Insider Responds To Questions From Crypto-community About The BANKEX Token Sale And More
Seoul based Community Manager Young Kim has spent days responding to your questions and has decided to provide his readers with a more direct and comprehensive approach to clarifying some issues related to the BANKEX Token Sale. Kim has invited Constantine Kurbatoff, Chief Strategy Officer at BANKEX, to respond at greater length to some frequently asked question.
Young: Hello everyone! We here with BANKEX Strategy Officer Kostya Kurbatoff on Skype and were going to ask him some questions that have been on everyone’s mind. Kostya, are there? How’s Boston?
Constantine: Hi Kim! Boston is great! The weather is fine, almost as good as the BANKEX Token Sale! What’s on your mind?
Young: As you known, many token buyers and interested parties have been asking why BANKEX has decided to issue tokens in 2 stages?
Constantine: I’m happy to answer questions — it’s a great opportunity to explain our vision and include people in our headspace. The answer to this question has several parts.
First, an ecosystem as complex as the Internet of Assets can’t be realized all at once — it will take many years. It would be as if a single company was commissioned to create websites for all the thousands of companies around the world to create this web of assets. The BANKEX team understands this and it is part of our vision for the future. Its because of this that we see demand for our tokens will grow over time and our commitment to those who will use our services has led us to the conclusion that putting all of our tokens in circulation at once is unwise. This is why we decided to split the dispersal of tokens into two phases.
The initial Token Sale is needed to jumpstart the capacity of BANKEX to usher in the early period of this ecosystem. We need to raise enough funds to develop our proprietary technology and to grow our team with only the best developers, economists, scientists and other industry experts. We have estimated the number of tokens we need to handle these tasks. We have turned to our advisors and consultants to get a better understanding of the critical volume of digitized assets we need to start with in order to make the system work. As you know, our public Token Sale started on November 28 — supporters could buy as use them instantly, because our platform is not just a marketplace of assets, it’s also a toolkit of financial instruments that will be used for asset turnover — the exchange of funds, a depositary and a for hedging cryptocurrency.
Furthermore, since the BANKEX business model targets close cooperation with established financial institutions, we will offer a range of services that will satisfy a number of needs. We will provide modular Bank-as-a-Service offerings that will enable smaller banks to compete with larger banks in terms of service offerings. These will be services with high demand and our offering will change the banking service landscape to be more inclusive. Some of these service concepts are outlined in our roadmap on the BANKEX web site. In turn, banks and other financial institutions that integrate BANKEX solutions will form the backbone of the early-era Internet of Assets. This will happen using our tokens. Taking into account that in the future the number of services and number of ecosystem participants will grow, we realize that the volume of tokens should also increase. A limited supply of tokens may otherwise cause undesirable rapid growth in the price of the token in relation to other cryptocurrencies. The tokens are designed as utility tokens and their primary use will be in circulation. A strategy of dispersing more tokens at a later date is intended to keep the growth of the ecosystem as the focus of value.
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Young: So BANKEX isn’t aiming for rapid growth of the value of its token? Isn’t that what a token is for?
Constantine: It’s not so simple. The growth of the value of a token is desirable, of course, but there are caveats that we want to guard against. When the price of a token in relation to other cryptocurrencies grows too quickly because of rising demand, this could create issues for both token holders and the BANKEX development team. Rapid growth in value of a utility token is undesirable not only because the services the token is used to pay become more expensive, but also because token holders won’t be able to predict the value of a financial or a service operation with sufficient precision over longer periods of time. To counteract this situation, we have come up with a strategy to smooth out the spikes and reduce volatility of our tokens against other cryptocurrencies — this is the more gradual dispersal of tokens.
The first token sale is to generate funds for our development. The second token sale will be part of the BANKEX strategy to even out the market. Having said that, I should make it clear that the BANKEX team represents a major group of token holders, so we are interested in token rise in value of the token. We want this not from speculation, but as a result of our hard work implementing technologies and services with high demand starting in January 2018.
Ideally we’d like to see the gradual increase of tokens in the system through financial institutions — they are the token holders who we expect will also be the main users of our products and services. To set these institutions apart from our ordinary contributors, many of whom may not otherwise be interested in the services we provide but rather in speculative opportunities, we have assigned some restrictions on the purchase of the second dispersal of tokens sometime in 2018.
Young: Exactly what restrictions on the purchase of tokens are you talking about?
Constantine: First and foremost, we hope to encourage the institutional purchase of BKX tokens by setting a minimum amount of tokens available for purchase. The logic is that institutional buyers from the financial services sector will want to have a significant volume of tokens on hand to conduct operations with BANKEX products and services. Professionals will see the services that we want to offer financial institutions are comprehensive appealing to the market. The structure of these products and services contain significant volumes of financial transactions that need to be paid for in tokens. It follows that institutional investors will be interested in buying these services for the projected price and will therefore be interested in buying a large volume of tokens at a fixed price so that they can then do cost planning for their operations for the future.
Young: So, like buying a month or a year pass for the subway instead of buying tickets for individual uses of the subway?
Constantine: Yes, that’s a perfect analogy. You buy a year pass in order to guarantee a fixed “per ticket” price over the course of the rest of the year even if the price of tickets will change. In the case of BKX tokens, financial institutions who purchase the minimum required volume of tokens will be protected from the potential price volatility of our token.
Young: What other restrictions will BANKEX have for the purchase of tokens in the second Token Sale?
Constantine: To offer security for the entire ecosystem, including for individual token buyers, we will also impose a 1 year restriction on the resale of the tokens purchased in the second Token Sale. This restriction is intended to protect our individual token holders based on the assumption that investors with great financial resources may try and affect the market through large purchases or sales of BKX tokens.
Young: Why just one year then? Why not longer?
Constantine: We have a roadmap on our website. This is our plan of action which anyone can take a look at. In this action plan, we have a timeline of the services we want to create in the future. We’re confident that within a year will have a sufficient amount of realized services that will balance the supply and demand of our tokens and work to withstand any external attempts to affect the token price that may fluctuate as a result of trading large amounts of tokens on the open market. In this way, we’re building our system so that users can be assured of a more stable token price and, in turn, predictable operational costs for BANKEX services over a reasonable period. Assuming that our services will be in place according to the timeline, we will not need artificial restrictions on the token. The incentive works both ways — BANKEX is motivated to deliver its services as a more viable and responsible means of containing speculation and token buyers are motivated to hold the tokens for use within the ecosystem rather than speculation. In this way, everybody will benefit from the circulation of the tokens.
Young: In a related context, how is the BANKEX soft cap of $20 million justified in relation to the two Token Sales?
Constantine: The volume of the BANKEX soft cap is derived from our immediate estimated costs for the upcoming 2 years. We plan to implement a lot of technology and those who watch us closely will see we already have our initial prototypes up and running and that we’ve already begun to develop them with the funds that we raised at the pre-ICO stage from institutional and accredited investors.
According to our estimates, the technologies that we plan to roll out over the course of next year will require about $6–7 million to realize. This is taking into account the fact that all sorts of hurdles are sure to arise. We are also considering the fact that our most prospective clients may request tailored solutions that require integration of particular technologies based on the blockchain, for example, in the spheres of healthcare and real estate. We have estimated that this will require a reserve of another $3 million. So we arrive at a minimum amount of $10 million set aside for development of our platform during the coming year.
Furthermore, we already have plans for the second year of operations. We expect that this period will be even more productive because we will have built a fairly rich infrastructure that will already be very valuable for all community projects. The tools we plan to develop in the second year will help us achieve massive cost reductions or even to achieve zero cost parameters, for example, when moving a financial asset from one country to another. So as you can see the soft cap of 20 million BKX is the required amount for operations and development over the next two years, an amount that will guarantee that we meet our goals and targets. If we collect more than this amount, we will have the opportunity to provide more interesting and even more promising technologies. We are delivering blockchain technologies to traditional banking institutions, but there are a lot of opportunities for us in the insurance and healthcare industries as well. This could both — economics and BANKEX community. The more people will use our tokens the more value will be staying behind them.
Young: There is another figure related to BANKEX fundraising, right?
Constantine: Yes, there is a second ‘soft cap’ sum, set at 140,000 ETH. This is also related to operating costs.
BANKEX technology is built on smart contracts and in order to activate these smart contracts, we need large amounts of gas. The target of 140,000 ETH is basicaly the amount of gas and tokens required for the operation of the entire platform and for all users in a smoothly operating environment. I want to point out that this amount of ETH tokens is intended to support the system over the next several years. Mind you that by investing today, those who intend to use our tokens get them before prices start to fluctuate — ergo early adopters will have a competitive advantage as their operations within our ecosystem will not be affected by the price of gas, the price of ETH or even the market price of our tokens.
Young: Many have asked what will happen if there some tokens are left over. Is there a plan for this?
Constantine: Due to the DNA-like structure of BANKEX, our individual products, and the opportunities for decentralization that come through the blockchain and smart contracts, we have built a certain flexibility into the system so we will not need to reject or burn these tokens. We will not freeze them, as some other projects have. We’re will just putting minor restrictions on them that will be removed if a token buyer who aims to use our technology is interested in its rapid implementation and is ready to pay for it. In this way, if institutional buyers want to buy BKX tokens for an equivalent of 1000 ETH or more, they will be able to approach us directly and buy the necessary amount of tokens for the new technology they want us to develop according to their needs and specifications. We are trying to create solutions that we believe will be in great demand, but have yet to confirm these assumptions in the form of active user demand. If any large company or customer wants to develop a particular a new technology, they can do that by buying a significant amount of tokens, fixing the price for use and funding us.
We very much hope that those who support us — those individuals and institutions that have already bought BKX tokens or intend to buy them — share our faith in this Proof-of-Asset technology and its potential to transform global finance. We very much hope that some of you may join our team as developers or in other roles or just benefit from our future technologies development. We will be happy to see more people that share our values and the values of transparency, safety and reliability, which are provided by new blockchain technology applied to finance. The most important word is a transparency — the basement of the new industry.
Young: Kostya, this is been a very enlightening interview. Thank you for sharing the mind of BANKEX with our supporters. I hope we can have more such interviews in the near future.
Constantine: Young, it has been my pleasure. I think it’s great that we have these chats to keep everyone up to date on what’s going on. I am participating in several of our Telegram channels and routinely answering any questions. I’d be happy to make time to have more such interviews in response to user FAQs.
