 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. When Facebook changed its name to Meta last fall, it catalyzed the chain reactions throughout the tech industry. Software firms, gaming companies, chip makers, device manufacturers, and others have joined in the hype machine. Now it's easy to dismiss the Metaverse as futuristic hyperbole, but do we really believe that tapping on a smartphone or staring at a screen or two-dimensional Zoom meetings are the future of how we work, play, and communicate? As the internet itself proved to be larger than we ever imagined, it's very possible, and even quite likely, that the combination of massive processing power, cheap storage, AI, blockchains, crypto, sensors, AR, VR, brain interfaces, and other emerging technologies will combine to create new and unimaginable consumer experiences and massive wealth for creators of the Metaverse. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we welcome in cyber expert, hacker, gamer, NFT expert, and founder of OrSystem, Nick Donarski. Nick, welcome, thanks so much for coming on theCUBE. Thank you, sir, I'm glad to be here. Yeah, okay, so today we're going to traverse two parallel paths, one that took Nick from security expert and pen tester to NFTs, tokens, and the Metaverse, and will simultaneously explore the complicated world of cybersecurity in the enterprise and how the blockchain, crypto, and NFTs will provide key underpinnings for digital ownership in the Metaverse. We're going to talk a little bit about blockchain and crypto and get things started there and some of the realities and misconceptions and how innovations in those worlds have led to the NFT craze. We'll look at what's really going on in NFTs and why they're important as both the technology and societal trend. And then we're going to dig into the tech and try to explain why and how blockchain and NFTs are going to lay the foundation for the Metaverse. And finally, who's going to build the Metaverse and how long is it going to take? All right, Nick, let's start with you. Tell us a little bit about your background, your career. You started as a hacker at a really, really young age and then got deep into cyber as a pen tester. You did some pretty crazy stuff. You have some great stories about sneaking into buildings. You weren't just doing it all remote. Tell us about yourself. Yeah, so I mean, really, I started long time ago. My dad was really the foray into technology. I wrote my first program on an Apple IIe in basic in 1989, so I like to say I was born on the internet, if you will. But yeah, so in high school at 16, I incorporated my first company and did just tech support for parents and teachers. And then in 2000, a transition really into security and focused there ever since. I joined Rapid Seven after they picked up Metasploit. I joined HP as one of their founding members of Shadow Labs and really have been part of the information security in the cyber community all throughout, whether it's training at various different conferences or talking. My biggest thing and my most awesome moments as various things of being broken into are is really when I get to actually work with somebody that's coming up in the industry and is new and actually has that light bulb moment of really kind of understanding a technology, understanding an idea or getting it when it comes to that kind of stuff. Yeah, and when you think about what's going on in crypto and NFTs and okay, now the metaverse, it's as you see, you see some of the most innovative people. Now I want to start off by, I want to first share a little bit of data on enterprise security and maybe Nick get you to comment. We've reported over the past several years on the complexity in the security business and the numerous vendor choices that SecOps pros face. And this chart really tells that story in the cybersecurity space. It's an XY graph we've shown it many times from the ETR surveys where the vertical axis, it's a measure of spending momentum called net score and the horizontal axis is market share which represents each company's presence in the data set and a couple of points stand out. First it's really crowded and that red dotted line that you see there, that's 40%, above that line is on the net score axis marks highly elevated spending momentum. Now let's just zoom in a bit and I've cut the data by those companies that have more than a hundred responses in the survey and you can see here on this next chart, it's still very crowded but a few callouts are noteworthy. First companies like Sentinel-1, Elastic, Taneum, Datadog, Netscope and Darktrace, they were all above that 40% line in the previous chart but they've fallen off. They still have actually a decent presence in the survey over 60 responses but under that hundred. And you can see Auth0, now Octa, big $7 billion acquisition, they got the highest net score, crowd strikes up there, Octa Classic, they're kind of enterprise business and Zscaler and others above that line. You see Palo Alto Networks and Microsoft, very impressive because they're both big and they're above that elevated spending velocity. So Nick, kind of a long-winded intro but this is a little bit off topic but I wanted to start here because this is the life of a SecOps Pro. They lack the talent and the capacity to keep bad guys fully at bay and so they have to keep throwing tooling at the problem which adds to the complexity and as a pen tester and hacker, this chaos and complexity means cash for the bad guys, doesn't it? Absolutely, you know, the more systems that these organizations find to integrate into the systems means that there's more components, more dollars and cents as far as the amount of time and the engineers that need to actually be responsible for these tools. There's a lot of reasons that, you know, the more, I guess, hands in the cookie jar, if you will, when it comes to the security architecture, the more links that are or avenues for attack become built into the system. And really one of the biggest things that organizations face is being able to have engineers that are qualified and technical enough to be able to support that architecture as well because buying it from a vendor and deploying it, putting it onto a shelf is good but if it's not tuned properly or if it's not connected properly, that security tool can just put up more avenues of attack for you. Right, okay, thank you. Now let's get into the meat of the discussion for today and talk a little bit about blockchain and crypto for a bit. I saw a sub-stack post the other day and it was ripping Matt Damon for peddling crypto on TV ads and how crypto is just this big pyramid scheme and it's all about allowing criminals to be anonymous and it's ransomware and drug trafficking and yes, there are definitely scams and you got to be careful and lots of dangers out there but these are common criticisms in the mainstream press that overlooked the fact by the way that IPOs and SPACs are just as much of a pyramid scheme. Now I'm not saying there shouldn't be more regulation, there should Nick, but Bitcoin was born out of the 2008 financial crisis, cryptocurrency and you think about it's really the confluence of software engineering, cryptography and game theory and there's some really powerful innovation being created by the blockchain community, crypto and blockchain are really at the heart of a new decentralized platform being built out and where today you got a few of large internet companies they control the protocols and the platform. Now the aspiration of people like yourself is to create new value opportunities and there are many more chances for the little guys and gals to get in on the ground floor but blockchain technology underpins all this. So Nick, what's your take? What are some of the biggest misconceptions around blockchain and crypto and do you even pair those two in the same context? What are your thoughts? Sure, so I mean really we like to separate ourselves and say that we are a blockchain company as opposed to necessarily say anything like that. We leverage those tools, we leverage cryptocurrencies, we leverage NFTs and those types of things within there but blockchain as a technology which is the underlying piece is something that can be used and utilized in a very large number of different organizations out there. So cryptocurrency and a lot of that negative context comes with fear of something new, right? Without having that regulation in place, without having the rules in place and we're a big proponent of we want the regulation, right? We want to do right, we want to do it by the rules, we want to do it under the context of this is what should be done and we also want to help write those rules as well because a lot of the lawmakers, a lot of the lobbyists and things, they have a certain aspect or a certain goal of when they're trying to get people. Our goal is simplicity. We want the ability for the normal average person to be able to interact with crypto, interact with NFTs, interact with the blockchain and by saying blockchain in quotes, it's very ambiguous because there's many different things that blockchain can be. The easiest way, right? The easiest way to understand blockchain is simply a distributed database. That's really the core of what blockchain is. It's a record keeping mechanism that allows you to reference that and the beauty of it is that it's quote unquote immutable, right? You can't edit that data. So especially when we're talking about blockchain being underlying for technologies in the future, things like security where you have logging, you have record keeping, whether you're talking about sales where you may have to have multiple different locations, users from different locations around the globe. It creates a central repository that provides distribution and security in the way that you're ensuring your data, ensuring the validation of where that data exists, when it was created, those types of things, that blockchain really is. If you go to the historical, right, the very early on, Bitcoin absolutely was made to have a way of not having to deal with the Fed, right? That was the core functionality of the initial crypto. And then you did. You had a lot of the illicit trades, those black markets that jumped onto it because of what it could do. The maturity of the technology though of where we are now versus say back in 97, is a much different world of blockchain and is a much different world of crypto. You still have to be careful because with any Fed, you're still gonna have that fraud that goes out there in sales, that fear uncertainty and doubt, which spurs a lot of those types of scams and a lot of those things that target end users from that we face as security professionals today. You still get mailers that go out looking for people to give their social security number over during tax time, mail, snail mail is considered a very ancient technology, but it still works. You still get a portion of the population that falls for those tricks, fishing, whatever it might be. It's all about trying to make sure that you have fear about what does that change? And I think that as we move forward and move into the future, the simpler and the more comfortable these types of technologies become, the easier it is to utilize and indoctrinate normal users to be able to use these things. You know, I want to ask you about that, Nick, because you mentioned immutability. There's a lot of misconceptions about that. I had somebody tell me one time, I'll blockchains BS and they will hold on a second. They say, ah, they say it's immutable, but you can hack Coinbase or whatever it is. So I guess a couple of things. One is that the killer app for blockchain became money. And so we learned a lot through that. And you had Bitcoin and it really wasn't programmable through its interface. And then Ethereum comes out, I know you know a lot about Ether and you have Solidity, which is a lot simpler, but it ain't JavaScript, which is ubiquitous. And so now you have a lot of potential for the initial ICOs and probably still the ones today, the white papers, a lot of security flaws in there. I'm sure you can talk to that, but maybe you can talk about, help square that circle about immutability and security. I mentioned game theory before. It's harder to hack Bitcoin in the Bitcoin blockchain than it is to mine. So that's why people mine. But maybe you could add some context to that. Yeah, it goes to just about any technology out there. Now, when you're talking about blockchain specifically, the majority of the attacks happen with the applications and the smart contracts that are actually running on the blockchain as opposed to necessarily the blockchain itself. And like you said, the impact for whether that's loss of revenue or loss of tokens or whatever it is, in most cases, that results from something that was a phishing attack, you gave up your credentials, you, somebody said, paste your private key in here and you win a cookie or whatever it might be. But those are still the fundamental pieces. When you're talking about various different networks out there, depending on the blockchain, depends on how much the overall security really is. The more distributed it is and the more stable it is as the network goes, the better or the more stable any of the code is gonna be, right? The underlying architecture of any system is the key to success when it comes to the overall security. So the blockchain itself is immutable in the case that the owners are the ones that have to be trusted. If you look at distributed networks, something like Ethereum or Bitcoin where you have those proof of work systems, that disperses that information at a much more remote location, right? So the more dispersed that information is, the less likely it is to be able to be impacted by one small instance. If you look at like the Dow hack, or if you look at a lot of the other vulnerabilities that exist on the blockchain, it's more about the code. And like you said, solidity being as new as it is, it's not JavaScript. The industry is very early and very infantile as far as the developers that are skilled in doing this. And with that just comes the inexperience and the lack of information that you don't learn until JavaScript is 10 or 12 years old. And the last thing I'll say about this topic and we'll move on to NFTs, but NFTs were late is that, again, I said earlier that the big internet giants have pretty much co-opted the platform. If you wanted to invest in Linux in the early days, there was no way to do that. You maybe had to wait till Red Hat came up with its IPO and there's your pyramid scheme folks. But with crypto, which is again, as Nick was explaining underpinning as the blockchain, you can actually participate in early projects. Now you got to be careful because there are a lot of scams and many of them are going to blow out if not most of them, but there are some gems out there because as Nick was describing, you've got this decentralized platform that causes scaling issues and performance issues and people are solving those problems, essentially building out a new internet. But I want to get into NFTs because it's the next big thing here before we get into the metaverse. Nick, why should people pay attention to NFTs? Why do they matter? Are they really an important trend? And what are the societal and technological impacts that you see in the space? Yeah, I mean, NFTs are a very new technology and ultimately it's just another entry on the blockchain. It's just another piece of data in the database. But how it's leveraged in the grand scheme of how we as users see it, it can be the classic idea of an NFT is just the art or as good as the poster on your wall, right? But in the case of some of the new applications is where you actually get that utility function. Now, in the case of say video games, right? Video games and gamers in general already utilize digital items, they already utilize digital points as in the case of like Call of Duty, Call of Duty points. Those are just different versions of digital currencies. You know, World of Warcraft Gold, I like to affectionately say, was the very first cryptocurrency. There was a Harvard course taught on the economy of WoW. There was a black market where you could trade your in-game gold for fiat currencies. And there's even places around the world that you can purchase real world items and stay at hotels for World of Warcraft Gold. So the adoption of blockchain just simply gives a more stable and a more diverse technology for those same types of systems. You're gonna see that carry over into shipping and logistics where you need to have data that is a single repository for being able to have multiple locations, multiple shippers from multiple global efforts out there that need to have access to that data. But in the current context, it's either sitting on a shipping log, it's sitting on somebody's desk. All of those types of paper transactions can be leveraged as NFTs on the blockchain. It's just simply that representation. And once you break the idea of this is just a piece of art or this is a cryptocurrency, right? You get into a world where you can apply that NFT technology to a lot more things than I think most people think of today. Yeah, and of course, you mentioned art a couple of times when people sold his digital art for whatever was 60, 65 million, 69 million. That caught a lot of people's attention, but you're seeing, I mean, there's virtually infinite number of applications for this. One of the Washington wizards tokenized portions of his contract. Maybe he was creating a new bond. But really interesting use cases and opportunities. And that kind of segues into the latest hot topic, which is the metaverse. And you've said yourself that blockchain and NFTs are the foundation of the metaverse, the foundational elements. So first, what is the metaverse to you and where do blockchain and NFTs fit in? Sure, so I mean, I have actually referred to the metaverse as just a VR. Essentially, we've been playing virtual reality games and all the rest for a long time and VR has really kind of been out there for a long time. So most people's interpretation or idea of what the metaverse is is a virtual reality version of yourself. And this, right, that idea of once it becomes yourself is where things like NFT items or blockchain and digital currencies are gonna come in because if you have a manufacturer, so you take an organization like Nike and they wanna put their shoes into the metaverse because we as humans wanna individualize ourselves, right? We go out and we wanna have that one-of-one shoe or that T-shirt or whatever it is, we're going to wanna represent that same type of individuality in our virtual self. So NFTs, crypto and all of those digital currencies, like I was saying that we've known as gamers are going to play that very similar role inside of the metaverse. Yeah, okay. So basically you're gonna take your physical world into the metaverse, you're gonna be able to, as you just mentioned, acquire things. I loved your wow example. And so let's stay on this for a bit if we may. Of course, Facebook spawned a lot of speculation and discussion about the concept of the metaverse. And really, as you pointed out, it's not new. You talked about, wow, Second Life really started in 2003 and it's still around today. It's small, but I read recently it's creators coming back into the company. And books were written in the early 90s that use the term metaverse, but Nick, talk about how you see this evolving, what role you hope to play with your company and your community in the future and who builds the metaverse? You know, when is it gonna be here? Yeah, so I mean, there's, right now, and we actually just got back from CES last week and the metaverse is a very big buzzword. You're gonna see a lot of integration of what people are calling, quote unquote, the metaverse. And there was organizations that were showing virtual office space, virtual malls, virtual concerts and those types of experiences. And the one thing right now that I don't think that a lot of organizations have grasped is how to make one metaverse. There's no real player one, if you will, Oasis yet. There's a lot of organizations that are creating their version of the metaverse, which then again, you know, just like every other software and game vendor out there has their version of cryptocurrency and their version of NFTs. You're gonna see it start to pop up, especially as, you know, Oculus is gonna come down in price, especially as you get new technologies like some of the VR glasses that look more augmented reality and look more like regular glasses that you're wearing, things like that. The easier that those technologies become as adopting into our normal lifestyle as far as like looks and feels, the faster that stuff's gonna actually come out to the world. But when it comes to like what we're doing is we believe that the metaverse should actually span multiple different blockchains, multiple different, you know, segments, if you will. So what our system is doing is we're actually building the underlying architecture and technologies for developers to bring their metaverse to. You can leverage the or systems NFTs where we like to call our utility NFTs as an in-game item in one game or you can take it over and it could be a T-shirt in another game. The ability for having that cross support within the ecosystem is what really a, no one has grasped on yet. Most of the organizations out there are using a very classic business model, right? Get the user in the game, make them spend their money in the game, make them, all their game stuff is only good in their game. And that's where the developer has you. They have you in their bubble, right? Our goal and what we like to affectionately say is we wanna bring white collar tools and technology to blue collar folks, right? We wanna make it simple. We wanna make it off the shelf and we wanna make it less cost prohibitive, faster and cheaper to actually get out to all the users. We do it by supporting the technology. That's our angle is if you support the technology and you support the platform, you can build a community that will build all of that metaverse around it. Well, and so this is interesting because you point out, if you think about some of the big names we've read Microsoft is talking about it, obviously we mentioned Facebook. They are essentially walled gardens. Now, yeah, okay, I could take TikTok and pump it into Instagram, that's fine, but it's really, they're really siloed off. And what you're saying is in the metaverse, you should be able to buy a pair of sneakers in one location and then bring it to another one. Absolutely, that is exactly it. It's up, and so my original kind of investment attractiveness, if you will, to crypto was that the little guy can get in early, but I worry that some of these walled gardens, these big internet giants are gonna try to co-op this. So I think what you're doing is right on. And I think it's aligned with the objectives of consumers and the users who don't wanna be forced in to a pen, they wanna be able to live freely, right? And that's really what you're trying to do. That's exactly it. When you buy an item, say a skin in Fortnite or a skin and call of duty, it's only good in that game and not even in the franchise. It's only good in that version of the game, you know? In the case of what we wanna do is you can not only have that carryover and your character, so say you buy a really cool shirt and you've got that in your call of duty or in our case, we're releasing Osiris Protocol, which is our proof of concept video game to show that this whole thing actually works. But you can actually go in and you can get a gun in Osiris Protocol. And if we release Osiris Protocol 2, you'll be able to take that to Osiris Protocol 2. Now, the benefit of that is, is you're gonna be the only one in the next version with that item if you haven't sold it or traded it or whatever else. So we don't lock you into a game. We don't lock you into a specific application. You own that. You can trade that freely with other users. You can sell that on the open market. We're embracing what used to be considered the black market. I don't understand why a lot of video games, we're always against the skins and mods and all the rest. For me as a gamer and coming up through the many, many years of various different call of duties and everything in my time, I wish I could still have some this year. I still have a World of Warcraft account. I wasn't on vanilla, Burning Crusade was my foray, but I still have a character. If you look at it that way, right? If I had that wild character and that gear was NFTs, in theory, I could actually pass that on to my kid who could carry on that character and it would actually increase in value because they're NFT-backed. And then if needed, you could trade those on the open market and all the rest. It just makes gaming a much different thing. I love it. All right, Nick, hey, we're out of time. But I gotta say, Nick Donarski, thanks so much for coming on the program today, sharing your insights and really good luck to you in building out your technology platform and your community. Thank you, sir. It's been an absolute pleasure. And thank you for watching. Remember, all these episodes are available as podcasts. You just search Breaking Analysis Podcast and you'll find them. I publish pretty much every week on siliconangle.com and wikibond.com and you can reach me at D-Valante on Twitter or comment on my LinkedIn post. You can always email me David.Valante at siliconangle.com. Don't forget, check out ETR.plus for all the survey data. This is Dave Vellante for theCUBE Insights, powered by ETR. Happy 2022, be well, and we'll see you next time.