Polybius Bank Project: How We’re Building the First Cryptobank with Estonian-Swiss Roots
News stories about new Crypto startups and blockchain projects appear almost every week, but up till now Crypto business has not had its own bank — which you might think a little strange, considering the focus of most of these projects on financial technologies, and the importance of banking services for a business to function.
The Estonian company Polybius Foundation has decided to fill this gap, and is setting up the first bank in the world to specialize in financial services for Crypto startups and blockchain projects: Polybius Bank Project. To find out what this bank really is, why it’s needed, how it’s organized — and, most importantly, how to get involved in the party before it’s too late — read on for our first article on the topic.
A Little Bit of History
The founders of the Polybius Foundation are the same guys who established the mining equipment producer and blockchain development company HashCoins. The company’s first form of business was producing and selling equipment for mining. Obviously, like any business would, they needed a bank account. The conversation with a clerk went something like this:
— What kind of business do you have?
— We sell equipment for mining and then get bitcoin.
— Uh-oh, we don’t want anything to do with that!
You have to understand that the process of accepting cryptocurrencies in the regulatory bodies only began quite recently, and right now it’s in full swing. Before this, about three or four years ago, if you walked into a bank and declared “we mine cryptocurrency”, you’d get about the same reaction as if you’d asked to open an account for your profits from drug running and arms trafficking. In order to find a bank which would agree to hold the HashCoins account, the guys ended up saying that they sold computers and computer accessories (which is basically true, just leaves out the alarming words “cryptocurrency” and “bitcoin”), and they had to take on a higher rate of interest “because of the risk”, which the bank lowered only after years of stable and problem-free collaboration.
Crypto startups run into similar problems all over the world. Only a couple of years ago in Russia, as we remember well, you could more or less get yourself locked up for dealing in cryptocurrencies. The situation has changed since then — in large part thanks personally to Herman Gref, who heard the words “blockchain” and Agile at Western conferences and got straight down to introducing them in Sberbank and popularising them around the country — thanks to which Russia has now become one of the world leaders in developing Blockchain projects and cryptocurrencies. But progress is making its way around the globe rather unevenly, and the problems described above are to a greater or lesser extent still pertinent in many countries.
We chose the “Polybius square” — one of the most ancient methods of cryptography — because it sounds pretty fresh, commercially, and at the same time it’s a catchy and instantly recognisable name.
Launch Course and ICO
If you subscribe to our blog, you’ll get the unique opportunity to watch the process of setting up a bank in real time — where possible, we’ll give in-depth commentary on what’s happening.
- Registering the founding organization, which will control 100% of Polybius Bank Project’s shares — Polybius Foundation. Done.
- The bank’s Articles of Association. An important legal document and the cornerstone of any organization. In our case the Articles will be a little bit unusual — you might even say unique. More on this below.
- Registering the bank. We’re in the process of deciding on a location within Europe. Right now we’ve narrowed it down to the United Kingdom, Switzerland (the obvious choice for a bank) and Lithuania (not so obvious, but also a pretty sweet option, given Lithuania’s intention to become a leader in the field of financial technologies).
- ICO. Initial Coin Offerings can be thought of as the crypto-analog of the more well-known IPO (Initial Public Offering). Instead of shares, tokens are issued — a loan of cryptocurrency in exchange for a fixed share of the profits. One token costs $10. The principles of the ICO are laid out in the Articles of Association for the Polybius Foundation, the Polybius Bank Project’s founder. And there’s going to be a separate post about that.
Why Take Part in the ICO
For most people, the word “banker” has been synonymous with success and a fat paycheck since childhood. But opening your own bank is out of reach — not only in terms of money (opening a bank in the EU requires a budget stretching to several million euros), but also in terms of the necessary experience, knowledge and investment of time; and on the other hand there doesn’t seem to be much point investing in established banks, because there’s no expectation of rapid growth from any of them — so why not think about investing in a newly-created bank? This is the opportunity that Polybius Bank Project offers: a modern high-technology bank, where full compliance with all the demands of European financial regulators is combined with modern technological content, guaranteeing fast and safe transactions to a 21st-century standard. Now you have the opportunity to invest in its development, and guarantee yourself a share in the bank’s profits, protected by a smart-contract and the laws of the European Union. The more you put in, the more profit you’ll get out.
How It’s Going to Work
First and foremost it’ll be a bank — just a normal bank, a financial institution for everyone. Polybius Bank Project will offer a traditional selection of financial services such as deposits, credit financing, issuing bank cards etc. not only to Crypto startups, but also to normal businesses and, of course, individuals.
What’s more, we’ll be making use of the very latest technological advancements, both of the Crypto variety and normal.
The point is to reinvent what can be reinvented and optimise what can be optimised in a modern financial institution, within the boundaries of the Procrustean bed of currently existing legislation. European legislation, of course, has never been known for its brevity. From one perspective, this is a positive: the very fact that the bank is located within European jurisdiction guarantees a European level of protection for investors’ rights.
— Articles of Association with a smart contract. According to the conditions of the ICO, a payment of 20% of Polybius Bank Project’s profits will be set aside for investors and guaranteed by a smart contract. The very fact that concepts like a smart contract and an ICO can appear in such a conservative document as the Articles of Association is something of a breakthrough, and a genuine sign that changes are already underway.
— AI in credit financing. As all banks do, we will deal with credit financing. And for scoring — i.e. determining the client’s borrowing capacity — we’re planning to use neuronets. Perhaps that doesn’t sound super innovative, because banks are actually already introducing similar technologies all around the world, but we will reinforce artificially intelligent scoring with one more curious development of our own design.
— Digital Pass. This is where blockchain comes in. Digital Pass will be a universal decentralized repository of private information about the user — from their credit history to their medical records — in blockchain, which only they will have access to. The role of Polybius here consists of working as a proxy to verify the data submitted by the user.
The information authenticated by the bank will be valid for all credit, financial and many governmental and private organizations around the world. What’s more, the user will be able to decide for himself what information can be accessed at the request of one or another organization. Want to get credit at Citibank? Instead of having to deal with a ton of tedious inquiries, simply provide access to the part of your Digital Pass which contains your credit history. Buying health insurance? Share access with your agent for the part of the repository where information about your health is. Because the repository is decentralized, your information is guaranteed to be stored independently from the status of Polybius Bank Project itself.
Services for Crypto Projects and Crypto Fans
Not the only, but certainly the most important reason why we started all this is to provide support for Crypto startups and Crypto enthusiasts around the world.
— For legitimate Crypto projects — i.e. those not involved in any illegal activity — it will be no trouble at all to get an account and the chance to apply for credit in Polybius Bank Project, on a general, non-discriminatory basis. In a certain sense, it will be even easier for them to work with us, because the team behind the bank is full of Crypto fans and enthusiasts — we will easily be able to find common ground.
— Credit financing on the security of cryptocurrency could also be an interesting option for many Crypto projects and Crypto users. Just picture it: you’ve come up with a new crypt, and you’ve come to Sberbank to get credit for its development, given that you may have no other assets to offer as security. Or not Sberbank — put any other high street bank, Raiffeisen or Citibank for example, into this thought experiment — the result will be exactly the same. Polybius Bank Project on the other hand would consider the proposition with pleasure. Our experience and expertise in mining and the creation and development of Crypto projects will help us to evaluate your prospects and maybe even give advice on the direction of future development.
The People Behind Us
The Polybius project only became possible when those with experience, knowledge and the desire to make modern digital products came together with those who have financial expertise, banking experience and an understanding of what can and can’t be improved within the conditions of existing regulation. And so, at the outset, our bank gathered a motley but exceptionally strong team of experts from very varied fields: a formidable team of programmers, experts in security and cryptography, financial platform developers, credit agencies, bankers, lawyers and experts in European regulations. In our team we’ve got a fair few doctorates, and our combined experience in what we’re looking to do comes to more than a century. You can have a look at our team for yourselves on our site Polybius. We’re very proud of our people and we definitely want to tell you more about them, but for now let’s start with a few names.
Ugo Bechis. Strategic Consultant for Polybius Bank Project. When a technology company launches a bank, they’re presented with two problems: on the one hand, some ideas will be simply impossible to realize given modern legislative limitations; and on the other hand, due to a lack of banking expertise they may miss some really worthwhile trends and fail to spot empty niches. So that this doesn’t happen to us, we have Ugo to help us: a distinguished financier who built his career in some the biggest banks around, including Deutsche Bank and Bank of America, and a member of the European Electronic Cybercrime Task Force. His many years of experience in the financial world have covered all aspects of the banking business: from how financial transactions are carried out, to building a bank from scratch. For the past 14 years Ugo has been at the forefront of the financial world, and he can not only refine the company’s development, but also suggest new directions to move in.
Ivan Zakharenko. In the Polybius Bank Project, Ivan is in charge of creating and promoting banking products and services, starting from his own knowledge of the demands and requirements of the market, and his decade of experience working in banks such as Swedbank and Citadele Bank. He held the post of Director of Corporate Development in Expobank AS, Senior Major Account Specialist in Baltikums Bank and Major Account Specialist in Parex Bank.
Pavel Kravchenko. Ph.D. in Technical Sciences, cryptography expert. Kravchenko is a technology security adviser of Polybius Foundation. He is also one of the founders of AtticLab that has developed the openbankIT banking system. A part of the system includes a cryptographic processing core that has been certified by the Federal Bank of Ukraine.
Sergei Potapenko: the idealogical inspiration behind Polybius Bank Project and co-founder of the Polybius Foundation. He’s also co-founder of the HashCoins company which has been producing equipment for mining since 2013, and also develops Сrypto projects, including the HashFlare service for cloud mining, whose users number over 500,000.
Oleg Khovayko. A specialist in cryptography, Oleg advises the technical specialists at Polybius Bank Project on questions of cryptography, security and blockchain usage. Oleg is one of the creators and the Technical Director of the Emercoin project — we’ve described in our blog their many technical innovations using blockchain.