 Live from Toronto, Canada, it's theCUBE. Covering Blockchain Futurist Conference 2018. Brought to you by theCUBE. Hello, everyone, welcome back. This is theCUBE's exclusive coverage here in Toronto for the Blockchain Futurist Conference. We're here all week. Yesterday we were at the Global Cloud and Blockchain Summit put on by Digital Bits and the community here is a big show around thought leadership around the future of Blockchain and where it's going. Certainly token economics is the hottest thing with Blockchain, although the markets are down, the market is not down when it comes to building things. I'm John Furrier with Dave Vellante, here with CUBE alumni and special guest, Arte Sani, who's the founder of Ho Show, doing a lot of work in security space and they have a conference coming up that theCUBE will be broadcasting live at Ho ShowCon this coming fall. It's in October, I believe. Welcome to theCUBE. Thank you so much for having me. It was great to see you, man. What's the date of the event? Real quick, what's the date on your event? It's October 9th of the 11th, Hard Rock Hotel in Casino. We rented out the entire property. We want everyone to only bump into the people that we're inviting and that are coming. And the focus is Blockchain security. And we attend over 130 conferences a year and there's never enough conversation about Blockchain security. So we figured DevCon is still pure cybersecurity. DevCon from Ethereum is more for ethereum developers only and every other conference is more of a traditional Blockchain conference with ICO pitch competitions. We figured we're not going to do that and we're going to try to combine the worlds. DevCon meets DevCon vibe and have hackers welcome, have white hat hackers, host a bug bounty, invite white minds in this space like Max Kaiser and Stacey Herbert, the founders of the Tracer Wallet, RSA. You know, we've even invited everyone from our competitors to everyone in the media to everyone that are leading the Blockchain whole space. That's the way to run an event with community. Congratulations. Mark McAllen is everyone at Ho ShowCon coming up in October. I want to ask, I know Dave wants to ask you your trip around the world kind of questions but I want to get your take on something we're seeing emerging and I know you've been talking about I want to get your thoughts and reaction and vision on. We're starting to see the world, the losers go out of the market and certainly prices are down on the coins and the coins are a lot of tokens out there. But the- Too many damn tokens. Any damn tokens. The losers are the only ones who borrowed money to buy a Bitcoin. Someone shorted Bitcoin. That's it. But there's a now an emphasis on builders and there's always been an entrepreneurial market here. Alpha entrepreneurs are coming into the space. You're starting to see engineers really building great stuff. There's an emphasis on builders, not just the quick hit ponies. So your thoughts and trend on that trend? It's during the down market that you can really focus on building real businesses that solve problems that have some sort of foresight into how they're going to make real money with a product that's built and tested and maybe even enterprise grade. And I also think that the future of fundraising is going to be security tokens and we don't really have a viable security exchange available yet, but giving away actual equity in your business through a security token is something very exciting for sophisticated investors to participate in this future tokenized economy. And you're talking about real equity, not just percentage of coin. Yeah, you know, actual equity in the business but in form of a security token. I think that's the future of fundraising to some extent. And is that a dual sort of, two vectors there? One is the value of the token itself and the equity that you get, right? Is that correct? I mean, you basically are getting equity in the company, securitized in token form and then maybe a platform like securitized or polymath, these security exchanges that are coming out will list them. And so I think that during the down markets when prices are down, again, I said before, the joke, but it's also the truth. The only people losing in this market are the ones who borrow to buy Bitcoins. The people who believe in technology remain to ignore the price more or less. And if you're focused on building a company, this is the time to focus on building a real business. A lot of times in an upmarket, you think you see a business opportunity just because of the amount of money should have surely available to be thrown at any project. You can ICO just about any idea and get a couple of million dollars of work on it. Not as easy during a down market, so you're starting to take a step back and ask yourself questions like, how do we hit $20,000 of monthly recurring revenue? And that shouldn't be such a crazy thing to ask when you go to Silicon Valley, unless you're two time exited or went to Stanford or you were an early employee at Facebook, you're not getting your first million dollar check for 15 or 20% of your business even until you make 20, 25K monthly recurring revenue. And I say this on stage at a lot of my keynotes and I feel like some people glaze their eyes over, like obviously I know that, the majority are running an ICO where they're nowhere close to making 20K monthly recurring. And when you say, what's your project? They go, well, our latest traction is that we've closed about 1.5 million in our private pre-sale. It's like, that's not traction. You don't have a product built. You raise the money for people. And that's a dot com bubble dynamic where the milestone of fundraising was the traction and that really had nothing to do with building a viable business. And the benefit of blockchain is to do things differently but achieve the same outcome, either more efficient or faster in a new way, whether it's starting a company or achieving success. Yep, but at the same time, blockchain technology is relatively immature for some products to go, at least for the Fortune 500 today to go for them to take a blockchain project out of R&D to the mainstream isn't going to happen right now. And right now the Fortune 500 is investing into blockchain tech, but it's in R&D. And they're quickly and fastly training their employees to understand what is a smart contract? Who is Nick Zabo? When did he come up with this word, smart contracts? I was just previewed to seeing some training information for multiple Fortune 500 companies training their employees on what are smart contracts. Stuff that we read four or five years ago from Nick Zabo's essays is now hitting what I would consider the mainstream, which is mid-level talent, VP-level talent at Fortune 500 companies who know that this is the next wave. And so when we're thinking about fundraising, it's the companies who raise enough money are going to be able to survive the storm, right? Like in this down market, if you raise enough money in your ICO for this vision that you have, that's going to be revolutionary. A lot of times I read an ICO's white paper and all I can think is, well, I hope this happens because if it does, that's crazy. But the question is, did they raise enough money to survive? And so that's kind of another reason why people are raising more money than they need, right? Like they, do people need $100 million to do the project they need? I don't know. It's an arms race. But they need a last 10 years to make this vision come true. Hey, so I want to ask you about your whirlwind tour and I want to ask in the context of something we've talked about before. You mentioned on theCUBE, it's solidity, very complex and there's a lot of bugs and a lot of security flaws as a result in some of the code, a lot of the code. You're seeing people now try to develop tooling to open up blockchain development to Java programmers, for example, which is probably exacerbates the problem. So in that context, what are you seeing around the world? What are you seeing in terms of the awareness of that problem and how are you helping solve it? So starting with Fortune 500 companies, they have floors on floors around the world, full of Java engineers, full stack engineers who of course know Java, they know C sharp and they're prepared to build in this language. And so this is why I think IBM's Hyperledger went in that direction. This is why even some people have taken the Ethereum virtual machine and tried to completely rebuild it and rewrite it into functional programming languages like Clojure and Scala. Just so it's more accessible and you can do more as a functional programming language. Very few lines of code are equivalent to hundreds of codes and lines of code in linear languages. And in functional programming languages, things are concurrent and linear and you're able to build large scale enterprise great solutions with very small lines of code. So I'm personally excited, I think, about seeing different types of blockchains cater more towards Fortune 500 companies being able to take advantage right off the bat of rooms full of Java engineers. So the turn to teaching people solidity, it's been difficult. At least from the cybersecurity perspective, we're not looking for someone who's a software engineer who can teach themselves solidity really fast. We're looking for a cybersecurity QA-minded quality assurance mindset, OPSEC mind. Someone who has an OPSEC mindset to learn solidity and then audit code with a cybersecurity mindset. And we found that to be easier than an engineer who knows Java to learn solidity. And education is hard. We have a global shortage of qualified engineers in this space. So cybersecurity is a good crossover bridge to solidity. The skills matter. If you're in a cybersecurity and you're a full-sac engineer, you can learn just about any language just like anyone else. It's the key is to start at the core. The key is to have a QA mindset and to have that mindset of actually doing quality assurance on code and finding vulnerabilities. Not as an afterthought. Yeah. There's a fundamental component of the development process. Because I can be a good engineer and make an app like Angry Birds, upload it. And even before uploading it, I'll get it audited by some third party professional. And once it's uploaded, I can fix the bugs as we go and release another version. Most smart contracts that have money behind them are written to be irreversible. So if they get hacked, money gets stolen. And so the mindset is shifting because of this space. All right, so on your tour, give us some, paint a picture. What did you see? You had an opportunity. First of all, how many cities? How long? So I just did about 80 days and it hit 10 countries. Most of it was between Europe and Asia. I'll start with saying that right now there's a race amongst smaller nations like Malta, Bermuda, Belarus, Panama, the island nations. Where they're racing to say that we have clarity on regulation when it comes to the blockchain, cryptocurrency industries. And this is a big deal, I'd say, mainly for cryptocurrency exchanges that are fleeing and navigating global regulation. Like in India, Uno Coins Bank has been shut down by the RBI. And they're going up against the RBI and the central government of India because as an exchange, their banks have been shut down and they're being forced to navigate waters in unique ways around the world globally. You have people like the world's biggest exchange at least by volume today is Binance. Binance has relocated a hundred people to the island of Malta, right? And it's for a small island nation that's still technically part of the European Union. They've made significant progress on bringing clarity on what is legal and what is not. Eventually they're saying they want to have a crypto bank. They want to help you go from IPO to ICO from the multi-stock exchange. Similarly, you also have Gibraltar and there's a law firm out there, Hassan's, which is like the best law firm in Gibraltar. And they have really led the way on helping the regulators in Gibraltar bring clarity. Both Gibraltar and Malta, what's similar between them is they've been home to online gambling companies, right? So a lot of online casinos have been in both of their markets. They've been very innovative in many different ways. And so even conversations with the regulators in both Malta and Gibraltar, you can hear their maturity. They're actually, they understand what a smart contract is. They understand how important it is to have a smart contract audited. They already understand that every exchange in their jurisdiction has to go through regular penetration testing. That if this exchange changes its code, that the code opens it up to vulnerabilities and that is the exchange going through penetration testing. And so the smaller nations are moving fast. So they're operationalizing it faster. Yeah. And hence the opportunity for them is the upside. My only fear is that they're still small nations. And maybe not what they want to hear, but it's the truth. Like operating in larger nations like the United States, Canada, Germany, even Japan, Korea, we need to see clarity in much larger nations. And I think that's something that's exciting, that's going to happen possibly after we have the blueprint laid out by places like Malta and Gibraltar and Bermuda. And what's the Wild West look like or Wild East, if you will, on Asia? A lot of activity because it's a free for all, but there's so much energy both on the money making side and on the capital formation side and the entrepreneurial side. So lay that out. What's that look like? By far the most exciting thing in Asia was Korea, Seoul. Like out of all the Asian Tiger countries today and August 2018, Seoul, Korea has a lot of blockchain action going on right now. It feels like you're in the future. There's actually physical buildings that say blockchain academy and blockchain building and Bitcoin labs. You feel like you're in 2028. And today it says in 18. You have a lot of syndication going on. Some of it illegal. It's illegal if you give a guarantee to the investor you're going to see some sort of return as a guarantee. It's not illegal if you're putting together accredited investors who are willing to do KYC and AML and be interested in investing a couple of hundred ETH in a project. So I would say today a lot of ICOs are flocking to Korea to do a quick fundraising round because a lot of successful syndication is happening there. Second to Korea I would say is a battle between Singapore and Hong Kong. They're both very interesting. They both, it's the one place where you can find people who speak English but also all four of the languages of the Tiger nations. Japanese, Mandarin, Cantonese, Korean, Japanese all in one place in Hong Kong and Singapore. But Singapore you still can't get a bank account as an ICO. So they're bringing clarity on regulation and saying you can come here and you can get a lawyer and you can incorporate but an ICO still has trouble getting a bank account. Hong Kong is simply closer in proximity to China. And China has a lot of ICOs that cannot raise money from Chinese citizens. So they can raise from anybody that's not Chinese and they don't even have a lot of white... They don't have a white paper, a website or even anybody in house that can speak English. So they're lacking English materials, English website and people in their company that can communicate with the rest of the world and other languages other than Mandarin or Cantonese. And that's a problem that can be solved and bridges need to be built. People are looking in China for people to build that bridge. There's a lot of action going on in Hong Kong for that reason, since even though technically it's a part of China, it's still not a part of China. It's a tricky gray line. Right, in Japan, a lot going on but it's still, it's Japan, it's kind of insulated. The Japanese government hasn't provided clarity on regulation yet. Just like in India, we're waiting for September 11 for some clarity on regulation. Same way in Japan, I don't know the exact date but we don't have enough clarity on regulation. I'm seeing good projects pop up in Korea. We're even doing some audits for some projects out of Japan but we see them at other conferences outside of Japan as well. I like coming up in Singapore as consensus. I'm hoping that Singapore will turn into a better place for quality conferences but I'm not seeing a lot of quality action out of Singapore itself. Who's based in Singapore? Lots of family funds, lots of new exchanges, lots of big crypto advisory funds have offices there but core ICOs, there's still a higher number of them in Korea, even in Japan, even. I'm not sure about the comparison in Japan and Singapore but there is definitely a lot more in Korea. Hey, what about Switzerland? You have any visibility there? I was in Zook, I was in Crypto Valley, visited Crypto Valley Labs. What feels best for you? I don't know, Mother Earth, all the above. The point of Bitcoin is for us to start being able to treat this earth as one and as you navigate through the crypto circuit, one thing that is becoming more visible is the power of China partnering up with the Middle East and building a one belt run road initiative. I feel like one belt one road ties right in the future of crypto and it's opening up the power of markets like the Philippines, Thailand, Malaysia, Singapore, right? And what Gabriel's doing in the Caribbean with the Barbados action. Gabriel from Bit, yeah. Bit's got these, bringing them all together. Yeah, I mean the island nations are open arms to companies and I think they will attract a lot of American companies for sure. So you're seeing certainly more, in some pockets, more advanced regulatory climates outside the United States and talent pools substantial. So when it comes to talent pools, I believe it was in global commits for the language of Python. China is just on the verge of surpassing the United States and there's a lot of just global breakthroughs happening. There's a large number of full stack engineers at a very high level in countries like China, India, Ukraine. These are three countries that I think are outliers in that a full stack engineer at the highest level in a country like India or Ukraine, for example, would cost a company between two to 5,000 USD a month to employ full time in a country where they likely won't take stock to work for your company. And I think that is... 15 years ago, those countries were outsourced. Hey, outsource some cheap labor, no. Now they're product teams, they're engineers. They're really building value. They're building their own things in-house. Power of new markets are opening up, as you said. This is huge, huge. Okay, Harte, thanks so much for coming on. I know you got to go. You got your event October 9th through 11th in Las Vegas, Blockchain Security Conference. You guys are the leader of Blockchain Security. Congratulations, hosho.io, check it out. hosho.io. October 9th, Mark McAllum is theCUBE. We are live here in Toronto for the Blockchain Futures Conference with our good friend, Cube alumni, Hartez. I'm John Furrier, Dave Vellante. We bite back with more live coverage from the untraceable event here in Toronto after this short break.