poet blockchain digital assets - hashed health

Interview With Tyler Evans of PO.ET – Ep006

poet blockchain digital assets - hashed health

John Bass from Hashed Health interviews Tyler Evans of Po.et. Po.et is a shared, open, universal ledger designed to record metadata and ownership information for digital creative assets. Po.et is a continuation of Proof of Existence, the first non-financial application of the blockchain. By creating an open platform on the Bitcoin blockchain, Po.et aims to create the most institutional, globally-verifiable record of digital media assets.

Full Podcast Transcript

[00:00:06] Hello I’m Philip Claudio you and you’re listening to the Hashed Health podcast. This show is dedicated to everything healthcare and blockchain related here at Hashed Health we have begun this incredible journey of developing blockchain solutions for healthcare. And we have the privilege of being able to talk with amazing people about this subject every single day. The goal of this show is to include you in these conversations. Join us as we host meet-ups, attend conferences and conduct interviews with our friends and other industry thought leaders. You can find more content like this at hashedhealth dot com that’s W W W dot H A S H E D Health dot com or connect with us on Twitter @hashedhealth. Here we go. Tyler Evans is here. Tyler’s the CTO of BTC Media which is a digital currency media group. Probably the largest of those in the world. Based here in Nashville they just moved from Cummins Station down to the Pinnacle building and they have resources that you’re probably familiar with including Bitcoin Magazine and Distributed and they are the hosts of Distributed Health Conference as well as Distributed Trade and Distributed Markets and a bunch of other conferences as well. So we’re happy to have Tyler here tonight. He’s going to not be focusing so much on BTC but he’s also the, an adviser and a board member of PO.ET and so we’re going to focus the conversation side on the PO.ET token sale. PO.ET is an open platform for managing digital assets and I will let’s just real quick welcome Tyler and thank him for for being here tonight.


[00:02:11] So Tyler before we get to the token sale maybe we should set up a conversation just by talking a little bit about PO.ET the problem that PO.ET is solving and the value proposition of PO.ET. Sure. Well glad to be here tonight we get to talk about ICO’s which is everyone’s favorite topic these days. So can looking forward to talking a little bit through the PO.ET process and kind of around the decisions we made. And just the market in general because we work with and advise for and consult and do marketing services for a number of token sell projects that are happening all over the world. So we can talk a little bit about those. But the one that I’ve been spending most my time on for the past couple of months is called PO.ET and it’s a project that really came out of what we were doing at BTC Media as John mentioned we run a media company for the digital currency space here in Nashville. And so we’ve been covering the blockchain industry for almost five years now and looking at some of the ways that different companies are applying this technology to solve problems around tracking all sorts of different data using a blockchain. So everything from you know real estate transactions to settling stock trades to health care and electronic medical records. What Hashed has help bringing to the spotlight here in Nashville. And so we looked at all these different projects going on and started to ask ourselves, what’s a problem for us as a media company or as a publisher that we could use blockchain technology to solve?


[00:04:01] And so over the course of really about six months we kind of kicked around some different ideas and looked at some of the different pain points we had and decided to build essentially an application for ourselves that solved a particular pain point around the licensing and attribution and essentially just tracking ownership and metadata about digital media assets. And so we’ve built PO.ET to solve that problem and then kind of abstracted it to be able to provide really a low level protocol for other people to build applications and smart contracts and new features that interact with digital media assets. Whether those are articles or photographs or video or even audio. And what are just a couple of the use cases that you see coming out of PO.ET? So you know one of the biggest use cases we built PO.ET to solve was around the attribution and acquiring content. So today for one of our publications when someone approaches us and wants to write for us as a freelancer or when we find a great article on medium or on someone else’s blog that we want to share.


[00:05:31] We have to manually contact that person and negotiate the right to republish that article and whether there’s a fee involved for the author and those sort of negotiations are timely and especially if there’s any lawyers involved very costly for an article that is you know ends up being very very inexpensive for us to license. And so we built PO.ET as a way for us to essentially automate and digitize those interactions where we can discover content that’s registered on the PO.ET blockchain and license it and pay for that content instantly using a digital currency. And in the same way this enables a freelancer or journalist to be able to write an article and put it up in this sort of content marketplace for any publication to license even if they’re on the other side of the world or they have no U.S. bank account or no preexisting relationship with the publisher. Do you see it as just media or do you think that over time it kind of goes beyond that to other types of music or other types of digital assets? So yeah that’s an interesting question. You know as we’ve looked at this problem it’s not a unique problem to the digital media industry at all and really tracking ownership and provenance of of all sorts of goods whether that’s food passing through a supply chain or whether that’s the title to a piece of real estate is a complex problem in the analog, non-digital world, but we built PO.ET really to instead of trying to go wide and build you know one size fits all solution. We really narrowed it down on on the industry that we know best which is publishing to build out those features and you know my hope for the platform is that what we’ve built so far really does have value for people in the music industry or in Hollywood in the movie business and that we designed PO.ET to be flexible enough to accommodate different use cases as it develops. But our initial roadmap is pretty much all around publishing. That must have been kind of a tough call though because you have these ideas and you play them out and you can do all of these different things we should, you see a lot of ICO’s and token distributions of it’s out there that are kind of going for this big wide vision rather than narrow.


[00:08:18] And I really think it’s cool that you guys were very focused in your approach knowing that it could be expanded to a larger set of use cases but you were very focused and narrow. And I think that, you know tell me, just expand on that a little bit. Was that a hard decision to make and why did you why did you position it that way? You know it was something we discussed for quite a while. You know one of the unique things about being a media company is we have the benefit of of covering hundreds of other companies who are building blockchain projects and talking with their teams and talking with their clients. Fortune 500 companies that are are accepting submissions for different proof of concept projects. And so you know from from watching this industry for a couple of years it was something that we kind of observed that the people who could hone in and focus on solving one particular problem seemed to be able to get traction a lot quicker than than you know companies that were building a general purpose platform that still had to be adapted or you know iterated on to meet every different customer’s needs. And so we said hey we already have customer BTC media let’s build something that fits our problem. And then from talking to other publishers in the crypto space we knew that we could also take the same technology and solve the same problem for a number of different publishers and then grow it from there. That’s great. It makes a lot of sense. Why is a token sale? What in your mind, what purpose did that serve for for you guys as you were thinking about how to approach the market. So real quick here.


[00:10:15] Who is familiar with the concept of a token sale or ICO as there more commonly called? All right. Good. So so they’re all the rage these days so I’m glad there’s some familiarity. You know this phenomenon has really swept through the industry in the past 12 months maybe even a little quicker. And I think we’re almost up to three billion dollars cumulatively raised in this token sale model with the majority of that coming in the last six months. And I think you know this concept has gained adoption so quickly because of a couple key things. The first is that it is just opens up companies and projects to be able to raise funding from a global pool of investors for the first time you know where traditionally seed stage startups have been limited to raising from networks of angel investors or from venture capitalists on Sandhill Road or I’m in in pockets of the U.S. For the first time using this truly global technology, these companies and these startups can appeal to a global audience and raise funds from anyone. And so that has made the fundraising process a lot easier for a number of the companies we talked to who pursued this model. Now that’s a little bit for better and for worse because it certainly lowered the bar, the standards for due diligence on some of these projects. But the other kind of key value driver for token sales is that it gives you an engaged, invested community of people that have a financial stake in using and sharing and evangelizing your product.


[00:12:19] And so that’s an extremely powerful social force to be able to motivate and empower tens or hundreds of thousands of users who now not only are excited about your project but have a direct way to kind of participate in the upside of its success. And so you know a number of these projects have have been very very successful and grown very quickly. One example is a publishing platform called Steam that is similar to Medium but where content creators on the platform are are rewarded and incentivized with digital currency and because they’re rewarded for people reading and uploading and liking their articles. Now they’re sharing their content even wider and there’s a built up community of millions of readers who are you know invested and have a stake in the success of this project.


[00:13:22] Steam has an interesting token design where you know the speculation happens with Steam and then you’ve got Steam power you got Steam dollars and that’s it’s a multiple token system that was really thoughtful. I think those guys are an example of someone who really thought out the crypto economic formula pretty well. I think you know for a lot of people that’s harder than it sounds. It’s easy come up with a token concept I think it’s harder to kind of make sure that there is an actual economy within the application and you know token centric design in those types of things. What are some of the concepts that you guys focused on to to make your token sales the success that it was? So there’s a, there’s a lot of pieces there that go into really creating that ecosystem and being able to tell the story and structure the project so that it’s attractive to investors.


[00:14:31] You know one of the things that that is unique about these projects is is that token really has a utility and most of these networks. And so there’s a wide range of tokens being created that do variety of different things kind of on on one spectrum you have tokens that function more like a network currency like Ethereum that’s used for essentially paying for compute power on the blockchain or on the network you’re working on. And then on the other side of the spectrum you have tokens that are representative ownership stake or are security or represent kind of a share of a fund which is like the blockchain capital token, where they had a traditional venture capital fund and were able to work with regulators and with a law firm to tokenize a piece of that venture capital fund. So now anyone could buy and participate in the upside and returns of their fund not just their original investors. I’m in and everywhere in between you have tokens that function really as more of an API key to access the system or you have tokens that are maybe a proxy for governance where the staking or holding the token gives you a right to vote or kind of have a say in the direction of the project. So that was something that we considered a lot with PO.ET and how we structured the token and landed on a model where the token holders participate in in the system by having by being incentivized essentially to perform actions on the blockchain. So one of the issues with a registry of digital media assets is now for the first time you know anyone can register a work of art or an article on this blockchain.


[00:16:40] And so that means that I could also go upload an article from The New York Times onto PO.ET and claim authorship of that. And so the network has to have a way of resolving disputes essentially about the ownership of content or the ability to be of a certain licence or how those assets are being used. And so that’s really how we design the token to be a way to economically incentivize other actors on the PO.ET platform to help arbitrate and resolve those disputes and in exchange the token holders earn a share of the essentially the transaction fees or the licensing fees that are generated on the PO.ET platform.


[00:17:29] So there’s an incentivization to become part of the governance process and the resolution of, in moments like that become part of the trust factors that go on within the network. Exactly. Cool well let’s talk a little bit for a minute and we’ll open it to questions from the audience as well here in just a few minutes. But let’s talk a little bit about the token sale itself. So I think you completed your token sale on the 8th of August. Yep. Raised ten million dollars. Let’s just talk about kind of the, just explain kind of at a high level to start the token sale how it was structured and some of the highlights there.


[00:18:19] So in terms of the structure for PO.ET we landed on a structure where we sold 50 percent of the tokens in the public crowd sale. So there is a fixed number of PO.ET tokens that will ever exist. And some of those were given to early angel investors.


[00:18:41] Some of those were given to the team that built the project and then 50 per cent of them were sold to the public in the sale. And we set a hard cap for the funds we raised at ten million dollars. So 50 percent of the tokens for 10 million dollars which would imply basically a market cap for the whole project of 20 million dollars. And this is something that we put a lot of thought into about how to price the project. And you know there’s a couple of different strategies we’ve we’ve seen develop here in the market. There’s some projects like PO.ET that take a pretty conservative approach and set a low cap which leaves a lot of room for investors to do well and to have the project appreciate if it’s successful. And then on the other hand you have some projects that have gone with uncapped raises where they’re simply trying to raise as much money as they can from investors. And you have a couple over the past few months Tezos and EOS and Filecoin that have raised hundreds of millions of dollars each, and all of those projects have very very ambitious roadmaps of building new essentially new smart contract systems or Ethereum killers which has enabled them to raise a lot of money. But for PO.ET we felt very strongly to try to keep it realistic and this whole token market has has gotten so hot in the past six months that valuations for some of these projects are just totally absurd and we didn’t want to have PO.ET be be one of those projects that people pointed to and said you know this is just totally unrealistic.


[00:20:41] So given the NBP we had and the technology we built and the team we had behind it we felt like ten million dollars would be plenty to take the projects to where we want it on its initial roadmap and basically see if if this was viable and if we could really get PO.ET to be adopted by media companies.


[00:21:04] So there’s a couple token sales out there that have been put on a pedestal as flawless token sales or ICO’s. Aragon is one that I think that a lot of people say man that was a good a… Bancorp maybe not so much. Down 50 percent. Exactly. I can think of a few others as well. But would you say you had a flawless to conceal. Not at all. It was a all I’ll say is it was very, very stressful day. There was a couple things that went into that but you know basically we had been working on this project for about six months and had been telling the world about it and you know onboarding publishers and advisers and we’re all ready to go with our token sale. But the critical piece that we were missing is that we ended up using a partner to actually administer the sale that kind of build the checkout flow where you would log on and you would send Bitcoin or Ether to an address and it would record your purchase and send you a confirmation email essentially. And so we did, we had spent months getting people excited about the sale and building up a whole community of people that were counting down to August 8th. And then the moment we opened the doors on the sale and let the crowds of people come rushing in the servers that were running that checkout process just couldn’t keep up with the load.


[00:22:46] And so the servers started crashing and people’s pages weren’t loading and no one could get through the checkout process. And so it was very, very bad. And so we ended up having to actually pause the sale after about an hour. I think we had gotten three people who had successfully made it through the whole checkout process just because of you know we essentially unleashed a massive DDoS attack on on the server of servers of our partner. And so we hit the pause button and they were on the phone with AWS support frantically trying to get them to increase the limits of their their AWS account for more servers and load testing the application. And so we put things on hold for 12 hours to try to get things to a point where they’d be stable and investors were understandably a little upset that they couldn’t participate at that time. So our community managers were busy in our Slack channel and telegram group trying to defuse the situation and appease people and even creating some some means to help pass the time. And then 12 hours later after a lot of Red Bull we we opened up the doors again and again it was a disaster. Twelve hours hadn’t really helped us. And people were still unable to get through the checkout. We were getting a few through. I think we’re on a rate about 40 people an hour. But still just melting under the load essentially.


[00:24:42] But one of the engineers from our team was hot debugging the code during the sale and kind of identified the bottle neck and was able to push a patch pretty quickly that let people, that open the floodgates and let people actually complete the checkout flow and so as soon as we were actually open for business the sale sold out in about 15 minutes. So it was a stressful 12 hours to say the least. But at the end of the day everyone was totally wiped but relieved that you know it’s been a success. Thanks.


[00:25:22] We were expecting a book to be written next year. One of the best pictures I’ve seen all year is a picture of David Bailey about halfway through this process. I think Emily may have taken it and sent it to me, but it’s classic. I should have put it up on the screen. But I mean so that’s the that’s like the stuff that must have been an epic day and very stressful but, ten million dollars in a couple hours while it was up is a pretty impressive sale and by all means successful. What are you most proud of in terms of how you executed that?


[00:26:08] Ah man that’s a long list. We have some incredible people on our team that that pulled it off. And you know I think we were able to attract some very, very high quality investors and advisors onto the project. You know people with a lot of credibility in the media community with you know backgrounds at Yahoo and at BBC and at Samsung at Vice, that really was a positive signal to the market that that you know we were really on to something here that could solve problems for all sorts of publishers. And so I think that was a big factor in our success.


[00:26:51] I also want to give a shout out to our China team who also worked tirelessly for a couple of months to translate all of our materials and our white paper into Chinese and to host meet-ups across the continent and we had a huge turnout from the Asian community in our token sale as well. But man, 10 million and you’ve got these people around you raising, Tezos’ raised 270 million right around the same time in an uncapped sale. So in a world you know where it’s like the news makers are these huge uncapped sales just must’ve been really hard to say no we just need ten. That’s very, very rational, thoughtful, conservative approach that must have been kind of challenging. I know that things have evolved very quickly to get to these numbers but you certainly could have raised a lot more than you did and it must have taken a significant amount of restraint and debate amongst the team members to land on that number.


[00:28:03] It did. But you know at the end of the day one of the things that was super important for us as well was to to price and value the projects such that the people in our community and the you know early investors and the people that believed in this from the start had some opportunity for upside. And when you have a project like Tezos that raises 250 million and is trading at a billion dollar valuation for a pre-product, pre-revenue startup. Time will tell if there’s much upside for those investors.


[00:28:41] So yeah I think that’s a great point pre-product right. So you guys not only, did you are you kind of thoughtful about the mechanics of the token in the token sale itself. But I think another

thing that’s pretty impressive is you actually had a product. It’s not something most people who do token sales can say. Tell us about kind of where are you guys are in the product and the timing of developing a product versus executing on the sale.


[00:29:12] Yeah. So that was also one of the things that we kind of felt very strongly about from the get go is that we needed to have a product we could show to potential investors to prove the concept and let people interact with it and see it on on our sites before we tried to raise any money for it. So we had built out that MVP of the PO.ET network which essentially ingested articles from our publications from Bitcoin Magazine and Distributed and also from a number of publications in the digital currency space, Crypto Insider and the Merkel and Coin Speaker and a couple others, and the MVP took all those articles hashed them included the meta data and registered them on the PO.ET blockchain and that’s something you can go check out today. If you go to a Bitcoin Magazine dot com and read any of the articles on the left hand side bar there’s a little badge that says verified on PO.ET that shows where that document’s been registered and hashed into the PO.ET blockchain. And so you know from from there we’ve got a lot of things to build and that’s you know our plan for the next couple years is to deploy the money we raised primarily into development of additional features on on top of that as well as onboarding other media organizations and expanding beyond just publishing.


[00:30:54] So I’m hearing some keys to kind of the success right, so cap sale, product available, customers kind of in line are already onboard. Any other kind of best practices that you want to recommend to our listeners in the crowd? Yes. So just kind of has as a framework for evaluating these projects so if you hear about a new token sale a couple things out to encourage you to look at one, definitely the team. Are they real people with real GitHub profiles or real LinkedIn profiles who have some sort of relevant background just like you would if you were investing into an early stage startup. Like does, do the people make sense? Does the problem their solving make sense? And more importantly does it need a blockchain? That’s a hard question to answer for a lot of projects but looking really at how they’re using this technology and what the token does and why the they need a token that is held by you know a large community of people to really accomplish their purpose is something that’s super important. And I think that’s an area where a lot of projects that are just a money grab really struggle and then I would look at the structure of the deal. How much are they selling them the tokens? At what cap? And you know especially from a perspective of an investor that’s super important for you to know what you’re buying it one at what price. The other thing that we haven’t really talked about at all which I’m sure I’ll get some questions on is the legal or the regulatory aspect.


[00:32:56] How did they structure their projects kind of in what what jurisdiction to be able to have an entity or a nonprofit that operates this project long term? Yes. I think let’s talk about that before we get into kind of what’s next for PO.ET. How did you guys, you know it’s a very dynamic environment out there in terms of you know there’s been recent announcements from the FCC and FinCEN and we talked about that in the last meet-up just recently there were announcements by the Chinese government, South Korea and others. Obviously all of this has happened since your token sale. Maybe a two part question One is how did you think about the regulatory environment going into the sale and then what are your thoughts on some of this recent news since the sale happened and is it is it changing the things that you would’ve done differently?


[00:34:04] So for, for these type of token sale projects there’s really two kind of structures that have emerged as the most common, most battle tested which is you know keep in mind everything is basically 12 months older or newer. So battle tested is pretty pretty relative. But two, two past a lot of projects have I have used successfully up to this date. One is a framework in Switzerland which is kind of what the Ethereum Foundation did when they did their token sale originally and is essentially setting up what’s called a shiftong in Switzerland which is a foundation that can operate

with this structure.


[00:34:59] What we did with PO.ET is actually use this similar structure that’s based in Singapore, where the monetary monetary authority of Singapore has set up a Fintech sandbox for all sorts of blockchain companies to be able to have more more flexibility and more clarity and a little more guidance as they seek to do things that are are kind of fall in in a new area that has no real regulation to date. And so we structured PO.ET as a Singaporean non-profit essentially that has the mission to develop these open source blockchain media technologies. And so the foundation is the one that’s governed by a board of directors that’s going to be deploying the funds raised in the token sale for the development of PO.ET over the long term. I’ve heard Isle of Man is now making a run as the next Zoog. And actually Canada today came out with their own kind of Fintech sandbox for a specific token sale project that was very favorable where the regulators essentially said we’re willing to work with you on this project, and even though you know your base for the project they looked at in question they said you know this would be considered a security by traditional Canadian standards but we’ll let you do this on a blockchain and you know let’s all figure this out together rather than trying to shut it down or stop innovation.


[00:36:51] So it’s pretty you know as we all are here trying to make Nashville a this hub for blockchain activity. And you know at least in healthcare and maybe music and education our our industries the ones that we kind of claim as Nashville’s hot hot spots but it could be challenging over time you know if if the regulatory environment is much less friendly here than it is in Canada or Isle of Man or Zoog or Singapore. It’s a race for innovation and in some ways it seems like the US is a little bit hamstrung in that in that race.


[00:37:35] It definitely is, you know basically for for the main reason that the FCC regulates anything anywhere in the world that has to do with U.S. citizens. And so you know for that reason a lot of projects that fall in a gray area including PO.ET basically out of an abundance of caution have no choice but to cut off the U.S. market. And so for the PO.ET’s sale we restricted the sale of it to U.S. citizens even though you know that in all likelihood it would have been fine just out of an abundance of caution. I think the majority of projects these days are are banning U.S. investors.


[00:38:26] What’s the way the way people do that is they just geofence the token sale? That’s the primary way. Either, either geofence or you know require some sort of KYC for U.S. people. So what’s next for PO.ET? Like Ben and I were talking about this earlier. You know you do this big token sale and it’s successful and you kind of take a deep breath and you realize you’ve just done this big sale and you’ve got it now execute on a strategy that has a whole new set of challenges. So kind of tell me quickly what’s next for PO.ET and how do you execute? I know you’ve got these milestones that you’re looking to accomplish. Just take a quick overview of that.


[00:39:11] Yeah. No. Like you mentioned the real work begins now. As much fun as the token sale process was. So now we’ve got a community of thousands of investors basically that hold us accountable for executing on the vision and the narrative we told. So we are getting to work primarily hiring for PO.ET now that we have these resources to deploy. So if anyone’s interested in blockchain tech job come come let me know afterwards. But we’re hiring particularly beefing up our technical team from growing it from three people to six or seven people and then expanding our reach with publishers. And and you know I feel like working directly with more publishers and interviewing our customers essentially and learning more about how we shape the development of PO.ET to meet their real pain points is going to be really important. So we’re opening a office for PO.ET in L.A. as well as Nashville. And additionally we’re committing some of the money raised by the PO.ET Foundation to funding other decentralized media applications that are built on top of PO.ET or that could integrate with PO.ET as well.


[00:40:44] So one other question for get your thoughts on. I mean it’s a lot of these token sales that are going on now not yours but a lot of the ones other ones that you read about and hear all these podcasts and things are you it’s kind of like this rush right? To get in you know I think one of the hard things is when you’re preparing for these these distribution events or sales or whatever you call it, you’re making these decisions and that rush maybe cause you to think in more short term but these small decisions as part of the planning have long term effects. And I think that’s just something that seems to me is going to require some patience and require some thought. It’s just it’s just something kind of reading between the lines it’s something that you guys clearly have thought a lot about how these small decisions can have these bigger long term effects that can become limiting factors to your success over time.


[00:41:42] And one thing that’s even even crazier on kind of on that point is that there’s a number of projects who have completed their token sale maybe 12 months ago or 10 months ago where it was a team of eight people that did a similar raise and now the price of bitcoin and ether has exploded since then. And so you have a couple of these teams now that maybe raised 30 or 40 million that are now sitting on 700 800 million dollars worth of crypto. So those guys are the ones that have, that really have the work cut out for them. Last question before I open it up, when can people buy the token? And what’s the process of getting it listed on exchanges so that people out here can can buy? So we distributed the PO.ET token three weeks after the sale. So it’s an ERC 20 token which means it trades on top of Ethereum. And so at the time of the sale we collected ether addresses for everyone and then sent the tokens to those folks and basically immediately it started trading on some decentralized exchanges where people are trading peer to peer and since then a couple other ones have added it and there’s a couple more in the process of adding it to hopefully bring some more liquidity to it. But right now the majority of the volume happens on on an exchange called Ether Delta. So you can go check out PO.ET on there that ticker is POE, Poe and see what it’s trading at. It’s on Queen Market Cap or Block Folio if you use either of those sites.


[00:43:41] All right. So now it’s your turn. Ask questions. Yeah go ahead. (audience question) Can you repeat the question? Yeah. So the question was, A. did we KYC people? and B. what are the regulatory implications for exchanges? For the post sale we did not KYC people. We, we geofenced and we had people self certify to you know all of our terms and that they weren’t a U.S. citizen. But beyond that we didn’t we didn’t actually you know do any any KYC checks. Are you concerned about that? I would be if you were taking money from U.S. investors. But not so much for an inter…international audience. And I think when you look at the majority of projects that’s kind of the same standard that that most are held to. On the exchange front you know the SEC’s guidance from about a month ago was actually focused more around the exchange piece than the actual token issuers. And so I don’t know that side of things as well. But basically beyond the token sale being compliant there’s cases in which either individual investors or secondary exchanges or broker dealers do have different obligations depending on the project down the line. And you know one of the things that SEC said in that memo was that they are going to be looking carefully at exchanges that are trading what they consider securities. Like projects like blockchain capital that are definitely a security and whether they’re trading essentially an unregistered securities.


[00:46:01] I just wanted to follow up on what the Chinese announcements of banning ICO’s. I had read that some of the previous ICO’s are refunding money. What are your guys stance on that? So you guys had a lot of Chinese investors.


[00:46:14] So for those that aren’t aware Monday morning the Chinese government came out with a pretty harsh stance on ICO’s, essentially pressing pause on everything going on in the Chinese market about these token sales. Telling Chinese projects that they needed to shut down and refund the investors. Telling ICO platforms that they needed to shut down until there was further regulation and telling the exchanges to stop trading a lot of these tokens. Basically everything except Bitcoin

and Ether. And so understandably caused a lot of concern in the market. I think the Ether price was down about 25 percent after that announcement but it’s rebounded a little bit. But I see this as you know similar to when China banned Bitcoin which has happened a couple times for those of you with a memory. Where essentially the regulators realized that this thing is really getting out of control and moving faster than they could keep up with. And so they they kind of played the nuclear option in terms of putting a stop to everything until they can get their head around it. And you know from the people we’ve talked to in China I think it’s likely that there will be more regulation coming and that there will be a licensed or regulated path forward for these projects in the future may be coming as soon as a couple of months, but until then everything is on pause. Oh you said that you went and you sold to (unintelligible) or sold to non-U.S. Did you consider, or I don’t think coinless is really anything at that point, did you look at just selling to accredited investors in the U.S. versus doing the ICO where it’s just open to everybody?


[00:48:28] So for the we actually did sell to some accredited investors in the presale. So not in the in the ICO itself but early on to fund some of the early development of PO.ET and for those people we did you know check that they were accredited and we did do KYC. (audience question) the 50 percent. (audience talking) They actually are in a different 10 percent bucket for the seed investors in the project. One, thanks for sharing everything tonight. It’s great to get an inside peek at this. So realizing this is probably too logical of a question, will this thing trade on one pure speculation? But if not does it really matter how many digital publishers want a coin to be able to have an article protected or what value a person might review an article to see that’s really New York Times? Is that going to determine the value of the token or is it how much is that foundation worth that owns 20 million tokens? I mean I know it’s wild speculation, I’ll buy anything crypto but you know back to what do I really own is it based upon the operations or is it based upon the value of the whole thing?


[00:50:02] Great, great question. I think the price for all these assets and including PO.ET is really driven by speculation. First and foremost right now the market is just so hot right now. But in terms of the long term value I do think it’s a combination of both. It’s a play basically on the use of the token in the network now. It’s a play on the quality of the development team in terms of what new features or new use cases or new things you’re going to be able to accomplish with the token and how they’re going to move the project forward.


[00:50:42] And then it’s you know involvement with the foundation that has all these assets and is holding the majority or the essentially 30 percent of the tokens for the long term development of the project. (audience comment) Exactly it’s a nonprofit. So there’s no equity investors and there’s no real shareholders it’s just people that have the token. So quick question Tyler. Can you talk a little bit about the difference between a traditional venture raise versus the ICO model? Such as you know there really can’t be a series A or series B when the total amount of tokens is capped from that from the get go and the planning roadmap is much longer perhaps than maybe what a traditional company looks like that can dilute investors in the future.


[00:51:54] Yeah. So you know kind of building off the last question. What’s unique about the majority of these projects is there is a fixed amount of tokens and unlike venture financing where you may issue shares in the future that delete, dilute your first investors or your early employees to be able to keep raising money. There’s a there’s a fixed amount of tokens and everyone can see that amount. And so the calculus around both the raised amount and how you structure that financing changes changes quite a bit. And I think that’s the reason why you’ve seen a number of these projects to do uncap sales where they’re trying to basically raise all the money that a traditional venture backed startup would raise over the course of a lifetime into one day token sale event where they come out of it with 100 million dollars to deploy.


[00:52:56] I don’t think that really aligns incentives properly which is one of the reasons why we chose to do it much smaller for PO.ET. You are seeing some projects now that are experimenting with some continuous issuance models where the tokens do have some inflation over time that’s maybe paid out to the largest token holders or paid out to big users of the network. But for the most part you know these projects are raising all up front and then have this massive war chest to deploy to make their vision a reality.


[00:53:38] Tyler could you comment on how you think this activity and any related things you might be talking about will contribute to building the blockchain role, cryptocurrency role of Nashville and BTC media. What does this do for you, BTC? What does it do for Nashville? I know you guys have been advocates of, that’s why we have this meet-up you know for a long time. What can Nashville do to leverage this?


[00:54:17] So that’s, that’s something that kind of we’re, we’re trying to figure out. You know I think I’m really glad that we’ve been able to to help put Nashville on the map for this technology and that you know now we have the resources through PO.ET to be able to invest in growing another technology project here in Nashville and hiring developers and moving people here. I hope this isn’t the last token sale that Nashville sees and I don’t think it will be. After talking with some of you in the room.


[00:54:57] I think one of the reasons this is great is, we’ve seen this is a good token sale. This is an example of best practices. Maybe this will help us self regulate cause if things continue to go the way they are. There’s more token sales and some of those are going to come out of Nashville. Let’s make sure we self-regulate and create a community of strong tokens and token centric design. That’s part of being a community of thought leaders that I think we can set an example in that way. I think we’ve got time for one more question, is that cool Tyler? Yeah. (Audience question) So you’re targeting the creatives right? Publishers and media companies. Publishers and media companies. So your task, your next task is to reach out to them and begin educating them right on the value of returning a return on their constant return on what they produce. Is that right?

[00:56:09] You know to educate them about the tools we build and how you know this can help solve their pain points essentially. Right, right. Is that the biggest challenge you’re facing going forward? Because I mean you know a lot of these creative companies kind of are new to the to the potential revenue stream. And so there’s an education you know the challenge the biggest challenge in any business is to educate your client and then sell to them.


[00:56:42] I think that’s definitely true of the whole blockchain industry in that you know we have this amazing brand new technology that that we see so much promise in. But to get people to understand how that makes their life easier, their bottom line a little bit better is a monumental task. OK I just want to give you a chance to say that. (laughter) Monumental, we need all the help we can get. OK. Thank you Tyler Evans for reviewing the PO.ET token sale with us. (Clapping) And thanks to everyone who came out tonight. Good crowd. We’ll be back.


[00:57:29] Our next event is at the Distributed Health Conference in September. Again we hope you’ll all come out for that event including the hackathon the weekend before the code camp on Monday 25th. And then two days of panels and keynotes in the healthcare blockchain industry. Thank you to our sponsors BTC Media, Hashed Health, Frost Brown Todd, National Technology Council, Honkytonk Brewery. Appreciate it. Safe drive home and this will be the podcast will probably be released in about a week. So you can start hearing these recordings online. Have a good night. Thank you.


[00:58:14] You’ve been listening to the Hashed podcast presented by Hashed Health. Find more

content like this at hashedhealth.com or come to our next meet-up and join our growing community of blockchain professionals and enthusiasts. Learn more at hashedhealth.com. Thanks for listening. We’ll see you next time.

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