 From New York, it's theCUBE. Covering Blockchain Week. Now, here's John Furrier. Hello everyone, this is theCUBE's exclusive coverage here in New York, Blockchain Week, New York, hashtag, Blockchain, NY. This is theCUBE, I'm John Furrier. Host, our next guest, this is my dude, Cuddy, who's a partner at Arcadia Crypto Ventures. Thanks for joining me here in New York City. We're at the Block Party, that private event here. Thanks for joining us during Blockchain Week. So you guys do a lot of deals. We had Richard on, who's the managing partner of the firm. Obviously early in the space, super early suit in the front wave, get all the best deals. Now it's competitive. Read the white papers, you gotta get down and dirty. Look at the pretenders, figure out what's the bad deals, the good deals, and then when you get a good deal, make sure it's tailor fit. Both the tech matches the economics, which I find it to be interesting because you're gonna have a brilliant entrepreneur come in, but their token model's off. You see this every day? Yeah, we see this a lot. So especially till last year, things were much more easier because most of the people who are coming were genuinely at least trying to do something good. But this year, we see a lot of people who just want to make use of the wave that's happening, just get on the hype and get some quick buck. Even traditional firms that have failed are coming and trying to capture the blockchain hype. Yeah, so throw the Hail Mary, basically. Let's do an ICO when they want. We're going under, let's throw the Hail Mary. Yes, yes, that's what we see a lot happening. And then there was a lot of her tech projects back in the past, so it was a little more easy to evaluate. But this year, we're seeing more real business applications coming up. I was telling Richard about some of the growth things around crypto, I don't want to get your take on it because the internet infrastructure's changing. We see the Web 1.0, we hear in these, all the events that go to this similar kind of conversation, TCPIP created internet working and interoperability. HTTP created a whole new way to do things, Web 1.0. Now we're hearing token economics and blockchain as a new way but yet interoperating with the old systems. So you have a whole sea change. And there's a real tech enablement. So what's your view on this? Because some people get it wrong on the business logic, maybe they want to know what the tech enablement is. What's the tech that's driving all this new infrastructure? Yeah, so the internet, you could think of it as a way to share information with the worldwide audience. So blockchain, for the first time ever, enables all blockchain or the entire crypto infrastructure. First time enables humans to transfer value over the wire. So you could represent one as one over the wire rather than creating a duplication of one. So you could have your own Bitcoin stored on the network and you can access it to yourself and you can send that value across. This was never possible in the history of the human race. So that's what blockchain enables, the solution to a Byzantine general's problem. And we always thought that it was not possible, but for the first time ever, we have a means to achieve that. I also understand some of these CUBE events. Every company needs a chief economic officer. You used to have a CTO. Now you need to see a chief economic officer. So I got to ask you, when you see a technology, you got to kind of make sure it marries the right model. So in the token world, putting security tokens aside, which I like, by the way. Yeah, even I like it, yeah. They're very easy to deal with. Utility tokens are different. You have two types of utility tokens, a work-like token. And a burn mint equilibrium approach. What's your take on the two strategies there? And when should someone deploy a burn mint or BME strategy versus say a work token, which is much more of a utility classic? So a burn token is what has been the work, at least in the past, like for building actual platforms. So that solution itself is not fully solved. So once we solve that completely, that's when we see much more utility tokens coming on board. But at this point, we see more of the remittance problem that's being solved so that we have a lot of exchanges and transferring of currency that's being worked on. So you can think of it like the email in the internet era. So though we had all these different, different dot-coms, only email worked well. So right now the transfer of value, the remittance and the exchange is the only thing that's working. But as we go forward, we'll see much more business models coming up. So it's better to involve. Yeah, I think this could be the year that's going to be, Ethereum was a moment when, there was an Ethereum moment when you really could start the next generation on the cryptocurrency movement. So I think this year we could see more business. And I heard some of the conversations here at the consensus event around a lot of people trying to force blockchain and decentralized, specifically with a centralized business model. So a lot of people are poo-pooing that, which is we just call that blockchain washing, just whitewashing, trying to save themselves. So I got to ask you, I mean, first of all, I mean, I remember having conversations back when the web started, oh my God, AOL and this 14.4 dial-up is so slow. It's so much slower than a mini computer. It's technically right. Mini computer was much faster than a dial-up modem to the web. But the web wasn't replacing the mini computers, replacing direct mail, direct response, analog things. So the question I want to ask you is, what is the analog displacement? What apples to apples comparison should we be making when people throw out these idiotic comments like, oh my God, blockchain's so slow. Because it is kind of slow. It is slow. The web was slow too, but it replaced something old. Is it right or is blockchain replacing something old, and what is the right comparison? So the right comparison is that it has solved theoretically the problems. The theoretical solution for these problems, we are going to solve the decentralization and decentralizing business. Theoretically we have solved it and we have proved it practically it's possible. But it is not really there for that, for the mass adoption for real business to onboard. It has not reached that scale yet. As we all know, if Netflix was a business in 1999, it could never succeed. But then a lot of infrastructure was built up and on top of it, Netflix worked. So the same thing is going to happen. So you're not worried about that the complains will say it's slow? No, because there's more in IC, each time I go to these conferences, these events as you would have seen, more and more smart people are jumping in, more money is flowing in. So more. The web grew too, more people were using the web. So growth was the key. Yeah, growth was the key and more smart people will come in and they're going to figure it out. When you look under the hood of a company and they come in and they say, hey, I want to get funding or have this great business model or take an existing business and tokenize it, what are the things that you look for in a good ICO candidate or just someone who's trying to do token economics with a technology trying to transition, not pivot, transform into token economics. So a lot of it, there's something people call it as a conviction-based investing. So there are a lot in this cryptocurrency space. So we look at the technology, underlying technology, how we can solve some of the issues. We look at the broader aspect of the space, how big the space is, so it can solve that. And we also look at the team and these three things, if they're in good combination, we believe it can be a viable business. And also the partners or the founders have to be a little less greedy, like look for smaller races that's good enough for the next two years. Well, I think entrepreneurs can get liquid faster on token economics. I think it's actually better for the entrepreneur, in my opinion. I want to take change gears, so I can talk about you personally. How did you get here? I mean, how did you just wake up one day and say, I'm going to go work for Arcadia crypto ventures? I mean, were you scratching a niche? Did you come from finance? What's your background? My background has been in technology and finance. So we worked with a bunch of Wall Street banks, then private equity firms. So then I was running a technology firm when I met Richard, who's very early in the space. So we talked about it and he had a lot of interesting questions about the space. So myself and one of my partner, we went back and researched on it. So we came back with these answers and he had a little more insight and back in the days, much more access to the deal flow during that time. So we worked with him and loosely we worked as some kind of analysts for him and we started working together and then it formalized in a bigger way When did you have the moment saying, Dan, this is going to be good? I think so once we totally understood the Santoshi paper at that point, we knew that this is going to change the world, but even I didn't expect that this would be this fast. So what we are seeing today, at that time, I thought maybe we'll see that in 2020, 2021, but the space exploded, Ethereum hitting 1000, which it hit sometimes this year. I was thinking it might happen sometime 2021 Which sector surprised you the most? Was it just the trading side, the entrepreneurial side? What area of the market surprised you the most? The surprising is the worldwide adoption and how especially the new generation who was kind of lost a bit of interest or I would say not even like they are disillusioned with various other investment model, they are jumping in a big way. And I think this is even regulated everyone has to look for that. These people have come in. So let's get it right for these folks so that they have a belief in the system and they can go forward. Madhu, I want to get your thoughts on something I think is important for folks to understand and that is there's a lot of liquidity. Richard mentioned liquidity is an important part of it. So there's a lot of new dynamics and art and science that goes into the trading side of it, much accelerated than a classic IPO or say a hedge fund kind of deal with those kinds of stuff going on. But here you can get much earlier on the process. Tell us about the folks who like now know what a wallet is and might have an account on Coinbase to the extent that that's their knowledge base. You're so much deeper on some of the trades. What are the dynamics? How would you break down the trading situation on crypto? Give us the crypto trading 101. So the idea is that first of all there are some huge exchanges. So every cryptocurrency out there want to be on these exchanges. So these exchanges have much more trading volume. They have much more liquidity. That's where you want to be. And if you're doing some investment and you want to protect it, you want to be in these highly liquid instruments. So I would stick to top 10, 20 coins for majority of the portfolio if you want to protect your investment. So that has a lot more liquidity. And then around I would say 10 to 20% you would do in sectors that you're interested in where you really have some kind of idea. That's where I would call a conviction-based investment. So I want to convert my crypto to fiat currency. You're saying stay with the top trading firms or stay with the sector. What was the advice? Just say I'm sitting on some crypto. If you're a regular investor who's not following the market at 24.7 I would say at least put like 80% on the top 20 coins where there's much more liquidity and which won't go bust tomorrow. And then you would focus maybe 10, 20% of your... This is I'm just talking about a crypto portfolio on something you have some kind of conviction. If you are like let's say you are in a automobile space that's what you understand a lot. So any crypto on that which you think is interesting you could put your money there. And I'm at the tech person so I would put more on technology platforms. What's your favorite tech coins right now and their investments that you're putting money into? We've always been long on Bitcoin Ethereum so there are a lot of new exciting stuff coming like EOS, like we are big on Tesos. It's a very community-driven project. You're very excited about that. Then what block is bringing Metronome I think that's going to be huge. These are like these are very unique in their own ways. EOS is offering something as a challenging challenger to Ethereum. Tesos also in some form with a very community focus and Metronome for the first time offers ability to do cross-platform transactions. Madhu this space is attracting a lot of young kids and I'd say kids coming either at a business school or from a firm like Goldman Sachs these classic firms, kind of bored. They want to do something new. What's your advice to the next generation coming in? Jump on the wave, fall down, learn it, get off my way, get off my beach. I mean what's your advice for the young people? Now if I was in that spot right now I would just jump in and go with the flow and you'll figure out what you need to do. So would at least rather than stick with the traditional companies this is something new and exciting and at least the next two, three years spent on this. Get your hands dirty, don't lose a lot of money. Try not to lose a lot of money. Madhu thanks for coming on, appreciate the commentary. We're here, exclusive coverage with the Block Party here at the Blockchain Week New York exclusive continued coverage with theCUBE. We're here in New York City to break down all the action inside the ropes of the industry. I'm John Furrier, thanks for watching.