Category: Security Tokens

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Is Amazon about to launch virtual payments?

Categories Blockchain, Cryptocurrency, Technology, Payments, Bitcoin, Tokens, Wallet, Utility Tokens, Security Tokens, Ethereum, Ripple

Is Amazon about to launch virtual payments?

Rumours have been swirling for months that e-commerce giant, Amazon is set to launch its cryptocurrency payments. Earlier in the year they purchased a range of crypto-themed domain names such as amazoncryptocurrency.com and amazonbitcoin.com which just fuelled the reports further.

Now reports from an anonymous software engineer have been circulating on Reddit stating that Amazon has been talking about accepting Bitcoin payments and that the only reason they haven’t done it yet is due to issues surrounding refunds and volatility.

There have also been talks of them offering blockchain solutions through their AWS Blockchain Templates which can be used to launch an Ethereum of Hyperledger Fabric network in a matter of moments. It has also been speculated that they are creating their own cryptocurrency. In fact, they created one back in 2013 called Amazon Coin but it never took off due to the fact it was not based on any blockchain technology and could only be used on the Amazon platform.

Whilst the tech and e-commerce giants have not revealed anything about accepting crypto or developing blockchain tech over the previous months, they have made some interesting moves during the last few weeks. An Amazon subsidiary “Amazon Technologies Inc” recently issued a patent for a data streaming marketplace which allows clients to view crypto transaction data as it happens. It is designed to function like a crypto stock trading portal with real-time updates.

The patent states:

“A group of electronic or internet retailers who accept Bitcoin transactions may have a shipping address that may correlate with the Bitcoin address. The electronic retailers may combine the shipping address with the Bitcoin transaction data to create correlated data and republish the combined data as a combined data stream.”

Whether they will do something more concrete to move forward in the space remains to be seen but what we do know is that they are interested in dallying with the technology and its implications. The fact that crypto and bitcoin has even been recognised by Amazon is a big step forward and a vote of confidence for the sector.

 

E&S Group is a leading law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

For more information click the link.

 

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Why are white papers important for DLT companies?

Categories Blockchain, Cryptocurrency, ICOs, Smart Contracts, Technology, Tokens, Utility Tokens, Security Tokens, White Paper

Why are white papers important for DLT companies?

White papers have always been a very effective way of marketing and promoting virtual currencies. Back in 2008 when Bitcoin first launched, it was marketed through its own white paper that was said to be penned by Satoshi Nakamoto. Since those early days, almost every project on the market has been introduced via a comprehensive white paper, and now, in some jurisdictions such as Malta, this is actually a legal requirement.

Now, when the developer of an ICO is considering marketing, they have much more advanced methods at their disposal such as webinars, social media, and animated presentations. This does not mean, however, that the importance of a white paper should be discarded.

The purpose of a white paper

A white paper is a definitive guide to a project that gives the investor all of the information they will need to make a decision whether to invest or not. The main aim is to present a problem that exists within a particular sector, and then explain how the developer and the project will solve it.

The paper will also incorporate the philosophy of the company including its rationale for why it is needed a well as clearly illustrating how the model will make money.

A white paper needs to share the following information about the business:

  • The long-term goals of the company and the vision of the project
  • A problem that exists within a particular sector or market
  • A solution to the problem
  • Information on the founders, ambassadors, advisors and anyone else involved in the project
  • Information about the business
  • Technical information about how the problem can be solved
  • The tokenomics of the ICO itself

Why is a white paper important?

The truth is that very few companies will be able to hold a successful ICO without a good white paper to present with it. This paper needs to explain the scope of the project in detail but also in a way that is accessible and understandable. By creating a document that can be freely distributed, it can reach those that may not have access to a webinar or conference.

A serious investor is not going to waste time and money investing in a project that lacks the basic information on its technology. The same idea applies in presenting information to the developers and the founders of the project.

If there is no white paper, or the white paper is badly written or missing key information, most will assume that the ICO is not legitimate and it will raise a number of red flags.

How to create your own white paper

But writing a good white paper is not easy as the author has to strike a careful balance between legal compliance, being technical but accessible, and providing all of the information required in a way that is easy to read and interesting. In most cases, it is not something that a developer can write in a couple of days- it requires the input of a professional.

At E&S Group we are able analysed your white paper with the appropriate format and technical details needed.  Our team of lawyers, marketing experts, writers, and ICO specialists are on hand to ensure that your white paper ticks all of the right boxes and will be of interest to all of the right people. Send us an email on [email protected] or by telephone on +356 2010 3020

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How DLT can provide a good global payments solution

Categories Blockchain, Cryptocurrency, ICOs, Technology, Cryptocurrency Exchange, Tokens, Utility Tokens, Security Tokens

How DLT can provide a good global payments solution

The debate continues to rage regarding the potential benefits of blockchain technology and their role in improving the world of international payments.

At the moment, this is a business where many different parties need to reach a consensus in order to route payments, execute currency conversions, and manage liquidity in different jurisdictions. All of these are subject to volatility, change, and regulatory constraints.

The complexity of existing payment networks

One of the big issues that blockchain is capable of solving is the actual complexity of the payments network due to the inherent fragmentation of the financial industry itself. This makes it very impractical for individual banks or financial institutions to deal directly with any other banks in the world.

For example, when a bank receives instructions to make a payment from a client, it needs to first find a correspondent bank that is willing to accept the clients’ funds before terminating the payment locally at the receiving bank. In order to do this, the correspondent bank needs to have a nostro or vostro account with the receiving bank that has enough pre-funded liquidity to complete the payment on the client’s behalf.

The receiving bank has absolutely no way of verifying the incoming transfer from the correspondent bank, rather they correspond to the client that set the moment. That is why a SWIFT message is required from the sender so that the receiving bank is able to understand the purpose of the incoming funds and carry out any AML or due diligence on the payment.

Each party that is involved in this process has a different ledger which means they do not share one, single version of the truth. The communication between these parties is slow and error-prone and can often rely on manual interventions by staff in the bank. In addition to this, someone needs to perform a currency conversion and all parties are responsible for managing liquidity levels at nostro/vostro accounts.

The idea behind blockchain is that it aims to offer the single version of the truth which is missing from the current banking system.

Smart contracts and blockchain

A smart contract-enables blockchain to provide a single ledger and transactional engine where balances can be both maintained and transacted upon this means that payments can exist as a single, common digital object that makes reconciliation totally redundant.

Through the use of smart contracts, all involved parties cannot only register their tokenised payments and funds, but they are able to lay down the rules applying to every step of the payment process. This will significantly eliminate errors and misunderstandings, whilst increasing transparency and audibility. Everything exists on the same ledger with the same smart contracts and there is no risk of tampering or fraud.

Most of these decentralised solutions that are being proposed focus on improving the payment process through digitisation and creating single, digital representations of payments that can enforce transactions on proprietary ledgers. This is a significant improvement on the standard message-driven payment processes we use at the moment.

The problem is that an issue arises when we try to scale such systems, especially when large payments are issued by corporate clients.

Overnight, fast payments have a reliance on pre-funded nostro accounts so everyone knows that the correspondent bank has the funds to terminate the payment. Whilst these accounts then need to be rebalanced over the course of the day, large sums of money need to be moved through the central bank. Once again, this is a cumbersome, slow and error-prone process, especially when compared with real-time transactions that blockchain claims it can deliver.

Digitally native tokens

The idea of having digitally native tokens that can function as a store of value within the ledger where the payments, commercial bank balances and nostro balances are stored is a revolutionary solution. These tokens can then be used to exchange liquidity between liquidity providers and markets within seconds.

This means that it is possible to also implement token based secondary markets for liquidity exchange which then enables liquidity providers to trade with each other much easier and quicker. By using tokens and smart contracts, users can even post unused liquidity in certain jurisdictions as collateral to borrow liquidity in places where it is needed.

These tokens will need to be universal and able to support the liquidity of today’s currency markets which amount to around $7 trillion per day.

The Utility Settlement Coin project comprised of Santander, BS, Deutsche Bank, Bank of New York Mellon and others, are working on an initiative where a tokenised, digital central bank currency will be created to help overcome issues within the process.

These initiatives show a positive approach to the idea and also aim to improve liquidity management for commercial banks and market makers. As the ideas continue to develop and flourish, many believe that they will become a leading enabler of the decentralised, tokenised economy that much of the world is talking about.

 

E&S Group is a leading law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

For more information click the link.

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Why Vitalik Buterin was right about centralised exchanges

Categories Blockchain, Cryptocurrency, ICOs, Utility Tokens, Security Tokens, Ethereum, Exchanges

Why Vitalik Buterin was right about centralised exchanges

Vitalik Buterin, otherwise known as the founder and creator of Ethereum is without a doubt one of the leading figures in the world of cryptocurrency and blockchain. Whatever he says and whatever he does, it gets investors and the media talking and his latest opinion is on centralised exchanges.

Not one to mince his words, Buterin was quoted as saying that he hopes centralised exchanges “burn in hell”. Whilst his response may seem extreme, when we consider his arguments in this regard, they do tend to make sense. His main argument is that centralised exchanges hold pretty much all of the power when it comes to determining which cryptocurrencies are successful and which ones are not.

A centralised monopoly

He is right- when a major exchange lists a new coin, it tends to grow in value almost immediately regardless of how “good” the coin is. Centralised exchanges have created a situation where only the coins that they like and that they want to list, are able to grow. This is not a healthy situation and furthermore, it completely goes against the grain of the point of cryptocurrency- decentralisation. Without centralised exchanges holding such a monopoly on the sector, the chances are that BTC would not be the leading currency in the market and perhaps something else would have pipped it to the post. This is due to the fact that the market volumes around other cryptos would increase as well, based on their technical capabilities.

An unhealthy amount of power

But this is not the only reason Buterin hates centralised exchanges- they also have an unhealthy amount of power over customers. In the recent past, we have seen instances where some centralised exchanges raise the minimum withdrawal fees for their clients meaning that some clients are not able to withdraw at all. This has resulted in a situation where the customer’s money is being held against their will, but there is very little that the client is able to do about it. This is a level of power and manipulation that is completely unfair and goes against the whole idea behind cryptocurrency and blockchain technology. The power that centralised exchanges have over crypto is pretty much exactly the same as the power that centralised banks have over their customers. Cryptocurrency is supposed to be about returning the power to the people, but this manner of controlling crypto is very far from it.

 

Are you looking for ICO Legal Advice? Click this link to know more.

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First two-way decentralised currency ATM installed in Malta

Categories Blockchain, Malta, The Blockchain Island, Bitcoin, Tokens, Wallet, Utility Tokens, Security Tokens

First two-way decentralised currency ATM installed in Malta

Each day, a new development seems to just further cement Malta’s position as the ‘Blockchain Island’.

In an announcement by, Moon Zebra, an ATM firm that allows its users to buy and sell cryptocurrencies using fiat currency, installed the new machine at their Malta office. Through moon Zebra’s collaboration with local Bitcoin maximalist and the co-founder for Bitcoin Club Malta, Leon Siegmund the purpose of the ATM is to promote a greater public interest in crypto amongst the general public.

Siegmund stated:

“When I moved to Malta two years ago, there was not much happening regarding Bitcoin and decentralised ledger technology. But within just 2 years, and thanks to the collaborative effort of many individuals, something very special has happened…and after much blood, sweat and tears, we are happy to launch.”

The new cryptocurrency ATM will give users the ability to buy, sell, deposit, and withdraw cryptocurrency in the same way that a traditional ATM works. Customers can deposit fiat currency into the ATM, enter their wallets public key and have the cryptocurrency of their choice sent instantly.

“Users can also convert crypto back into fiat with the two-way ATM. It also gives people the ability to bypass exchanges and – on some levels- crypto ATMs could solve the issue of exchanges being centralised.”

At first, the ATM will only support Bitcoin and fiat currencies, but in the future, other cryptocurrencies will become available.

The concept of cryptocurrency ATMs is not exclusive to Malta as other sites have been popping up over the USA and Europe during the last few months. It is, however, the first of its type in Malta and it is hoped it is a sign of greater public acceptance and adoption of cryptocurrencies.

If you are looking to set up a cryptocurrency business in Malta, our team of professionals at E&S are on hand to assist you. Visit our ICO Legal Services we offer, or contact us by sending us an email  at [email protected]

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Is blockchain technology vital for ICOs to function?

Categories Blockchain, Cryptocurrency, ICOs, Malta, ICO Legal Service, E&S Group, Technology, Tokenomics, Advisory, Tokens, Utility Tokens, Security Tokens, Ethereum, VFA Act, ESTS Initiative

Is blockchain technology vital for ICOs to function?

Every Initial Coin Offering (ICO) works by means of blockchain technology. Subsequently, blockchain is the source that issue tokens, trade cryptocurrencies and aid miners to operate the platform. This technology is combining many industries both private and public to use this advanced system of collecting data.

ICOs and Tokens

Although blockchain can function on its own, it is widely used by ICOs. Many companies and startups are moving towards a blockchain era of things. A surge of investors are spending their money on various projects and digital currencies that are exceeding the market cap by trading volume. However, most ICOs issue their cryptocurrency by means of tokens. In reality, ICOs are projects that are designed by founders offering a service to their followers. Most companies opt for a blockchain based ICO to remove any third parties. Money needed to start off the project is collected by means of crowdfunding. Tokens, another word for cryptocurrencies are issued to whoever funds and supports the initiative.

What will happen when ICOs reach their Soft cap and Hard Cap?

During the Virtual Financial Assets (VFA)  offering stage, ICOs invest in their marketing projects to attract more investors. During the VFA offering process, ICOs would need to reach their soft cap and then the estimated hard cap. When the VFA offering ends, every ICO takes a different path. Some of the currencies end up on the market cap, trading their tokens with other cryptocurrencies while others continue with their intended project.

Blockchain a decentralised platform.

Blockchain is a decentralised platform for storing data. This new technology is becoming an important platform for processing transactions. Every transaction is verified by means of computer nodes connected to each other. Besides Bitcoin, new blockchain based cryptocurrencies started to take over the market. One of the most popular blockchain platform by far is the Ethereum platform. Created by Vitalik Buterin, the Ethereum platform has become the ideal platform since it is easy to set up. The Ethereum platform works via smart contracts. These digitalised contracts work to facilitate, verify or enforce the negotiation or performance of a contract. Meanwhile, these contracts eliminate the use of third parties. The majority of ICOs tend to use the Ethereum platform for smart contracts.

Legal advice to ICOs.

Despite the fact that ICOs require blockchain technology to work, legal advice is of the utmost importance. Signing up your ICO in a progressive jurisdiction such as Malta would help the project reach its final stages. An interdisciplinary firm based in Malta, E&S Group, offers an array of services assisting ICOs from their concept stage up the actual offering. Advisory service offered to prospective ICO clients are blockchain, tokenomics, taxation, and opening a Malta company, to name a few. To date, E&S Group has successfully advised over 40 ICOs, all reaching their hard cap.

Now is the chance to set up your dream ICO project in Malta. E&S Group will help you achieve your dream. For further information regarding our ICO Legal Service please click here.  Or contact us on +356 2010 302  or by email on [email protected]

If you have an upcoming ICO and would like to take part in ESTS Seed Competition, please follow this link to know what is required of you to participate.

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Why Utility and Security tokens are not comparable.

Categories Blockchain, Cryptocurrency, E&S Group, Blog, Utility Tokens, Security Tokens

Why Utility and Security tokens are not comparable.

By Karl Schranz – Director at E&S Group.

 

There is a lot of talk on the subject of security tokens. Many industry players seem sure that these will surpass utility tokens in importance in the medium term. I tend to disagree. I believe the creation of Utility tokens is the most important innovation for the global economy since the creation of the banking system. I will tackle the reasons why in another post.

In their purest sense, Utility and Security Tokens are not comparable. The only thing a Security Token has in common with a Utility Token is the fact that they are both crypto tokens.  Their use, rights and how these are valued could not be more different from each other.

Use

Utility Tokens have a use, hence the name Utility. This is to access the company’s, ecosystems, products or services. In the case of Ethereum, Ether (its utility token) is used to be able to transact on the Ethereum Blockchain. Ether was designed to act as a gas fee. This however evolved with Ether being used to transact in many other goods / services making it more of a currency than a means to transact on a network.

Now Ether is not the best example for this discussion as it has become a cryptocurrency due to its wider acceptability beyond its pure use. If we look at other tokens, we can see that these act as the currency of a specific ecosystem. People buy these tokens to be able to use them on the system or platform that they relate to. This use could be to either pay gas fees, pay commission or pay for specific services on that platform.

Security tokens, again in their purest form, have 2 simple functions.

1.)  For the company to raise finance

And

2.) For the investor to make a return.

This could be either in the form of a share of profit or a fixed return.

Rights

Utility token holders have no right except that of using the token for its intended use.  Security Token holders would have not only rights assigned to the token (dividend, fixed return etc.) but would also have expectations. These expectations are the expectation to receive more than one paid for. This would mean that the company issuing these Security Tokens have more obligations toward holders of Security Tokens.  This is the reason why Security Tokens are and should be regulated.

Valuation

Utility Tokens are valued as currencies, based on their use, acceptability etc. Security Tokens on the other-hand, are valued based on generally accepted security valuation methods, depending on what return method is being offered. In its simplest form, this would be the discounting of future inflows to present value.  This makes Utility Tokens very subjective to value and thus the immense speculation and corresponding price swings that we see today. On the other-hand, Security Token valuations are relatively easy to achieve.

Conclusion

It is thus clear that there is nearly nothing in common between Utility and Security Tokens. Security Tokens are one of many forms that already exist for companies to raise finance and for investors to invest in whereas, Utility Tokens, on the other hand, are the creation of an internal currency that supports an ecosystem.

What is so revolutionary is the ability of a company, to raise capital, by monetising the value of its internal currency!

Karl Schranz is a founding director at E&S Group and heads the Tokenomics and Strategy team. Karl has advised on several ICOs, Crypto Exchanges and Crypto Funds. For more information visit our website.

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