 From New York, it's theCUBE, covering Blockchain Week. Now, here's John Furrier. Hello and welcome back. This is the exclusive coverage from theCUBE. I'm John Furrier, the co-host. We're here in New York City for special on-the-ground coverage. We go out where all the action is. It's happening here in New York City for Blockchain Week, New York, hashtag Blockchain Week, NY, of course, Consensus 2018 and a variety of other events happening all over the place. We got Decentral having a big boat event here, tons of events from Hollywood. We got New York money. We got Hollywood money. We got nerd money. It's money everywhere. And of course, great deals are happening. And here with two friends who have done a deal, Al Burgio is the CEO of Digital Bits Co-Founder and Ethan, who's the partner at Arcadia Crypto Ventures. You guys, we're like family now and you hide in secrets from me, you did a deal. Al, what's going on here? Some news. Yeah, well, first John, thanks for having us. We always love coming on the show and I really enjoy spending time with you and so forth. Previous conversations that we've had, we were not out there fundraising, but it really had the opportunity to meet a lot of great people. Nithin and his firm being definitely one of them. And as a result of that, really building this, say, following these relationships within the venture community or more specifically the crypto venture community, when we were ready to actually go out and do, let's say, a first round, for us it happened very quickly. And it was a result of being able to leverage those relationships that we had. For me, it was kind of remarkable to see that support come and happen so quickly. Normally venture, it's just a process. Many, many months. Long road. And a month to close. Kiss all the frogs. Yeah, here it's like it's, people can do diligence on the fly. You have an opportunity with events like this. They're smart. They're smart and there's an opportunity to really foster these relationships in this really tight-knit community. And Nithin and his firm being obviously one of those. And so when we were ready to go out and do our first round, it happened quickly. And I'd like to think that in a lot of ways it happened amongst friends. Well, you're being humble, Al. We've been covering, you've been on theCUBE early when you just started the idea. So it's fun to watch you have this idea come to fruition. But you're hitting a tam and total adjustment market is pretty large. And that's one of the secrets of a tam. It's aggressive, bold move. We'll see how it turns out for you. But you gotta have the moonshot. You're going after the loyalty market, which is completely run by the syndicate. What do you wanna call it? The mafia of loyalty. Yeah, I would say that in some cases, those that are supporting a C of that is really just one use case because we built this general purpose blockchain. One of the use cases and one of the first use cases we're out there to support happens to be the loyalty space. It's big. And it's massive, highly fragmented, but massive market. And we can solve a lot of liquidity issues with our technology. But then it goes beyond that. So it's a big market at the start and then it can scale even greater from there. And I think that's part of what, I mean, obviously I'm not gonna speak for Nithin. Nithin, no, I'll let you weigh in here. Pass the mic over. Talk about the deal. Why these guys? I know you met them, you like Al, and the feedback I've heard from other folks is he's a classic entrepreneur and that obviously the entrepreneur gets the deal. But obviously you don't just give money because you like someone. What about this deal? What about this deal that is it that you guys like? Do you guys been there early? You got some great people in your team. What about this deal? Is it that you like? Sure. For us, Al met pretty much most of, almost all the criteria that we had, okay? We had when we go, the thesis, before we go fund someone, we don't get so many deals like that. Usually we get, you know, they meet 50% of the criteria, we might still put money because you can't get the 100%. So one thing, Al, as the founder, he's experienced, he's done it multiple times before. He's sold companies. Tech guy, so which is very key for us. A tech project is very key. Okay, second thing, he's built the whole thing. It's not like he's raising the money to go and build it. He built it, now he's raising money to go to market strategies, which makes sense, okay? He's shown it and we tested it out. So like we were completely blown away. He has a team behind, he's built a team on every side, on the marketing side, on PR events. And the idea, or this is a general blockchain, but he's addressing a very specific issue. It is a real problem. Loyalty points or rewards points or gift points or whatever you call them. It is segmented, it's fragmented, and this is a chance. And there might be many people who are trying to solve this problem, but I think Al has the greatest possibility or probability of becoming the winner. You and I have talked on theCUBE before. Both of you guys are CUBE alumni. I know you both, so I'll ask you because I'll just remind everyone. We've talked about token economics. One of the things that's coming up here at the Consensus 2018 event in New York, and state certainly, and some fireworks in one of the sessions is like, if you're not decentralized, why the hell are you doing a decentralized model? So one of the criteria's is the fit for the business model has to fit the notion of a decentralized world with the ability of tokens becoming an integral part. What about this deal makes that happen? Obviously fragmentation, is that still decentralized? So how are you sorting through the nuances of saying, okay, is it decentralized market for him and this deal, or does it fit? See, decentralized is one thing, okay? In here, more than decentralized, I would say there was the platform so that all the companies can come in, use this common platform, release it, and as a user, you're getting a chance to atomically swap it if you don't like something, okay? Most of the reward points or loyalty points go waste, all right? Maybe the companies wanted to go waste. I don't know if that is- It's a natural burn and equilibrium going on anyway, right? It's a perfect fit. So that was the only doubt that we had, okay? Would companies want this because, do they want their customers' loyalty points going waste rather than swapping it for something else? That was the only question that we had. Well, that's a question that won't get answered in the market, but otherwise we hadn't seen something like this before. What's your take of the show so far? We saw each other in the hallway as we were getting set up for theCUBE for two days of coverage in New York for Blockchain Week, New York. What's your take? Obviously, pretty packed. Oh my God, it's so packed and it's great that the show is going on, okay? It is bringing a lot of money. It's bringing all the investors in new money, old money, traditional money, nerd money, as we said- It smells like money. It's everybody's coming in. See, the beauty about those things coming in is you're going to get a lot of people from other fields that are going to come into this field to solve problems. Because earlier, if there is no money coming in, you're going to have very smart people or very intelligent people stick with physics or whichever was their field, now they're going to look into the space because they're getting paid. See, that brings more people who are intelligent who can solve problems. That is very key for me. Now, I want to ask you as an entrepreneur, one of the things you have to struggle with as any entrepreneur is navigating the 3D chess you've got to pay, whether it's competitive strategy, market movement, certainly the market's moving and shifting very quickly, but you've got growth. Big tailwind for you. What's your takeaway? Because now you have new things coming on every day. It seems like a new shoe is dropping. SECs firing a warning on utility tokens, security tokens are now coming online, but that looks very promising. And then ecosystems become super important. You guys just announced news yesterday or this morning around the ecosystem. Yeah, tomorrow we have some news today, but we have more tomorrow. Yeah. Can you tell about the news? Yeah, so we have a multi-tiered go-to-market strategy. Obviously in the loyalty space. Again, I want to emphasize it's just one use case, but it's a massive one. You have brands, the enterprise. And many of those enterprises or brands may operate their loyalty program internally in terms of like back-office systems. In some cases, they're outsourcing that to a SaaS provider, some application provider that's kind of hidden in the background. But let's just say like Hilton. I use Hilton, that's the location for the event. But Hilton, you have this user experience using this app, but maybe that technology, the SaaS application that's powering that is actually not Hilton technology. And so let's just say there's 30 million people in the Hilton program and there may be 30 million on the Marriott coexisting on some SaaS application. And so that's another important category for us, SaaS providers and so forth, supporting that industry. And then last but not least, today, whether enterprise or SaaS company, there are many cases not touching their own hardware, right, they're using the cloud. And so we have- It's not outsourcing. Yeah, they're outsourcing the backend. And so you have managed cloud providers. So what does it mean for the market? I don't understand, not following it. Well, I guess what I'm saying is that there needs to be a common standard across enterprise application provider in global cloud community. Cloud is the new hardware. And so- So horizontally scaling loyalties, that's what you're thinking about. Exactly, so we have, we're basically securing partnerships at all three levels to make sure that if you want to use new technology, you want to ensure that it's widely supported across a variety of partners you may want to work with if you're an enterprise, whether software company, cloud company and so forth. You want to be able to ensure that they come back up the truck. And so we've basically signed partnerships at all of these tiers. You're going to see news in the morning. It's late here on a Monday evening. So tomorrow at 9 a.m., major cloud company, one of the major cloud companies, and there's more to follow, making an announcement that they've joined our ecosystem partner program and supporting this open source technology in a number of different ways, which we're really excited about. You see ecosystem as a strategic move for you. Absolutely, this is, for us this is, it's all about helping the consumer, but it's not about one consumer at a time for us. It's very much an enterprise play. It's one enterprise at a time. And with each enterprise you, we basically add to the ecosystem millions, if not tens of millions of consumers instantly. Nathan, I want to ask you a question because what he just brought up is interesting to me as well as a new thing. It's not new, but it's new to the crypto world, new to the analog world. That's not in the techs field. Tech business, we all know about global system integrators. We know about ecosystems. We know the value of developer programs and community, all those things, check, check, check. But no, those things are coming to new markets. People have never seen an ecosystem play before. So it's kind of not new. It's new for some people. It's competitive about advantage opportunity. True, it is. See, the whole thing is so new that you can't even define it at this point. It's very hard to define. It's like, see, as an example, I would say, none of us thought that when the iPhone came, there would be a $60 billion taxi sharing economy that comes out of it, right? Same thing. Blockchain comes, we just don't know. And it's very hard to predict. New brands aren't emerge. I mean, if you look at every major inflection point, I point to a couple that I think are relevant. TCPIP was created internet working that essentially went after proprietary networks like IBM, digital stacks, but it didn't replace, it wasn't a new functionality, it was interoperability. The web, HTTP, created a whole new functionality. Out of that, emerged new brands. So I think this wave's coming as a new brand's are gonna emerge. Here, what's the brand, I don't know what's gonna emerge. There it was interoperability. Well, new players. It's here, it's more inter, or the collaboration. The collaboration is so huge. It's the scale is so huge in the sense you can collaborate across the world. You're cutting those borders. There are no borders that can hold you. Even though interoperability happened in internet, there were the Googles and the Facebook that still had those borders. Well, don't put it, Cisco came out of that, 3Com and those generations, but the hyperscalers came out of the web. So I'm saying, well, I'm saying, when I get your reaction to it, I think that is such a small scale relative to blockchain and crypto because it's global. It's every industry. It's not just tax, it's just like everything. So there's gotta be new brands. Startup's gonna come out of the woodwork, that's my point. Right, see, it's not yet time for the brands to come in. See, that's the whole thing. So let's put it this way. The internet was there from 1978. If you really look at it, ARPANET or DARPA, those things were there. Email was there, but it was by 1997 or by the time we all came to know Google, it was 2001, okay? There is that gap between the brand forming because it has to permeate first. More people have to use it. Like, what is the user? Yeah, but everything was a bubble, but everything happened. Right. It was not a bubble. I get pet food delivered to my house today. Right. That happened. People were saying that's a crazy idea. But now it's going on, right? So it's the timing and the time for it to permeate. So here, how many people are using Bitcoin and to do what? Most of them are just speculating, right? There's very few real use case of remittance or speculative trading. That's what's happening. See, that's what I said. The other use cases, it has to permeate. And that comes with more user adoption. And the user adoption initially is going to come from the speculation. I think it's a good sign. Honestly, I think it's a tell sign because I remember when the web was going, I was coming out of it right and growing into the industry was people were like, oh, that's just for kids. Exactly right. The big company said, who the hell is going to use the worldwide web? Right. Enter the search engines. Yeah. I remember that, like it was yesterday, I forget that I'm not a kid anymore. And I had the opportunity to be an entrepreneur during that era. And one of the things I want to add is that we had, I think what Nitin is really pointing out, it started with the infrastructure. You had network engineers and ISPs, an email. But what was the enterprise application here? What was that consumer application? That followed. So it started infrastructure, then it evolved. Once we saw these applications, enterprises started to go crazy. Whether it was the Ubers of the World surfacing or enterprises reinventing themselves, that's kind of the next wave. Well, this is why I think you had a good opportunity because I remember licking stamps and sending out envelopes to get people to come to a seminar. He held it at a hotel. It was as to how you did in the old world. The web replaced that with direct response mechanisms. But there's something else. The mainframe ran faster than the web. You're replacing an old loyalty. That's like licking the stamps. It's not about comparing what you're doing to something else. There's also something that helps, that we're not acknowledging that really helped take internet from 1.0 to 2.0. It's Linux. I remember websites were insanely expensive. It was Windows servers. It was Sun Solaris, all of this crazy expensive server systems that you needed to have. So the barrier of entry was extremely high. Then Linux came along and you still needed to have your own data center space. So it's still high, but the licensing fees went away. And now with containers and Kubernetes. Yeah, exactly. Game over. I made a bet I was gonna get Kubernetes in a crypto show. Anybody from a bedroom could start a company. You could do what your pajamas still on. Well, orchestration is easier now. Absolutely. So this started this really revolution. Now you have blockchain and you start to introduce enterprise-grade blockchain technologies. It's the next wave. It's not VoIP. It's value over IP. Okay, I wanna ask both of you guys a final question to end this segment here at the block event. I know you guys wanna get back and take it away from the schmoozing and networking and the fund out there, DJ. Predictions, next year this time, what are we gonna be? What's the world gonna look like? What's gonna evolve? I mean, we had a conversation with Richard, who managed a partner with you guys at Arcadia crypto partners saying the trading thing's interesting, the liquidity. What's your take? I want you guys both to take a minute to make a prediction next year. What's different? Who's out? Who's in? What's happening? Is it growing? So I would say this. Surprisingly, CTOs, I love CTOs, but many CTOs, I would say that well above 50% of CTOs still can't spell blockchain. Really, and what I mean by that, really understand the transformational power of what this is in terms of how this is really Web 3.0. This is going to change so many industries, create so much value for consumers, help businesses and so forth. And we're gonna cross that 50% mark. Next year. With CTOs. 50% of what? Be clear on this. Basically, we're going, in terms of the net that blockchain's gonna capture and really enterprises, and not just enterprises, service providers and so forth. So 50% of the mind share or 50% of the projects? Yeah, no, I'm talking, people aren't gonna be saying, oh, blockchain, isn't that Bitcoin? They're gonna really understand and they're gonna understand that impact. And over the course of the next two months, we're gonna see that. And it starts, obviously, in many cases with the CIO, CTO of many companies. There are definitely a lot of CIOs and CTOs on the forefront and innovation that get it. But what I'm saying is that more than 50% don't. So you're saying? They're very busy in doing what they're doing today and it hasn't hit them yet. Okay, to recap, you're saying by next year, 50% of CTOs or CTO equivalents will have a clear understanding of what blockchain is and what it can do. Absolutely. Within your prediction next year, this time, what's different, what's new, what's the prediction? So one of the key things that I think is gonna happen is there's gonna be a lot more training and knowledge that's gonna spread out so that a lot more people understand what blockchain is and what Bitcoin is. Even now, as Al said, he was telling about CTOs. If the CTOs are, that's the state that they can't spell blockchain, imagine where the real common madness, you know? You've got people like Jamie Dibb and I'm coming on TV and saying, he doesn't like Bitcoin, but he likes blockchain. I'm like, what the heck is he saying? He likes a database? He was selling it, sure, everyone knows that. He likes a database. And then you have Warren Buffett coming over there. Rat poison. And then there's a rat poison. I'm like, my question is, does any of his funds buy gold? Do they buy gold? He was telling that this is only worth as much as the next buy buying at a higher price. What's Warren Buffett's best tech investment? I don't know. I think he bought Apple. He started buying Apple now, right? When it reached a thousand bucks or it reached a trillion dollars or close to that, or 750 billion, he started. The Apple buy was 2006. If he were there, then you were good. Yeah, but he's- Your prediction? Market-wise, I don't know what's gonna happen. I am expecting the crypto, the utility token or the crypto market to be at least a $6 trillion business, but it'll happen next year. Definitely not, but I've been proven wrong. Like I was expecting it to happen by 2025, but when it went to 750 billion by December, well, it's not too far. You did get the prediction right in the Bahamas at Polycon 18 about the drop around the tax consequences of the people slinging trades around not knowing the tax consequences. Right, right. We don't know because who knows? Because what is going on over there is, IRS is still saying it's a property. That's what the last circle is. SEC is saying it is all equity and the CFTC is saying it's commodity. So what tax do I pay? Okay, lightning around question because I want to have one more pop in my head. The global landscape from an investor standpoint, the US we know is going on US. SEC is throwing the bulls across the bow of the boats, kind of holding people in line. What percentage of US big investors will be overseas by next year? Percentage of? Meaning having deals being done, proxy deals outside the US. What percentage? It's still going to be low though. That is going to be low because that, I don't think the US investor means the large scale of those investors will do more. The big funds will co-locate outside the US? There will be some, but not enough percentage. Yeah, not percentage, I think it's still going to be less than 10%. Al, your prediction? In terms of investment. Investment outside, investors saying, hey, I got money here, I want to put it out there. Outside of the United States. Share money, not move their whole fund, but like do deals from a vehicle. Do deals outside. I mean, I think I agree with Nathan. Are you throwing darts at the board here? So I want to clarify, there's definitely massive investment happening overseas in some respects, probably bigger than the United States. So that's not going away. If anything, that's going to grow. But your question is, how many in terms of US entities making a broad investments? Overseas investments versus just domestic? You know, I think that trend doesn't necessarily change. You have the venture community. There are certain bigger venture funds that can have global operations because at the end of the day, they need to have global operations to be able to do that. And most venture funds aren't that massive. They don't have that infrastructure. So they're going to focus on their own backyard. So I don't necessarily think blockchain changes the venture mindset. It's just easier for them logistically to do diligence in their own backyard and invest in those. Guys, always a pleasure. Great to see you. You guys are like friends with Entourage here. Great to get to update here at Blockchain Week. We get to Silicon Valley Week. We'll connect up again. I'm John Furrier, here in New York, theCUBE's continuing coverage of crypto, decentralized applications and blockchain. Of course, we're all over it. You'll see us all over the web, all the shows. Thanks for watching.