Tyler Suiters
Hey everybody. For the Consumer Technology Association, I'm Tyler Suiters. We are the owners and the producers of CES, the largest, the most influential tech event in the world. We are here to help you get CES Ready. The big show is January 7th through the 10th as always in Las Vegas. Today we are addressing the topic of cryptocurrency. Now CES is where you will find the latest in blockchain technology and how it's being incorporated into business solutions and this is a technology that means greater security for a panoply of plays here from think of food safety and the supply chain all the way to payment processing and data sharing. Multiple valuable uses.
Tyler Suiters
And today two different points of view on the crypto sector. First of all we're talking to one of CNN Business' digital correspondents—someone who writes daily about the markets and the blue chip companies and is on CNNI's business programs regularly and has a real focus on digital currency, especially where we've been in the last year and where we may be heading over the next five years or so. Also a conversation with cryptocurrency startup Zocial. Their co-founder is a Silicon Valley microprocessing veteran, also a holder of multiple patents. What in the world is he doing in the crypto sector? And why is he so optimistic? All of that is coming up on today's edition of CES Tech Talk.
Tyler Suiters
With us now from New York is Paul LaMonica, a digital correspondent for CNN Business. You have probably read his content whether you realize it or not. Paul, glad you're with us today. Thank you.
Paul LaMonica
Thank you very much for having me.
Tyler Suiters
You have been neck deep in this topic for a number of years now. Chart its path since you've been keeping a close eye on cryptocurrency and the larger digital money space.
Paul LaMonica
Yeah, I think Bitcoin is obviously first and foremost I think the main crypto that people follow, and it's really been fascinating to watch what has happened to Bitcoin prices in the past couple of years when we got close to $20,000 at the end of 2017 and then came crashing back down to earth last year. But it's had a nice rebound even though it's remained pretty volatile this year. And I think that you're starting to get this sense that Bitcoin may still not ever be a true form of payment that many of the evangelists want it to be. I think it's kind of like a crypto, it's a currency on steroids. It's something that I think a lot of people just love to trade like a stock because let's be honest here, cryptocurrencies move in a much more dramatic fashion than old fashion paper currencies issued by the governments and central banks. You have the dollar, the yen, the euro.
Tyler Suiters
Yeah, yeah. For better or worse, that goes both ways, certainly. To your point, if it's not a viable currency just yet, or if crypto isn't a viable currency writ large, is it then a viable commodity? A viable investment?
Paul LaMonica
Yeah, exactly. I think that it could be something that is better suited for commodity investors and people that really have a very high tolerance for risk. You look at how it has surged back this year. It's now trading at about, 7,500 or so. And that's sharply higher than where it ended 2018 but it's well off the highs from earlier this year as well when we got close to over 12,000 again. It's something that moves extremely dramatically. Obviously it's very headline driven. I think, some of the skepticism about Facebook and Libra lately has maybe hurt Bitcoin even though in prior months maybe the introduction of Libra really helped Bitcoin because I think it in many investors' minds that legitimized or help make Bitcoin and cryptocurrencies writ large, a real thing. And if Facebook is willing to make this big bet with Libra on cryptocurrencies, it's harder to ignore the growing trend of cryptocurrencies as a store of value, if not necessarily an acceptable, mass market, digital payment.
Tyler Suiters
Last month in one of your pieces, Paul, I saw this great tension point within there where you're talking to an industry analyst who says, "Well, just by nature, less and less Bitcoin is mined year over year. And so the inherent value will grow." There's less of a commodity year after year to some degree. I know that's scalable, won't get into the math, but there's the quote and your very next line, and I'll paraphrase here, is something like, of course this is ridiculously volatile and who knows what will happen next year, much less next week.
Paul LaMonica
Yeah, exactly. To go further, I think I what I said after that was, it's not necessarily though the Wild West anymore because this is something that has validity because of things like Facebook and Libra as well as futures trading on the Chicago Mercantile Exchange.
Tyler Suiters
Sure. The broader landscape.
Paul LaMonica
Yeah. Big brokers have embraced it as well with futures trading for the likes of Schwab and E-Trade and TD Ameritrade was in the process getting bought by Schwab. But I think, yeah, really when you look at how there is that aspect of Bitcoin mining that it is something that I think savvy investors do need to realize that unlike a paper currency that you have the Fed, the ECB, the Bank of Japan, et cetera, turning on the proverbial printing presses, because of Bitcoin mining and the way that it's hard coded into blockchain software, that there are only a certain amount of Bitcoins that will be mined and the number that gets produced every couple of years is cut in half. It does wind up creating a bit of a supply shock that some people have said is similar to when you have oil supply shock. That can artificially boost prices and that may be something that we're already seeing this year in anticipation of that sort of quadrennial event and could happen, it could extend into next year.
Tyler Suiters
You've mentioned more than once already Paul, Libra. The Facebook announcement earlier this year. I think it's generally well understood in this space what Facebook is doing in cryptocurrency. How about the why? What's your take on why a global giant in the tech space like this wants to be in crypto right now?
Paul LaMonica
Yeah, I think Facebook is obviously very savvy and recognizes that it has billions of users on not just the Facebook platform but on Instagram and WhatsApp as well. And that digital commerce is a potential way for Facebook to generate even more revenue, make it maybe less dependent on advertising and having a viable digital currency that it can have it be pegged more to the dollar and not be as subject to the volatility that Bitcoin and ether and Litecoin and other cryptocurrencies have those pretty wild, dramatic swings that this could be good for Facebook and just add a revenue stream for them that they might need. But of course the big question is going to be, how will, not just consumers, but regulators view any Libra efforts from Facebook? Obviously we've already had a lot of skepticism. It's not exactly a huge surprise or secret that Facebook has run into a lot of regulatory headaches and bad PR over the past couple of years.
Tyler Suiters
Yeah, that's exactly where I was heading Paul. We're here in Washington DC and policy is often first and foremost in conversation. Although cryptocurrency in the digital side of things where we're under some scrutiny and there was a level of recognition among policymakers here, Congress really didn't sink his teeth into it until the Facebook announcement. How does that play out across all the players in this space? Because it seems like everybody will have to abide by whatever and if Congress takes action, regulation is put into place.
Paul LaMonica
Yeah, I think that clearly as we've seen with not just concerns about regulation for cryptocurrencies, but regulations for tech writ large, we are in an environment right now where the Silicon Valley firms and the big companies up in the state of Washington, Amazon and Microsoft, obviously they're not as beloved by regulators and politicians the way they might've been in the past. Even though a lot of these companies are still applauded for being innovators and creators of jobs. I think big tech has in some respects, almost replaced the big financial firms after 2008 as a pretty easy sort of target and a whipping post. All of the skepticism about Facebook and what we've seen also with Amazon and Google and Apple, I don't think that's going to end anytime soon and it seems pretty bi-partisan obviously.
Paul LaMonica
There are a lot of Democratic leaders like Elizabeth Warren, who's been pretty outspoken, but we all know that President Trump has a bit of an ax to grind against some of the big tech companies as well. We know how much he disliked Amazon because he complained to Amazon with Jeff Bezos owning the Washington Post. But I really think that the big tech companies are going to face more regulation in all of their businesses and that's going to include Bitcoin and any other cryptocurrency moves that they make, like Facebook is doing with Libra.
Tyler Suiters
Looking across the entire crypto landscape for a moment Paul, you have the benefit as a journalist to talking to the smartest people in the room or outside the room. I don't want to put guard rails around it, but in this space, what are you gleaning from them as you peer around the corner to the next say five years in the crypto and digital space?
Paul LaMonica
Yeah, that's a great question. I do think that you are going to see people probably finally start to use crypto a little bit more than they have maybe a as a form of payment and not necessarily just as an investment. I don't think again that you're ever going to get to a point where people are going to necessarily feel comfortable buying a loaf of bread at the local grocery store using fractions of Bitcoin or pay for their Netflix subscription every month with Bitcoin for example. But I do think that you might have more companies that are going to adopt Bitcoin or other cryptocurrencies as a viable form of payment.
Paul LaMonica
That's something that you've seen some retailers, Overstock has made some pretty big efforts in that area and there are other retailers as well that I think may follow suit both online and offline. I think that is the trend probably. It's going to be worth watching that it's going to slowly become a bigger part of actual commerce and digital payments and not necessarily just this trading asset that we've talked about, but I think by and large it's still going to be something that's more of a play thing for sophisticated traders and not ever going to replace paper Fiat currency.
Tyler Suiters
Is there Paul, any kind of trend you can identify that gives you insight into who the big players will be then? Who's going to emerge from this pack in the next five, 10 years?
Paul LaMonica
Yeah, I think that obviously you can't ignore Facebook because it has made this big move with Libra even though it's been pretty controversial. I'm sort of surprised that you haven't seen as much on the crypto front from the likes of Amazon who would seemingly be an obvious contender to want to do more in digital currencies just because of the fact that they are obviously the largest eCommerce firm and that they are expanding aggressively into other aspects of retail as well with their own physical stores and owning Whole Foods. I think that Amazon is a company that you'd have to watch and then obviously Google as well because with that Alphabet structure, they have the flexibility to be more experimental and really invest in things that may not pay off for a long period of time, but they have that willingness to make those sort of moonshot bets. And I think that that will just continue in the years ahead.
Tyler Suiters
Sounds like you're summing it up by saying look to the FAANG.
Paul LaMonica
Yeah. Obviously not Netflix. I don't think they're, obviously, but no, we all love to talk about the FAANG stocks because of them being sort of the big momentum plays, but I think at the end of the day it really is your Facebook, Amazon, Microsoft, Apple and Alphabet that are the main companies that are dominating tech right now. I Netflix gets thrown into that group as a momentum play but they are a much more somewhat simple story to understand because they really are mainly about streaming media. They don't seem to have aspirations to be becoming a major cloud company or a retail giant the way that some of these other companies have done obviously.
Tyler Suiters
We'll look to your upcoming stories to propose some alternate acronyms for us as we refer to the giants. Paul LaMonica, digital correspondent with CNN Business. Hey, a blast Paul. Thanks so much for the insight. We appreciate it.
Paul LaMonica
Thanks for having me. I appreciate you having me on.
Tyler Suiters
Joining us today from Silicon Valley is the CEO and co-founder of Zocial, Rick Bleszynski and Rick it's good to have you with us today.
Rick Bleszynski
Good to be with you as well.
Tyler Suiters
You are no stranger to the startup realm. You're a Silicon Valley veteran to say the least. Let's start by talking about exactly what Zocial is, what your company is and its place in the ecosystem right now. Sort of your overall vision for what this company is.
Rick Bleszynski
Okay, so at the high level, Zocial is working on transforming the internet, which is one of the greatest inventions of all time, into the new global network of trust. And that is at the very high level of our vision. Again, the internet is one of the greatest invention of all time. However, it is far from perfect and there is lots of room for improvement such as privacies and validations, security, performance, et cetera. Especially around the social network. What is this global network of trust? Who do we trust? Data privacy and trust among the many large companies are diminishing in the past several years. There are several technologies that are shaping the internet and one of them is blockchain. With blockchain, the trust actually transfers from the intermediary entity institution's middleman, to mathematics and cryptography. We are not eliminating the intermediary, but in order to survive they will adapt to the new technology. And most of them or some of them are adapting to the new technologies.
Tyler Suiters
When you get into issues of privacy and especially security, Rick, that's really where blockchain has its sweet spot. The real value delivery of blockchain would you say is pinned to security?
Rick Bleszynski
That is correct. And also, there is quite a few features and functionalities that blockchain's addresses. We can get into some of the more attractive one with respect to zero knowledge proof and so forth that you don't really have to show so much of your privacy to be able to achieve something. It's a very, very good technology.
Tyler Suiters
Let's talk about the application software that Zocial creates as dealing with social communities and enterprises. In your company's words augmented by permissioned blockchain. If you would delve into that a bit, Rick, and talk about the practical applications there and also some of the challenges of the internet as we know it now that this addresses.
Rick Bleszynski
Yeah, so Zocial again, as the name applies to, it comes from zen social, which is calm and peaceful social media. The applications that we are building on top of blockchain, it comprises of three different area. One of them is social media and then we combine social media with a mobile commerce, eCommerce and financial services in particular in the FinTech services area. This is a social media commerce, payment, FinTech services in one app. It's a super app that we are currently working on with a huge customer, actually a community based in Asia right now.
Tyler Suiters
Is there a particular geography that this seems most apt for? Or where this is offering the most market application or perhaps the best market application where it's needed most? You mentioned Asia Rick, that certainly comes to mind, but is it possible to geotarget this to some degree?
Rick Bleszynski
Well the interesting part of this type off application is that you really want to include all level of society. If you look at Asia right now, specifically in Southeast Asia, I compare Southeast Asia similar to what China was 10 years ago. If you look at China right now, the number of middle class out of China, it's just mind-boggling and especially in the last five to 10 years. And this is where Southeast Asia is right now. Recent research from Google and Dematex, throw a number that the Southeast Asia internet economy is to grow to 240 billion by 2025 up from 72 billion just last year.
Tyler Suiters
And that's US dollars.
Rick Bleszynski
That is US dollars. That's correct. And in particular to include all level of society, there are a lot of people out there that are under-served, under-thanked, even unthanked but they are yet digital savvy. They have a smartphone, mobile phone, smart devices. And in particular what's very important about this region is the median age. The median age is under 30 years old and they picked up digital, in a much faster than other regions.
Tyler Suiters
Taking that somewhat unique marketplace, Rick, then how are you driving a market strategy? Or what's your value proposition for that particular group if that's the growth area you see?
Rick Bleszynski
Okay, so one of the biggest value props is that we are, we have engaged with the largest social community, and I believe it could be in the world. This community specifically, it consists of more than 91 million members. It was founded about a 100 years ago. And within that 91 million members, they have sub-organizations and sub-divisions of this community. And one of the divisions is called the business owners and third partner's division. Within the business owners itself, there are approximately about three million business owners. And that is our biggest value proposition right now, is that we are working with this huge community, even most countries in the world, they don't have 91 million people. And that alone, supplying, providing them with the best of the best and the latest technology, and I mentioned before the three million business owners and majority of those business owners are the micro, small, medium businesses. And this is the key to growing a country or a region or a global economy, is you need to increase the level of human capital, especially at the micro and small businesses. And that's where we are targeting right now.
Tyler Suiters
Your background is fascinating Rick. Because I mentioned a long time Silicon Valley insider, within the tech sector. Your background is in the processor world, in the networking silicon, the systems area. How are you applying that rich experience in and what was a constantly evolving milieu, into this blockchain sector and the value proposition that you're offering there at Zocial?
Rick Bleszynski
Okay, that's very, very, very good questions because right now blockchain and this new, I call it the next transforming the internet to be the global network of trust. This one right now, it's only a matter of when we will hit a mass adoption. They're, enterprise communities, big companies, small companies, everybody's involved in this blockchain world right now. Today if you look at the internet and with my background with just the infrastructure of the internet, if you look at the internet, that is four or five decades old. And the internet was built primarily on applications that just email, file transfers, photo posts and so forth.
Rick Bleszynski
Yet, it has evolved quite a bit in the last three to four decades. But it wasn't built for the applications that we are really throwing at it today. the way I looked at it, once you solve the protocol, the inter cooperabilities as well as the consensus algorithm within the blockchain realm and platforms, it's not done. You still have the layers, what I called the layer zero. Once you solve layer one, layer two, transaction perspective, deterministics and all that good stuff, what happen in layer zero? And that is where I think the internet and the processor background gives us quite an edge in that layer zero area.
Tyler Suiters
Rick, final question for you. Your CES 2020 strategy, who are you looking to engage? What are you doing to approach CES 2020 from a strategic standpoint?
Rick Bleszynski
Okay. At CES, we are hoping to meet with more communities out there, be it social, sports group or others that share a common interest. Even large enterprises that we are hoping to engage with soon in Southeast Asia. These guys have 200,000 more employees. That in itself is can be considered as a community right there. We're also continuously looking for value add services to add to our super app for our large community base in Southeast Asia. And therefore I hope to find some useful, innovative companies and technologies that we can work with and be partners and add some value, more value with the super app. Last but not least, we're also fundraising and hope to meet with potential investors. It's the community, the enterprise, the partners, new technology and the investments.
Tyler Suiters
CES is where business gets done. No question. Rick Bleszynski is CEO and co-founder of Zocial, a startup in the red hot field of blockchain. Rick, enjoyed the conversation and we'll see in about a month at CES.
Rick Bleszynski
Thank you very much, Tyler.
Tyler Suiters
All right, coming up next time on CES Tech Talk. You hear us say it with regularity, every company today is or needs to be a tech company. It's almost a strategy at this point. A conversation with two companies you may not associate with technology, but will be at CES 2020, CVS Health and also Weber Grill. As for the latter, this is a company that has been around for more than half a century. We will discuss the what and the why this American company that's an icon in the grilling and outdoor cooking sector sees such value in technology growth as its future.
Speaker 4
It is rapidly evolving as you and your audience know as well as I ever could. The appearance of technology, whether it's in the kitchen or on the patio, in food preparation is evolving rapidly.
Tyler Suiters
That is next time on CES Tech Talk. Now, of course, we want you to be CES Ready, so do yourself a favor. You can subscribe to this CES Tech Talk podcast. That way you won't miss a single episode as we're getting you ready for the 2020 show. Speaking of the dates again, January 7th through the 10th in Las Vegas. The information you need to help play out and prepare is all at the website, ces.tech. That is ces.tech. As always, none of this is possible without the true stars of our podcast, senior studio engineer, John Lindsey and our executive producer, Tina Anthony. You all are the best in the business. I'm Tyler Suiters. Let's talk tech again soon.
