1 00:00:01,000 --> 00:00:08,000 CryptoTrader is proudly brought to you by Element, a full-service investment bank for the digital token capital markets. 2 00:00:08,000 --> 00:00:36,000 markets traded under 500 billion ahead of another futures close. Bitcoin goes on a run in anticipation of the Bitcoin private fork. 3 00:00:36,000 --> 00:00:47,000 South Korea issues an unusually positive statement about cryptocurrency regulation just 24 hours after a vocal anti-crypto regulator is found dead at his home. 4 00:00:47,000 --> 00:00:54,000 Venezuela launches a petrol-backed crypto, creating a vehicle to create investment despite its sanctions. 5 00:00:54,000 --> 00:00:58,000 Those are your headlines. You're watching CryptoTrader on CNBC Africa. 6 00:00:58,000 --> 00:01:05,000 This week we're coming to you live from Dallas, Texas, where we're covering the Bitcoin and Ethereum superconference. 7 00:01:05,000 --> 00:01:10,000 And this is a superconference indeed. It's got all the biggest names in crypto right here. 8 00:01:10,000 --> 00:01:18,000 Over the next 30 minutes I'm going to try and track them down and get them to sit in the hot seat and tell us what their predictions for crypto are for 2018. 9 00:01:18,000 --> 00:01:19,000 So stay tuned. 10 00:01:19,000 --> 00:01:35,000 Where do you keep your crypto? If you're anything like me, your crypto is stored on a selection of wallets, online, offline wallets, and you're earning no interest on your crypto, which is kind of counterintuitive. 11 00:01:35,000 --> 00:01:44,000 Well, at least according to Alex Mashinsky, who says he's from this Celsius network and says that we should be earning interest on our crypto. Alex, how? 12 00:01:44,000 --> 00:01:48,000 Well, you should be earning interest and you should be getting low interest loans, right? 13 00:01:48,000 --> 00:02:08,000 So if the community got together, the crypto community got together and staked its crypto and allowed other people to borrow against it as well as borrow against your own crypto, you would be able to get much lower interest rate from the community as well as get much higher rate paid to you as a crypto holder. 14 00:02:08,000 --> 00:02:14,000 But Alex, let's take a step back because you're using big words, using words like stake and a lot of our viewers don't know what that means. 15 00:02:14,000 --> 00:02:24,000 So we do know of other lending platforms where you can borrow money against your crypto. Those are out there. How is Celsius different? 16 00:02:24,000 --> 00:02:31,000 So the guys that are out there today have basically raised a little bit of money and are lending a little bit of money. 17 00:02:31,000 --> 00:02:38,000 If you try to actually get a loan there, you will be waiting on a very long line of people who are also trying to get those loans. 18 00:02:38,000 --> 00:02:46,000 The difference between those companies and Celsius is that Celsius managed to convince a very large financial institution to partner with us. 19 00:02:46,000 --> 00:02:52,000 And one of my backers agreed to lend billions of dollars, not millions of dollars out. 20 00:02:52,000 --> 00:03:02,000 So we're not going to have a line and we're not going to have, you know, you're going to get your interest earned as you deposit your coins into the Celsius wallet. 21 00:03:02,000 --> 00:03:07,000 So let me understand this. So Celsius is a wallet. I deposit my crypto into the Celsius wallet. 22 00:03:07,000 --> 00:03:10,000 From the moment I deposit my crypto, I start to earn interest. 23 00:03:10,000 --> 00:03:14,000 You get to do two things. One, you can get a loan against your crypto. 24 00:03:14,000 --> 00:03:18,000 So you deposit, let's say, a thousand dollars worth of crypto. 25 00:03:18,000 --> 00:03:23,000 You can get between four and five hundred dollars as a loan at less than ten percent. 26 00:03:23,000 --> 00:03:26,000 We will charge about nine percent interest. 27 00:03:26,000 --> 00:03:33,000 That interest that we collect is then redistributed to all the other members of the community because they allowed us, 28 00:03:33,000 --> 00:03:39,000 their crypto is what allows us to get these, all the capital from this financial institution. 29 00:03:39,000 --> 00:03:44,000 So if I got the facts right, I put in a thousand dollars worth of Bitcoin. 30 00:03:44,000 --> 00:03:47,000 You will loan me five hundred US dollars against that. 31 00:03:47,000 --> 00:03:49,000 And you'll charge me under ten percent for the loan. 32 00:03:49,000 --> 00:03:50,000 Yes. 33 00:03:50,000 --> 00:03:51,000 That's ten percent per year. 34 00:03:51,000 --> 00:03:52,000 Per year, yes. 35 00:03:52,000 --> 00:03:54,000 Per year. Now, the ten percent that you earn goes into a pool. 36 00:03:54,000 --> 00:03:56,000 Say nine percent. That sounds much better. 37 00:03:56,000 --> 00:03:58,000 Nine percent because you said under ten percent. 38 00:03:58,000 --> 00:04:04,000 So I take this interest and you put the interest into a pool and the pool is shared amongst your token holders. 39 00:04:04,000 --> 00:04:08,000 I think I'm smart enough to realize that here what I'm doing is I'm actually getting money, fiat money, 40 00:04:08,000 --> 00:04:12,000 against my crypto without a tax event because I'm not actually selling. 41 00:04:12,000 --> 00:04:15,000 That's exactly what you're deferring your tax event. 42 00:04:15,000 --> 00:04:18,000 So all the rich people in the world do that every day. 43 00:04:18,000 --> 00:04:23,000 If they own Facebook or Google when they need cash, they don't sell their Facebook stock. 44 00:04:23,000 --> 00:04:28,000 They just go to their broker dealer and say, hey, can you lend me dollars against my Facebook? 45 00:04:28,000 --> 00:04:30,000 And the broker dealers are very happy to do that. 46 00:04:30,000 --> 00:04:34,000 They're very happy to give you a loan against it because they have an asset. 47 00:04:34,000 --> 00:04:43,000 So we provide, we are the first ones in the crypto community who convinced a major financial institution to treat that crypto as an asset 48 00:04:43,000 --> 00:04:45,000 and allow us to borrow dollars against it. 49 00:04:45,000 --> 00:04:48,000 Okay. Now you're doing a token sale. Tell me a little bit about your token sale. 50 00:04:48,000 --> 00:04:53,000 So we're in a pre-sale right now. We're accepting accredited investors. 51 00:04:53,000 --> 00:04:58,000 You can go to Celsius.network is our website and register. 52 00:04:58,000 --> 00:05:04,000 You can basically get a bonus on the 20 cent per token. 53 00:05:04,000 --> 00:05:08,000 The public sale is on March 15th and the price is 30 cents per token. 54 00:05:08,000 --> 00:05:12,000 And how many tokens are you issuing and what is this token actually for? 55 00:05:12,000 --> 00:05:15,000 So the token is, we're issuing 500 million tokens. 56 00:05:15,000 --> 00:05:21,000 Anything that's not sold in the pre-sale or the public sale will be burned. 57 00:05:21,000 --> 00:05:24,000 And the token is used, the token is the smart contract. 58 00:05:24,000 --> 00:05:28,000 So basically when you pay your interest to the community, you're buying tokens. 59 00:05:28,000 --> 00:05:33,000 They go into a smart contract and the smart contract distributes tokens to all its coin holders. 60 00:05:33,000 --> 00:05:37,000 So can you be part of the network without buying Celsius tokens? 61 00:05:37,000 --> 00:05:44,000 We only lend to crypto holders and we only lend to Celsius network members. 62 00:05:44,000 --> 00:05:48,000 So you're not one of these ICOs that's taking a chicken approach saying, 63 00:05:48,000 --> 00:05:51,000 yeah, we'll have a token but you can also use other cryptocurrencies. 64 00:05:51,000 --> 00:05:52,000 No. 65 00:05:52,000 --> 00:05:54,000 If you want to be part of this, you've got to have Celsius tokens. 66 00:05:54,000 --> 00:05:59,000 We believe that, you know, we ran out of anarchists, we ran out of libertarians 67 00:05:59,000 --> 00:06:02,000 and now we're running out of speculators. 68 00:06:02,000 --> 00:06:07,000 The next 100 million people to join crypto are people who need a loan or want to earn interest. 69 00:06:07,000 --> 00:06:08,000 That's my view. 70 00:06:08,000 --> 00:06:11,000 That is the next big thing that's going to change the world. 71 00:06:11,000 --> 00:06:12,000 Awesome. 72 00:06:12,000 --> 00:06:15,000 Alex, so if our viewers want to get more information, where can they go? 73 00:06:15,000 --> 00:06:20,000 www.celcius.network or join us on Telegram at Celsius.network. 74 00:06:20,000 --> 00:06:24,000 That's www.celcius.network. 75 00:06:24,000 --> 00:06:25,000 Sounds amazing. 76 00:06:25,000 --> 00:06:27,000 I'm going to move my crypto to your Celsius wallet. 77 00:06:37,000 --> 00:06:41,000 One million dollars by 2020. 78 00:06:41,000 --> 00:06:46,000 Well, at least one million dollars by 2020 or he'll eat his own genitals. 79 00:06:46,000 --> 00:06:47,000 That's what John McAfee said. 80 00:06:47,000 --> 00:06:49,000 John, why a million dollars? 81 00:06:49,000 --> 00:06:51,000 Why not 1.5 or 2? 82 00:06:51,000 --> 00:06:55,000 Well, you know, I'm a very conservative person and I seldom lose bets. 83 00:06:55,000 --> 00:06:58,000 I chose a very conservative number. 84 00:06:58,000 --> 00:07:01,000 One which is absolutely impossible for me to lose. 85 00:07:01,000 --> 00:07:04,000 Because I think the true value will be many times that. 86 00:07:04,000 --> 00:07:05,000 And how did I reach the value? 87 00:07:05,000 --> 00:07:10,000 The way I do most things, back instead of taking what happened and project it forwards. 88 00:07:10,000 --> 00:07:16,000 The nice thing about Bitcoin is it has a finite end when the last coin is going to be mined. 89 00:07:16,000 --> 00:07:20,000 Or even 10 years from now where there are very few coins left. 90 00:07:20,000 --> 00:07:24,000 So I'm thinking, okay, so there's 10 coins left or whatever. 91 00:07:24,000 --> 00:07:30,000 And we have 100,000 miners and we're spending a billion dollars a month trying to mine this coin, 92 00:07:30,000 --> 00:07:32,000 which might take us half a year. 93 00:07:32,000 --> 00:07:34,000 What's the value of that coin? 94 00:07:34,000 --> 00:07:37,000 It's got to be in the trillions of dollars. 95 00:07:37,000 --> 00:07:41,000 So if it is, because we know it's going to be mined. 96 00:07:41,000 --> 00:07:43,000 And it's going to have some value. 97 00:07:43,000 --> 00:07:46,000 And if we're spending billions to get it, it has to be worth many times more. 98 00:07:46,000 --> 00:07:50,000 So let's say it's $1 trillion, a very conservative number. 99 00:07:50,000 --> 00:07:52,000 And let's work backwards. 100 00:07:52,000 --> 00:07:56,000 Then $10 million in 2020 is about the right price. 101 00:07:56,000 --> 00:07:57,000 So it could be anyway. 102 00:07:57,000 --> 00:08:01,000 I mean, from what you're saying, if it's equivalent to the investment in the miners in the network... 103 00:08:01,000 --> 00:08:03,000 Well, it has to be, else they wouldn't be mining, would they? 104 00:08:03,000 --> 00:08:05,000 See, this is a business. 105 00:08:05,000 --> 00:08:07,000 This is one of the world's largest miners. 106 00:08:07,000 --> 00:08:08,000 We're not going to mine something. 107 00:08:08,000 --> 00:08:09,000 We're going to lose money. 108 00:08:09,000 --> 00:08:10,000 Of course not. 109 00:08:10,000 --> 00:08:13,000 If we're mining it, it's going to be worth a fortune. 110 00:08:13,000 --> 00:08:17,000 And we're going to have to cooperate with each other because I'm not spending a billion dollars 111 00:08:17,000 --> 00:08:21,000 and everybody else to get my competitor, get the last coin. 112 00:08:21,000 --> 00:08:25,000 No, we're all going to cooperate and go, whoever gets it, we divide it equally. 113 00:08:25,000 --> 00:08:27,000 So John, why did you exit the mining business then? 114 00:08:27,000 --> 00:08:30,000 You mentioned earlier that you exited the mining business a few weeks ago. 115 00:08:30,000 --> 00:08:34,000 If you're so positive about this infrastructure that's being built, why exit? 116 00:08:34,000 --> 00:08:37,000 Because you think that life is all about money? 117 00:08:37,000 --> 00:08:38,000 No. 118 00:08:38,000 --> 00:08:39,000 It's a boring business. 119 00:08:39,000 --> 00:08:42,000 When you exited the mining operation, how big was the mining operation? 120 00:08:42,000 --> 00:08:45,000 About 11,000 S9 machines. 121 00:08:45,000 --> 00:08:46,000 11,000 S9 machines. 122 00:08:46,000 --> 00:08:47,000 11,000 S9 machines. 123 00:08:47,000 --> 00:08:48,000 Yes. 124 00:08:48,000 --> 00:08:49,000 And where were they hosted? 125 00:08:49,000 --> 00:08:50,000 Where were you guys? 126 00:08:50,000 --> 00:08:52,000 I still can't tell you because the company still has that information. 127 00:08:52,000 --> 00:08:55,000 I mean, that would give my competitors a leg up. 128 00:08:55,000 --> 00:08:58,000 And what are you spending your time on today? 129 00:08:58,000 --> 00:09:04,000 Initial coin offerings are the future of this industry and of our world. 130 00:09:04,000 --> 00:09:11,000 And it's from these ICOs that the magical creativity that's going to change your life 131 00:09:11,000 --> 00:09:13,000 and the lives of your children is going to come from. 132 00:09:13,000 --> 00:09:18,000 So we're going to spend some time talking about ICOs because it seems like ICOs are really 133 00:09:18,000 --> 00:09:19,000 back in favor these days. 134 00:09:19,000 --> 00:09:20,000 Yes. 135 00:09:20,000 --> 00:09:23,000 During the little correction that we had a couple of weeks ago, you seem to be keeping 136 00:09:23,000 --> 00:09:26,000 your wits and telling people that it's actually nothing. 137 00:09:26,000 --> 00:09:27,000 It is nothing. 138 00:09:27,000 --> 00:09:28,000 What is the basis for that? 139 00:09:28,000 --> 00:09:29,000 The market went down over 50%? 140 00:09:29,000 --> 00:09:32,000 The basis is the mathematics of this industry, okay? 141 00:09:32,000 --> 00:09:38,000 If you look at it, you know, I buy everything with cryptocurrency, almost everything except 142 00:09:38,000 --> 00:09:40,000 coffee and, you know, a donut. 143 00:09:40,000 --> 00:09:42,000 Because the transaction fees are too high? 144 00:09:42,000 --> 00:09:43,000 Uh-huh. 145 00:09:43,000 --> 00:09:44,000 No, no, no, I buy everything. 146 00:09:44,000 --> 00:09:45,000 But no. 147 00:09:45,000 --> 00:09:48,000 Well, Bitcoin transaction fees, if you have noticed, come way down. 148 00:09:48,000 --> 00:09:51,000 From 30-some dollars to a couple of dollars now. 149 00:09:51,000 --> 00:09:55,000 Ethereum transaction fees are frequently free, depending on which wallet you use. 150 00:09:55,000 --> 00:09:56,000 No. 151 00:09:56,000 --> 00:09:57,000 No, it's not the transaction fees. 152 00:09:57,000 --> 00:10:00,000 It's just the fact that, isn't it easier? 153 00:10:00,000 --> 00:10:05,000 Isn't it easier just to go click, pay for this, than it is to go to the bank or to write 154 00:10:05,000 --> 00:10:06,000 a check or to send a wire? 155 00:10:06,000 --> 00:10:10,000 No, it's a hundred times, a thousand times more simple. 156 00:10:10,000 --> 00:10:15,000 So, if you have something that is that powerful, how are you going to stop it? 157 00:10:15,000 --> 00:10:17,000 How is it going to just die? 158 00:10:17,000 --> 00:10:18,000 It will not. 159 00:10:18,000 --> 00:10:21,000 It's kind of like saying, oh, the automobile is great. 160 00:10:21,000 --> 00:10:22,000 You don't have to feed it. 161 00:10:22,000 --> 00:10:24,000 You don't have to, you know, put a saddle on it. 162 00:10:24,000 --> 00:10:27,000 You don't have, you know, don't have to worry about it getting old. 163 00:10:27,000 --> 00:10:28,000 No, no. 164 00:10:28,000 --> 00:10:34,000 It did not matter what the people who manufactured horse buggies wanted to say or do. 165 00:10:34,000 --> 00:10:35,000 The car was coming. 166 00:10:35,000 --> 00:10:40,000 But what about all these threats or noises that we're getting from the governments? 167 00:10:40,000 --> 00:10:44,000 I mean, the crash a few weeks ago started because of the Indian government issuing statements 168 00:10:44,000 --> 00:10:48,000 and the SEC being a bit less than neutral on cryptocurrencies. 169 00:10:48,000 --> 00:10:49,000 Of course. 170 00:10:49,000 --> 00:10:55,000 But if you keep your wits about you, you will see that there's no possibility of enforcing 171 00:10:55,000 --> 00:10:56,000 any of these things. 172 00:10:56,000 --> 00:10:57,000 None. 173 00:10:57,000 --> 00:11:02,000 I mean, so how can you possibly enforce something that you can't see? 174 00:11:02,000 --> 00:11:06,000 Especially with the anonymous and the privacy points. 175 00:11:06,000 --> 00:11:08,000 No one knows what you say. 176 00:11:08,000 --> 00:11:09,000 No one knows it. 177 00:11:09,000 --> 00:11:10,000 I'm even using it. 178 00:11:10,000 --> 00:11:13,000 I'm going to break into my house and look at every application on my computer. 179 00:11:13,000 --> 00:11:14,000 No, please. 180 00:11:14,000 --> 00:11:15,000 It's not possible. 181 00:11:15,000 --> 00:11:17,000 So the governments lost the fight already? 182 00:11:17,000 --> 00:11:18,000 Is it too late for them to stop? 183 00:11:18,000 --> 00:11:21,000 They lost the fight as soon as Satoshi wrote his paper. 184 00:11:21,000 --> 00:11:23,000 That was the end of the war. 185 00:11:23,000 --> 00:11:30,000 Because the mathematics, I'm a mathematician, the math in that paper is kind of like when Newton 186 00:11:30,000 --> 00:11:37,000 discovered the laws of mechanical immersion and said, oh, I can guarantee you that Mercury 187 00:11:37,000 --> 00:11:39,000 is going to be right here in five years. 188 00:11:39,000 --> 00:11:41,000 What are the big drivers for 2018? 189 00:11:41,000 --> 00:11:45,000 What's going to bring in the next wave of money to drive the crypto market cap? 190 00:11:45,000 --> 00:11:52,000 Distributed exchanges, number one, pure and simple. 191 00:11:52,000 --> 00:11:59,000 And applications with social value, like the one that I talked about, your allowance, okay? 192 00:11:59,000 --> 00:12:03,000 Between parents and the kids, where you get an allowance for doing chores, okay? 193 00:12:03,000 --> 00:12:06,000 The way it stands now, you do them, you usually get your allowance anyway. 194 00:12:06,000 --> 00:12:08,000 You have a smart contract, okay? 195 00:12:08,000 --> 00:12:09,000 Between the child and his parents? 196 00:12:09,000 --> 00:12:10,000 Yes. 197 00:12:10,000 --> 00:12:11,000 You have a smart contract, okay? 198 00:12:11,000 --> 00:12:12,000 Here's the money. 199 00:12:12,000 --> 00:12:14,000 It's already an escrow, okay? 200 00:12:14,000 --> 00:12:15,000 So I mow the front lawn? 201 00:12:15,000 --> 00:12:16,000 That's right. 202 00:12:16,000 --> 00:12:17,000 I mow the front lawn. 203 00:12:17,000 --> 00:12:18,000 I get the money. 204 00:12:18,000 --> 00:12:21,000 But I forget to mow the back, and a father says, hey, it's a smart contract. 205 00:12:21,000 --> 00:12:22,000 What does it say? 206 00:12:22,000 --> 00:12:23,000 Front lawn, back lawn. 207 00:12:23,000 --> 00:12:24,000 Okay? 208 00:12:24,000 --> 00:12:25,000 So you don't get your money. 209 00:12:25,000 --> 00:12:26,000 Mow the back lawn. 210 00:12:26,000 --> 00:12:27,000 It's beautiful. 211 00:12:27,000 --> 00:12:28,000 What does it do? 212 00:12:28,000 --> 00:12:32,000 It brings negotiation between parents and child. 213 00:12:32,000 --> 00:12:34,000 Isn't that better than nothing? 214 00:12:34,000 --> 00:12:36,000 What about the institutional money? 215 00:12:36,000 --> 00:12:39,000 Can we expect the institutional money to start flowing into blockchain? 216 00:12:39,000 --> 00:12:43,000 We've been talking about institutional money for many, many years in the blockchain, and 217 00:12:43,000 --> 00:12:45,000 to date, well, they've been slow to arrive. 218 00:12:45,000 --> 00:12:47,000 Where is the money? 219 00:12:47,000 --> 00:12:53,000 Well, there's not going to be much coming in, because investors invest in companies, 220 00:12:53,000 --> 00:12:54,000 don't they? 221 00:12:54,000 --> 00:12:55,000 No. 222 00:12:55,000 --> 00:12:57,000 What does a company mean in the crypto world? 223 00:12:57,000 --> 00:12:58,000 No. 224 00:12:58,000 --> 00:13:04,000 A company is something you just create in order to start the flow of your tokens, and then 225 00:13:04,000 --> 00:13:05,000 it disappears. 226 00:13:05,000 --> 00:13:06,000 Right? 227 00:13:06,000 --> 00:13:07,000 There's no company left. 228 00:13:07,000 --> 00:13:10,000 So investors go, what am I investing in? 229 00:13:10,000 --> 00:13:15,000 So the only way that investors can invest is to buy the tokens themselves. 230 00:13:15,000 --> 00:13:16,000 Big difference. 231 00:13:16,000 --> 00:13:17,000 And do you think that's going to happen? 232 00:13:17,000 --> 00:13:20,000 And institutions are not going to buy use case tokens? 233 00:13:20,000 --> 00:13:21,000 Pardon? 234 00:13:21,000 --> 00:13:24,000 Are institutions not going to buy utility tokens or use case tokens? 235 00:13:24,000 --> 00:13:25,000 No. 236 00:13:25,000 --> 00:13:30,000 No, because they view this compressed chart as being volatile. 237 00:13:30,000 --> 00:13:31,000 No, it's not volatile. 238 00:13:31,000 --> 00:13:34,000 It's as predictable as General Motors. 239 00:13:34,000 --> 00:13:36,000 It's simply compressed in time. 240 00:13:36,000 --> 00:13:38,000 Will you talk about any ICOs that you're excited about? 241 00:13:38,000 --> 00:13:41,000 I mean, you did mention a few that you are excited about. 242 00:13:41,000 --> 00:13:44,000 And no shilling, just real-world applications of stuff that you see. 243 00:13:44,000 --> 00:13:48,000 I know you're exposed, and there must be stuff that you're really excited about. 244 00:13:48,000 --> 00:13:49,000 Okay, well, here's one. 245 00:13:49,000 --> 00:13:51,000 There's one called Docademic. 246 00:13:51,000 --> 00:13:56,000 D-O-C-A-D-E-M-I-C. 247 00:13:56,000 --> 00:14:03,000 It's a South American company that already has in place millions of users and thousands 248 00:14:03,000 --> 00:14:09,000 of physicians around South America to provide free consultation. 249 00:14:09,000 --> 00:14:11,000 In fact, I did one myself last night just to try it. 250 00:14:11,000 --> 00:14:13,000 I'd never tried it before. 251 00:14:13,000 --> 00:14:15,000 So I was sitting with the developers, and I said, here, here's the app. 252 00:14:15,000 --> 00:14:19,000 I'm going to go on, and sure enough, you know, there's the doctor. 253 00:14:19,000 --> 00:14:21,000 Whoa, where did you come from? 254 00:14:21,000 --> 00:14:24,000 And there's my little picture up in the corner, live. 255 00:14:24,000 --> 00:14:26,000 And for free. 256 00:14:26,000 --> 00:14:28,000 John, you take a lot of flack on Twitter. 257 00:14:28,000 --> 00:14:31,000 Every time I look at your Twitter, no matter what you say, 258 00:14:31,000 --> 00:14:33,000 no matter which coin you pump, people are after you. 259 00:14:33,000 --> 00:14:34,000 Yes. 260 00:14:34,000 --> 00:14:37,000 I mean, that can't feel great when you're reading your Twitter 261 00:14:37,000 --> 00:14:38,000 and you see people after you. 262 00:14:38,000 --> 00:14:39,000 How do you deal with it? 263 00:14:39,000 --> 00:14:44,000 Listen, I learned a long time ago that what people think and say 264 00:14:44,000 --> 00:14:48,000 has no meaning whatsoever in a person's life. 265 00:14:48,000 --> 00:14:50,000 In America, we have a saying, 266 00:14:50,000 --> 00:14:55,000 sticks and stones may break my bones, but words and ideas will never hurt me. 267 00:14:55,000 --> 00:14:57,000 And that is the truth. 268 00:14:57,000 --> 00:15:01,000 Sticks and stones will break your bones, but words won't harm him. 269 00:15:01,000 --> 00:15:02,000 That's John McAfee. 270 00:15:02,000 --> 00:15:06,000 Is 2018 going to be the year where the masses get into Bitcoin? 271 00:15:06,000 --> 00:15:09,000 And I think we can only answer that by answering one simple question. 272 00:15:09,000 --> 00:15:13,000 Is 2018 going to be the year that your mother buys crypto? 273 00:15:13,000 --> 00:15:16,000 Dr. Julian Hosp is the founder and president of Tenex. 274 00:15:16,000 --> 00:15:20,000 Dr. Julian, is 2018 going to be the year when your mother buys into crypto? 275 00:15:20,000 --> 00:15:23,000 Well, I'm not sure if my mother buys into crypto, 276 00:15:23,000 --> 00:15:25,000 but I think a lot of mothers are going to buy into crypto. 277 00:15:25,000 --> 00:15:28,000 I think 2018 is going to have a big mass adoption actually. 278 00:15:28,000 --> 00:15:31,000 What are the barriers for the masses to get into crypto? 279 00:15:31,000 --> 00:15:33,000 Why don't we have the masses in crypto at the moment? 280 00:15:33,000 --> 00:15:38,000 I think a lot of companies are really looking into quite high end 281 00:15:38,000 --> 00:15:41,000 or very kind of deep down things. 282 00:15:41,000 --> 00:15:44,000 They're trying to solve those rather than focusing on very simple things 283 00:15:44,000 --> 00:15:47,000 like with a click of a button, how can you get from fiat into crypto? 284 00:15:47,000 --> 00:15:49,000 Or how do you store your private key? 285 00:15:49,000 --> 00:15:51,000 What are really secure measures? 286 00:15:51,000 --> 00:15:55,000 And I think there's too few companies trying to solve these boring cases, 287 00:15:55,000 --> 00:15:58,000 but these cases will be really, really, really profitable. 288 00:15:58,000 --> 00:16:00,000 And is 2018 going to be the year when this is solved? 289 00:16:00,000 --> 00:16:03,000 When you can actually buy and store tokens with one click? 290 00:16:03,000 --> 00:16:05,000 Move fiat into crypto with one click? 291 00:16:05,000 --> 00:16:08,000 I think so. I think banks are more open now. 292 00:16:08,000 --> 00:16:10,000 I think the regulators are going to be clearer. 293 00:16:10,000 --> 00:16:12,000 I think companies really start offering solutions. 294 00:16:12,000 --> 00:16:14,000 The private key solution is going to get solved. 295 00:16:14,000 --> 00:16:18,000 I think that 2018 is going to be a very powerful year because of that. 296 00:16:18,000 --> 00:16:19,000 And what about scalability? 297 00:16:19,000 --> 00:16:24,000 I mean, we saw CryptoKitties cripple what is the most powerful blockchain in the world today. 298 00:16:24,000 --> 00:16:27,000 The Ethereum blockchain. And that's one application. 299 00:16:27,000 --> 00:16:30,000 What happens with scalability? What can we expect? 300 00:16:30,000 --> 00:16:34,000 So I think we're going to see these second layer solutions on Bitcoin with Lightning Network. 301 00:16:34,000 --> 00:16:39,000 I think Ethereum is going to have some breakthroughs with sharding and, again, second layer solutions. 302 00:16:39,000 --> 00:16:44,000 And I think what it's going to come down to is that blockchains, how they are today, are going to be very stable, very secure. 303 00:16:44,000 --> 00:16:46,000 They're going to provide the infrastructure. 304 00:16:46,000 --> 00:16:50,000 But the actual applications will happen on the next layer. 305 00:16:50,000 --> 00:16:53,000 And I think that's going to be the future. And we'll see this this year. 306 00:16:53,000 --> 00:17:02,000 So something like what's happening with Lightning and Bitcoin, where the Lightning Network is doing applications off-chain and then transacting with the chain once every now and then. 307 00:17:02,000 --> 00:17:04,000 Correct. I mean, we see this with Lightning now. 308 00:17:04,000 --> 00:17:08,000 I think on Lightning at this very moment, we have 600 nodes live. 309 00:17:08,000 --> 00:17:11,000 We have liquidity in the system. There's transactions happening. 310 00:17:11,000 --> 00:17:14,000 It's the start. And it's going to be a hockey stick. 311 00:17:14,000 --> 00:17:17,000 It's going to be nothing, nothing, nothing there. And I think that's what we're going to see there. 312 00:17:17,000 --> 00:17:22,000 And what about crossing over from blockchain to blockchain? Will that not solve the scalability problem? 313 00:17:22,000 --> 00:17:25,000 If one blockchain is full, just transact on another one and the third one. 314 00:17:25,000 --> 00:17:32,000 Definitely. I mean, that's also an area where we at Tenexo are working on with Comet, where we really try to solve how can we have these cross-chain transactions. 315 00:17:32,000 --> 00:17:37,000 Instant, super secure, trustless, meaning you don't have to trust anyone. 316 00:17:37,000 --> 00:17:42,000 There's just some challenges to solve because obviously every blockchain is different. 317 00:17:42,000 --> 00:17:49,000 It's like it's not comparing the dollar to the euro. It's comparing gold to flowers because some currencies are so different. 318 00:17:49,000 --> 00:17:52,000 Right. And I think there's still some hurdles that you have to jump. 319 00:17:52,000 --> 00:18:01,000 But once this gets solved and I also think it's going to get solved this year, that's going to be truly making cryptocurrencies agnostic and very relevant for people to come in. 320 00:18:01,000 --> 00:18:07,000 So we think that if we connect the blockchains, it does make blockchains agnostic and solve the scalability problem. 321 00:18:07,000 --> 00:18:12,000 You mentioned something called Comet, and I think you spelt it C-O-M-I-T. What is Comet? 322 00:18:12,000 --> 00:18:19,000 Basically, it's a cryptographically secure, off-chain, multi-asset, instant transaction network. 323 00:18:19,000 --> 00:18:28,000 So it is nothing else where you can transact between blockchains instantly, really, really secure, and you can do this immediately through the entire network. 324 00:18:28,000 --> 00:18:33,000 And the idea behind it is that you don't need to own all the coins. You just want to control them, actually. 325 00:18:33,000 --> 00:18:38,000 And so as long as you can control any coin with the coin you're holding, it becomes agnostic. 326 00:18:38,000 --> 00:18:44,000 So the worry is not, should I buy Bitcoin, should I buy Ethereum, should I buy Dash? No, it's you buy one and you can control all the others. 327 00:18:44,000 --> 00:18:48,000 So are you comparing blockchains to intranets in this example? 328 00:18:48,000 --> 00:18:53,000 So are you saying that the Bitcoin blockchain will be one blockchain and the Ethereum blockchain will be another blockchain? 329 00:18:53,000 --> 00:18:55,000 How do you connect the two blockchains? 330 00:18:55,000 --> 00:19:02,000 I think it's a really fantastic example. I mean, the intranets in the past, 40 years ago, universities, for example, or corporations, 331 00:19:02,000 --> 00:19:05,000 they had these intranets set up so they can communicate among each other. 332 00:19:05,000 --> 00:19:13,000 But let's say a university wanted to communicate to another one or outsource some power, they had to communicate with each other. 333 00:19:13,000 --> 00:19:18,000 But they didn't necessarily want to trust each other. So they had a TCPIP protocol and that did all the work. 334 00:19:18,000 --> 00:19:27,000 And so with blockchains being these intranets, you could do the same. And that's why we are working on a Comet routing protocol CRP that is exactly doing this communication between blockchains. 335 00:19:27,000 --> 00:19:33,000 So Comet is going to serve as a TCP IP layer between blockchains. How will it work? 336 00:19:33,000 --> 00:19:42,000 The idea behind it is, first of all, it should be open source. We're running it under the MIT license, which allows for usage but doesn't allow to commercialize it. 337 00:19:42,000 --> 00:19:49,000 I think that's the first really important start. And the other thing is it has to define rules that most of the blockchains have today. 338 00:19:49,000 --> 00:19:55,000 And so actually there's three rules. One is multi-signature, which just means there's several people who have to sign a transaction. 339 00:19:55,000 --> 00:20:02,000 The second one is a hashing functionality, which means you can only do something if I give you a secret and then you can actually execute something. 340 00:20:02,000 --> 00:20:09,000 And the last one is a so-called time lock, which means if I go offline, you just have to wait a certain amount of time until you get your funds out. 341 00:20:09,000 --> 00:20:15,000 So let's use a practical example. Say that I've got Bitcoin and you've got Ethereum and I want Ethereum and you want Bitcoin. 342 00:20:15,000 --> 00:20:17,000 Practically, how would we transact using Comet? 343 00:20:17,000 --> 00:20:21,000 So let's say I would have Bitcoin here in my left hand and you have Ethereum here in the right hand. 344 00:20:21,000 --> 00:20:29,000 And so we have a multi-signature account this way. And then if I reveal a secret, you automatically get my Bitcoin, but then I automatically get your Ethereum. 345 00:20:29,000 --> 00:20:37,000 And let's say we go offline or you go offline, then I just wait a certain time, let's say 24 hours, and then I automatically get my Bitcoin back and you get your Ethereum back. 346 00:20:37,000 --> 00:20:39,000 So we wouldn't have to trust anyone. 347 00:20:39,000 --> 00:20:41,000 So it's totally secure. What do you need the time lapse for? 348 00:20:41,000 --> 00:20:43,000 You mean the time lock? 349 00:20:43,000 --> 00:20:44,000 Yeah, the time lock. 350 00:20:44,000 --> 00:20:47,000 So imagine the other person goes offline. So let's say you go offline. 351 00:20:47,000 --> 00:20:52,000 Then my Bitcoin would be stuck in there because I need your secret to actually get my money back out. 352 00:20:52,000 --> 00:20:54,000 But if you go offline, I never get your secret. 353 00:20:54,000 --> 00:21:01,000 So for me to not have my money stuck in there, it's a predetermined time, 24 hours, and then I automatically get my money out. 354 00:21:01,000 --> 00:21:05,000 Now, is this an idea or is this something that you're actually implementing today? 355 00:21:05,000 --> 00:21:12,000 No, so we're working actually on the testnet. I mean, the reason it's still in the testnet is because there's always something new. 356 00:21:12,000 --> 00:21:19,000 So there's always some kind of things you have to test or fine tune. And so we're not ready yet to release it to the public because it's, again, it's not finalized. 357 00:21:19,000 --> 00:21:26,000 But it's really being worked on. And this year, we're definitely going to have libraries out for developers to actively work on themselves. 358 00:21:26,000 --> 00:21:35,000 Now, if I understand it correctly, 10x is a crypto debit card company. Why is it in 10x's interest to create this comet? 359 00:21:35,000 --> 00:21:44,000 So we envisioned the future is without debit cards. So we envisioned and said, OK, if we don't have debit cards, will everyone agree on one blockchain, one cryptocurrency? 360 00:21:44,000 --> 00:21:50,000 Or will there be a lot that have to interact? And so we realized or this is our vision that we will never agree on the same cryptocurrency. 361 00:21:50,000 --> 00:21:54,000 It will all be different ones. So how are these cryptocurrencies connected? 362 00:21:54,000 --> 00:22:00,000 Today, Visa, for example, or MasterCard do this with their infrastructure. And that's why they are so valuable. 363 00:22:00,000 --> 00:22:05,000 So we believe if we build this infrastructure, that's what's going to be really, really bringing a lot of value to 10x. 364 00:22:05,000 --> 00:22:14,000 So what is the future of Visa and MasterCard? Everyone's been talking about the fact that they've become very scared of cryptocurrencies and cryptocurrency debit cards. 365 00:22:14,000 --> 00:22:16,000 What's the future for Visa and MasterCard? 366 00:22:16,000 --> 00:22:23,000 I'm not sure if scared. I think they have respect. I think a lot of these large companies, banks, credit cards and companies and so on, 367 00:22:23,000 --> 00:22:29,000 they know what's happening. And I think they're trying to figure out their place, where they should be. 368 00:22:29,000 --> 00:22:35,000 And I think their place is going to be somewhere in the mix between the old traditional world and the new virtual world. 369 00:22:35,000 --> 00:22:41,000 I don't think that everything in the future is going to be decentralized just because it's so clunky for people to access it. 370 00:22:41,000 --> 00:22:47,000 So these companies will actually have a very good place if they find that middle between decentralization and centralization. 371 00:22:47,000 --> 00:22:51,000 Watch out Visa and MasterCard. It sounds like 10x is coming for you. 372 00:22:51,000 --> 00:22:57,000 There used to be a time when the stock markets used to crash. People used to flock to gold as a safe haven. 373 00:22:57,000 --> 00:23:02,000 A few weeks ago, the Dow Jones crashed. And people, well, they didn't flock to gold. 374 00:23:02,000 --> 00:23:09,000 Are they going to flock to Bitcoin one day? Valentin, can we expect a flock to Bitcoin one day when the markets go down? 375 00:23:09,000 --> 00:23:13,000 Is Bitcoin going to become the new digital gold? 376 00:23:13,000 --> 00:23:24,000 Actually, I think Bitcoin is already a type of digital gold. It's just that people, they get ahead of themselves when they think about what kind of status and what kind of market dynamics is going to happen when. 377 00:23:24,000 --> 00:23:30,000 So for example, Bitcoin already had a crash before the stock market crash in December. 378 00:23:30,000 --> 00:23:36,000 But then when the stock market crashed, 10% in a week, which is significant, Bitcoin actually went up. 379 00:23:36,000 --> 00:23:39,000 So I think the assets are still relatively uncorrelated. 380 00:23:39,000 --> 00:23:49,000 But as always, and that counts for gold too, if you have a massive deflation in credit, credit money, bank money, which is being used to buy other assets, 381 00:23:49,000 --> 00:23:59,000 then at least there's no new money coming into crypto. For example, the play was the hot money, the retail, they pushed the price up to 20K. 382 00:23:59,000 --> 00:24:05,000 They got burned because they went and borrowed against their houses and their businesses, put it into Bitconnect. 383 00:24:05,000 --> 00:24:12,000 They're not coming back so soon. The game was the institutions were going to come in and say, hey, let's put in 5% of our portfolio into Bitcoin. 384 00:24:12,000 --> 00:24:17,000 You know, we don't really understand it, but let's put in a little bit because we're missing out. 385 00:24:17,000 --> 00:24:23,000 Now the market's down 50%, first of all, the Bitcoin market, they're like, well, maybe we should wait a little bit. 386 00:24:23,000 --> 00:24:29,000 And now the stock market is down 10%. They're like, okay, wait a second, we have to de-risk anyway. 387 00:24:29,000 --> 00:24:32,000 Maybe let's shelf the crypto project for another year or two. 388 00:24:32,000 --> 00:24:43,000 So if the central banks keep the deflationary course, if interest rates keep rising, in absolute terms, you're not going to see new highs in crypto until 2020. 389 00:24:43,000 --> 00:24:51,000 So you really think that a deflation in the stock market is going to have an effect and maybe even a downward effect on the Bitcoin market? 390 00:24:51,000 --> 00:24:54,000 Because what you're saying is new money went into the market. 391 00:24:54,000 --> 00:25:00,000 That's it. That's it. Basically the symptoms are that the stock market is just a symptom of credit contracting. 392 00:25:00,000 --> 00:25:05,000 And you still have to understand when you look at Bitcoin and fiat terms, that's what you're using. 393 00:25:05,000 --> 00:25:11,000 If you transfer money from your bank to your exchange and buy Bitcoin, it's credit money that you're using. 394 00:25:11,000 --> 00:25:14,000 That's the money that institutions would be using. 395 00:25:14,000 --> 00:25:19,000 But if their accounts in the stock market, maybe, you know, they're losing on bonds too. 396 00:25:19,000 --> 00:25:26,000 If they are being drawn down, they don't just add that much money and they don't have the risk appetite to move into crypto. 397 00:25:26,000 --> 00:25:31,000 What's going to be like the next sleuth gate that opens and brings in a whole lot of new money? 398 00:25:31,000 --> 00:25:33,000 OK, so here's the other scenario. 399 00:25:33,000 --> 00:25:43,000 So now we have the deflationary forces, you know, the Fed is tightening, treasury rates are rising, stuff, you know, companies, some of them are defaulting. 400 00:25:43,000 --> 00:25:52,000 You have the crash in crypto. But let's assume the Fed says, you know, in a month or so, oh, the Dow Jones is down 30% now in 2018. 401 00:25:52,000 --> 00:25:57,000 That's too much. And we're going to start printing money again like in 2008, right? 402 00:25:57,000 --> 00:26:08,000 Then you can see Bitcoin at 20, 40, 50K at the end of the year, because that's going to reboot the credit cycle, flush, you know, worthless fiat money into the system. 403 00:26:08,000 --> 00:26:13,000 And then the people are going to start looking again. Oh, now I've got all this new money. Where do I put it? 404 00:26:13,000 --> 00:26:17,000 Actually, you know, stock market is kind of expensive. Yeah, let's put some of it in Bitcoin. 405 00:26:17,000 --> 00:26:25,000 Bitcoin and crypto has become a bona fide investment class. And if that's the case, that means that it has to react when other markets react. 406 00:26:25,000 --> 00:26:32,000 So you're saying the Dow goes down, maybe Bitcoin will go down, maybe Bitcoin will go up. If the Fed prints more money, Bitcoin will definitely go up. 407 00:26:32,000 --> 00:26:33,000 Bitcoin will go up. 408 00:26:33,000 --> 00:26:42,000 Definitely go up. We're not quite there yet. You see, the game plan was for the institutions, family offices, some investment funds to move in big in the first quarter. 409 00:26:42,000 --> 00:26:49,000 But two things happened. A, we had the crypto crash and B, we had the stock market crash. So they've shelved those plans. 410 00:26:49,000 --> 00:26:55,000 But again, if the central banks become soft again, they start printing money again, those plans are going to come back out of the drawer. 411 00:26:55,000 --> 00:27:02,000 They're going to be like, OK, so we had all the calculations ready. You know, we are, you know, financial system is stabilized. 412 00:27:02,000 --> 00:27:11,000 Now we're going to move into Bitcoin. And because the total market cap is so small relative to everything else, you've got 25 trillion in stocks in the US alone. 413 00:27:11,000 --> 00:27:18,000 Surely fund managers today are looking around and saying, look, we've got no returns in gold. There's no returns in oil. 414 00:27:18,000 --> 00:27:25,000 The markets are, well, pretty flat and not really giving returns. There is one place out there where you can go and get returns. 415 00:27:25,000 --> 00:27:30,000 And today that place is crypto. Surely this is what's going through a fund manager's head today? 416 00:27:30,000 --> 00:27:37,000 Absolutely. Again, you know, on a relative value basis, crypto is undervalued. I mean, look, every project is different. 417 00:27:37,000 --> 00:27:41,000 But let's look at the whole market. It's undervalued relative to other asset markets. 418 00:27:41,000 --> 00:27:50,000 However, it also has a higher volatility and higher risk. So the fund managers are only going to take that risk if the general conditions are good. 419 00:27:50,000 --> 00:28:04,000 And right now they're tipping from good to more unstable. So as long as we are in a risky environment, stocks, bonds, you name it, then the fund managers are going to be like, well, let's wait with the super risky stuff. 420 00:28:04,000 --> 00:28:14,000 But if we flip back to straight money printing and everything's great scenario, then they're going to be like, yeah, let's buy that, you know, hard crypto stuff. 421 00:28:14,000 --> 00:28:18,000 We can make a hundred percent in a year and let's move in there. 422 00:28:18,000 --> 00:28:21,000 Crypto is indeed the only place they can make a hundred percent in a year. 423 00:28:21,000 --> 00:28:27,000 And that's a wrap. Another week, another conference and another plane to catch to get back home. 424 00:28:27,000 --> 00:28:32,000 I'm glad we finally managed to get Mr. John McAfee himself into the hot seat. 425 00:28:32,000 --> 00:28:37,000 And you know what that means? It means that there are only three big names left in crypto that we haven't had on our show. 426 00:28:37,000 --> 00:28:43,000 We haven't had Vitalik. We haven't had Thier Demiester. And we still don't know who Satoshi is. 427 00:28:43,000 --> 00:28:47,000 Next week, I'll be back in Johannesburg at our CNBC studios. 428 00:28:47,000 --> 00:28:51,000 Until then, my friends, trade well. 429 00:28:51,000 --> 00:28:53,000 Crypto Trader is proudly...