S2E2 - Vijay Pravin: AI-Enhanced NFT data with bitsCrunch

In this episode of "From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets," host Taylor Zork, CPA, sits down with special guest Vijay Pravin, the founder and CEO of bitsCrunch.

Vijay shares his journey into the crypto space and the creation of bitsCrunch, an AI tool for on-chain analytics, specifically for NFTs and ERC-20 tokens.

They discuss the role of AI in crypto analytics, the impact of blockchain data on crypto accounting and valuation, and the future of bitsCrunch in the evolving crypto space. Tune in as they discuss how they're using AI to combat fraudulent activities, the evolving landscape of crypto accounting, and the wide-reaching implications of blockchain data.

Visit https://www.CryptoCFOs.com to learn more about the CryptoCFOs community.
Visit https://bitscrunch.com to learn more about Vijay and bitsCrunch

#DigitalAssets #VijayPravin #bitscrunch #CryptoAccounting #Blockchain #Tax #NFTs #DeFi #Regulations #FinTech #Accounting #CryptoPodcast #FromNicheToNecessity

Creators & Guests

Host

Taylor Zork

Co-founder CryptoCFOs | Host "From Niche to Necessity" Podcast

Producer

Brandon "Bova" Santiago

Helping finance pros build and grow their practice in the $5B tax / accounting Web3 space.

Producer

Brian Whalen CPA

Here for #TaxTwitter. Cannabis & #CryptoTax for fun, Blaise’s Dad, Veteran of Nuclear Navy, #CPA firm owner, Cannabis Landlord

Producer

CryptoCFOs

Teaching you to navigate the complex and evolving DeFi and crypto landscape to level up your tax or accounting practice.

Guest

Vijay Pravin (VP) | bitsCrunch

Founder & CEO @bitsCrunch | Proudly raised $12M+ | On a mission to decentralize blockchain data. Backers @coinbase @animocabrands | Partners @mastercard @EYnews

What is From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets?

"From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets" is your source for expert insights on the rapidly evolving world of crypto and digital assets. Hosted by Taylor Zork, CPA, and presented by CryptoCFOs, this interview-based podcast delves into the complexities of tax and accounting for Web3 and digital assets. Tune in as Taylor sits down with top finance professionals, and CEOs of Web3 organizations to explore the latest developments and best practices in this exciting field. Whether you're a seasoned finance professional or simply curious about the future of digital assets, this podcast will keep you informed and engaged. Subscribe now to stay ahead of the curve and unlock the potential of Web3 and digital assets in tax and accounting!

Taylor Zork, CPA: 00:00

Hello, and welcome to another episode of Niche to Necessity, where we talk about the, crypto crypto industry's progression from a niche industry into a necessity, necessity similar to that of, Internet accountants back in the day. So, today, we have a special guest. We have, Vijay Pravin. He is the founder and CEO of BitsCrunch, which is an AI tool that allows for, on chain analytics, specifically for NFTs, but also ERC 20 tokens and other, information on chain. So welcome, Jay.

Vijay Pravin: 00:31

Thanks. Thanks for having me today, Taylor. It's a pleasure talking to you. I mean, I've been following your part for, for some time now, and then you have brought a lot of really good guests and then shared a lot of really good alpha in here. Glad to be here and looking forward to the next few minutes of the roller coaster conversation.

Taylor Zork, CPA: 00:54

Sounds great. Yeah. So, could

Vijay Pravin: 00:56

you just give us a

Taylor Zork, CPA: 00:57

little bit of a background on your own personal journey into crypto? You know, as in, you know, when did you or how did you get into the crypto space, and what led you to create, BitsCrunch?

Vijay Pravin: 01:06

Yep. So myself, Vijay, Vijay Praveen, I originally come from India, but then living in Munich, the city of Oktoberfest, they call, for the last ten and a half, 11 years now. It's it's been more than a decade. So safe to say that this has become my second home. So yeah.

Vijay Pravin: 01:25

I'm living, I came here to do my master's degree in the first place. I graduated my electrical engineering back in 2013, 2014. And, after that I worked for Volkswagen, one of the leading automobiles, and then Siemens. So it's it's 2 OGs in the web 2 space, in in Germany before I founded bitsCrunch, with my colleagues, friends and colleagues. And, yeah, it's it's been close to 3 years now since we started.

Vijay Pravin: 01:56

It's definitely a a surreal journey. We have raised, what, more than $6,000,000 from prominent VCs in the space, like Coinbase Ventures, Animoca Brands, Polygon, Chainlink, Hash Key Capital, Gatelabs, crypto.comcapital, and and the name there. The list of amazing cap table goes on and on. We have got the best and the best, on on the cap table. And we just recently recorded the fastest ever sale on CoinList history.

Vijay Pravin: 02:29

So, obviously, CoinList is a is a great name in the in in the journey. So they have launched some amazing projects like Solana, Filecoin, Flow Blockchain. And and, having seen that, to be there and to do the fastest ever sale on the coin list history was was so pleasing. So, yeah, what, we do is NFT analytics and forensics. I mean, we started with NFT analytics and forensics, but now we are moving beyond NFTs as a space.

Vijay Pravin: 02:59

So think of it like a chain analysis, and, Dion analytics or Nansen, especially for NFTs to begin with. So, yeah, that's

Taylor Zork, CPA: 03:09

what we do. That's great. That's a much needed tool in the space. I know that people, lean on, on chain analytics tools, and to have something that's driven by AI, that that's really awesome. So, yeah, speaking on that, like, the role of AI in crypto analytics, how does bit BitsCrunch integrate AI for NFT analytics, and what are the benefits of this approach?

Taylor Zork, CPA: 03:31

Yep. So like the name says, we crunch each and every bits of data behind blockchain. So that's there there goes the name and the meaning of the brand. So

Vijay Pravin: 03:42

we started as an analytics firm. We then realized that there are a lot of scams, potential rug pulls, malicious activities happening in the space. So we wanted to safeguard the retail users, safeguard the institutions. As as we saw a lot of interest from brands already. Right?

Vijay Pravin: 04:02

I mean, look at the space. We have Nike, Adidas, Reddit, with Starbucks, and then, Lacoste and and a lot of other brands stepping into NFTs. But on the other hand, there are a lot of copycats, a lot of fake NFTs getting minted, time and again. And then wash trading is one of the prominent issues that people talk about in this space. And then, people not knowing the valuations.

Vijay Pravin: 04:29

So these are elements. These are, pain points that we wanted to address. I'm glad that, VCs aligned with our principles. That's why you see a lot of good backing. And then the community backing is is also vital.

Vijay Pravin: 04:43

Right? I mean, for a project for a crypto project, we need community support. And then, obviously, the fastest sale on CoinList just just so shows, that. So, yeah, that's in a nutshell, I would say we are like the police of NFTs for now, but then we are planning to be police or the military of, general blockchain space where we wanted to scale to the defi, where we wanted to see the same on, tokens, ERC tokens, Bitcoin tokens, and then, other ecosystems as well as we scale higher.

Taylor Zork, CPA: 05:23

That that's great. Yeah. It's, it definitely community drives a lot of, a lot of progress in in in the space, so important to have a strong community behind you. And when people kind of connect with the mission that you you set out for, you know, many of us have been, if not the victim of scams, people have attempted to scam you. If you've been in the crypto industry for longer than a minute, you've probably had an attempted scam.

Taylor Zork, CPA: 05:45

And and some of us get good at spotting them, but those people get savvier and savvier. And to your point, you know, it can also be easy to fake or or at least make it perceived to have, higher value for different, NFT projects as well, by just, you know, trading between yourself, so that can create an inflated sense of value there as well. So having having tools like yours is really important.

Vijay Pravin: 06:11

Yeah. I mean, for for people who are not sure about what is watch trading, I mean, I'm I'm I'm sure this podcast has has been received well by dominantly 3 audience. But then on the other side, people who want to chip and who want to understand what is web 3, from the web 2 world. For them, watch trading is a phenomenon where people flip tokens back and forth. It it doesn't have to be just multiple people.

Vijay Pravin: 06:36

It it can be single person who uses multiple wallets to trade back and forth NFTs just to artificially inflate and then lure someone else. Right? Let's say if Vijay has multiple wallets, which is similar to what bank accounts are in the real world, and I take one NFT to the other wallet back and forth and and then increase its price from $10 to $1,000 in a matter of time. And then all of a sudden, Taylor comes in, looks at, whatever prominent NFT marketplace out there, and sees my name right on the top because they do provide analytics. They say I'm the top trader, on that percent hour.

Vijay Pravin: 07:14

I'm the top, that is the top NFT that is trading on the percent hour. So they they cannot do much because that's that's what it is. Data is data. And, Taylor comes in things that Vijay is a great artist. So you you get into it, put your money and then that's it.

Vijay Pravin: 07:31

I say thanks, Taylor. That's not an NFT. That's just a joke. Mhmm. So they, like, lose this money and then I I go home happily.

Vijay Pravin: 07:40

Right? So that's unfortunate way of of alluring people that's happening because the space is pretty new. Right? It's it's similar to what early days of Internet is. Right?

Vijay Pravin: 07:51

Because back in days, people were scammed. People were, falling prey for malware, for malicious links. But now even now, yes, people do, but it's relatively a lot lower. Right? We have antiviruses.

Vijay Pravin: 08:06

We have, really good OS in in the name of Apple OS, iOS, and and macOS. So we aren't, prone to scams like the earlier days, I would say. Mhmm.

Taylor Zork, CPA: 08:20

Mhmm. And Yeah. And how would you how would you say that your tool, goes about combating the issues that you just brought up with regards to wash trading? Like, how do you do you guys identify those types of activity and and help to bring that to the attention of users?

Vijay Pravin: 08:34

Mhmm. So we use AI, artificial intelligence, not just because that's the talk of the tongue, because of what Sam Altman and then JetJPG is doing with us. We use AI right from inception of BitScruent. Right from day 1 of BitScruent dating back to 2021. So what do we do?

Vijay Pravin: 08:53

I mean, obviously, there are 1,000,000 and billions of transactions on blockchain as we speak. Even as we speak, there are multiple transactions going on, multiple blockchains. So there has there are, so many blockchains that are prominent like Ethereum, Polygon, Avalanche, Binance, Solana, and and so many chains like Base, Zuora, Optimism. And then there are changes that are coming up, every now and then capturing the market. So, obviously, to keep track of all the transactions to manually validate, to check, and verify these patterns, it's very hard.

Vijay Pravin: 09:29

So rather what we do is we train the AI. We figure out certain patterns. We feed the computer. We tell them tell them what it is, what is worst trading, what is potential worst trading, and then the AI gives results to back to us. And and having people having seen the results of AI, I mean, having seen what chat GPD and and the is doing with us right now.

Vijay Pravin: 09:56

That's also when people started believing in in patterns in in wash shedding patterns. So today, we have identified 11 patterns of wash shedding. So from simple to complex patterns. And that's something that, we also take pride in in, taking support from community as we decentralize things.

Taylor Zork, CPA: 10:16

Mhmm. Cool. And, is there, like, an appeal process? So if, like let's say if someone gets flagged as wash trading, but it's actually legitimate trading, is there an appeal process at all or or where you can help verify that it was it was legitimate?

Vijay Pravin: 10:34

Yes. So we also have a small manual process in house in the team inside the team that we verify. We we have some certain, cap levels. So we don't go into each and every transactions. Rather, we see, larger transactions.

Vijay Pravin: 10:51

We have a cap on volume and and market cap, that that is those are internal flags that we use. But as we decentralize, as as we speak, we plan to bring community in. Because today, we are a team of what, 10, 20, or 30 people max, who say what is post trading, what is not. But in the future, we want, so many BJAs and so many tailors from this world to say, okay. This is what's straight.

Vijay Pravin: 11:19

I validate. I help validate that. This is what's straight. And in the process, we also plan to incentivize those indicators. Right?

Vijay Pravin: 11:27

We we have all these utilities on chain so that people can see who contributed to what I mean, they don't see the name. They will obviously see the wallets. So we we have staking, which is an obvious utility for token delegation. So anybody can come in and delegate their tokens on a particular node operator that they trust, And we have indicators. So today, we are a team who decides internally which chain to go next.

Vijay Pravin: 11:56

Is it Base? Is it Zuora? Is it Optimism? That is something that we decide internally. But in the future, we rely on community.

Vijay Pravin: 12:03

We rely on the Dao that says, okay. Okay. Let's crunch. Let's go to optimism next. Let's go to Celestia next.

Vijay Pravin: 12:10

So that is something that, we take support from community as we progress. And then on the other hand, we have contributed role from the community that also involves what you just said. So we we take help from them in validation of wash trading patterns, for for larger transactions. We take support in ballot labeling. So for instance, we might have seen some wallets getting labeled as wallets, Coinbase wallets, and and so on, with tools like Coinmarketcap and Gecko.

Vijay Pravin: 12:43

That is something that we rely on. Let's say, for NFT space. Let's say this particular wallet holds a. So he's a holder, a holder or or a punk holder. So that that give them a o g status the moment they come into, an ecosystem.

Vijay Pravin: 13:02

So that's you know, we will do. So, yeah, it's it's going to be fun, in coming years. We have done all the hard yards. The product is out and we are test relying on testnet. So, it's been people have made 420,000,000 queries on testnet.

Vijay Pravin: 13:20

That's already quite a lot and, excited for the mainnet and and would love to see how it goes.

Taylor Zork, CPA: 13:28

Great. So kind of transitioning into the impact on on crypto accounting as a whole, how do you see your technology impact in the field of crypto accounting and and valuation specifically?

Vijay Pravin: 13:39

What so the valuation of of an asset actually helps accounting softwares, accountants in general because crypto accounting is still new. Right? It's still a old headache, that people find it tough, based on different jurisdictions, different geographies. They are still, banging their heads on the door to to figure out what is the exact way to do it. Right?

Vijay Pravin: 14:07

In some cases, So for instance, in Denmark, I believe no. In not in Denmark. In Netherlands, you can actually take a snapshot of your profile on 1st of a year, let's say, 31st December or 1st January, and then that's it. You send it to your accountant. They take a bit of tax, wealth tax, or whatever from your portfolio.

Vijay Pravin: 14:32

That's it. But in countries like Germany, it's totally different. In in country India, for instance, it will it is definitely different. So that's where crypto accounting crypto account tanks are still, beating around the bush. They are still figuring out the way to figure out what's what's the true value, and that's where guys like you come into picture, like you and and your founder having seen his work on LinkedIn, I I I can really vouch for such proficient people in in accountancy.

Taylor Zork, CPA: 15:09

Great. Thank you. So so how would you say that you perceive the actual evolution of crypto accounting, you know, from a niche to a necessary skill for accountants, you know, as we progress and we as we as adoption grows and things like that? So, obviously, complexity of data is getting bigger and bigger.

Vijay Pravin: 15:29

It's it's it's a good headache to have. Right? I mean Mhmm. Obviously, we cannot compare the earlier iPhones to the current iPhone. We have, what, 15 or or 15 Pro Max right now, which Yeah.

Taylor Zork, CPA: 15:40

Yeah. Yeah. 15.

Vijay Pravin: 15:42

Are better than the, iPhones back in days. Let's say iPhone 6 or 7, which had very little features. Right? So, obviously, I see crypto as also a space which evolves. Right?

Vijay Pravin: 15:56

And and, similar to the Internet days, back in days, people can read from the websites. They they have the static pages and then they see it. But now you can post, texts, pictures, audios, whatever. So the metadata has grown. So similarly we have blockchains, EVM based and then non EVM, Rust Solidity and then so many programming that are coming up.

Vijay Pravin: 16:22

And then we have Celestia modular blockchains that are coming up. So it is going to be fun. It is going to be get complex. It is going to get complex as we progress. But then at the same time, people will start building their tax applications or or figure out a way to account, or or show the, holdings, what they have.

Vijay Pravin: 16:48

Because there are multiple layers in crypto. Right? It is not just about holding it or or selling it or buying it. You have staking in there. You have, daily interests or or monthly or weekly interest.

Vijay Pravin: 17:02

And then you delegate tokens, for instance, in terms of projects. You participate in DAO. You you get something that accrues value overnight. You you become a millionaire but then the next day you could potentially lose half of the bird. It's it's a wild west.

Vijay Pravin: 17:19

It's, it's definitely a wild west. So to and also claiming airdrops adds another complexity. Right? In some jurisdictions, they they don't mind, if you get it as a gift or an airdrop. But most of the jurisdictions, they care, about airdrops.

Vijay Pravin: 17:37

They say it's it's like a salary. Just like a gift. You have to pay tax. So things are complex. It is going to be even more complex, as we add new blockchains, new softwares, new layers into it.

Vijay Pravin: 17:52

And with interoperability where people can move funds from one chain to one of the chain or move NFTs from one chain to another chain. That is where it is going to be fun, for data organizations like Bitscrunched. Because for us, if we see an NFT today on Ethereum and tomorrow it goes to Polygon, obviously the whole nature of it changes. Right? Because the gas fees is different.

Vijay Pravin: 18:16

The ecosystem is different. The value itself is different because sometimes you pay for an NFT on native tokens. Let's say you pay in ETH. You pay in, marketplace tokens. Let's say a rally token or looks token or blood token.

Vijay Pravin: 18:33

And if you switch ecosystems, you all of a sudden you have to include Solana from the next day. If you pay with Solana, what what what does that mean? Because it's it's a different token and it's a different, complexity. It is definitely going to be fun. And, it's where evolution also needs to happen as we understand the complexity of crypto.

Taylor Zork, CPA: 18:56

Mhmm. Great. Yeah. And and so, you know, coming back to your product and and kind of what you guys have on the road map, what what future developments can we expect or projects, from from bitsCrunch in the future?

Vijay Pravin: 19:10

Anything around data. And so we plan to support a to z when it comes to data. I mean, look at all the top 10 companies in the world right now in the web 2 world. Look at Google, Facebook, Microsoft just toppled Apple, like Apple, Meta, Twitter, Tesla. Everybody relies heavily on data.

Vijay Pravin: 19:32

I mean, look at Tesla. Tesla is is is is a computer on wheels. Right? It it has a lot of data. It's it's it's in a in a way, it's called the computer on the wheels.

Vijay Pravin: 19:44

And, that's the beauty of data. Data is actually the the current oil of the world. And then blockchain, which is thought to be the next, data, and then then combining that with data, obviously, blockchain plus data plus AI, That is going to be far more powerful than any other industry in the coming decade. And we are glad we, are in the forefront trying to capture the leads, trying to capture, the market. Only time will tell where bits strange we will end up, but but definitely one thing that I can say is we have started well.

Vijay Pravin: 20:20

We have started really well. We have we have done all the hard yards well. We have raised capital, 6,000,000 from VCs, 4,000,000 from the public community. So we have already are into the double digit, 1,000,000 when it comes to raising funds. And the product is out.

Vijay Pravin: 20:39

People are using testnet flawlessly. We are able to handle their load. So oh, yeah. Accounting is it is is a sort of byproduct that we can generate or we can help with the amount of data that we have. So we see, marketplaces use our data, blockchains use our data, lending protocols.

Vijay Pravin: 21:02

People need to know the value of an NFT that they give loan for. So they need to understand that valuation and you as an individual. Let's say, tailor who wants to know the portfolio's worth. You want to set alerts on let's say if your portfolio drops below 10% are you going to sell? Do you smash a notification icon there?

Vijay Pravin: 21:24

Or if if your notification hits 30% above, are you going to sell it out? Or are you going to Huddl ing it? So we are also catering to the needs of a retail user like you and me. And and, obviously, for accounting applications or, whatnot. So we plan to scale to the a to z of, the the blockchain data space.

Vijay Pravin: 21:47

So data in general is is wide, and we would want to capture all of those as we progress.

Taylor Zork, CPA: 21:54

Very cool. Well, really great to hear about your product and all the work you're doing in this space. I think specifically on the valuation front, that's a major challenge for accounting professionals in this space. So I'm glad that you guys are helping to address that. And then also kind of helping to limit the, kind of fraudulent or fake trading that's going on or at least expose it.

Taylor Zork, CPA: 22:14

So, really a great pleasure speaking with you today, Vijay, and, I I really appreciate your time and and and appreciate what you're doing for the space. So, thanks thanks again for joining

Vijay Pravin: 22:24

us. Yep. Thanks again. It was a wonderful conversation, like I said at the beginning, and I'm really looking forward to the outcome of this. Glad to share it to my community and and, yeah, best best of the future.

Vijay Pravin: 22:37

Thanks.