Erich Spangenberg is the CEO and founder of IPwe, a company using blockchain and artificial intelligence to create the patent asset class. He also was a founder of nXn Partners, a company that is focused on predictive analytics. He was the founder and CEO of IPNav, a company that was one of the pioneers in patent monetization.
AT: Can you give a brief overview of how IPwe plans on revolutionizing the patent market?
EP: IPwe is leveraging technology—in particular, AI and blockchain, experience and changes in market attitudes to create the patent asset class. Billions are spent on regulating, obtaining and maintaining patents and the returns to owners and society are low. We are going to help fix that. AI and blockchain make things much easier to understand and far more transparent. Intangible assets—and patents are one of the key intangible assets for many companies – are just too important to be ignored and left to underperform under the management of people who are not asset managers.
AT: Are you using a public or private blockchain?
EP: IPwe’s Global Patent Registry – the first registry of the world’s patents—and our transaction platform are built on Hyperledger Fabric. After evaluating other solutions, we concluded that our market is best served through a private blockchain—we are not dealing with a fungible commodity where issues of who you are transacting with are not of any importance. We will be building public components as part of our product roadmap—but it will take time for the market to accept these solutions.
AT: How will you educate companies to register patents on the blockchain?
EP: We are fortunate that our management team is well known in the space and has extensive connections with key players in industry and the nonprofit and government sectors. Leveraging these connections, we reach a large swath of the world’s patent owners. In 2019 you will see IPwe more aggressively advertising and raising its profile.
AT: One of your goals is to enable the easy access to any patent from any office in the world. What incentive will those offices have to use the blockchain?
EP: Many of the world’s 200 patent offices already understand the importance of blockchain and its ability to increase transparency and improve things like how title is recorded. The most forward-thinking offices are already in conversations with us and we will be publicly announcing initiatives with them in 2019. We are not selling anything to these patent offices—we do not seek revenue from patent offices. What we offer is a way for these offices to better fulfil their public mission. Will all of them participate? No, as there are some offices that harbor curious beliefs that their mission is to do something other than serve innovators and society—we wish them well and believe they will soon enough recognize they can play an important role in improving the patent system.
AT: The IPwe blockchain is linked to your patent analytics platform, Zuse. Can you explain how Zuse is able to both estimate the worth of a patent and its validity?
EP: Zuse has been under development for 10 years and is the only analytics system that we are aware of that can lay claim to being central to and directly involved in over $3 billion of identified licensing and financing transactions and raising over $1.4 billion of capital as part of a strategy to invalidate patents. Zuse has been used by experts in recent US patent cases. The “how” is fairly complex and white papers are available on our website for those who want to dig deeper, but the system closely mimics the methodology experts use to assess validity. Our valuation efforts are progressing and we will be announcing an initiative in December as part of a joint effort with key industry, accounting and academic participants that will advance patent valuation to a new level.
AT: One of the intended goals of IPwe is cheaper patent transactions. How will the blockchain help with these cost savings?
EP: We have already announced our pricing for traditional transactions – 10% of the purchase price or license price– which compares to current market rates of 25%–and pricing for other services that owners pay for things like annual maintenance fee that are over 50% lower than what patent owners currently pay. We use a variety of technology–including smart contracts built on Hyperledger–to lower transaction costs. Since we are making the pie bigger, there is still a critical role for legal, broker and other patent service providers that we want to work with the improve the system and increase the transaction volume. A key goal of IPwe is to dramatically lower the cost of patent ownership.
AT: IPwe did not pursue an ICO – happy with that decision?
EP: An ICO was not a viable option for IPwe. At the end of the day we are a B2B market solution. Today most large companies simply cannot get past the regulatory issues raised by traditional ICOs. This will change—but it will take time. We also believe that forcing customers to transact with you only through a single purpose token is not a viable way to transact or build a platform.
AT: How about security token offerings—do they play a role in IPwe’s future or the future of the patent market?
EP: STOs are something completely different from ICOs in our view. We are huge fans of regulatory compliant STOs and will use STO structures for both IPwe and for our patent finance solutions. This is a huge development in the patent space that will become apparent soon when we announce our first two STO financings next month.
AT: It doesn’t sound like IPwe is seeking to eliminate intermediaries that exist in the current patent market—why?
EP: Patents are in fact complex assets and certain intermediaries will play a critical role going forward and some, we expect, will either change their business models or disappear. Many enjoy singling out lawyers as non-value creating intermediaries, and while this may be true in some contexts, it is not true in the patent space. We think their role might change as they will become focused on higher value services, but we believe they play an important role in the new market IPwe is helping to create. The patent intermediaries that charge exorbitant rates to, for example, do nothing more than make annual payments to patent offices – we think their days of exploiting these types of inefficiencies are limited.
We think some of the abuses and negatives in the system—patent trolls, efficient infringers and lower quality patents, for example, will be addressed and remedied by these same changes. The intermediaries that embrace AI and the transactional efficiencies that can be realized through blockchain and focus on high value services are going to do even better as the market expands. The sloths and luddites will disappear.
AT: If we visit with IPwe again in a few years, what will we be talking about with respect to patents and the patent market?
EP: The biggest changes that AI and blockchain are going to facility is that new managers will likely take over the patent asset class and, as capital becomes more comfortable with patents, patent based financings will dramatically increase and large and small patent owners will regularly use patents to access capital. Intangible assets – which includes patents – are a majority of most companies balance sheets. Today, these assets are largely managed by departments other than finance and not well understood by finance types. This will change and it will be a change for the better.
Mikko Ohtamaa, CTO at TokenMarket – Interview Series
Mikko is the cofounder and CTO of TokenMarket Ltd, one of the leading token sale and blockchain crowdfunding platform at Gibraltar. Mikko has advised dozens of blockchain startups. He is also the former co-founder and CTO of LocalBitcoins, a peer-to-peer cryptocurrency exchange. Mikko holds MSc. in industrial engineering and management from University of Oulu. Mikko actively engages in open source communities and speaks in conferences. He is a cofounder of Pycon Finland, a Python programming conference. Mikko is also a member of Plone Foundation, the oldest of open source non-profit foundations.
AT: You’ve been in the crypto space since 2011. Could you share with us how you first became involved with cryptocurrency and blockchain?
Mikko: Back in my mobile software development days, I was asked to develop the first and original Bitcoin mobile wallet back in 2011 compensated by $10,000 worth of Bitcoin. I rejected it as I thought fiat would suffice at that point in my life. In hindsight, taking this offer might have been the last project I needed to do. Later I got involved in building out LocalBitcoins and from there I moved to establish TokenMarket.
AT: You’re listed as one of the original co-Founders of TokenMarket. What inspired you to launch this marketplace?
Mikko: The original goal of TokenMarket was to tokenise company shares. However, back in 2016, it was way too early for that. The term “token” had just been invented, many referred to tokens as ‘coloured coins’ looking at new digital assets as bitcoin with different ‘flavours’ and ‘colours representing different token attributes and purposes’.
We saw the ICO boom coming a little bit earlier than others in late 2016 when FirstBlood, Gnosis and other Ethereum based ICOs started to roll out. The catalyst was that the Ethereum technology had matured to the point that it was realistic to launch custom tokens with it. And oh boy, a lot of tokens were launched.
TokenMarket had the first tokenisation platform in the world and suddenly there was a spike in customer demand.
AT: When inspired TokenMarket to pivot from ICOs to STOs?
Mikko: I would not use a word pivot here. Security tokens are a natural continuum for unregulated token offerings. It is always better for investors themselves to get something with stronger investor rights. Securities offerings give investors rights which utility tokens never legally could, such as receiving dividends, yields and voting rights in the company you purchase a security from. For the investors, receiving passive income with security tokens becomes so much easier rather than moving toward a largely unstable and volatile utility token dragged up and down by bitcoin price.
Since 2016, it took some time for the global audience to learn about the benefits of tokenisation, including financial regulators. Now we are seeing interest from regulators worldwide on how to apply DLT and blockchain technology to regulated securities markets.
AT: TokenMarket recently announced a partnership with Loopring which is a protocol for decentralised token exchanges. Could you tell us more about this and what we should expect from this partnership?
Mikko: Loopring is one of the industry leading projects developing layer two scalability for decentralised exchanges and we will use Loopring’s technology to scale our own DEX.
As you might know, at the moment, decentralised exchanges have scalability issues and cannot match the volumes of exchange giants such as your Bitmexe’s and Binance’s. But from other aspects, decentralised exchanges are more secure and fair. Bitcoin exchanges get hacked every two weeks. Some exchanges are accused to trade with insider information and against their own users. Regulators like the decentralised aspects, as they guarantee that all the investors and traders can access the post trade data in equal manner, there cannot be irregularities with accounting and trading with something that is merely fabricated.
The good news is that the security tokens will have low liquidity, like Bitcoin back in 2012, when they start to roll out for trading. But for the future exchange technology, we want to build it better and more bulletproof what both traditional trading and crypto trading has today. We see the academic research and theory that allows us to get there, now it is just engineering over the next few years to fulfill this promise.
AT: Can you tell us what the listing requirements are for companies who wish to crowdfund via the TokenMarket platform?
Mikko: There are many crowdfunding platforms out there which operate on a ‘cater for all’ thesis, TokenMarket operates on an industry specific focus. We mainly look for global growth companies in sectors such as fintech, gaming and software services as this is what our investor audience has looked for in the last two years.
We mainly look for companies which are close to, or already have, some substantial revenue generated with a key commercial focus on B2C businesses.
AT:TokenMarket is current raising their own STO. Are you happy so far with the progress of this raise?
Mikko: This is a pilot raise under the UK’s regulator, FCA, sandbox. We need to demonstrate them that tokenised equity crowdfunding works: payments goes in, people get their tokens and are properly registered in Companies House as shareholders.
We do not expect huge intake of money for our pilot project due to the UK’s FCA’s Sandbox test limitations. Awaiting regulatory approval we will be able to raise up to €8M from self-accredited investors for all our STOs with no private funding cap restrictions.
AT: Are there any STOs that are launching on TokenMarket that have you personally excited?
Mikko: Yes there are! But at the risk of publicly endorsing or soliciting a securities investment go check out our pipeline of projects here.
AT: Where do you see the marketplace in 10 years?
Mikko: The change and transformation is not just about the technology or blockchain. There is an ongoing process of how new investors, millennials behave. There is an ongoing process to dial down the regulation for SME listings since the last financial bubble, especially in Europe. Then there is a change in globalisation as the future powerhouse economies of the world may come from countries like Brazil, Indonesia and Nigeria.
The future investing is going to be more “marketplace driven” and less about relationships and network centric models. We are going to replace Silicon Valley and their venture capital networks with a website like Amazon did for retail commerce. Ironic, is it?
AT: Is there anything else that you would like to share about TokenMarket?
Mikko: If you are a high tech company looking for funding, contact us. If you are a fund, a family office or similar looking for alternative investments, contact us. We do not care which part of the world you come from. We want to create an equal playing field for opportunities and investors all around the world.
Srdjan Mahmutovich, Founder of Kriptomat – Interview Series
Srdjan Mahmutovich is a tech enthusiast and the founder of Kriptomat an exchange that is fundraising by offering a security token. Previously, he has built a successful B2B digital marketing agency with 40 employees and coworkers. He also worked as the head of web development at Telemach.
Antoine: When did Kriptomat first launch and why did you decide to launch a cryptocurrency exchange?
Srdjan: Kriptomat opened to the public on 15 July 2018. We identified the need for a service anyone could use (like our friends and family members). We are on a mission to bring crypto into every household and to do that we needed to create a simple yet powerful service anyone can use. This will enable complete beginners to enter the world of cryptocurrencies in an extremely simple, safe and quick manner.
Antoine: Which countries do you currently accept customers from?
Srdjan: We currently accept customers from 82 countries around the world. They are listed here: https://kriptomat.io/global/
Antoine: How many active customers do you currently have? Where do most of these users originate from?
Srdjan: We currently have more than 10k registered users and steady growth of 20%-25% month on month. The majority of the users come from Europe, but with the recent addition of more payment methods, we are seeing a gradual increase in customers from all over the world. Our next goal is the 100k registered user mark and we are hoping to achieve this by the end of 2019.
Antoine: Are there plans on accepting Non-European customers any time soon?
Srdjan: We already accept Non-European customers, but we are working on adding more payment options in order to provide true worldwide support. Currently, we support Skrill which is really global, but we will be adding new locally popular payment methods.
Antoine: What currencies can be purchased on the Kriptomat exchange?
Srdjan: You can buy 29 cryptocurrencies; they are listed here: https://kriptomat.io/price-of-cryptocurrencies/
Antoine: Can you tell us about your upcoming security token sale? What’s the soft-cap, the hard-cap, and what will be the benefits offered to investors?
Srdjan: We have come to a stage where we need capital to speed up our growth and take us to the next level. We have decided to do an STO because it’s an innovative way to raise capital that allows our existing users and community members who already believe in us to invest in our project. We’re not only looking to get an investment but also loyal users that will evangelize and use our service as well. It’s a win-win situation. If we’re successful, our investors will be successful and we feel we’re in a much better position to build something big if our investors are our users who actually use the service.
We are looking for an investment of 1.8 million euros. We offer our investors an 8% share of our revenue and 4% of our audited profit.
The soft cap is 1 million euros and we reserve the right to cancel the issuing of the token if we don’t reach that. Detailed information can be found in our Security Offering document which you can get in the crowdfunding platform Desico which is going to issue our security. To get there go to https://kriptomat.io/sto
Antoine: What will these funds be used for?
Srdjan: So far, we have been focused on building a product, relationships and proving the business model. With the new funds, we will focus on creating user acquisition mechanisms and improving the platform.
The orientation of spending of the funds raised during the STO:
– 60% Growth – Marketing, customer base growth
– 18% Product development
– 12% Security, compliance
– 10% Operations, support
One important thing to note here is that crypto market is in its early stage and things are moving fast. We have been maneuvering quite successfully so far and adapting to the sudden market changes and that’s what we plan to do in the future as well. If the market situation changes significantly, we will pivot and change direction if necessary.
Antoine: The market is beginning to become saturated with exchanges, how will you differentiate yourselves?
Srdjan: Because we are creating some awesome new products. We are integrating the next-generation Ethereum-based ERC-1155 tokens into our Kriptomat exchange. This adoption of blockchain-based virtual items is the first of its kind and it is being made with the purpose of gamifying user experience. In other words, it is a blockchain-based reward program that will boost loyalty, increase the customer lifetime value and speed up user acquisition.
We have recently launched a revolutionary ERC1155 Token Mint Portal, giving everyone in the world an opportunity to create their own customized tokens. The use cases are countless and we haven’t even scratched the surface of what can be done with such a powerful tool.
So it seems we are going more in the direction of supporting gamers and game developers. This means we as an exchange will appeal more to the gaming community and they might just be the first customer segment to completely adopt crypto.
Antoine: What are long-term plans for Kriptomat?
Srdjan: Our mission is to bring cryptocurrencies into every household. This can be in terms of giving people the best way to exchange digital currencies, or in terms of giving them a valuable product or use-case that utilizes blockchain and crypto. Whatever the case, we truly believe that this technology will be integrated into every pore of our lives, and just like the internet protocols, people won’t have to know exactly how it works in order to use it.
Antoine: Is there anything else that you would like to share about Kriptomat?
Srdjan: We are very transparent with our community and we welcome an open discussion on our social media channels. I invite everyone reading this to join our Telegram channel where you can talk directly with our team members. We know that it is often hard to maintain a personal relationship with the community when the number of users starts to grow exponentially, but we make a concerted effort to reply to every single message.
To learn more visit the Kriptomat website.
Arnoldas Nauseda, CEO of Smartlands – Interview Series
Arnoldas Nauseda is the CEO of Smartlands a crowdfunding platform that tokenizes real-world assets. Prior to joining Smartlands, he spent four years as a full-time entrepreneur, developing businesses in the fields of technology, fintech, and robotics.
Antoine: How did you personally get involved in blockchain and cryptocurrency?
Arnoldas: Well, we need to acknowledge that getting involved in blockchain does not necessarily mean that you’re involved in cryptocurrencies and myself is a stark testimony to that, although, understanding ICOs as a mode of crowdfunding was step one for me.
I’m trained in finances and business development and for a while, have been an entrepreneur. I hold a bachelor degree in economics, MBA in Finance and International Executive, and I’ve made some strides co-founding companies in fintech, venture capital and robotics industries. In the past years, I’ve done a lot of projects, held top executive positions with fintech companies, did my share of consulting and, of course, was heavily involved with real estate.
The point is, even though I was a little late in the game, but by 2017 an executive of my stature and experience would have to have heard of blockchain, it was inevitable. At that time I felt that building a business on DLT was not only a clear sign of “progressiveness” as a business person, but it was also a real unadulterated adventure when I felt reborn every day waking up for work. It was great, still is!
Antoine: What made you decide to get on-board as the CEO of Smartlands?
Arnoldas: I dedicated a year to studying DLT, what it could do for my field, read countless pages and visited hosts of blockchain conferences, gatherings, meetups. At one such event, I was introduced to one of Smartlands co-founders, and we immediately hit it off. We both realized that cryptocurrencies as one of many DLT derivatives are a fascinating use case and an excellent tool for transforming financial markets, but the real value of blockchain lays in providing trustless access. The immutable ownership rights embedded in smart contracts… You don’t have to be a specialist to imagine what it could do in a world where the right to claim ownership was the reason for war for thousands of years. Smartlands and I were on the same page: attributing digital ownership to an asset and giving the owner the ability to use that piece of code as they saw fit was the wave of the future, and we wanted to unveil that future to people.
Antoine: Smartlands is a crowdfunding platform that focuses on tokenizing real-world assets, what will some of these asset types be?
Arnoldas: Literally, anything. As long as an asset has a documented rightful owner, it can be turned into a security token using Smrtlands proprietary tech. With that comes liquidity – the Holy Grail of asset tokenization. Naturally, the sort of flexibility in holding, trading or exiting investment that we can provide is something any asset owner or investor is after.
Antoine: The first project on your platform is purpose-built student accommodation in Nottingham, UK. Could you tell us a bit about it?
Arnoldas: We’ve selected this type of asset after careful consideration and with the help of our community. Purpose-built student accommodation complex in Nottingham, UK is a perfect starter use case for a tokenization platform like Smartlands: it’s a hands-free investment with the projected 15.72% annualized return, revenue comes from rent as well as property appreciation. The equity share is 30%, and we are aiming at £1 million funding target.
Overall, student housing in the UK is an up-and-coming asset class. The United Kingdom remains one of the top global destinations for those seeking quality marketable education, which means that the revenue stream from students paying rent is not about to dry up. Also, if you’re looking to benefit from current weakness of the pound sterling, inexpensive real estate in the British heartland is where you’d be looking to park your capital right now.
Antoine: How many more projects should we be expecting in 2019? Are you at liberty to discuss any of these?
Arnoldas: I can’t give you the details right now but I will say that we’re looking at a pipeline of six more asset tokenization projects to go live before the year’s end and the portfolio we’re preparing is highly diversified. We are looking at agricultural assets, various types of real estate, private equity. Like I said before, the essential benefit of our proprietary technology is unlimited access: asset owners and managers looking to crowdfund capital get access to investors, in turn, investors are given the opportunity for what we call “fractional ownership.” With the lowest in the industry threshold for investment, we are granting regular people the opportunity to get verified as accredited investors on the Smartlands platform and through the use of security tokens issued on Smartlands own a share of a property in the UK.
Antoine: How do you choose which projects to list on your platform?
Arnoldas: We put a lot of thought and careful analysis in the process of selecting the right assets for our investors. In fact, that’s one other major benefit of Smartlands: we have a team of researchers formulating investment documents for our clients so that the scope and scale of a project are revealed to an investor at the earliest stages of participation. As a result, the process is as straightforward as it can be on a regulated investment crowdfunding platform registered with the British Financial Conduct Authority, FCA.
Antoine: Smartlands recently launched a Stellar Powered Wallet, what is the benefit of this for investors?
Arnoldas: Essentially, it’s a multisig wallet primarily designed on the Stellar’s SEP8 protocol but with the addition of some cool proprietary features such as AI-driven compliance engine, account recovery/mapping, and others. Smartlands wallet operates within the compliant segment of the Stellar network, which to an investor means that all transactions with security tokens as well as XLM and our native token SLT are carefully sourced to prevent any risks connected with illicit activities.
Antoine: Where do you see Smartlands being positioned in 5 years?
Arnoldas: At the Consensus 2019 event in New York, we’ve introduced our “Unicorn Vision” – the strategy of consumer-centric approach that envisages our transformation from a security token issuance platform to a global investment ecosystem focusing on the most lucrative equity types and asset classes. The Vision is all about unlocking liquidity for various kinds of currently illiquid assets and, of course, going fully mobile. Basically, Smartlands is about to become a one-click operation with a built-in exchange where investors will be able to track offers and manage portfolios right from their mobile devices using multiple fiat currencies and cryptocurrencies.
We will be issuing Smartlands Card with the genuinely unique functionality of a multi-wallet payment system. All the wealth you create using the Platform will be stored in your account – digital assets, fiat currencies, and crypto. The Card will be used just like Visa or Mastercard enabling our customers to engage in IBAN and SEPA transfers as well as for value storage.
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- Will Facebook Subsidiary, Calibra, See the Light of Day? July 15, 2019
- Mikko Ohtamaa, CTO at TokenMarket – Interview Series July 15, 2019
- Custodianship – A Look at Various Industry Solutions July 13, 2019