 Live from Nassau in the Bahamas, it's theCUBE. Covering Polygon 18, brought to you by Polymath. Hey, welcome back, everyone. It's theCUBE's live coverage in the Bahamas of Polycon 18, put on by Polymath and Grid Capital, and a special guest who just did a walk-by, fly-by, theCUBE wanted to bring a man, Jeremy Gardner. We've been chatting with him all week. Influencer, entrepreneur, venture capitalist now, been involved in crypto, dropped out of college, luminary industry, young gun. Great to have you on theCUBE, thanks for coming on. That is the most honorific title I've ever received. We like to shoot the shit around here on theCUBE. Seriously though, you got big following in the community, well respected. I mean, a lot of cool things going on. A lot of young people working on projects, you're one of them. A lot of old people coming in that have skills from whether it's cryptography or other ecosystems, interesting blend. You've also worked on the Augur project, which has been highly successful. It's been a great case, and I hear people point to it all the time and say, love that concept. But a lot of cool tech. And you're at awesome ventures right now that you're running. What's your take right now? I want to get into some tech questions, but you're out there, you've done some things. You're in the middle of it. You get a fresh perspective. What's going on? What's your view and how do you see it playing out in this business? What we see occurring in 2018 is an incredible maturation of the industry. We've gone from Bitcoin to cryptocurrencies to blockchain technology to this concept of smart contracts and decentralized applications to kind of this ICO fad. So now what we're seeing here at this conference, which is the emergence of security tokens. And this evolution represents the broadening of the blockchain economy as a whole. From something that once with this niche little kind of ideological technology to something that is totally global and perhaps as big as the internet, if not bigger. And that maturation is really important because as the market matures, a lot of the scams that we've seen in years past will begin to fade away. That being said, I think we're gonna need to see a real shake out in the industry, a bloodbath in the markets, where a lot of these poorly formulated tokens, crypto assets disappear before we see a really blossoming crypto economy. It's like you got to clear the digestive tract of all the bad food you ate. I mean, you just got to kind of get it out. Exactly, it's a perch. You really, like there is so much toxic crap in this industry today. We, it has to disappear before we can really evolve into something that rivals Wall Street. Yeah, and it's early on too. I got to say, we've seen many ways in our day. Cube, we cover it. What I like about what's happening now is you got an ecosystem forming. You got people like yourself who are putting out statements like that, which is quite frankly, a signal. And people need to speak up right now because we got to identify the bad stuff. So the ecosystem's forming. Well, it can be hard to do that when you're making a lot of money on crap. I mean, I've missed out on a lot of money making opportunities, because I've been ideologically pure. I've only invested in projects that I truly believe will change the world. That can be limiting. And I don't blame people that kind of set aside ethics or quality projects for a greater profit motive. I'm a big believer in capitalism. But fundamentally that mentality has to go in order for us to take this technology to the next stage. Okay, money making's going to happen. There's going to be some high flyers and some are going to be legitimately good intentions that may turn out to be crap. And then there's going to be total crap which starts out to be a scam anyway. How do you look at those signals? I mean, obviously you want to look for trajectory and community and tokens. How do you look at it? Underpinnings of the tech? Is there a business model? What's your view on? How do I look for those potential trajectories? It's, in my view, it's just like venture capital. It starts with the team every single time. Team, team, team, then concept, then market, then tech. You know, the tech, I mean, the tech changes. The code's constantly being updated. I'm not a coder. It's something that can evolve. It's something that once you raise capital you can have better technologists building out your tech stack. That doesn't really concern me. Is this team going to execute? Are they going to be able to iterate in a fast moving kind of business environment in which the tides are always turning, regulators are always doing different things? Are you going to be able to adapt and evolve? And are you going to work together as a team? I take teams out to dinner. I see how they interact with one another. Do they have symbiosis or are they kind of antagonistic? They have an antagonistic relationship. It doesn't matter how good the concept is, how great the tech is, because the team won't stay together. And I don't want to have to make those sorts of bets on who's going to be the winning player. I'll stay in touch with the team, but I'll rarely make that investment. Yeah, they've got to be ready for battle together. You've got to get down and dirty. So I hold teams paramount in early stage investing, which is all I do. Awesome. So what are you excited about today right now? What are you looking at? What's floating your boat? What's getting you excited? What's the debate? Augur's about to go on the main net. So it's going to be the first truly decentralized consumer facing decentralized application. Very excited. I think it could change the world of finance forever and the way we predict the future. So it's main net going live. And then three months after that, hopefully, the actual platform going fully live. It's still the most exciting project in the crypto space in my view, even though I haven't been involved for a couple of years. I am an advisor to Basecoin, which is wrapping up its presale right now. Basecoin is an algorithmic stablecoin that today maintains parity with the dollar. And it, I think, is going to be one of the most necessary components, it or another stablecoin, will be one of the most necessary components of creating a true crypto economy. Because if you look at most of the blockchain applications today, most of them are using these volatile crypto assets as forms of payments and transactions. And that doesn't work for your average consumer or even for large enterprises. People do not like volatility. It's a compounding risk factor for almost any sort of transaction. And so for us to have a real robust crypto economy, we need a stablecoin. My bets are on Basecoin, but I'm rooting for all the teams because whoever does this, and it may be multiple teams, will have unlocked one of the biggest problems that affects crypto assets today, which is volatility. And liquidity is also a concern. People want to get liquid. That's also a dynamic of why token economics works, as you don't have the process of going public. You can do a little bit of funding and liquidity. Talk about liquidity impact. Yeah, so I mean, look, ICOs and token sales are this fabulous way to democratize finance and raise capital, especially for decentralized applications and new protocols that really can't take a traditional fundraising mechanism. That being said, if you are trying to create any sort of payment token, which I would never encourage anyone to do, but if you are, like a lot of these utility tokens, their point is for the purpose of payments. And that's idiotic to me because if you're going to do what, raise $30 million, maybe $100 million, I'd say $200 million. What's the volatility on that going to be daily or annualized? It's insane. It will never be adopted by consumers. And furthermore, anyone that tries to create a payment token for their specific application, whether they're not recognizing it, someone's going to have to go to Coinbase, buy Bitcoin, send it to Polonix, buy their token, send it to the applications, just to make a payment? No way. Credit cards are always going to beat that out or Bitcoin underneath them. All right, so I've heard on the QP and I've also heard in the hallway, a consistent theme I want to get your reaction to. This marketplace of having decentralized apps and blockchain and cryptocurrency kind of dynamic really disrupts areas that have a lot of slack or lag or unused resource. It could be a physical asset, it could be computers in a data center doing P2P stuff, and that this market busts down those inefficiencies, creates efficiency, that's the arbitrage. Your reaction to that? It can't, but like I say, how do you get access to those tokens? So there arises security exchanges, security token exchanges, and more robust crypto asset exchanges will potentially enable that right now, but unless you have an easy way to buy and store those tokens that are freeing up illiquid assets in a dynamic manner, they're not, tokenizing assets isn't very useful. With Blockchain Capital and my last venture fund, we created the first liquid venture fund. It was actually the first security token ever. And the problem that we ran into is everyone was excited. We created this liquid, limited partner interest in a venture fund, but the problem was there was no place to trade or sell it. And so despite the nav of the fund going up, the price of the token remained the same because there was no liquid exchange. So you need a liquid place for the exchange of value in order for the liquidization of these assets to occur. Furthermore, I think more important than that point is that Blockchains are fundamentally the largest technological disintermediator that has ever existed in human history. Even, well, since the beginning of time pretty much, we have always relied on middlemen, whether they're banks or governments or tribal councilmen to mitigate any sort of transaction. With Blockchains, we can now have truly trustless transactions and disintermediate trillions of dollars worth of middlemen and trolls under the bridge. And that's the most revolutionary component of this technology. That's awesome. I want to get one quick question now we're tight for time. The rise of the security token has been a great innovation. We've seen great traction because of the security token. We're seeing Polymath doing a lot of people looking at this as a stabilization. What does it do to the utility token? Does it change the nature of the utility token? Will utility token have a life that's not a monetizable thing? Will it still trade? What's your view and vision on the role of the utility token now that the security token has been established as a viable mechanism? Well, so look, when we were building Augur, we did not want to issue a token. ICOs were really scary back then, but we realized in order to have a truly decentralized prediction market platform, we had to have a second token. One that wasn't used for payments, but that created a decentralized consensus in our network. And so we created the first utility token ever. And back then I was like, oh, this is novel, this is cool. We tried selling it to people, no one really got it. But you know, then it seems like we went and opened up Pandora's box. All of a sudden utility tokens became flourished in the past two years as it means to raise capital. The problem was nobody was thinking beyond that capital raise. And so most of those utility tokens would have been much better as security tokens. They didn't actually provide much utility. And so I think those tokens, that 99, 98% of utility tokens that have come out in the past two years, that didn't actually have true utility, those will go, you know. I think it's an interesting conversation. I want to follow up, we'll get back to the Bay Area. This is a big, this is super important. I really love the idea that you're kind of teasing out. I see utility tokens having an instrumental role in governance, consensus, other community dynamics, which might have its own value. I don't know yet what it looks like, but we'll certainly follow up. Absolutely, and security tokens will be the largest crypto asset in the next two to three years. Jeremy Gardner, great conversation. Love the young guns, man. They're so smart, great to have you on. That's old guys, we're just trying to keep up with these young guns. We'll be back with more live coverage after this short break. My pleasure, man. You're awesome, dude. All right, hey, when we get back, I really want to get, I think the utility, I think we dual token model is the way to go. Security. But right now, the problem is most utility tokens up until then.