 One, this is SiliconANGLE's special segment here live at HP Discover for exclusive coverage of HP Discover live in Barcelona, Spain. I'm John Furrier, the founder of SiliconANGLE. I'm joined by my co-s, Dave Vellante, co-founder of Wikibon.org, and also Mark Hopkins of SiliconANGLE, SiliconANGLE TV, the cube master of all things behind the curtain, SiliconANGLE, with me going back to 2009. Special segment, we're going to talk about what's going on in the news and hot technology trends. As you know, SiliconANGLE is a reference point for tech innovation, Wikibon.org, free research. We've been covering the enterprise, big data, cloud, mobile, and social like a blanket, and we're going to go down and discuss some of the hottest trends. And if you've been following the cube, you know that Dave Vellante and I always have been debating Bitcoin. I'm for Dave was against Bitcoin, and that Dave's starting to come around. So, I'm against it. I'm always asking. Hold on, let me finish, please. So, we are going to have a play. He wants to learn more. He's open to learning, as Dave is always open to learning. We're going to have a session on Bitcoin. Well, for those of you who watch SiliconANGLE, you've seen a lot of Bitcoin coverage and may be wondering, like I had, why the hell is SiliconANGLE covering Bitcoin so much? That was sort of my question to you. And what was your response? It's, Bitcoin is very relevant. It's an emerging technology. And my response was specifically, SiliconANGLE doesn't break news, we break markets. And Bitcoin is a market we've been looking at for a very long time. In fact, we've paid developers in Bitcoin going back a couple of years ago, and Mark Hopkins and the team at SiliconANGLE that no one sees is scouring for these new markets. Bitcoin is one of them. Now, just to clarify, we had a similar conversation about this thing called Hadoop, several years ago. It's a Hadoop matter. And we had the same conversation about software defined before it was called software defined. David Floyer called it IO centric infrastructure. So SiliconANGLE and Wikibon have been breaking markets for the past four years. And we are the number one media organization that is ahead of the curve on all new relevant technologies. And the key word is relevant. So what I want to do is Bitcoin relevant. So Bitcoin is very relevant. New cryptocurrencies is a trend. And, you know, to me, my vision has always been, you know, smells like a big mega trend. And we look at it, it has emerged because of, you know, I see the Silk Road drug outfit got busted, busted was dealing in Bitcoin. You start to see the underbelly really is foster some of these new technologies. You know, porn is always discussed as well. So we brought Mark Hopkins on here in the cube, usually he's behind the curtain. As like I said, Mark has been a Bitcoin follower, has Bitcoin, trades Bitcoin, runs and co curates the Dr. Bitcoin column. So Mark, give us a quick tutorial. You know, and Dave's got a great point. You know, we want to know what this emerging technology is. So let's break it down. One oh one Bitcoin for the folks out there. What is Bitcoin? So the simplest way to put it, because Bitcoin is as many things to many people. It's a commodity. Depending on how you treat it, it could be a currency. You can treat it simply as a way of processing payments internationally or locally, if you so desire. The basically what makes it unique from something like PayPal or something like, you know, Visa, MasterCard is that Bitcoin will allow you to process this stuff without paying, you know, a fee or being answerable to a central organization. Now, you pay with PayPal, you're paying your like a central bank. Yeah, it's a four to six percent fee that goes to PayPal. And there's a whole corporation that supports that. And there's so on at the head of that. Similarly, with the US dollar in general, there is a Federal Reserve Bank that, you know, sets policy and interest rates for that denomination. So it's a democratized currency. It's a headless control by the market. Yeah, period by the market and by the algorithm. Right. So what do you mean by the algorithm? What algorithm? So I'm going to keep it kind of in general terms because we can go down the rabbit hole on all the technical stuff. But basically, there's something that's referred to as the blockchain. And the blockchain is a record of every transaction that's ever occurred in Bitcoin. And that blockchain is hashed by Bitcoin, they call them Bitcoin miners, but they're basically like computerized accounting software. And as a block of the chain is successfully hashed, successfully verified is, you know, no fraud attempts, no double spends, that sort of thing. An award is given to those accountants basically like pay. And that's how new Bitcoin is minted in the system. So that award is a virtual coin, a virtual coin that has value, right, has value and can't be duplicated. And what's the value of Bitcoin today? So the spot price right now on one of the most common markets is $960 per coin. What we're okay, sounds like a lot for a coin. Yeah, well, now where did the market start? And when when did it start? So it's it's about three years old, three years old. And it started at what level? I mean, like, you know, less than pennies per coin. So really, so so you're talking pennies per coin. Yeah. And now it's worth 900. So the first the first major first recorded, like what it was for Bitcoin transaction was someone paid for a pizza 20,000 bitcoins. Okay, yeah, so different value, obviously, back then. Okay, and and and so obviously, if you invested a little bit of money in Bitcoin back then three years ago, you'd be worth hundreds of thousands of dollars, or more there there are a bit determined for that is bit millionaire. There are a bit many millionaires out there. Okay, and so what's driving the price up? Supply and demand? Supply and demand right now. China has reached as of about six to eight weeks ago has just exploded their interest in in Bitcoin. And the the price has been driven up by that. Maybe the Bitcoin over who you on for the next day, if we missed it, we missed the Bitcoin gold rush. The Bitcoin bubble. Is it a bubble? Well, let's talk about Bitcoin for a second on on two things. One is fraud, bubble that downside, but let's get a front end. Sure. Why is Bitcoin relevant? So to me, this is the consciousness we want this will start with. To me, it's always about the currencies online behavior is shifting where a new generation has mobile devices. Dave, so this you seeing new payment methods. I remember when PayPal launched, people laughed at PayPal, no one will ever ever pay on the web. That was talked about. So PayPal was like, what are you crazy? I want to put my bank information on the wire. Never. It's never going to happen. Okay, there it is PayPal. So same with Bitcoin. There's still the foot around will alternative currencies is still small relative to the overall global currency market, but it does have momentum. It has legs. There are actual transactions being done. And the question is, can Bitcoin be an alternative currency for a new culture of online users? Mark, we'll start with you. Well, I mean, I think so. I think you you you have to say yes to that because if you look at the ranking of of bit payment processes that are out there, the Bitcoin has already passed up PayPal. In terms of facilitating online transactions, it's in terms of what metric in terms of daily transaction volume. So daily transaction volume, it's PayPal and Bitcoin are vying neck and neck for actual purchases for goods and services for goods and services. So what kinds of things are Bitcoins being used to to buy? Tesla just started accepting Bitcoin last week, the Long Beach Lamborghini dealership. Sandpack Ford. These are like noteworthy car dealerships trying to track those Bitcoin and millionaires. Right, right. There's been several houses bought and sold. There's is very popular in just on the street. There's like a lot of coffee shops, a couple of bars in Dallas, I know they do it very in Venezuela. It's actually common. But they're willing to be paid in Bitcoin. So they're betting that the value of Bitcoin will increase. Right, right. Yeah. I mean, so I mean, it makes sense. And there's a lot of shady transactions going on. Of course, of course, like what? Well, Silk Road, it was in the news, right? So the this guy, Dred Pirate Roberts was his online name. But he was arrested recently. And because he was running this online marketplace, it was like an eBay for drugs and guns and all kinds of illicit activity drugs, guns, porn, right? They're running it over the tour network. But I mean, that was also, you know, kind of it being taken down was also kind of a watershed moment for Bitcoin itself. When people go, okay, now we don't have this albatross, you know, hanging around, we can talk about Bitcoin in legitimate terms. Because in all actuality, and this came up in the Bitcoin Senate hearings last week, the one of the directors from FinCen actually said United States dollar is still the most efficient way to launder money. It's still the most still the most commonly used criminal transaction method. So let's, okay, let's get past that. Take us through how someone buys a Tesla. And if I'm a Tesla business, right, how do I determine the value of the Bitcoin? Do I just say, okay, a Tesla cost is to save around numbers 100 grand? So yeah, so if you're any business or any person that's selling goods and services, you really don't want to go with what the spot price is. Because I mean, while we sat here, it's it's fluctuated. I don't know, 2% in value, right? So most payment processing shopping cart systems based on Bitcoin will use like a 24 hour or 48 hour moving average and basic on instead of using a spot price. And that, unless there's a hype cycle going on, relatively stable, it's not going to fluctuate more than, you know, maybe 2% over the course of a week or two. Limited supply of Bitcoin out there. Of course, yeah, there will always be a limited supply. But the algorithm determines whether or not a coin is minted. Yeah, virtually. But so can there be an infinite number of coins minted? Is that going to just tank the price? No, no, so that's that's the way the algorithm is designed. There's only ever be 21 million bitcoins 21 million. Yeah. So that's a cap and how many are out there today? Roughly half, roughly half. But as time goes on, less and less get minted over the same periods of hashing times. So if that's true and Bitcoin is a viable currency, then the value almost certainly will increase, won't it? Absolutely. And that's a feature, not a bug. This is sorry. It's a feature, not a bug of the system as part of the design. It was designed to be a deflationary currency. How could that algorithm be changed if the community decides to change it or who's the community? The community? Well, I mean, there's, there's developers, obviously, that they can write the code. Anybody that's developing the code for this can say, okay, this is going to be the next change. But it's up to the collective of thousands of Bitcoin miners to accept that change. The developers can say, okay, we're doing this now. And the miners can say, you know, that's not in our best interest. Bitcoin miners. What's a Bitcoin miner? So those are the people I was talking about that hash the blockchain. So they own pieces of equipment that are CPUs and GPUs that are in ASICs that are specifically devoted to verifying transactions. Okay. So they have to weigh in. Yeah. They weigh in with how many miners are there? Millions, at least. So and it's dominated by larger players. But I mean, there's, there's, there's so many people involved in it. I mean, you can, you can buy into this ecosystem and start mining for, you know, $70 or you can buy $50,000 worth of equipment. So there's people out there that mentioned Tesla willing or Tesla dealers willing to get paid in Bitcoin. Would you personally be willing to get paid in Bitcoin? Yes. Yeah, actually, I would. It's, it's, I think it's a, at least at this stage in the game, it's, it's very to hold your big, even if you're spending daily, you know, I use my Bitcoin at target to buy groceries, right? But the part that I don't use goes up in value. So if I'm holding even just a, you know, kind of a personal reserve or my savings in Bitcoin as an individual that does me, you know, is better than holding in dollars because dollars go down in value over time and Bitcoin goes up. So you could have bought back three years ago 500 Bitcoin for what, 15 cents, 25 cents, a quarter of a dollar, whatever it is, it'd be worth close to half a million dollars today. That's right. So, so, John, you know, this is okay. I grant you there's an interesting trend and alternative currencies have been talked about for quite some time. Well, two questions. One, would you be willing to get paid in Bitcoin? And my second is, what other big trends do you see occurring in the tech world? Well, I mean, first of all, on the Bitcoin. Yes, but consider getting paid in Bitcoin because endorsing the trend. I'm an early adopter. I would probably take the chance, but I always worry. I want to put my myself in the use case because what I'm afraid of is the, what is the value drop in the fluctuations concern me. Right. So to me, the stability of the Bitcoin is a relative factor. Right. So I can't have, you know, something be worth a hundred thousand dollars, say a Tesla or services. And then all of a sudden I get paid a hundred thousand and that's not worth about five thousand. So again, how hard is it to cash out? I mean, is it so there exists a lot of markets that you can cash? I mean, look, this is the list of markets here. It's like, I don't know, eighty five hundred of them. So those are all kind of governed by the same kind of places where you can sell your Bitcoin. Yeah. And so paid in paid in dollars or euros or or anything that you want or currency or whatever your preference is. Some of them are harder to use than others. Some of them. Most of them are geared towards large traders. So that but the easiest way for an individual to get in and out of that is to use something like local Bitcoin and find someone like me that is active in the community in a city near you. Then you can go meet them at a coffee shop and say, here's fifty bucks. Give me fifty dollars for the Bitcoin. All right, John. So where do you put this relative to some of the other trends that you're seeing? What else do you see going on out there? Well, the thing about Bitcoin that gets my attention is it's so disruptive and it's the fact that the user experience of what's happening online relative to massive online gaming, massive online learning, MOOCs as they call them. You're seeing essentially what I call the Xbox or PlayStation model of massively online environments are the future collaboration environment. So that's kind of one vision I see. When you see that kind of environment we always connected devices and people are threaded together, I think a new fabric of culture and Robert Young Johns was talking about this around big data autonomy. You're going to see new expectations by users and one of them will be some sort of online currency model like Bitcoin. So to me, Bitcoin is very, very relevant because like PayPal was for the web, a natural extension of buying e-commerce goods online, I think a whole new social fabric will be constructed around what's going on around consumers, real-time, analytics, big data will create new applications, new real-time benefits and when you're doing anything in real-time that involves real-time collaboration, you've got to have e-commerce components. So to me, Dave, the e-commerce equation will be disrupted and Bitcoin is rising above and has the momentum of all other cryptocurrencies and so to me I would bet on Bitcoin. I'm bullish on Bitcoin and again, you're seeing some of the big secondary market type of people coming in supporting it. You see venture funds coming in support Bitcoin. So I think some stability is around the corner. That is the ultimate question around Bitcoin. So I like to see these clearing houses come in. I like to see market makers come in and what you're seeing right now is that's the macro-dynamics. Now the micro-economic side of it is going to be interesting. You know, I could put stuff on the internet down in Phoenix and start doing some mining on the crypto. I still think the black box mining issue is a huge thing for Bitcoin. So on the business side, I see good momentum on Bitcoin. On the technical side, on the crypto mining, I still think there's got to be some backdoors. I am just skeptical that the alpha geeks have some sort of backdoor to the quote goldmine for Bitcoin. So again, that's just my fear. Yeah, you're saying if trading the commodity is not the only way to make money, then that's a problem. Well, certainly a bubble. If you look at the fluctuations, certainly a bubble, but certainly the stability factor, if that continues and the moment while the momentum and overlaying on the user experience of this new online culture is developing, it's a perfect storm of innovation and disruption. I think it could be a serious winner. I mean, there's definitely more stability now than there was before. But you can't deny that there's been wild fluctuations. But like you look at this time last year, there was fluctuations in excess of 75% of whatever the spot price was, little mini bubbles and bursts. And now we just had a mini bubble burst cycle was only a 35% fluctuation. And that was with China involved, right? Massive influx of capital so and massive influx of computing power to which I was just pulling up. This is a recent headline. The Bitcoin mining network is now 256 times more powerful than the top 500 super computers put together. So I mean, there is stability there. There's a lot of stability. There's also a derivative innovation effect. I mean, if you look at all the key innovations around the computer industry, it's always fun government funding. So, you know, there's a pony in there somewhere for new innovation, as I always say. So I don't know if I call it stability. I call it the potential for stability. I definitely don't think it's stability. No, it's stability on the horizon. You're seeing market forces drive stability. If goods and services are being transacted as the level Mark was talking about, Dave, then, you know, no doubt stability has to be there. Otherwise, it all comes crashing down. So you have the naysayers saying doom and gloom, crash and burn, and then the retail stores be taking Bitcoin as currency in the next five years. Yes, absolutely. Amazon has talked about it target. I mean, some of the bigger ones are a little bit more reticent. Bank of America has been talking about, you know, big major endorsements this week. Merrill Lynch. So within a decade, you would see either Bitcoin or some alternative currency, a crypto currency is pretty widespread. Yeah, I would say so. You feel like that's a very high probability. Yes, I agree with that, John. Yeah, I think it's a very high probability that all people will be taking Bitcoin with the caveat of some of the stability things. But you're already seeing the signs of there's a startup in California is doing a kickstart called coin. They have all those new payment. You're going to see, I believe an application market on top of it. The financial markets are coming in on a secondary market basis. You're seeing market makers, you're seeing clearinghouse. And if you go to the developer community, if there's an abstraction layer of apps for e-commerce and for other transactions that are in this new culture of massively online gaming, porn, drug dealing, as you see in the current market, is porn and drug dealing, that's a proof positive. I got to say, if you look at all the early adopters, all the innovations tested in those really high volume, highly transactional cash markets. So who wins? Who loses? The consumer wins, presumably. Who loses? Who gets disrupted? Well, I mean, banks have a potential to lose, just like newspapers have a potential to lose at the advent of blogging and social media. Because they're currently marking... Right, is it totally different? Is it disruptive to their current model? Payment processors, it's disruptive to their current model. eBay stands to lose if they don't adapt. With PayPal. Yeah, I'd love to get Meg Whitman's perspective on this. She was executive at eBay. She was flouting her eBay contractions on their keynote. I wonder what she thinks of cryptocurrencies, obviously being with the geeks at HB, and they certainly have the horsepower to do the mining. Yeah. But, so yeah, I'm good on Bitcoin. Other news around the web, you know, we're looking at SiliconANGLE right now. Obviously, still the stories around the NSA. You're still seeing the social media world going crazy with the recent tsunami of investments. You saw Twitter go public. That's still, we've got a backlash of massive social startups not coming out of the woodwork. You're seeing huge startups around networking. I think SdN is enabling networks. Sequoia just announced the 33, or not announced, was broken. They had a $33 million investment made in a stealth networking startup. You're seeing, you know, Facebook warring with Twitter and LinkedIn. I think you're going to see a complete reconstruction of the social media business. Obviously, we launched CrowdChat this week. What about the Twitter IPO? What about it? What's your take on it? I'm personally very pleased with the progress. Well, I think they went by the book. Facebook hacked the IPO process and everyone made a lot of money. Wall Street kind of got there, kind of got taken on the Facebook IPO. But again, the goal of an IPO is liquidity. Facebook definitely blew away Twitter on the liquidity front. Twitter was much more conservative, mainly because of Twitter revenue models not up and running yet. So if you look at Facebook, they were cleared the runway on one massive numbers, massive active numbers. Twitter is still unknown. And the way Twitter filed their S1 day, they filed it under the $1 billion revenue numbers. So they had some confidentiality on the IPO. So you saw some stuff was kind of hidden under the covers. You really had to dig into the IPO S1 to really figure out that there wasn't a lot of revenue in there and still an open book on the revenue model. Me, personally, I'm bullish on Twitter. I think it's going to be an absolute continue to grow stock. I'm a buy on Twitter. I want to give some plug to you because we were at Oracle Open World at the end of 2012. If you remember this, like October, November, 2012 and Facebook stock was taking a big hit because the IPO was sort of screwing the consumers, like you said, great liquidity event for the owners. And you called it then a buying opportunity. You know, a lot of people disagreed with that. I was actually bullish on Facebook as well. So I kind of agree with you on that one. You look at where Facebook is today. I mean, at the time, the stock was in single digits. It's up over 50 now. Yeah, and that was what? 20 something went in there? That was 2012. No, $20 stock price. When I said buy, or what were you talking about? No, it was under that. Yeah, the IPO came out at 20 something and then now it's at 50. It went up and down. It was below 20, too. Once they announced where their revenues are, now that they're actually putting a lot of ads in the feed, they can crank up the revenue. So Facebook, a lot of upside, you think. Yeah, Facebook is the web, right? I mean, Facebook has a single identity that winning that. However, there's a big cold war going on in the tech business. And this is to take note of. What do you mean? So the cold war going on in the consumer tech businesses, Facebook, billion users, LinkedIn owns the business market. Twitter has a signaling for the crowd. Tumblr got bought by Yahoo. Who knows what's going to happen there? Yahoo's trying to make some moves. You got Microsoft trying to be relevant with Bing. And what you're seeing, in my opinion, is an explosion of social networks. So to me, the metaphor that I'm seeing right now from my experience is the web created a few web pages. Then it became a million web pages. Then it became zillion web pages, search engine built on top of it. What you're seeing now is the construction of a lot of niche social networks, relationships, and big data is starting to surface that. So what I believe is that you're going to see a new search engine emerge. That's going to sit on top of all these social networks. So that is why I think there's a cold war going on, because they're all jockeying out. In essence, Facebook competes with LinkedIn. LinkedIn competes with Twitter. Twitter competes with LinkedIn and Facebook. There's a cold war between those big three. And I think the hashtag is what we talk about, Dave, we'll liberate them all, and that's what CrowdChat's all about. And I'm excited by CrowdChat.net. So Facebook has twice the value of HP, more than twice the value of HP, right now. It's insane. If you were a portfolio manager, where would you put your money? HP or Facebook? I think HP's a good buy right now. I think Meg is going to turn this around. I think all the critical criticism we've had of her in the past and the questions, we've also had praise for her. And I think I've got props. I think she's very conservative. She's going to really pick her marks. It's like when I used to be a double black diamond skier, those leaping deeps, you pick your spots to make your turns, and if you screw up, you're dead. That's I think the mode she's in right now. The company is such a fragile state when she took over, Dave, as we talk about all the time. She's looking down that slope and she's saying, I got to pick my turns, and that's what she's doing. And she's not being very, very careful. Minimizing her public appearances, bearing specific with her speech writing. And so it's very clear that she's taking a very conservative approach. So if you look at HP's assets, it's just overall good company. And if you look at the value of HP, and I question the Facebook value relative to that, but that's just me. And just another data point is LinkedIn and Twitter. Twitter's actually more valuable now than LinkedIn by about a billion dollars. Twitter's worth 28 billion, LinkedIn's worth 27 billion. So it didn't take long for Twitter as a public company to surpass the value of LinkedIn. I've always said that these social networks are like nightclubs. After a while, the Yogi Berra quote comes into play. I don't go there anymore because it's too crowded. But you mentioned you're high on CrowdShot, or CrowdShot is betting on Twitter, right? Well, we love Twitter. I think Twitter is a signaling social network around active mobile users, people on the go, breaking news. I think the consumption model on Twitter is very much going to look like people who are passively consuming Twitter. I think there's a build content and consume content model. Twitter is a lower percentage of building, but those active builders are providing a significantly positive user experience. And the consumers are like the 80% or 70% are consuming the content that the 30 to 20% are building. So that's the relationship with Twitter. And you know what? That's social dynamics. I don't think that's an anomaly. Do chat platforms like CrowdShot need to expand beyond Twitter in your opinion? Yes, absolutely. We have it for LinkedIn and we'll have it for Facebook. And we met with Facebook. We haven't met with Twitter yet, but we love those companies. I personally think they're awesome. And my feeling has always been, like to use the nightclub example, the user experience is everything, right? And to me, if you look at why we like CrowdShot so much, Dave, is that we are seeing significant data that people, average consumers are tuning into hashtags as a way to dial up content. And I think that's a user experience dynamic that will force the Cold War players to essentially figure out something to do. And I think that's going to be our opportunity and opportunity for HP and others. You're saying it's all about the hashtag. That's the sort of thing. It's about the user. That's the social currency. The user experience. Talking about the virtual currency in Bitcoin, the social currency is the hashtag. User experience. I love the MOOC trend, the multi online communities with gaming, with education, now business. I think the gaming culture that we see today from our kids, Dave, will be the model of collaboration for business and education in the future. Okay, so guys, thanks so much for this Bitcoin tutorial and riffing on the trends. This is SiliconANGLE's exclusive coverage of HP Discover, what's going on in Paris, LaWeb, Gardner Data Center. We were covering that last night. We'll cover that again tonight. This is theCUBE, our flagship program. We're here in live in Barcelona, Spain. That's the quick news brief. We'll be right back with our next guest here at HP Discover after this short break.