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Security Token Meetup Miami January 18, 2018



Lou Kerner:

Hey, I'm Lou Kerner and we're here at BTC Miami which is one of the largest conferences in the United States. For today, this is definitely the center of the Crypto universe, so it's great to be here. And also Miami's an epic city in terms of the history of Crypto because the coming out party of the Ethereum was here a few years back. We're here tonight at Bagatelle's, an awesome restaurant in South Beach and we're throwing a meet up. It's a security token meet up, so were getting some experts on that space. We're gonna talk about security tokens and I think we're gonna have a pretty great time so why don't you come in?

Jeff Pulver:

If you are a consumer and you're not investing in either Ethereum or Bitcoin or some other well traded, high volume security, you're an idiot. However, if you're a risk taker and you actually like to invest in things which you know absolutely nothing about try alternative coins. If you're an insider and you're trading with security tokens you go to jail.

That said, if you are going to invest in the stock market on something you're passionate about, what you think you have an edge on somebody else, you might. But in the area of Crypto, I look at Crypto as Gotham City. I happen to be friends with Batman. But once you get into Gotham City it's really hard to get out. So if you're gonna come in with your Ethereum, with your Bitcoin, you decide to go into some alternative exchange and buy some Crypto, yeah good luck selling it. Good luck having liquidity. Good luck actually finding someone who doesn't rip you off on commissions, not only purchasing but getting the hell out of Gotham. So you're stuck. So welcome to Gotham City. I'm Jeff Pulver, I'm the new mayor.

Jay Kolbe:

I've been doing technology PR for 20 years. We see lots of waves of exuberance. When I first started in the dot com era, and more recently the Ad Tech explosion, everything jumps forward really fast and we get ahead of ourselves and we get caught up in talking about new, new, new, new, new. Things get ahead of themselves and eventually they settle in a little bit. I think Crypto's seen a lot of the new, new, new. Excitement has jumped forward, it's gonna settle but then it's gonna jump again. Just like both of those did. It just has to find its footing. It never looks quite like you think its gonna look in the end. At least not after the first stage, the early innings.

Matt Lindenberger:

I've seen a lot of waves in technology, all the way back from software as a service when it was new in, call it 2002, to the advent of mobile. We actually pivoted our entire business towards mobile in 2007. Now we see what's happening with the Crypto currency space and specifically around block chain technology and distributed ledger technology. We feel it's a very, very exciting time, similar to how the internet boom happened. This is ripe to change the world in many, many ways and we're excited to be a part of it and continue to ride that wave.

Carlos Domingo:

Crypto currency is basically digital money and it allows you to digitize money, in a decentralized way and replace the traditional [inaudible 00:03:00] money. I see it's basically a company that issues a token that either represents some utility on the platform or represents some economic interest. If it's security token in a project that you can actually buy and provide liquidity to the investors [inaudible 00:03:17] equity investment [inaudible 00:03:18].

Masha Belinson:

A really great analogy that I heard about crypto currency is that it's not money. It's the internet of money. Right? So if we think about what that means, it's the ability to exchange something. An ICO is a token, it's an exchange for something else that's being delivered. Whether it's a service token, and that's delivered in different ways. An ICO, an initial currency offering, is going to have behind it, the purpose of it, is to raise money to fund that initiative.

Matt Lindenberger:

The difference between an ICO and a Crypto currency can be summarized in a couple of key elements. Number one, and ICO is a mechanism by which tokens are generated on top of an existing block chain and those tokens are issued to wallets that then hold those tokens. Those tokens exist on top of an existing block chain. They're not a block chain in and of themselves. There are many platforms you can do ICOs on. You can do an ICO on Ethereum, you can do an ICO on Neo, you can do an ICO on Stellar, you can do an ICO on multiple different platforms. Ethereum is obviously the most popular today in the format of an ERC20 token.

That's very different from a Crypto currency in which there are a series of distributed nodes all over the world running, what's called, a full node, or running the entire stack of the technology with the entirety of the whole chain. What those full nodes are doing are mining the transactions. Mining is a fancy way of basically saying they're organizing and making sure there's no fraud within the system. So those nodes run all over the world. When you launch a new Crypto currency you're setting up those nodes.

The first transactions that are created are called the Genesis block. It's a fancy name for saying "the start of the chain". That chain basically then continues on forever. So the bitcoin chain starting back in 2008, Ethereum chain starting, in I believe it's 2012ish-2013. So those chains continue on over time and the value that's exchanged inside of those crypto currencies happens through those full nodes that are running inside the system.

It's very different than an ICO. Now an ICO is great for raising funds. Its also great for doing multiple different types of tokens. So you can do utility tokens, you can also do security tokens.

Chris Rawlings:

The difference between investing in a traditional ICO with a utility token versus investing in a security token offering is that with a utility token you're basically betting on a future global economy that doesn't yet exist. It's like somebody's vision. They wrote it down in a white paper: "In the future all logistics payments will be done via Logicoin". And so you're betting on that future based on reading that white paper, that that Logicoin will have value some time in the future. A bunch of other people are betting on that too, which gives it immediate value. That future may or may not come to be realized.

When it comes to a security token offering, that is actually backed by a real security.

Moshe Joshua:

In ICO terms you have the ability to track and see the fundamental valuation that you're willing to provide and grant the company. Whether that means because you believe in the management, whether it's because of the product or the industry. You have some anchor in which to base your investment beliefs on. From a crypto currency perspective the currency itself doesn't necessarily have any intrinsic value on its own, other than what it is relatively valued as it relates to other currencies.

Ami Ben-David:

When I think about the success of an ICO, especially when we're dealing with tokenizing of securities, we're talking about real value to token holders. We're talking about people holding securities. So they're holding an equity in a company, they're holding a debt, they're entitled to dividends. It's all about really long term and medium term and short term. It's not just about making quick bucks like it is in some ICOs. This whole market is maturing. I think that the whole market is gonna move from quick opportunities to make a buck, to really serious companies. That's what we're doing with our company, with our portfolio company Securitize. We're now launching half a billion dollars of security token ICOs and all of them are real businesses, real technologies, real funds that actually give value to users.

Chris Rawlings:

If you're investing in a security token offering that is completely SCC compliant, and also compliant with all jurisdictions where it sells, then you don't have to worry down the road about all of a sudden you have this big portfolio of Crypto currency that's now considered legally securities. Which comes with all kinds of laws about trading, about issuing, about total number of investors that can hold securities. We just went through this whole process and learned a ton.

Igor Denisov:

When I think of what makes a good ICO to contribute to, I think the thinking is shifting. It used to be just hype. Now I think what's coming out is, it's the right team and it's the right advisors. It's really those two factors that I think are really most important.

Jay Kolbe:

Some people will make comparisons to earlier exuberance in technology.com, Ad Tech [inaudible 00:08:58], those expansions. This is gonna have elements of that as well. But what those guys didn't have that Crypto has is they can learn from how that technology exploded, and then settled a bit, and then exploded again. That history should be beneficial to this group of entrepreneurs and this next wave of tech entrepreneurs.

Igor Denisov:

We've seen this evolution over the last couple of months where we're not diverging away from the VC model as many people have said ICOs have. We're actually kind of converging on this paradigm where you do a private sale before the network is launched to private investors so that you're not breaking securities' law by effectively issuing a security in a presale to not accredited investors.

The follow on I think [inaudible 00:09:54] is gonna be one of the companies that does it where, instead of a public sale, we did an air drop. We did an air drop because we believe that creating a community of 40,000 people, we have one of the biggest Telegram groups out there, we topped it out at 50,000 max users. We're distributing some of our tokens to these 40,000 people. We're running through a KYCMO process to make sure that they are real and that we're not breaking any laws by giving value to somebody who shouldn't be getting it.

Fundamentally for us the creation of a community is much, much more important than trying to just get extra capitol because what we risk in that case is a bunch of whales picking up the public sale and then we don't have distribution and then we're getting traded in the open market without really any control.

Masha Belinson:

The potential of Telegram is huge. My feeling with Telegram is like with everything else. This is mind blowing. It's beyond. What's happening is really like the fourth revolution, which is the data revolution that we've all seen. But we didn't quite know how it was gonna happen and it's happening.

Alon Goren:

It's really exciting to see established companies doing really, really innovative things and getting into a space that's just getting more and more legitimate every single day with these kinds of transaction.

James Haft:

The Crypto community is amazing. It's young, energetic, intelligent, driven and looking for change. It's as much a representation of a political and social movement as it is economic. It's people that wanna change the world and make it work the way that technology can help us and interpersonal relationships where can take us. It's really energizing to be in a place like Miami, at this Bitcoin conference and see the thousands of people who are focused on creating a better world and finding a way to create an economy that can support the population.