 Live from Nassau in the Bahamas, it's theCUBE covering Polygon 18, brought to you by Polymath. Okay, we're live, welcome back. It's day two of our exclusive CUBE coverage of the Bahamas Polygon 18. It's a security token conference. It's where the world of cryptocurrency, blockchain, Bitcoin, and everything comes together around powering a new value economy, a new kind of decentralized internet. This is the biggest wave that I've seen in my lifetime. It's really bigger than all the other waves combined. I'm here with Dave Vellante, two days of wall-to-wall coverage. And the bottom line is, Dave, we are seeing historic, massive wealth creation. We're seeing crypto billionaires here. I mean, people are new money, they're old money, and a massive new landscape is emerging. And the tell sign of this is institutional money's coming in, real professionals are coming in. It's moving from a culture of Burning Man and cult of the personalities to real industry formation. You see that with companies coming out with real commercial opportunities. You're seeing ecosystems developing, and you're starting to see biz dev. And it's been probably at least a couple of decades since I've gone to a conference where this kind of computer industry movement is happening where the players are doing deals in the hallways. You're hearing people having substantive conversations around how they can work together to create tons of value. This is a dynamic that is absolutely happening, and we're seeing a lot of wealth involved. From people who have made tons of money, billions of dollars in Bitcoin, to kind of new migration coming into the sector from Wall Street, from other global markets. We're seeing a sea change of democratizing and with an open source ethos. To me, this is something that we've never seen before. It has all the elements of the modernization, business model modernizations, technology modernizations, real disruptive enabling technology at the heart of it. And some people ask questions like, how do we make money? Bottom line is, there is money being made. How, with who, is your question? So Dave, day one's over. We were out till one in the morning last night, working the hallways, having great conversations. I probably talked to at least six whales, as they're called, billionaires in the business. And the vibe is the same. We're here to play the long game. We love this market. There's a culture of ethos, of partnership and openness, and unwritten rules, and tons of activity. Sure there's bad actors, but there's a lot of great players here, and they are starting to crack down on behavior that's not right. Because this is a funding dynamic. It's a funding growth companies dynamic. It's a liquidity dynamic. All these things, classic business model modernization, happening with a massive wave. Your take. So let's share with our audience. First of all, this is an investor conference. It's the first conference built around the topic of security tokens. And we can maybe explain that in a moment. But I have, John, I have never seen at an investor conference, which I guess this is, but it's more than that. You know, the blockchain, technology, et cetera. But it never seems such diversity. Like you said, there's new money. There's old money. There's tons of millennials. 100% of the people here are doing deals. And the conversations in the hall, it's all about ICO, security tokens, utility tokens, protocols, white papers, business models. So a lot of diversity. Some super smart millennials, developers that really understand this stuff. And a lot of money. And more women in check here than I had thought. Yeah, I think it's a slightly higher proportion. But you're also seeing, just really interesting, you're seeing VCs who aren't going to sit back and wait and get disintermediated. You're seeing developers who have made a ton of dough that are now sprinkling the wealth. You're seeing private equity. You're seeing hedge funds. You're seeing, like I say, traditional VCs, new types of VCs. And very importantly, you're seeing a major diversity in cultural impact, nationalities, places where there's a heavily Canadian show because the organizers of Polycon, the folks who started Ethereum. But a lot of diversity in terms of where people are coming from. It's not just sort of US based, MBAs. Silicon Valley. I mean, the game's changing. The other thing that I'll observe is we're seeing validation of my premise a couple of weeks ago when I was in Washington, D.C. with Theresa Carlson, most powerful woman in D.C. She's also the chief and head of Amazon Web Services global public sector, is that the global national stage, the nation building, the digital nation transformation is part of it. Two, the validation that societal change and entrepreneurship that was used to be involved in non-profits that never went anywhere, these philanthropy projects, social entrepreneurship or societal entrepreneurship as I call it, is absolutely real. And in this culture, you're seeing people with Bitcoin and cryptocurrencies funding mission-based activities. Now, the younger demographics I think lean towards that, that's pretty clear in our reporting and our data that the younger generation wants to work for companies and communities that have an ethos of mission-based. But mission-based is not about changing the world, it's about saving the world. And this is real. You're looking at blockchain ventures that track water supply. You're looking at blockchain ventures that track food supply. You're looking at solving world hunger kind of challenges. And I think the tell here is, blockchain is used to identify markets and incumbents or opportunities where there's idle resource. So whether that's using compute in a P2P way or solving the world hunger problem, anywhere there's an opportunity to be efficient, blockchain is being used to solve those problems. And the creative talent is the technology providers. This is a completely new dynamic. One that Silicon Valley pays lip service to because they don't actually do societal change. They say they do, but they build apps and platforms. So I think this is a nuance, but an important game changer for the industry and the global economy and global entrepreneurship because you can do things now that can be global in impact, impact-based investing and technology investing in one shot. So you get a double down effect for change. This is not just cloud computing, have more power, faster, better apps, more monetization, sure. But now you have over the top impact to users. The community dynamic and the societal change is very, very real. That's a big driver of this ecosystem in terms of market selection, human capital, technology, leverage, and now financial. So it is pretty intoxicating here. People are geared up, they're energized, and it's just pretty phenomenal. So many people in our audience are still probably saying, I just don't get it. So let's go back to 2008 when Satoshi, whoever that person was, writes this out. I think it was an eight page white paper. And remember what 2008 was like. The banks were blowing up, too big to fail. The economic system was melting down and guess who paid for it? The taxpayers. So some libertarian minded people said, screw that. We're going to change the world. We're going to create a virtual currency and we're going to take back what the government is taking from us, essentially. Okay, so that started people like, what, I don't really get it. That has formed a whole, and people often say, it's not about Bitcoin, it's about blockchain. Blockchain is building out this whole new internet. And we've talked about that all week. But what you're seeing now is this concept of a value store, a virtual value store. And people leveraging that in so many different ways to build out this new internet. And they're building protocols. They're building apps. They're building new capabilities that we haven't seen before. That bring state to the internet, state of communications. And now let's talk about the investor profiles that we see here. I'm going to start with developers. So developers built the internet and most of them didn't really get paid huge money. Here, many of the developers are like multi-millionaires flying in on private jets. Okay, so why? Because they've developed a new token that they basically invested in with their sweat and their money. And the price has gone to the roof, Bitcoin, Ethereum, et cetera. VCs, VCs, they elbow it out. Well, they're elbowing their way back in. Private equity, hedge funds, big money. And there's two paths there. One is guys that read white papers, real hardcore technical guys who say, I'm going to invest in just this infrastructure token, utility token. Other guys who say, you know what? I got big money. I don't really understand the technology, but I'm going to sprinkle my money around and try to get a big hit. You got angels. You got entrepreneurs. You got superstars that have become billionaires that are mission-based. All these, and here's the thing, John, and I want you to sort of explain this to the audience. You have these investor ecosystems forming. It's like the PayPal mafia, you know, and they're basically buying up all the tokens early, elbowing other people out. You know, one investor told us, we're fighting steel with steel. Steel beats steel. You have to form. It's like the survivor Bahamar, right? And they're forming groups and they're eyeing each other, attacking opportunities, elbowing each other, and it's really interesting. I mean, it's happening big time, and this is healthy, I think. In my mind, emerging ecosystems have this behavior. The early days of Silicon Valley was very much the same, and it became very much war now in Silicon Valley. See, people don't incindicate deals as much as they used to. Some are, some aren't. But the notion of teamwork has always been part of Silicon Valley. The old saying is venture capital is a team sport. That is very much what's going on here. Now, they team up because they have to, but steel on steel implies art of war. We're going to take more allocations down. That's because the new persona of the investor, Dave, is the billionaire developer who captured value from the technology that they built, not someone else, not some central organization. They're the players. Developers and or the actors who were making money in the early days of Bitcoin, cryptocurrency, and blockchain actually are also starting funds themselves. So that is a new dynamic. We've never seen that before where you see a wealthy developer become rich and then also start investing at the same time. You have a smarter investor there, but they're doing it in packs and herds. You have a tribe mentality and people are starting to recognize that, okay, this group here loves Burning Man. This group here is more commercial oriented. This group here, like Polychain, is much more technical and Blocktower is much more golden sex-like. So you start to see the formation of categorical roles in the ecosystem. This is very healthy. Now, in the short term, there's some jockeying, right? So you're starting to see people syndicate together. You buy my coin, I'll buy your coin. So there's a healthy, robust equilibrium going on where the market of insiders is very much the story. The insiders of this industry are the players. They are the ones not just building the technology, their funding technology. They're also recruiting, the talent issue, human capital role, mission-based. These are all new dynamics. This is going to be a hard nut to crack if you're an incumbent, venture capitalist or hedge fund, trying to walk into this ecosystem, throw your weight around and compete on a frontal basis, money for money, steel on steel. If you don't play by the rules of engagement that's emerging, such as open-source communities, unwritten rules, certain kinds of syndications, eliminating bad behavior, this is a dynamic that's real and you'll either win or lose if you're an investor, win or lose if you're an entrepreneur if you don't recognize that kind of big picture. So you get down and dirty, you gotta pull back and say, okay, what's going on? How do I engage? This is where the true money-making is going on. Well, that's great analysis, John. And the other, you mentioned the word dynamic several times, the other underpinning dynamic is we are going to take control of our own destinies. I've heard things all week like I might move out of the U.S. You know, do you have a bank account overseas? I still don't think he's looking good right now. Because I'm going to move to a place that's more friendly to this kind of concept and the U.S. is anti-competitive. This is the ethos of this community. We are going to control our own destiny and we're going to go live in places and work in places that are friendly. This could be his perfect capitalism at work. Some would criticize Barack Obama or other folks that might have more of a socialistic bent around having government do redistribution of wealth. This is actually an example where I see redistribution of wealth going on in a capitalistic way where the enabling technology, blockchain, and or new business models with cryptocurrency, which is money, basically open source money, as Mico Matsumura would say, and that is the dynamic. That is actually creating real value and redistribution of wealth. And the premise of blockchain and cryptocurrency, although Bill Tye pointed out, an investor and leader in the area, money's a concept, right? A dollar's a dollar, it has money value because it's a concept. But if you look at things like what we learned in business school, the value chain of an organization, value chain, blockchain, cryptocurrency, money, is that this redistribution of wealth is going on in context to redefining business, redefining how people work. And again, I said it earlier, the human capital component is very much a real dynamic. It's not just machines taking over the world, some poo poo AI, some poo poo, all this technology, but human capital, a big force in this market and it is a big issue and got to learn protocols, we're all the developers. So again, zoom out. Opportunity is right there, I think I'm along on this sector, I'm along on this game because the actors are going to self-organize, steel on steel turns into handshakes, or steel on steel in the right areas, eliminating bad actors. SEC makes some regulations, that's only in the US. What about the opportunities for digital nations to say, hey, we're going to be the Wall Street of crypto. There are country opportunities right now where whoever builds that system, taking in crypto, converting it to fiat, will win everything. I'm surprised no one's done that yet. This is coming. I can't tell you what the price of Bitcoin is in August, but I agree, will be in August, but I agree with you. Long term, there's no question in my mind that this is going to be a key contributor to the digital economy, the build out of the next internet. Remember the fundamentals, you got Bitcoin, it's essentially virtual Fort Knox. You got Ethereum, which is a horizontal infrastructure that's much more easily programmed by developers. And then you got a zillion other protocols and tokens. I want to talk about risk factors. Like what could blow this up? What have we heard? Tax exposure, all these people, all these Bitcoin millionaires and billionaires that think, I don't have to pay taxes. Well, guess what? You do have to pay taxes. And so that's one theory is that's why the price has moderated lately, because people are saying, wow, that's like I exercised the option, but I don't have the cash to pay my taxes, because we saw our pullback recently. Regulation's the other one we heard. Too much regulation could put some breaks on the momentum here. Your thoughts? Your thoughts? Yeah, skill sets and developer talent, right? Yeah, well the top talent in the protocol area is going to be at a premium. This is a global issue, so the old days, old days, when cloud computing came around, full stack developers were all the rage, now protocol developers are all the rage, so if you're a full stack developer and a protocol developer, you're going to have a lot of leverage. So the danger in my opinion is the job hopping nature of some of these ICOs. Hey, I made a bunch of dough on this ICO, they paid me ether and or Bitcoin, whatever. I'm on to the next one, I make a couple million bucks there, I move on to the next one. So the job hopping factor for top talent is an issue. We heard that loud and clear. Tax thing, I'm bullish on Bitcoin post April 16th. I think buy Bitcoin right now and look for it to pop in April because I think people are going to realize, oh shit, I should have sold some. Well, be careful. Tax carry over. Be careful, they might have to sell more to meet their tax bill, they might be holding on for a little bit. File the extension. But anyway, I love the opportunity. Oh, your taxes on the date, if the extension doesn't remove you from paying the taxes. But the issue, Dave, is that what's a scam and what's not a scam? So if you ask Joe Sixpack on the street, throw crypto and Bitcoin, it's a scam. There's a lot of stuff going on. This industry is absolutely acutely aware of that dynamic. The risk on the wealth creation opportunity, they know it, so they're creating mechanisms to kind of weed that out. You're seeing PR firms starting to having internal and called in baseball and in sports, it's like clubhouse issue. There's a clubhouse issue going on in this industry and they're going to take it amongst themselves and I think that is going to be the tell sign if this ecosystem succeeds or not. Do you think there's more scams or less scams going on? There'll be less scams because obviously there's too much money to be made right now. In terms of the percentage of the activity that's going on. My opinion, the smallest percentage is the scams. The challenge is you got to, anyone could be a scam, so you have to sort that out. You have to do the diligence. As always, you got to do homework. All right, well day two, Dave, we're going to drill into, we've got a great lineup of guests. We're talking to investors, entrepreneurs, some whales coming on. We're going to get their opinion on the future of this market. What's the liquidity? How do you get paid? Who's making the money? How is the value that's being created ultimately captured and who's going to get that value? It's the CUBE coverage from the Bahamas exclusive coverage of the cryptocurrency tokenization here at Polycon 18. We'll be right back.