 Live from Toronto, Canada, it's theCUBE. Covering Global Cloud and Blockchain Summit 2018. Brought to you by theCUBE. Hello everyone, welcome to the live coverage here in Toronto for the Blockchain Cloud Summit, Global Cloud and Blockchain Summit. Here put on as prior to the big event this week called the Futurist Conference. theCUBE will be here all week with live coverage. I'm John Furrier with Dave Vellante. As we expand our coverage with theCUBE into the blockchain and crypto token economics world, we're here on the ground with covering the best events. We started in 2018 initiating cube coverage on the sector. Of course, we've been covering Bitcoin and Blockchain going back to 2011 on Siliconangle.com. Dave, we're here to kick off what is the first inaugural event of its kind, combining cloud computing coverage with Blockchain and as we had on our fireside chat last night, we discussed this in detail. Cloud computing and Blockchain either going to be a collision course or it's going to be a nice integration. And we discussed that. This is what this show is all about. It's really about connecting the dots to the future. The role that cloud computing will play with Blockchain and token economics. A variety of different perspectives. But again, this is the first time we and the industry are starting to unpack the mega trend of cloud computing which we know is like a freight train powering and disrupting and we cover it in detail. But Blockchain certainly transforming and reimagining business and process coming together. Well, we're here in Toronto which is of course the birthplace of Ethereum. And it's interesting to see how Toronto has attracted so many developers in the software and engineering, software engineering space. And there's a huge crypto community here. I'd give you my take on the cloud and Blockchain. I don't see them on a collision course. I see Blockchain and we've talked about this and crypto as a part of this other layer that's emerging. You had the internet, you had the web. On top of that, you had cloud, mobile, social, big data. And it was essentially a cloud of remote services. What we're seeing now is this ubiquitous set of digital services of which Blockchain is one. And to me, it's all about automation, machine intelligence, Blockchain, being able to do things without middleman. You made that point last night on the fireside chat. And I think it's complimentary. You need cloud for scale, everything's digital which means data. And you need machine intelligence for automation. And that is the new era that we're entering and Blockchain is playing a big part of that because of its inherent encryption, its immutability and its ability to show proof of work. So it's a key component of a number of different digital services that are going to transform virtually every industry. Certainly that's a tailwind for the industry. And certainly we see that all the entrepreneurs, alpha geeks and a lot of the business pros see Blockchain and token economics as a dynamic that will certainly change things. Today in Toronto this week, certainly not a good week for pricing of currencies. The crypto market is down, Ethereum and Ripple are at yearly lows. And the communities are kind of getting scared. We talked with Matt Rosak, one of the, an early investor and founder of Block last night about the price declines. And he said, quote, I've seen this pattern before. These price sell-offs also kick off the next wave of growth. So this kind of a weeding out was his perspective but you can't deny that over the past 24 hours, 30 billion has been erased from the crypto market caps and the greatest decline has been happening under Bitcoin's dominance and still increased over, still 56% over the year. So Bitcoin seems to be holding more value than say Ethereum. Ethereum and Ripple really under a lot of pressure. But so the insiders are somewhat scared. Some are like, hey, we've seen this movie before. Waves are a little bit rough right now but they're in for the long games. This is a long, the long game going on and then there's also money being lost. I mean, I was saying, bet the farm now. He says, I've seen this before, take everything, mortgage the house. I'm not sure I would advise doing that but you know, this is the time by low. So just as for the numbers, Bitcoin's high last November, December was 19,000. It's down at 6,000 now. So you just say it's still up almost 50% for the year but if you compress that timeframe to nine months it's down 60%. So very, very volatile. Ethereum on the other hand, last September was trading at around 240, 250 and today it's in the 260. So back to where it was last September. So the curve on Ethereum sort of looks like it did end the last summer whereas Bitcoin is still almost 70% up from where it was last September. So quite a bit of difference between the two cryptocurrencies. And you mentioned Ripple, IOTA, many of the cryptocurrencies. Ripple dropping 90% from its 2018 highs, 90%. Some money was made and lost on that one. So again, we always say when the music stops you better be sitting in a chair otherwise this is bubble behavior but you know, Matt and others and the insiders are saying they're still bullish because of the pattern even though there's a sell-off it's a weeding out process and they see still good deals going on. And again, this is going to come fundamentally down to whose technology is going to be adopted? What kind of application can be written on blockchain? We're seeing some promise in the enterprise just yesterday, Microsoft announced a blockchain as a service kind of thing with proof of authority, a new concept. IBM, we've been covering IBM with blockchain. They're working with the Hyperledger standards. So you cut the enterprises. Amazon has kind of telegraphed they've actually put a professional service note out where they are doing some blockchain. The big clouds are getting into the game. So the question is, will the clouds suck all the oxygen out of the blockchain room? And will there be room for other blockchains? Again, this is the big debate. Is it going to be a fragmentation of a series of blockchains or will there be some sort of set of standards? Again, we don't know what the stack's going to look like because the best thing about blockchains you could roll it out and implement a portion of the stack and still coexist with whatever standards emerge. So again, these are the questions. Well, one of the conversations that the course is going on is the actual number of transactions that's occurring with Bitcoin is way down. It's probably down 20% year to date. The other conversation is, we all know that Bitcoin and Ethereum, the transaction volumes, can't really support what we do with Visa or even Amazon. There's a discussion in the industry going around about what if Amazon chose some other coin? Like Ripple, for example, which has much higher transaction volumes or what if Amazon tokenized its own business and came up with its own cryptocurrency? What would that do to the price of Bitcoin? If all of a sudden you could transact in prime using Amazon coin or something like that. And we know that Amazon understands how to scale and obviously understands cloud. That's why I do see cloud and blockchains as complimentary. I just don't, it's very difficult to predict the future. There are those who say Bitcoin is the standard. It's got the brand. There are those who say that Ethereum because it's much more flexible and you can program distributed apps with it, have a great future. And then everybody points to the transaction volumes and says this is just a Petri dish for the future where new technologies will emerge that scale better and can produce. What's interesting last night on the, we had a fireside chat with Albergio Serial Entrepreneur, founder of Digital Bits, and Matt Rozak, obviously founder of Block. Investors on the Forbes billionaire list. Superactive, very engaged on a lot of advisors. Finances one and many other deals he's done. It's interesting you have two perspectives. Al is the networking guy who knows plumbing. He knows how networks work and Matt's a token economics genius. So the two have interesting perspectives and the battle Royale going on right now in my opinion is two things. I think token economics is a wonderful thing that's going to happen no matter what the standards are because token economics really is the value to me of the cryptocurrency that can be applied to new business models and efficiencies. The blockchain is a land grab and here's why I think whoever can nail the plumbing on the pipes of the infrastructure reminds me of the early days of the dial up web when you had points of presence and you had the infrastructure had to be laid down although slow people can dial up and get the internet then obviously the internet got faster and faster. Blockchain is struggling from that scalability performance issues. And so the question is on a public blockchain you got to have the super nodes. You got to have the core infrastructure plumbing nailed. I think Alberto takes that perspective. Then everything else just will flourish from there. So the question is, you know, what are those hurdles look like? And this is where the cloud guys could either be an enabler or they could be a foe against the core community. So I mean, like you said, Amazon could just snap their fingers tomorrow and just like take out the entire industry with one move. Right, just we're going to do our own blockchain as a service, everyone uses it. Here's our token and then a set of sub tokens would have to be coexisting with that. And that could be a good thing, we don't know. This is the discussion. And governments around the world could do the same. The US government could do Fed coin, you know, the Chinese government could do China coin. I mean, what would that do to the prices of cryptocurrencies? I mean, it would send it into a tailspin, you would presume. And you know, it was interesting. Matt, it rose back on your panel last night. I asked the question, will, you know, traditional banks lose control of the payment systems and granted he's biased in his, he was definitive. Yes, absolutely. But the counter argument to that, John, and I love your thoughts on this is the US government and the banks have a lot to lose and they're kind of in bed together and always have been. So one would think with the backing of the US, you know, it's Maid, it's military, et cetera, that they're not just going to let the bank lose control. Now, to his point is why do you need to pay, you know, transaction fees to a bank? But you're paying transaction fees to somebody even in crypto. I think our government in the United States is really asleep at the wheel on this one. And here's why. One of the beautiful things about the internet was it was started, you know, through collaboration in the universities in the United States. The United States enabled the internet to happen. And the Department of Commerce managed it. The domain name system was, you know, managing a very community oriented way. Again, community keyword, you know, postal, let's hit that history as well documented. If people aren't familiar with the history of the domain name system DNS, go check out the Wikipedia research. It was run by a bunch of people who manage a database of website names. And that became sacred and was distributed and funded by the U.S. government. Funded by the U.S. government, but the community managed it. The problem with the U.S. government today is that they are meddling in areas that they actually shouldn't be even playing in. Get the SEC shutting down everything right now just by the threat of subpoenas and the ICO market, which puts the overall country into a handicap position because now the innovation of blockchain and the entrepreneurial innovations happening is stunted. And it's just shifting outside of the United States. So what's happening is the money flow and the energy and activity is so high that that incubation is not happening in the United States. Although a lot of people are working on it. There's no funding mechanism. The capital formation of blockchains different than venture. It's a little, not super different, but you know, somewhat different. But it's happening outside the United States. Certainly the Chinese will be benefit of this. And if the Chinese wanted to shut down blockchain they would have done it by now. They're actually fostering it. And it's an opportunity for someone on the international stage to get a lever in the United States. So that's one. The second thing is they can enable crypto if they wanted to. I think they really should look at that. And I think the banks are central organizations, the World Bank, they're under a lot of pressure. They don't know what to do. So my talk to people, that's the same answer in so many words is the government and the regulators really just don't know what to do. Well, and Matt made the point last night, Matt Rosek, that when he talks to these banks they're talking about using blockchain and they're very excited because they're going to take hundreds of millions of dollars of cost out of their infrastructure and their processes that are just not very efficient and that's going to drop right to the bottom line. And of course they're in the money business so that gets them very excited. His point was that's really not what it's about. Yeah, that's nice, but it's really about transforming the businesses. And that's why I asked the question about banks losing control of the payment systems, opens up a whole new opportunities whether it's financial services, healthcare, automotive and again, to me it comes back to digital which is data plus machine intelligence plus cloud for scale. That you called it, I think at IBM Think, you coined it the innovation sandwich. Data plus machine intelligence plus cloud for scale put that together that is the innovation engine for the next decade plus. The innovation sandwich unlike a wish sandwich where you wish you had some meat in the middle. You know, this is a good point. I mean, let's end this kickoff and get into some interviews here with these really early thought leaders in this new kind of conference. It's the first of its kind, cloud and blockchain and we're going to certainly continue this in Silicon Valley with the CUBE Summit coming up in our events that we do. But I want to, let's get some predictions now because remember, this is the CUBE, everything's going to be out there, it's going to be on the record. So we can look back and say, hey Jay, remember in 2018 when I asked you what's going to happen? So let's get into a prediction. What do you think is going to happen? I'll start and you can think of an answer. So here's my prediction on this whole blockchain world. Not so much crypto or token economics. There's really two predictions. With respect to blockchain, I think you're going to see an exact movement that the cloud market took. And I think it's going to happen in three phases. Phase one is all the energy is going to go into public blockchain and public blockchain will be figured out first and people are going to get excited by the new operating models of blockchain, specifically the decentralization of how that works and the benefits of decentralized blockchain, immutability, no central authority and all the benefits of blockchain. I think it's going to be very rapid growth in the fixing of blockchain speed scale. That's going to happen very quickly and it's going to happen publicly. Then you're going to see private blockchains. You're going to see, you know, on-premises kind of like blockchain, kind of like the cloud and people have on-site kind of private. And then you're going to see a hybrid. The hybrid will look like multi-chain solutions. So this is almost an exact trajectory that cloud computing took because the blockchain feels like a cousin of cloud or a brother or a sister. So it's related but not exactly but I think it's going to the same trajectory. Public, private, hybrid, which is a multi-chain model and I think that's going to be the standards. That's going to be the market track. On the token side, I think you're going to see a couple of key tokens like certainly Bitcoin's not going away. I'd be doubling down on Bitcoin under 6,000 like everything on that. That should hit 20,000 in my opinion. Over the next timeframe. But there's going to be a lot of token integrations. You know, my token integrates with your token and almost natives and secondary tokens kind of blending together where people will coexist tokens on one platform. So it's just too powerful not to have that happen. So that's my prediction. What do you think? I think as it relates to blockchain, I think blockchain becomes on the enterprise, I think it becomes an invisible component of virtually every industry. Every industry has waste, can improve efficiencies and blockchain becomes a way to, whether it's supply chain or settlements or shared ledgers. I mean, there's dozens of applications for them and I think blockchain becomes a fundamental component of a digital infrastructure and it's starting now and I think it's here to stay for many decades and beyond and you won't even see it. It's just going to be there. It's going to become a fundamental part of how we do business. On the token side, very interesting, obviously hard to predict. I think that you're going to see continued volatility, of course, I think that's a safe bet, but I also think it's potentially going to get worse before it gets better. I think there's going to be a shakeout. I think you're going to see, you know, there's continues to be pump and dump scams going on. The US government's getting more aggressive. A bunch of subpoenas went out and people are still trying to understand what that all means. So I think it's going to be rocky roads for a while. I think you're going to see a big shakeout, like a big dip. And then I think it's going to power back. I think that crypto is here to stay and it's very, very hard to time these markets. So my advice is just, you know, buy trickle buys on the way down and hold, hold as they say in this world. And I think 10 years from now, it's going to be worth a lot. All right, you got to hear theCUBE. We're in Toronto for the first inaugural cloud and blockchain summit, global cloud and blockchain summit. Of course, part of the big event here in Toronto, the Futurist Conference, which will be there live Wednesday and Thursday, the kickoff is Tuesday night for the opening reception. It's theCUBE coverage. Continuing from blockchain and crypto markets. I'm John Furrier with Dave Vellante. Stay with us for more live coverage here in Toronto.