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BUILDING THE BLOCK-STORE

Mihai Ivascu – founder and CEO of Moneymailme and Modex – about the future of ICOs and how Modex is using blockchain to revolutionise the industry.

How did you get the idea for Modex?
Modex started with Moneymailme. After the release of the virtual and physical multi-currency cards, it was quite clear for us that the next step was to go into crypto. We decided to build a platform that allows other fintech companies to integrate crypto in their apps, as that would be beneficial for the whole industry. We don’t have internal developers that can do all the smart contracts, so we wanted to go to the community and ask the developers to build that for us. And then we realise, there is no community for that. There is no app store where you can go and reach out with a clear request for a blockchain product and the developers can just build it for you. So we decided to build this infrastructure – to build the app store for the blockchain, and Moneymailme, with the crypto included in it, becomes the deployment tool for the crypto.

What sets Modex apart?
We are the only ICO that was selected by Google for a case study. So we’re in Google campus and Google is writing the case study on us. That’s massive for us – to have the backing and the credibility added by Google, it shows a lot of substance. Most of the smart contracts developed in Modex, like money lending, insurance, etc., can be used in Moneymailme. This is a standalone product that is a strong competitor for Monese, Monzo, N26 and Revolut, because it comes with an IBAN associated with it, multi-currency, chat, video calls and international remittances – we can onboard clients from over 130 countries. Moneymailme has the same functionalities as Revolut, Monzo and Monese, but with the social interaction part as well. We wanted to take the next step and include crypto in this, so we have ethereum, bitcoin and also Mdx, which is our coin. Developers on the Modex platform will receive Mdx, which makes it a utility token, because it has a clear utility within a system.

How is the token being a utility token significant in terms of regulation?
We have the company incorporated in Gibraltar, because Gibraltar is very open to cryptocurrencies and similar activities, but now we are structuring the company so that it is 100% based in the UK. This means we fall under the jurisdiction of the UK in terms of ICOs. The main problem with ICOs is that most of them are marketing securities, so they are promising people future profits, and most of them are selling securities without a license. We took a lot of legal advice and opinions that ours is clearly a utility token – we have a clear application within a closed ecosystem. We don’t promise future profits, we don’t promise listings on exchanges, we don’t promise any of that stuff – so, basically, this is a proper ICO.

What makes a proper ICO?
There are 22 points that you need to look at when you look at an ICO. Most ICOs have heard about 8-10 of these points, and they are good at 4. But there are so many aspects that define a healthy ICO. It’s a project that can go through due diligence. You need to be able to check out the entity that owns the project – you need to be able to check that they actually have a team, that they have employees, that they have a governance system internally. You look at the governance – how are the funds being consumed and who’s the beneficial owner of the funds? If it’s a holding company like us, with 14 shareholders and with a proper structure, then ok. If it’s Joe from the street and you decide to invest in the company, that’s your decision, you can do that if you really believe in the project. But, at the end of the day, they need to disclose. You also need to look at the token dynamics and economics, you need to look at the White Paper, and you need to look at the structuring of their budget, because you see all these ICOs raising 50-60 million and they say 40% marketing, but I don’t know who can manage 30 or 40 million on a marketing budget between 2 friends. I mean, it’s just wishful thinking – it’s misusing the funds.

Another thing is that an ICO should be able to recruit top talent from big organisations – we’ve got some top guys from Microsoft, Google, BNY Mellon and Trustology coming to work for us. They’re leaving those big companies to join the blockchain revolution now. I think in the next 6 month, we’re going to see a shift – ICOs will need to be really close to IPOs in terms of the diligence. You’ll need to produce a minimum of 20 strong documents to back your ICO. People are starting to see that, they are starting to get burned, because, again, you’re doing an ICO, but you don’t have any project. You launched the coin on an exchange, but a year passes and you don’t have a product. There is no demand for the coin, so its value is completely destroyed. The problem now is that people don’t understand that you’re starting your journey with an ICO, you’re not ending it.

Who is most likely to benefit from this technology?
We want to think that we are decentralising creativity in this space, because you get a 16-year-old Ukrainian developer with a fantastic idea – somebody that spent the last year studying solidity and smart contracts, just because he’s passionate about it. Who’s going to hire him? He can’t even travel to the UK as a non-EU citizen, for example. He cannot be employed, but he may come with a top idea. We go and participate in all of these hackathons and we have a deep understanding of what talent means in this space. And they’re introverts – they don’t go out there with fancy Linkedin profiles and all of this stuff, but at the end of the day you care about the quality of the work. There are 2.5 million applications on the app store, you need millions to push an app and it’s not a one man show – you need a full team. So it’s almost impossible to stand out. But here, it’s a new segment, it’s a trending area, and you might end up being the number one smart contract developer for insurance, for real estate, for healthcare, just because you know your area.

There are 21 million registered senior developers globally. The shift from Java, EHP or C++ to solidity or to smart contracts is one month, so in one month you can convert yourself as a contractor to smart contracts and blockchain development. A very good Java developer is 100 Euros per hour, a Solidity developer is 550 or 600. So they can make six times more money in just one month. The problem is there is no request for their work. Many programmers are entrepreneurs, but entrepreneurship for them means – ‘I want to build my own app and generate revenue and live on a beach’, not to build companies or things like that – they just want to build something that brings in revenue and live their life. So we’re offering them exactly this kind of opportunity – to build smart contracts and post them on a mature infrastructure.

We sponsored a Hackathon recently and one of the teams built a lottery in 24 hours. That lottery on a blockchain was basically the end product, ready to be deployed. We’re going to these hackathons telling the developers to post their project on the platform. So you may end up with an Indonesian entrepreneur, for example, who sees that project and says – ‘nice, a lottery on the blockchain. How much is it? 2,000 Mdx – good, let me buy 2,000 Mdx from the exchange secondary market’, and they have a full business. They’ll just change the colours or whatever and they are entrepreneurs in blockchain immediately, just because somebody from some small part of Austria posted
a smart contract on our platform. So there’s a social aspect to it too – it allows entrepreneurs to enter the blockchain and crypto space just by scanning the network, where they might not have had the opportunity otherwise.

This is a long story short. Actually, it’s a very complex thing. When you want to build your smart contract, you need a private blockchain, you need security audits, you need a lot of tools that can check and update your smart contract – all of these tools are being offered to you as a developer on our platform. It’s not just a pure development – the deployment process and everything is offered by us. So it’s way more than a market space, it’s clear support.

How do you plan to reach this community?
The platform has an Alpha version – it’s not launched yet, it’s going to be launched in Q2 next year, but we’re already onboarding developers.

What’s the future for ICOs?
I think we’re going to see a lot of established companies with actual products and teams doing so called reverse ICOs. So, basically, they start from a company, they make an ICO, and then they grow the company further, instead of doing an ICO, creating a company and then starting the growth. The ICO is a fantastic way of raising capital, it’s absolutely great – done is a proper way and with the people using the funds right. We’re going to see a clean-up from that point of view. For a period of time, for the next three or four months, we’re going to see the amount of money invested in ICOs completely
destroyed, because people are starting to realise that most of the tokens don’t provide any value, as they are not linked to an existing platform and to a an existing dynamic. So, a lot of people are losing money – the average is 60% in the value of the coin.

If you can show you have a utility token and that the ICO is done not to promise future profits, because that’s a security, but to build a platform that will generate more work and more tax going forward, both the investors and the regulators should embrace that.
Right now we are working on forming a trade organisation to create a standard in the industry, to create a clear image for the authorities, so that they know what they need to look at. We are offering our knowledge in the space to help this be created. It’s in our interest to see it being cleaned up and regulated properly.
Eventually the projects that receive funding through ICOs will be the projects that have a functioning product, a team, a strategy. Some of them are raising too much money. They explain that they are raising rounds A, B and C in one go via an ICO, upfront. This of course allows us to accelerate the growth, but it needs to be done right.

Blockchain is a very interesting world, every day there’s a new challenge that we need to solve or to adapt to. It’s a liquid matter, basically, so you can design it however you want. All the friction points in all systems – from the political system, to the social system, to the financial system, can be solved through blockchain. So, for the end user, this is what we’re trying to solve now with the Modex infrastructure – the last mile adoption of the blockchain.

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