At Bytes, we try to innovate in all we do. Doing things differently yields new insights, enabling us to tap into new value drivers. We take this approach to everything, including how we incorporated our company (Bytes R&D).
What we did
On June 27, we became the first French company ever to incorporate using cryptocurrencies as initial capital. While companies typically use money or assets (like intellectual property or real estate), we used bitcoins.
Why we did it
- To demonstrate that a "regular" company can exist without a bank: with revenues, assets, and expenses all secured by the blockchain.
- To open a dialogue on how to treat bitcoins from a tax and accounting point of view, a major theme in Europe.
In many countries, the company registration authorities demand that a bank account be open ahead of a company's official incorporation. No bank account, no incorporation. Unfortunately, most banks refuse to open bank accounts for Blockchain startups. As an example, the French “La Maison du Bitcoin” had to go to Germany to open a bank account!
We just showed this entire hassle is unnecessary.
How we did it
Technologically, the process of funding a newly created company with Bitcoin fairly simple (although one has to be careful of getting the cryptography right). We started by mining an address for the company:
Second, we transferred bitcoins we held at an exchange to it. Everything is auditable @ Blockchain.info. Voilà!
Three (legal) remarks:
- The regulator typically does not consider bitcoins to be currency units. Therefore you need to treat them as "intangible personal property", and have an accountant/expert value them upon incorporation.
- We recommend transferring the initial funding from an exchange since this takes care of proving the funding source (as reputable exchanges will have taken care of the KYC anyhow).
- We had to demonstrate that the address 1BYTESu3… really is in control of the company. We did this by signing, using the private key corresponding with this address, the following message:
Bytes R&D S.A.S., in the person of its President, Samuel Martinet, hereby demonstrates control over this address.
For the cryptography inclined (an explainer):
- public key: 04e01c90696a276a735c26919ebc9062d239351b139d877958405381187753bae0eb5bfa32e77cd358c637d34ca6bee471ddfe220437448b3f69c01ed677707707
- signature: G1misERoCfTmsRKEnYmgSl1c6Du3FGWxSIUKN9gx2X7W+LPMejtYKaLyzmXlY+l1I0f8NMtGuD1xvK6akSWaxZg=
To ensure immortal existence to our founding act, we saved it in IPFS (@ Qmf5vz9LDVE7pLGPKyMhTJBshzX5HbeRxnzK7sZ9jFjjYF).
Arriving at this stage took months of efforts and coordination with accountants and lawyers (a thousand thanks to Marine M.D.). On the other hand, the procedure itself is very simple. For us, it shows that many cumbersome formalities could be cut down to a one minute exercise using the Blockchain.
We hope to pave the way for many others in France and abroad. In the meantime, we will keep surprising you!