 Live from Nassau in the Bahamas, it's theCUBE covering Polygon 18, brought to you by PolyMath. Hello everyone, welcome, live here in the Bahamas. This is theCUBE's exclusive coverage of the crypto world, blockchain, Bitcoin, all kinds of tokens, token economics, I'm John Furrier with my co-host and co-founder of SiliconANGLE theCUBE, Dave Vellante. We're here to cover the securitization of tokens as well as all the action in the ecosystem. What's going on with token economics? What is it going on in the ICO world? Who's investing in what? Who are the players? That's our job this week. We're going to get it done for two days. Our first guest to help us kick it off is Bradley Rotter, crypto investor for five years, been in the securities, hedge funds, financing business over the years. Great perspective to kick off. I'm an investor point of view. What's going on? Bradley, welcome to theCUBE. Thank you. Good day. Thanks for being here. Thanks for being a guest analyst to help us break down what's going on. Obviously, you've got a lot of investments to get portfolio companies, one which you wear in a shirt on rivets. They've done a token sale around cyber security, but as an investor in general, I mean, you're long on this game. Are you long on crypto? Are you doing deals? What's going on? I've been very long on crypto from a very early time, five years ago. I heard about crypto from a 15 year old, which got my interest. I had been one of the pioneers in an Aztec class that reminds me a lot of Bitcoin and that was financial futures. Remember when those came out? It was controversial. People were saying it'll never work. I was thrown out of some of the finest banks in Chicago and New York, trying to explain to those institutions how they can use financial futures to hedge interest rate risk. Kind of reminds me now of Bitcoin, but you can see the tide turning now and it's in all the headlines. I mean, Dave and I talk all the time about this and that is is that, don't get your thoughts on this and get your reaction. You're seeing startups, really startups doing token raises and ICOs, initial coin offerings and they need to grow. They got to build their product and there's a roadmap. Then you got the companies that are pivoting, hey, let's just reboot with crypto and raise a bunch of cash and hope for the best. And then you got businesses that are growing that really are aligned with token economics. Most of the investors we talk to say, that's where the action is, that okay, if they're going to be start up, then go with a hedge fund and that's more nurturing, a lot more of a classic venture capital back investment, but it's the growth companies that they're looking for. Do you see it that way too and what's your reaction to that? I think the issuance of tokens as securities is going to be a pretty big deal. And primarily what I'm extremely interested in is using tokenization for infrastructure, for gigantic projects. It hasn't happened yet, but I think I have ideas on how very large projects could be tokenized and that gives some real advantages to the individual investor. You mean like, what's the big part? Smart cities, give me some examples. Well, this is my favorite example is that someday you'll be able to buy a three mile stretch of a toll road in Texas. And as the owner of that three mile stretch, you'll get 25 cents a car credited every minute of the cars that are going down your stretch of toll road. You see what I'm saying. If you tokenize that infrastructure, you could then, it makes it more available to individual investors, but if you tokenize it, you could borrow against your token, your shares, if you will. You could hypothecate it, borrow against it. The tax credits for infrastructure investment could be tied to the token itself and vary depending on the need for that particular infrastructure project. And I think this administration, more than any I've ever seen, is going to be very open to those kinds of ideas. And I think it's transformation. So that's is transformational, being able to address our infrastructure problems with blockchain. That's your vision. Exactly. So I want to get Dave your reaction. You were just in the keynote. We're here at the PolyCon 18, which was put on by Polymath and Grit Capital, two Canadian organizations, but bringing kind of the world together. You were in the keynote, they're selling a security token platform so people can get raised money with security, tokens, which is really good because there are SEC regulations in the U.S. It's a lot cleaner than the utility token. And if folks want to learn more, go to YouTube, watch one of the videos that we've done on ICO 101. But Dave, what did you see in there? And then Bradley, you're going to get your thoughts on how you see it. Well, a couple of things. It was a summary. One is, and now it's biased, but the consensus in that audience was that security tokens are going to dwarf the value of utility tokens over time, like massive dwarfing. Number one. Number two is you're seeing a real mix of companies that are tokenizing their business. New companies, companies trying to solve problems in this new internet we're building out. Existing companies that are looking to transform and have a logical reason to tokenize their business. So there's a lot of diversity going on. Your perspective as an investor. Security tokenization is opportunity for businesses to use and raise money and use capital. But you got to secure something. Security token. Well, this market has been so hot that investors have swayed a little bit from their typical diligence and so forth. I think they'll soon start to realize by buying these utility tokens. In many cases, there's not much utility. In fact, I ask everybody I see, have you used a utility token today? No one's really using utility tokens now. And so we've got to keep that in mind. The cart's a little bit in front of the horse. Will we use them? You know, I believe so, but we're going to have to make it really easy to use. Do we need 2,000 tokens? I don't think so. It's going to be complicated. So what do you look for as an investor, as a reasonable profile or an attractive profile? Is it equity in the company? Is it rev share? Or is it the utility of the function? I have done both. My first utility token was a company called Madesafe. And I heard about Madesafe from a 14-year-old Bitcoin miner. I always listen to 14-year-olds also. This young man had approached me after I was giving a speech on cryptocurrency. We went out for a drink, in this case Diet Coke. And he told me about this company called Madesafe. I went home and started looking at it. I was up till 4.30 in the morning, and a week later I was climbing on a plane to Trune, Scotland to go meet the developers. What was Madesafe? What caught my eye? Madesafe was a distributed, decentralized, peer-to-peer, self-authenticating, self-managed network that runs on math and logic. All the data is encrypted, sharded, sent around to the nodes around the world, and then the map of where those shards go is then encrypted again. It's NSA-proof. Beautiful. Dave, you brought this up the other day and we talked about it at the pool. We did a segment on a kickoff about this event. We've been talking about digital transformation vis-a-vis some of the old guard companies, either central authorities and or incumbent laggards or leaders. This token economics is part of the digital transformation that a lot of people aren't seeing. So, you say you've been kicked out of many banks, you feel that these crazy ideas that are actually the ones that might actually be the best, and we think they are, your thoughts, Dave, as you look at the digital transformation. Oh, you've got to have a digital business. You need to use the power of data. Data's a new oil. Cloud computing. Now you've got this new variable coming in. Centralized, distributed data. What's your thoughts? I mean, I see, you know, we talk in theCUBE, we talk about, you know, SaaS and cloud and mobile and social and big data. That's yesterday. That's yesterday's news. To me, the future is machine intelligence. It certainly starts with data and it starts with, in crypto, blockchain plays a key part in building out that next wave of technology. And I see every industry being disrupted at different paces as a function of maybe the risk within that industry. You've certainly seen it in publishing, media, music. We really haven't seen it yet in banking, healthcare, but these are the industries that need the most transformation. What are your thoughts, Brad? Well, the banks better be paying attention to this. I think if we're right about cryptocurrency, banks will become as plentiful and as useful as blockbuster video stores. I mean, I got to tell you, in my experience, the old guard, the disruption is going to come really fast, I think, and my prediction is that, and again, this is based on my history in the computer industry, is if you look at the billion-dollar ideas, they're the dumbest ideas at first. I mean, you go down the line, Google. We don't need another search engine, we want portals. Keyword navigation, the one I did. Who would ever pay for a link on a search result? That's the dumbest idea. I have Airbnb. You're going to sell all your home. That's the dumbest idea I ever heard of. The dumbest ideas actually might be the best if you look at them. And when I say dumbest, it might be ones that don't make sense. Like you mentioned that one about Scotland. That technically makes sense. I get that, but someone in the mainstream of, huh, what? I got to do all this stuff. So it's kind of what's going on right now, isn't it? And if there's any fabric that connects all of those different ecospheres that you were talking about, I think it's going to be cybersecurity is extremely important. It's not generally discussed at these kind of events, but I view this just as much as a cybersecurity play as I do a digital currency play. And let me expand on that. The most valuable data in the world used to be in the Pentagon. No longer. Two reasons basically. One, that they've been hacked. All the data's already gone. But two, if you steal the plans for the next generation F-39 joint strike force fighter, good for you. There's only two buyers for that. I believe the most valuable data in the world right now is a Bitcoin private key. And people are coming for that. Members of the Bitcoin community are being hunted, singled out and hunted to try to get their Bitcoins. It's a really interesting phenomenon. I like that term used fabric, because we kind of envision this fabric emerging where you've got industries which are sort of vertical sliced, and then you've got these horizontal technologies, whether it's cloud, security, there's a data layer. And people are building businesses on top of them, and then obviously tokenizing those businesses. We talked last night a little bit, and you guys are networking guys. You understand the challenges of distributed apps, distributed database, the latency challenges. You're a little bit bearish on the market right now. Is it because of those technical challenges? Is it because of this so much bubble-ishness attitude going on? What are your thoughts? I've been a little bit bearish on Bitcoin for the very short run, and of course it's been in the headlines at the year end. It was the front headline in every journal you read. The reason I've been a little bit negative is that it's purely for a tax perspective. And let me explain why. These millennials that I collect, and I keep them around me just to guide me and give me a glimpse of the future. Most of the people at this conference believe that when they buy Bitcoin and sell it and buy Ethereum and sell Ethereum and buy Cardano, that those are all like kind exchanges and no tax will be due until they ever come back into fiat dollars. They're absolutely incorrect, absolutely incorrect. And so they're exposed, they're really exposed. That's why I believe cryptocurrencies in general, Bitcoin specifically, have been very weak this year and probably will remain weak until April 16th. People are getting their tax bill, which is difficult to calculate with thousands of transactions in some cases. They're getting their tax bill and they're going to have to sell some of their crypto holdings to pay Uncle Sam. It's a U.S. phenomenon. But it's like people who exercise their options in 2000 and held on to the shares and then got crushed. The tax liability is fixed at December 31, but now the value of their collateral has gone down. That's a problem. Bradley, thanks for coming on, kicking off the show with us. Brad, get your vision on investing. Dave, get to the keynote. More live coverage coming here from Polycon 18, the stampede is on. This is the show around security tokens in the Bahamas, theCUBE. We'll be right back with more live coverage after this short break.