you have to manage to also. But that's designed to appreciate, but not to go up 17 times. >> Okay, I want to dig into that for a second, because you mentioned scale. You're going to scale your business model with the utility token. That's the purpose of the utility token. So let's get into how you're going to do these smart contracts. Let's just say that a producer in Europe somewhere, in Italy, says, "Hey, I'm going to do something "with Joe in the UK." And they form a collaboration. >> Joe: That's right. >> Do they use that utility token or a new token gets created? >> No, that utility token. It's called a Chime, the Chime token. And what happens with that token is you can build in the contract administration through the token. Right now, you can do international deals. People do them every day. The difficulty is if you've got an audience of a half a billion people a month, for example, to do that on scale and automate it... Right now, if you do a deal with somebody in Japan, you, the American, has to have an American lawyer and a Japanese lawyer. And if there's a dispute, good luck suing. I, one time, a customer in Hong Kong, owed me a million and a half bucks and he's like, "Sue me." I'm in New York, he's in Hong Kong, and good luck. >> Did you do the New York thing? I'm flying over there and going to break your legs! >> We bitched and complained, threatened them, and ultimately we settled on 30 cents on the dollar, so we did, that's exactly what happened. With a situation like this, with smart contracts, neither side has to hire two sets of lawyers in the other country-- >> So Chime takes care of that. You want Chime to take care of that administrative inefficiency? >> Correct. The company might still get involved in administering exceptions but not everyone single one. What the smart contract does is it allows you to scale international business. The key is international business, and that's a new efficiency into the market, and that's a great-- >> And in the business model, what does that scale mean to you for operationalizing it? More people, do you have to hire them? >> More cash. No, less people and more cash because there's more automation, right? It means more software development-- >> Where's the cash coming from? >> We have a lot of revenue products. Like the obvious, like every other website, we have subscription revenue and advertising revenue. Subscription revenue comes from like... You know how IMDB is the LinkedIn of the TV and film business? So we'll have that too. >> It's not really large, though. It can be. >> Amazon could make it larger if they wanted to. They have their reasons for doing it the way they do it. But, in our case, I'll give you an example of some revenue products. Let's say you want to crowdfund a project. So let's say you want a bunch of Taylor Swift fans to crowdfund a project for her to do a duet with Kanye West. Sounds preposterous, but it's goofy enough. You'd be amazed, Stormy Daniels is crowdfunding a project for her legal bills with Donald Trump, and I betcha it's going to get funded, right? >> John: I would agree. >> So there's a lot of nutty stuff that gets crowdfunded. >> The wisdom of the crowd is actually efficient. >> Yes, that's right, and the whims of the crowd. But also, I'll give you another example. Let's say people want, if they go to a webpage about an artist, the band All American Rejects, for example, and Wheeler, one of the band members... Ten years ago, you could have given your niece a gift of a CD of All American Rejects. Well, good luck now. They wouldn't even know what a CD is in many cases, right? But what you could do is say, "Hey, you know what? "I'll give you a gift of a Google Hangouts chat with him, "And I'll pay $200 for that, or $500 for it." >> It's probably a bot, but anyway, how do you make this happen? This is really important. You're creating value by allowing people to collaborate in a way that's different, so that scales. Is that going to be done in the Chime contract or it's all going to be part of one currency? >> One currency, that's right. We're very careful. We brought in as an advisor, Rod Garrett, who gave one of the keynotes here yesterday. Rod Garrett is the money supply economist from UCSB, but he was also former VP of the New York Fed, he was the leader at the New York Fed for cryptocurrency. Rod is one of the smartest people I've ever met. >> You know him? >> Very well now, and you know what, Rod can explain the most complex things in simple words, which means he actually understands them. So we've actually used Fisher's equation to help model the utility token value over time. And, again, it's designed to appreciate, but we don't want nutty appreciation because then it'll be useless as a currency, right? We have fixed supply, the Bitcoin principle, the fixed supply and stable market so we can keep it reasonably stable. >> You're using the utility token to create value on your network so the creators can capture that value. >> Correct. >> That's what you're doing with the utility. The security is the money making side. How are you backing the security token, with equity or cash flow? >> Equity, and very important, really important, if you did a percentage of revenue or royalties, it wouldn't work, and I'll tell you why. It wouldn't scale, because we're looking five years out, 10 years out, for this to be a good investment. We want investors to buy it. And if you, let's say you need to do a secondary, because an acquisition becomes available, because you're low on money or whatever. Then how do you do a secondary if you've already given away 20% of your revenue to token holders. What if you have to do a secondary or tertiary capital round? How many rounds were necessary for Spotify, I happen to know Spotify, it was six, right? Facebook, Google, how many founds of financing did they do? A lot, and by the way, they still might do more. >> So basically the revenue share is hair on the deal. It really puts a lot of hair on the deal. >> Destroys it, in my opinion, destroys it. It's a dressing thing, but look, if you're really going to grow to a major company and have, be it five or 10 year success, it kills it. This is my opinion. >> What percentage of equity, say they're going to do a 50 million dollar raise, hard cap, soft cap, say 25, that's what seems to be the norm right now, what would be a percentage of equity converting to tokens that you'd see? >> In Chimes' case, we have a Common A class of stock. We're creating a preferred class of stock called a Series T which, if fully sold, would be about 43% of the equity of the company. They had to do it preferred stock, because there's too many, in Delaware Corporate Law, which all the tech companies are all Delaware, common stock would be very difficult to make a token. You can do whatever you want with preferred. So the preferred is more flexible, so it's actual equity, actual shares, it's not a derivative, it's not a rev share, it's not a royalty, it's actual equity. >> It's paper that converts nicely and it scales on the business side. >> So you say, "What's the evaluation?" >> We're selling 100 million dollars worth of the equity, or we're offering 100 million dollars of the equity, the pre-sale evaluation is a little over 200 million. In Chimes' cases, that's because we're not a startup, we're an early stage company. >> How old is the company? >> Pardon me? >> How old is the company? >> Three and a half years. >> So you weren't born yesterday. >> We acquired music databases that were built at a cost of tens of millions of dollars in Europe, funded by the richest guy in Europe, who built it out and then got tired of it, tired of funding it, and then we were able to pick it up basically for equity deals. We picked it up and we're buying a second music database also that's a very big one. So it's not like we're a startup with an idea and a business plan. >> No, you've got assets, and you've got momentum, good management, you obviously know what you're doing. It's awesome. You've got a great scalability mindset. You've got a nicely packaged, clear target. >> That's right, so we're probably a little bit different than a lot of crypto startups, in that, a lot of brilliant entrepreneurs that you see here, but we've been around the block with having to do IPO's, having to do exits, having to do... And you know, I'm a contrarian, right? I was getting a lot of advice yesterday from a lot of really smart people saying, "Hey, raise the money overseas through a foundation." >> "Everyone's doing it!" >> Look, I'm going to take a contrarian approach. >> I'm just going to comply with the law, by doing the registration. And they say, "What if your utility token has to comply "with money transfer laws?" Then we'll comply with them! It's like look, the contrarian approach is, whatever the law is, follow it! It gives us the flex-- >> The thing is you're actually doing what they want you to do, notifying them of what you're doing, and you have a utility! >> By separating out the token into two, one that has the attributes of currency, one that has the attributes of an equity, neither one is screwing up the other. >> I agree, that's really smart, and very novel. A lot of smart people are going down that road because it's actually known things people can understand. Security token is paperwork that you can do. >> Yes, but I'll tell you the other thing that feels very important, a pretty important point to make. By doing registration, the resale can go to anybody. My personal opinion, is you know these second market type of approaches that you can only resale them to accredited investors or to foreign investors or whatever, I think that's mistake. I think what happens is people who take that approach are going to find that the resale value of the token, or the token that has securities is going to be about 10% of what it would have been otherwise. >> If they only do accredited? >> Well yeah, because here's the thing. First, it's not only that they got to be accredited-- >> How do you get around the security token? >> Because it's registered. The waitress working the bar here can buy a publicly traded equity if it's registered, right? She can buy a publicly traded token-- >> That's the Form 10 that you were talking about. >> Right, Form 10 registers the company. The initial batch of trading will be done under 144 because the token holds will evolve over six months, so they can sell them at their leisure, right? There are exceptions, by the way, like an affiliate might have to do some form filing. I would have to file a Form 3, you know, the usual stuff. But, a regular token investor, he can do whatever he wants. And I can call them investors. I can do business in the United States. I don't have to pretend I'm domiciled in a country you've never heard of, right? So it's like look, I'm an American, my staff is mostly American, we do business in America, let's follow American law instead of-- >> Joe, this is a great conversation. We're getting down and dirty under the hood, capital structure, business models, Chimes' really interesting approach. Joe, thanks for sharing that great data here on theCUBE. Section 12G of the 1934 Securities Act. Form 10 is the secret weapon that was built by aliens before us to allow us to get this special clause in there for crypto. I'd love to continue this conversation another time. I think there's four or five things we just identified, great great topics, thanks for sharing. It's theCUBE's coverage here in Puerto Rico, I'm John Furrier, we'll be back with more after this short break. (digital jingle)

>> Narrator: Live from San Juan, Puerto Rico It's theCUBE. Covering Blockchain Unbound. Brought to you by Blockchain Industries. (latin music) >> Hello and welcome back to theCUBE exclusive coverage in Puerto Rico for Blockchain Unbound I'm John Furrier, your host, here covering all the action in Puerto Rico as the global society and industry come together. Our next guest is Marhall Taplits he's the Chief Strategy Officer and Co Founder of Nynja.biz, check out their site, Nynja.biz. Marshall, thanks for joining me. >> Thank you. >> So tell about what you guys do. You guys are doing some disruptive stuff, tell us about what you guys do, then it will jam into a conversation. >> Sure, so are you familiar with WeChat in China, for example? >> Yeah. >> Okay great. So I've personally been living in China 15 years, so we've watched kind of the birth of the Chinese internet, which as we know, is a little different than the regular internet. >> A lot of mobile users. >> A lot of mobile users, 800 million China mobile subscribers alone. WeChat, basically, is a platform that started off as just a messenger but basically what it's done is it's integrated into every facet of Chinese society. To give you an example, you go to a restaurant, you scan the QR code, the menu comes up, you pick the food, you pay for the food, it comes, you walk out. Everything like that is in China. Everything like that is in Wuzhen China. So what we've done is we've kind of taken this concept, and we're working on a global version of it, that's cryptocurrency based, and we are working specifically with Chinese companies in order to help them go global as part of the China One Belt One Road program and working with companies like Alibaba, what have you, in order to help Chinese companies go overseas and take what they've built in China but operate globally with cryptocurrency. >> Are you guys in China? Cause it's been hard for companies to start companies in China. So you're living in China or you're working in China? >> Yeah so because we live in Shenzhen, right next to it is Hong Kong. Hong Kong is where our company is based. Hong Kong, as you know, previous British colony, the legal system, and the financial system-- >> And you domicile in Hong Kong, that's where you're based? >> Me personally in Shenzhen, but the company is in Hong Kong. So we also have a Wyoming corporation in the US. >> That's where all the action is. >> That's right >> That's where WeChat is >> That's right >> Alibaba's got Alipay and then there's more business to business with their app. So I get that WeChat's been highly successful. In fact we have a huge following on WeChat, Sou Kanai, Niki Bond, free content. But that brings up the question of Chinese kind of showing the way with mobile expansion, so their users are heavily mobile savy. >> Marshall: That's right. >> This is pretty obvious when you think about it, but in America and around the world, that's going to translate to the new user experience. So in your opinion, how would you describe the expectations that users have? Because you're living on the front end of the wave of what mobile's doing, I mean there's a lot of gamification going on, some if it's kind of creepy, but what is your view of the expectations that users have and what's different about what's currently available in the webstac, and the 20 year old e-commerce stacks, that are out there? >> Sure, I think the most important thing is reducing friction, all right. You don't want to be using platforms where you can not do it wherever you are whenever you are, you don't want to have to go through payment processes, you don't want to have to re-authenticate yourself across whatever platforms you use. And interestingly, when I first went to China, it was all about copying what was in the west over to there, but actually it's kind of the opposite now, right, so we basically want to take this concept of the frictionless digital life, and make it a global opportunity. And especially with BlockChain and cryptocurrency you have that really as an opportunity, because if you look at all the apps that are out there, and the platforms that are out there, the only ones that have gone past a billion users, WhatsApp, Instagram, whatever are the free ones. But as soon as you layer in payment, it becomes very locked. And as big as WeChat is, and as big as LINE is, but ultimately it's locked into the Rem and B system or Reo in Korea, what have you, so the cryptocurrency is really the first opportunity that the world's had to create platforms that can get up to a billion, two billion, three billion users that are able to pay. And we just think that's a once in a lifetime opportunity and we want to be part of it. >> So I got to ask you about the impact that cloud computing has had on this, obviously we've seen cloud computing destroy the data center model, allow people to get time to value faster, mobile on top, big data analytics using data, all this stuff's awesome stuff. So the question is, is that, that's kind of a horizontally disruptive view, so these stacks that are built old way where I got to own the stack end to end, yeah there's some standardization on the lower end of the stack. But now you're thinking about more of a horizontal, I got jurisdictions, I got regions, I got countries, I got sovereignty, all these things are in the melting pot of the cryptocurrency BlockChain, de-centralized applications, are major impacts to all those things. How do you see that playing out because, that's kind of what developers worry about, oh shit will this work on that chain? I got Neo I got this I got that, so the plumbing is totally a moving train right now. >> Marshall: That's right. >> But the business models are pretty obvious. So there's like a business ops thing going on. What Dev opts did for Cloud, you got this new abstraction thing going on with this world. What's your view on that, do you agree? Or what's your take? >> Yeah well you pretty much nailed it. I mean basically what's happening is over the last 10 or 15 years people have finally accepted that having your own server is kind of silly, you know, and most people now will just spin up whatever they need in terms of resources on TheCloud. But over the last couple years, you're really going more toward Edge Cloud, where the way the clouds work, is that basically it's pushing to get the least amount of latency and store the data as close to the user as possible. And then there's also regulatory in some countries now in terms of, if your users are from this country, you have to legally store the data in this area. So this is all kind of evolving. And if you look at the BlockChain technology, I think it's the payment version of that. So for example, everyone's always concerned about getting in and out of Fiat Currency, and how am I going to get back to dollars, and this and that, but I think what's going to wind up happening, is this is going to get pushed towards the edges and there will be opportunities and ways with exchanges and what have you to get in and out. But more importantly, it's going to be like, just other currencies, so for example, I live in China but I come to the US a few times a year, I also travel to Europe, I have some dollars, I have some Euros, I have some Rem and B, when I leave China, I don't immediately sell all of my Rem and B, I just keep it because at some point I'm going to need it. And I think what's going to happen in the cryptocurrency space is, especially on the larger BlockChains, like Ethereum and Neo and what have you, is people are just going to get used to keeping some of it and they're going to stop worrying about what the exact exchange rate is and how am I going to get in and out, and this and that, and they're just going to start treating it as part of their currency stack that they keep. >> Yeah as long as there's some level of stability. It's just like, I remember when I was growing up, there was no Euro, every country had their own currency. You had the French Franc, the Swiss Francs, the Deutsche Mark, Lira, etc, etc. But you're seeing that the viability of the money aspect, cause at the end of the day there's two things that we've identified in analysis, and I was talking about it last night, talked about it this morning on theCUBE, is the killer apps for BlockChain cryptocurrency, these sorts of apps is two things, money and marketplaces. >> Marshall: That's right. >> Everything else is just kind of circling around those two. >> Well there's more but certainly that's the main part of it >> Money, moving around. So the UK just announced with coin based, the Financial Conduct Authority, reading the news yesterday, has essentially said we're going to allow for the fast payment system to convert to Fiat. This is a government, the UK is a nation. This is the beginning, to your point, that if they don't get up to speed, the edge of the network will democratize them and kind of circle the wagons, if you will, so it's already happening. >> Yeah and I think what governments are starting to realize is hey guys this is just a technology and not only do you don't really have jurisdiction to control it, but also that you don't even have the technical means. So Wyoming is a good example of regulation coming into play, that just kind of accepts the presence that this now exists, right. And they're not going to try to make it something and fit it into the old way. So, and in terms of the stability of these coins, I think it is important because people want stability, but in other ways, if you don't look at the exchange rate, it's actually way more stable than the current system, and I'll give an example. In the last month or two, the prices of cryptocurrency have dropped almost 40%. Now if the stock markets and the global affects markets drop 40%, you'd have blood in the streets. But the crypto market is asset based instead of debt based and because it's so structurally sound it's able to handle these wild swings without actually collapsing the system, so in may ways, it's way more stable, and then as the market gaps and the buy in of these currencies get bigger and bigger, of course it's going to be more stable over time. >> Well I mean its stable from a fail standpoint, but a lot of emotional instability. People losing money for the first time. >> But that's just because they're-- >> That's a lot of speculation, right? >> There's a lot of speculating and then if they're down they feel like they lost but, that's life. >> People that are into the game, like you, were long on this. So what would you explain to someone, cause I have two, a lot of friends that have two schools of thought, that's a total scam, don't associate with that, to oh my god, that's the next biggest wave, lets get our surfboards out there and lets get on this, there's a multiple set coming in, it's the biggest thing we've seen, and everything in between. How do you explain it to people for the first time? >> It's just your traditional curve, there's early adopters and what have you, and if you were one of the guys buying up domaine names in the early 90s, you know some people would say I can't believe you're spending $100,000 buying up domaine names, but some of them now are worth, you know, tens of millions of dollars. But again, this is the speculatory piece of it. And there's no shortage of opportunities for speculation and I encourage everybody to speculate a little bit because what it does is it gets you a taste of the technology. And usually, when you have some money on the line, you pay more attention, so if speculation is what gets people interested, and it gets them watching it and understanding the technology and using it, then I'm all for it, but people shouldn't be speculating with money they don't have. Anything could happen in the short term. Nobody knows what's going to happen with any specific currency. But in terms of the technology itself, this is a revolution way bigger than the internet itself. This is where you're getting, not only, communications like the internet, but financing governance and all as one. Programmable money, programmable contracts, that wipes out finance, it wipes out legal, it whites out governance in many ways. So this is a huge evolution in human society, and we've termed this Open Unity actually. And so we believe that society has to reach a state of open unity in order to go into the singularity as we would envision it wanting to be, as something that's under our control. >> Yeah and I think one of the things, first of all that's a great statement, well said. I'll just kind of put some reality on that, connect the dots, is that if you look at the trajectory of cloud computing, Amazon Web Services was laughed at years ago. S3 came out, compute storage building, basic building blocks and a slew more services. What Cloud did for software developers, and what they've disrupted from a business standpoint, dev ops, it's proven. What open source has done, even going back to the old red-hat days and linux, is that now a tier one global citizen in software, you look at those two trends, you can connect that dots to what you just said. And what made Cloud great was they made application developers have access to programmable infrastructure. >> Marshall: Exactly. >> You're talking about a whole nother level of software programmability, money, marketplace, society, >> Yeah you hit it on the head. >> We're there right? >> That's exactly right, so when a programmer wants to start a business, instead of going to create an LLC, and getting their EIN Tax ID or whatever, and when they want to go into Europe, and dealing with that and then trying to open a bank account, which is almost impossible, internationally now, instead of that, you just have your SDKs and your APIs or whatever and you've got access to money, program adding, you can take money, you can move money around, globally, frictionless, permissionless, with governancy, smart contracts-- >> They might not not need an SDK dashboard, its a console, click, click, click, smart contracts, governance, turn key. >> And one of the things we're working on with Nynja in particular, is this kind of on-demand marketplace and putting together a de-centralized teams for work. And this is all driven by smart contracts. So one of the issues with the economy is the huge booms and busts that people have in the economy. And if you look at the root cause of that, my personal opinion, is that it's because of payment terms. So for example, if I do work for you, and then there's an invoice, but it's not due for 30 days, now your business may be structurally sound, but the truth is your cashflow is all over the place. With BlockChain technology, we can actually do real time payments. You could be paid minute by minute, hour by hour. Real time, program, contract. So we're going to create very flat even money flows through the entire economy globally, and we're going to just completely remove these booms and busts that are really nothing more than just cashflow issues that are compounded and compounded at a global level. >> I mean I lived through the dot com bubble, I was actually part of it on the front end, on the euphoria side, as well as on the crash. Part of the whole search paradigm, google right there. Key words, all that stuff happening, growth, massive growth. So I saw that, the scammers in there, or the bubble people, that's what we called them. But the reality is, everything happened. It was pet foods online, you could get shopping delivered to your house. So again, to your point, it's a little euphoric right now, but what's different is, is you have now, community data. See what I see happening is, it's not a major bubble crash, because self government, self governing, self governance, is a community dynamic. So I think there's going to be a lot of self healing, inside the networks themselves. You're already seeing it here, a lot of people, bad act is being identified, investors flight to quality, looking at quality deals. Interesting times, your thoughts? >> Well I mean you know, we've been through many evolutions of society, we've had surf-dom, we've had monarchies, we've had representative democracies, we have all these things, and I just think the next evolution is decentralized governance. And we don't even know what that means yet, because it's just starting, but I think we can all, if we can close our eyes and really think about it. I think it's pretty obvious what the issues are with our current system and not just the US, but globally, and I think we have an opportunity here to build in organic program governance. And what's really special about BoxChain technology is if I program it to do X, it's going to do X. So we don't need to, I don't need to know who you are to trust you. I don't need to worry about where we're going to sue each other, or we're going to have arbitration if things go wrong. We're just going to make an agreement, and we're going to program it that way, and that's it. And now the next phase is, I could build on top of that trusting that that's just going to happen. So you can create these chains of trust, and that can happen anywhere in the world. So I think this is a whole nother-- >> Sounds like a bunch of web services. >> Well in many ways, in terms of the architecture, sure you could absolutely think of it like that. >> The reusability, the leverage is amazing. All right, so I want to just end the segment Marshall, take a minute to end the segment, to talk about what you're working on, Nynja coin, Nynja, N-Y-N-J-A .biz, you guys have a product, you got a BlockChain enabled platform, you got a coin, take a minute to explain what you're working on. >> Basically we want to provide the tools and services to help people live in this new reality. So in order to basically function in the world that we're entering into, we're going to need tools that far surpass what's currently available in terms of the messengers, the web sites, all these things. We need to be operating at a level that takes communication completely frictionless, payment completely frictionless, and governance completely frictionless. And we have to put this all together, and that's what we're doing with Nynja. We're staring with a global communicator, which is basically, if you want to take WeChat, telegram, whatever, but we have about 50 additional features that really take communications to the next level. And then on top of it, creating the baseline with cryptocurrency payment, and also smart contract wizards and helping people kind of get these teams going and get paid and organize their financial life in a de-centralized way. So we're just basically going to be the next generation of these messenger type platforms with BlockChain integrated. And what you're going to see is that over the next couple years you're going to get to the first companies that are achieving not just a billion or two billion or three billion users, but paying users, and we're going to be one of the probably three to five platforms that are offering tools at the global level like this. >> And have you got an IC already or not? >> We've just started our private ICO about two weeks ago. We're getting tremendous support in Asia. Quite frankly, the US is not seeing it as much-- >> Is it a utility token or security? >> Utility Token, and I think it's really telling, interesting, coming here. It's the first time I've been doing the presenting. We spoke yesterday at the d10e and we also spoke at d10e in Korea a week or two ago, and the response is incredible. And I think the reason is because-- >> The Asian market gets it. >> Well they're already living in this world within their own confines in terms of the messenger with their payment and governance built in, so when I tell them that we're going to do this globally with crypto, immediately they get it. I'm having trouble here, especially in these five minute pitches which is ridiculous, it's like a chop shop, I don't know how to communicate the idea within this short time frame, so, what I'm looking for while we're here this week is just to find people who really want to take an hour or two or even people like yourself who want to do interviews and just kind of really talk to people and really explain-- >> Well platform is complex, a lot of pieces to it. It's a system, but the value you offer is essentially offering developers, who are building products, for tools that you've built so they can scale faster. That sounds like your value. >> That's right and although I can't say specifically, we're also working on a deal that's going to get us started with about 15 million active users on day one, so that's very exciting and we're really really excited about that. >> And the coins will be utility of measures, what? >> Sorry? >> Well your utility coins going to be measuring what, what's the main token economics that drives the-- >> For the ICO economics? >> Your Nynja Coin. >> So basically we're releasing 5 billion tokens, 45% of them will be sold. There's five cents a token, so the hard cap, by definition is about 112 million, actually we're planning to do the public sale in April, but we may cancel it or postpone it just because the private sale is going really well, but we'll see how that goes. But in terms of once it's live, this will basically be the utility token of the entire eco-system, so anybody, not just within our Nynja App or platform, but even people, I don't know if you know XMPP federation, like back in the day-- >> Yeah you know about real messaging >> If you could think of us as the next version of XMPP federation, but using cryptocurrency in order to avoid bad actors by making it very expensive to do bad things, and very cheap to do good things and globally. >> So it's like Twitter you can create a bot instantly, but if there's coins involved, you'd have to spend to get it. >> That's right and also people could spin up nodes that are basically their own Twitters and decide if those Twitters of their own, their Nynja boxes of their own, are either just internally, or you could specify specifically context or group of context-- >> We agree, that's a great way to get bad actors out because it costs them money. And it's de-centralized, there's no single spot. >> That's right, if email came out today, when cryptocurrency existed, there would be no spam. Because it would be expensive as hell to send more than a few a second, but it would still be free and for everybody generally, and you wouldn't even have spam. So we think we can do that for messaging globally. >> Great. Marshall, thanks so much for coming on theCUBE, really appreciate it, check out Nynja. Marshall Taplits is the Chief Strategy Officer and co-founder of Nynja.biz, check them out online. Check out the website, it's in Asia, bringing that culture of mobile and fast moving, real time apps, to the rest of the developers. This is theCUBE coverage in Puerto Rico for BlockChain Unbound exclusive two days of coverage. We'll be right back with more, after this short break, thanks for watching.

>> Announcer: Live from San Juan, Puerto Rico, It's The Cube! Covering Blockchain Unbound, brought to you by Blockchain Industries. (upbeat music) >> Hello and welcome to The Cube's exclusive coverage here in Puerto Rico. We are on the ground covering Blockchain Unbound, Restart Week, Coin Agenda, a variety of events happening here in Puerto Rico, where the world is converging from Silicon Valley, New York, across the globe, here for a long week of bitcoin, blockchain, cryptocurrency, the decentralized internet. We're here for two days, wall to wall coverage. Here with me, kicking off, and special guest Miko Matsumura, who's the founder of Evercoin, also a venture partner at Bitbull Capital, influencer. Been around the block in the industry, seen many waves. Miko, great to have you on The Cube. >> Terrific, great to be here. >> So one of the things I want to get with you, we've had many conversations off camera over the past year, about what makes this wave super different than others. I've been saying, with Dave Allant and our team, that it feels like all the waves combined. I mean, look at all the major inflection points in the industry. The PC revolution, the mini computer revolution, the PC revolution, inner-networking with TCPIP, the internet revolution. You kind of had a web 2.0 thing going on, with the beginning of democratization. But now, major inflection point with infrastructure change with blockchain, cryptocurrency, and decentralized applications, which is disrupting the developer community. So you have an entire stack being disrupted, and at the center of it is an opportunity. >> Miko: Yeah, I think what you described earlier in our conversation, about this notion of a killer app, right? There's a bunch of people kind of clowning around, saying like, "Oh what's the killer app for blockchain?" It's under our noses, it is open source money, right? So if you look at what happened with open source software, for the past 25 or more years, we've watched software eat the world. Software has eaten the world. We all know this. Mark Andreasen said it famously, right? So the point is, is that open source has eaten software. Right? So now, what do you think is going to happen next with open source money? Open source money is going to consume proprietary money. >> I completely agree with you, and you look at all the tell signs in the industry, a lot of people putting the brakes on Google banning ads on Google, you're seeing the SEC putting signals out there, but the problem is this is a global money marketplace. So you have a global ecosystem now, connected via the internet, you have disruptive technology that kills the gatekeepers and any central authority, and you have money. So you can put the big rock in the river and try to hold the stream, but the thing is just moving so fast that the dam can be broken no matter what's put in place, because moving money faster, running money, whatever you want to call it, makes a difference. And today, breaking news is that Coinbase got a license to support the UK's faster payment scheme, which will speed up time for faster payments. So essentially the UK is taking a pre-emptive move against the US government, this is a game changer. They could kind of go to the top of the pack in terms of sovereignty leadership in the financial world, because how they handle the money situation. If they tap the software market, if they make the open source money work, this is again, the game is on. This is a real data point, the UK government. This isn't some underground economy, this is a nation. >> Well, and there's no question that domicile competition creates an open playing field for a planetary establishment of protocol, right? So the thing that's amazing about it is absolutely that there's no national regulator that has a global footprint. And so at the end of the day, the thing that's fascinating about what's happening is that the reason why I'm so confident about open source money is that it competes for consent, right? So it's really trying to acquire users by providing better services. And what government entity can resist, for the long term, something that's actually trying to provide a better and better and better financial infrastructure? >> Miko, I've got to ask you, because I've seen your presentation, and we've talked many times about open source money. I want you to take a minute and describe, what is open source money? Also you mentioned software eating the world, that's the seminal Wall Street Journal article that Mark Andreasen wrote about around the 10X engineer, and how software, cloud, computing, all these big data technologies, can change the nature of enterprise competitiveness. You're kind of teasing that out with software and money, open source. What is open source money? >> So, if you go to the bitcoin.org website, you're going to see the title of the website, and it basically, title tag says "peer to peer open source money." So those aren't even my words, those are the words of Satoshi Nakamoto. Open source money. Open source money basically just means, So let's say that money is software, and it is software, so if you buy something with a credit card, what do you think is happening? It's all software. So money is already software. There's some money now, paper money, that's not software, but that's all going to become software. Once you accept that money is software, then what kind of software should it be, right? And what has happened is open source software has always eventually won with respect to closed source software. So proprietary money is probably back on its heels because open source money is coming, and I think that's really the power of developers and the power of consent. >> I think one of the nuanced points, just to kind of highlight that, to kind of take it one step further, is if you look at proprietary, you mentioned the word proprietary. If you look at the open source revolution with software, everything that was proprietary essentially got dismantled, down to either some irrelevant point, or a smaller role in whatever that system would be, whether it's a mini computer or a mainframe, or software. Open source always seemed to grow into the primary, first tier citizen of the mechanism. So there's history on our side. What, in your mind, makes this movement, with open source money, different? Is it the reshaping of the internet infrastructure stack? Is it the decentralized application developer? Is it the role of the currency? Because you now have three dimensions of change. >> Yeah, so to me, I love your mindset about this kind of combination, and I just want to characterize my position properly, which is that I'm not a crypto anarchist or even a crypto libertarian. And when people talk about proprietary money being back on its heels, if you watch what happened to open source and proprietary software, the proprietary software industry is larger and more valuable than it's ever been. So I'm not saying proprietary money goes away. It doesn't go away, it continues to grow and become valuable but what happens is open source money will essentially take over all of the commodity functions and become the platform. >> And certainly the alpha geeks, everyone that I know that's an entrepreneur, that I would call kind of pure entrepreneurship, whether they're old or young, are gravitating to this magnet of opportunity. What are you seeing? Obviously you're in a lot of advisory boards, and you really can't do all of them, but you're getting a lot of requests. We just had a conversation with some entrepreneurs here in the hallway. What are some of the conversations that you've had that really kind of point to the energy and the relevance of this new ecosystem that's emerging? >> I think one of the things that's extremely exciting to me is that there seems to be a race going on between basically three parties. I'd say one party is sort of what I call the blockchain for good. So there's actually a tremendous amount of NGOs, there's non-profits, there's the United Nations getting involved. Tremendous amount of folks working on beneficial foundation backed projects, ripple works. There's a tremendous, huge open source foundation feeling that's happening. Second party is really more of the commercial cryptocurrency and blockchain, represented in large part now by the ICO movement, about six billion dollars. But the third arm, which is actually the negative side, is that there actually are a lot of scammers, and a lot of, like, dark forces inside of the cryptocurrency movement. So that's why I think we welcome, kind of, more regulatory influence. Because, you know, none of us want to see bad actors in the space. >> And what's the coolest project you're involved in? Pick a favorite child. >> Well, at the moment, you know, the sponsor of this conference is actually lottery.com, which is tremendously exciting. A couple of others to mention that I think are exciting are Celsius Network, so that's a large scale lending platform, and then Hub Token. So Hub Token is building essentially a problem. It's a protocol that solves a problem of second party trust in the internet of value. >> Well, Miko, great to have you on. I really appreciate your friendship, and I really appreciate the feedback you've had for The Cube team so we can be better with our open content model, we're open sourced content, as everyone knows. Thanks for sharing your perspective in the data with the crowd. People can find you online, what's your twitter handle, how do they get ahold of you? >> So you can follow me on MikoJava on twitter, but my website is miko.com. Miko.com. >> Great URL, obviously an early pioneer of the domain name, land grab, great job. Miko.com. Miko Matsumura, thought leader, influencer, investor, advisor. Really in the front lines of this movement, this revolution. Legitimate revolution in the changing of the world for good and for businesses. This is The Cube coverage from Puerto Rico, we're back with more live coverage after this short break. (upbeat music)

>> Announcer: Live from Nassau, in the Bahamas, it's The Cube. Covering Polycon '18. Brought to you by PolyMath. >> Hey, welcome back, everyone. This is The Cube's live coverage in the Bahamas of Polycon '18, put on by PolyMath and Grit Capital. And a special guest who just did a walk-by, fly-by, The Cube wanted to bring him in, Jeremy Gardner. We've chatted with him all week, influencer, entrepreneur, venture capitalist now, been involved in crypto, dropped out of college, luminary in the industry, young gun, great to have you on The Cube. Thanks for coming on. >> That is the most honorific title I've ever received. >> We like to shoot the shit around here on The Cube. Seriously, though, you have a big following in the community, well respected, I mean, a lot of cool things going on. A lot of young people working on projects, you're one of them. A lot of old people coming in, that have skills, whether it's cryptography or the other ecosystems, interesting blend. You've also worked on the Augur project, which has been highly successful. It's been a great case, and I hear people point to it all the time, say, "Love that concept", but a lot of cool tech. And you're at Ausum Ventures right now, that you're running. What's your take right now? I want to get into some specifics on some tech questions, but, you know, you're out there, you've done some things, you're in the middle of it, you get a fresh perspective. What's going on? What's your view and how do you see it playing out in this business? >> What we see occurring in 2018 is an incredible maturation of the industry. We've gone from Bitcoin to cryptocurrencies to blockchain technology, to this concept of smart contracts and de-centralized applications, to this ICO fad, to now what we're seeing here at this conference, which is the emergence of security tokens. And this evolution represents the broadening of the blockchain economy as a whole. From something that once was this niche little kind of ideological technology to something that is totally global, and perhaps as big as the internet, if not bigger. And that maturation is really important, because as the market matures, a lot of the scams that we've seen in years past will begin to fade away. That being said, I think we're going to need to see a real shake-out in the industry, a bloodbath in the markets where a lot of these poorly formulated tokens, crypto assets, disappear before we see a really blossoming crypto economy. >> It's like you got to clear the digestive tract of all the bad food you ate. I mean, you got to kind of get it out. >> Exactly, it's a purge. There's so much toxic crap in this industry today, it has to disappear before we can really evolve into something that rivals Wall Street. >> Yeah, and it's early on, too. I got to say, we've seen many waves in our day, Cube, we cover it. What I like about what's happening now is you've got an ecosystem forming, you've got people like yourself who are putting out statements like that, which is, quite frankly, a signal. And people need to speak up right now, because we've got to identify the bad stuff. So the ecosystem's forming. >> Well, it can be hard to do that when you're making a lot of money on crap. I mean, I've missed out on a lot of money-making opportunities 'cause I've been ideologically pure. I've only invested in projects that I truly believe will change the world. That can be limiting. And I don't blame people that kind of set aside ethics or quality projects for a greater profit mode, I'm a big believer in capitalism, but fundamentally, that mentality has to go in order for us to take this technology to the next stage. >> Okay, money making's going to happen, there's going to be some high flyers, and some are going to be legitimately good intentions that may turn out to be crap, and then there's going to be total crap, which starts out to be a scam, anyway. >> Right. >> How do you look at those signals? I mean, obviously you want to look for trajectory and community and tokens. How do you look at it? Is it underpinnings of the tech? Is there a business model? What's your view on how to look for those potential trajectories? >> In my view, it's just like venture capital. It starts with the team every single time. Team, team, team, then concept, then market, then tech. I mean, the tech changes, the code's constantly being updated. I'm not a coder; it's something that can evolve, it's something that, once you raise capital, you can have better technologists building out your tech stack. That doesn't really concern me. It's, is this team going to execute, are they going to be able to iterate in a fast-moving business environment in which the tides are always turning, regulators are always doing different things? Are you going to be able to adapt and evolve, and are you going to work together as a team? I take teams out to dinner, I see how they interact with one another. Do they have symbiosis, or are they kind of antagonistic? If they have an antagonistic relationship, it doesn't matter how good the concept is, how great the tech is, because the team won't stay together. And I don't want to have to make those sorts of bets on who's going to be the winning player. I'll stay in touch with the team, but I'll rarely make that investment. >> Yeah, they got to be ready for battle together. They've got to get down and dirty. >> So I hold teams paramount in early-stage investing, which is all I do. >> Awesome. So what are you excited about today, right now? What are you looking at, what's floating your boat, what's getting you excited, what's the specific-- >> So, Augur's about to go on the mainnet, so it's going to be the first truly de-centralized, consumer facing, de-centralized application. Very exciting. I think it could change the world of finance forever, and the way we predict the future. So it's mainnet going live, and then three months after that, hopefully the actual platform going fully live. It's still the most exciting project in the crypto-space, in my view. Even though I've been involved for a couple of years. I am an advisor to Basecoin, which is wrapping up its presale right now. Basecoin is an algorithmic stable coin that today maintains parity with the dollar, and it, I think, is going to be one of the most necessary components. It, or another stable coin, will be one of the most necessary components of creating a true crypto-economy. 'Cause if you look at most of the blockchain applications today, most of them are using these volatile crypto-assets as forms of payments and transactions, and that doesn't work for your average consumer, or even for large enterprises. People do not like volatility. It's a compounding risk factor for almost any sort of transaction. And so for us to have a real robust crypto-economy, we need a stable coin. My bets are on Basecoin, but I'm rooting for all the teams. Because whoever does this, and it may be multiple teams, will have unlocked one of the biggest problems that effects crypto-assets today, which is volatility. >> And liquidity is also a concern, people want to get liquid. That's also a dynamic of why token economics works, is you don't have the process of going public. You can do a little bit of funding and liquidity. Talk about the liquidity impact. >> Yeah, I mean, look. ICOs and token sales are this fabulous way to democratize finance and raise capital, especially for de-centralized applications and new protocols. They really can't take a traditional fundraising mechanism. That being said, if you are trying to create any sort of payment token, which I would never encourage anyone to do, but if you are, like a lot of these utility tokens, their point is for the purpose of payments. And that's idiotic to me, 'cause you're going to do what? Raise $30 million, maybe $100 million? Let's say $200 million. What's the volatility on that going to be daily, or annualized? It's insane, it will never be adopted by consumers. And furthermore, anyone that tries to create a payment token for their specific application, what they're not recognizing is someone's going to have to go to Coinbase, buy Bitcoin, send it to Poloniex, buy their token, send it to the application, just to make a payment? No way! >> Yeah, too complex. Credit cards are always going to beat that out, or Bitcoin and ether. >> Alright, so I've heard on The Cube here, and I've also heard in the hallway, a consistent theme I want to get your reaction to. This marketplace of having de-centralized apps, and blockchain, and cryptocurrency kind of dynamic really disrupts areas that have a lot of slack, or lag, or unused resource. It could be a physical asset, could be computers in the data center doing P2P stuff, and that this market busts down those inefficiencies, creates efficiency, that's the arbitrage. >> It can. >> Your reaction to that. >> It can, but like I say, how do you get access to those tokens? So the rise in security exchanges, security token exchanges, and more robust crypto-asset exchanges, will potentially enable that right now. But unless you have an easy way to buy and store those tokens that are freeing up illiquid assets in a dynamic manner, tokenizing assets isn't very useful. You know, with Blockchain Capital, my last venture fund, we created the first liquid venture fund. It was actually the first security token ever. And the problem that we ran into was everyone was excited, we created this liquid, limited-partner interest in a venture fund, but the problem was there was no place to trade it or sell it. And so, despite the nav of the fund going up, the price of the token remained the same, 'cause there was no liquid exchange. So you need a liquid place for the exchange of value in order for the liquidization of these assets to occur. Furthermore, I think more important than that point is that blockchains are fundamentally the largest technological disintermediator that has ever existed in human history. Even, since the beginning of time, pretty much, we have always relied on middlemen, whether they're banks or governments or tribal councilmen, to mitigate any sort of transaction. With blockchains, we can now have truly trustless transactions, and disintermediate trillions of dollars' worth of middlemen and trolls under the bridge. And that's the most revolutionary component of this technology. >> That's awesome. I want to get one quick question in, we're tagged for time. This rise of the security token has been a great innovation. We've seen great traction because of the security token, we're seeing PolyMath doing a lot of people looking at this as a stabilization. What does it do to the utility token? Does it change the nature of the utility token? Will utility token have a life that's not a monetizable thing? Will it still trade? What's your view and vision on the role of the utility token now that the security token has been established as a viable mechanism? >> So look, when we were building Augur, we did not want to issue a token. ICOs were really scary back then, but we realized, in order to have a truly de-centralized prediction market platform, we had to have a second token. One that wasn't used for payments, but that created a de-centralized consensus in our network. And so we created the first utility token ever. And back then, I was like, oh, this is novel, this is cool. We tried selling it to people; No one really got it. But then, it seems like we went and opened up Pandora's Box. All of a sudden, utility tokens flourished in the past two years, as this means to raise capital. The problem was, nobody was thinking beyond that capital raise. And so most of those utility tokens would have been much better as security tokens. They didn't actually provide much utility. And so I think those tokens, that 99%, 98% of utility tokens that have come out in the past two years, that didn't actually have true utility, those will go, you know. >> Yeah, I think it's some interesting conversation. I want to follow that up when we get back to the Bay Area. This is super important, I really love the idea that you're kind of teasing out. I see utility tokens having an instrumental role in governance consensus, other community dynamics, which might have its own value. I don't know yet what it looks like, but we'll certainly follow up. >> Absolutely, and security tokens will be the largest crypto-asset in the next two to three years. >> Jeremy Gardner, great conversation. Love the young guns, man. They're so smart, great to have you on, us old guys, we're just trying to keep up with these young guns. Back with more live coverage after this short break. Good job, man. >> My pleasure, man. >> You're awesome, dude. Alright. Hey, when we get back, I really want to get, I think the utility, I think the dual-token model is the way to go. Security, and >> I didn't think it would, but right now, the problem is most utility tokens-- (electronic 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)

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

(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.