By Henrik Nel, CEO, and David Simmonds, Vice-Chairman & Business Development, for The Fintech Times.
What is the problem that you’re solving?
DeepToken will be utilised as an alternative deposit and withdrawal mechanism for players in the Entropia Universe. Using DeepToken will give them lower transaction fees, and thanks to the advanced KYC (know your customer) and AML (anti money laundering) processes it will expedite the entire procedure. This will create intrinsic value for DeepToken holders ahead of the next phase of MindArk’s development, the IPX.
The global intellectual property market is worth an estimated $180 billion USD, and yet only 2% of the 2.1 million patents filed each year gain commercial success. We believe that the low success rate is in no small part due to the highly fragmented nature of the IP market. Right now there are two conflicting issues; firstly, it is very difficult to ensure your patents are reaching the right potential market; secondly, it’s virtually impossible to find new patents that could enhance a business’s capability. Unfortunately, there are significant barriers to entry for those who wish to commercialise assets, or license new assets to avoid rework. We believe there is a huge opportunity to help creators commercialise their assets. Within the Entropia Universe alone, there exists over 70,000 reusable digital assets, representing between $25-30 million in development costs. However, there is currently little ability to make these assets available to others as there is no central location for their exchange.
That’s why we’re creating an Intellectual Property Exchange (IPX). The IPX is a revolutionary cross-platform digital exchange that connects owners of digital assets, and IP, with those seeking to access and license those assets. It will be the first ever repository of digital assets and intellectual property backed by blockchain technology. The IPX will allow creators to share their digital assets with the world, and will provide an intelligent, searchable repository which can be accessed by businesses and developers that want to avoid rework.
Blockchain technology is part of our solution for a number of reasons. Firstly, we strongly believe that blockchain will eventually underpin virtually every aspect of our digital lives. It’s easy to forget that it is possibly the most advanced ledger technology ever created thanks to the buzz around cryptocurrencies such as Bitcoin!
As already mentioned, for our Entropia Universe players, being on the blockchain allows us to expedite the KYC and AML processes. This is what will let us offer faster, and cheaper, deposits and withdrawals!
For the IPX, the blockchain will ensure that the exchange of digital assets is fast and transparent. Due to its immutable nature, fraud and theft will be virtually impossible over the exchange. This will make it safer for creators to monetise their IP with confidence.
Entropia Universe is regularly lauded for the most expensive digital assets ever sold, for example a planet was sold to a player some years ago for over $600,000 USD.
Investments such as this are profitable, but the entry cost makes them irrelevant to the average person. The immutability of the blockchain will allow for the tokenisation of such digital assets. As it is a tamper proof record of every token, asset and transaction, they can be split into smaller, easily traceable packages. For the first time, ‘crowdfunding’ of digital assets will be possible! Multiple parties can easily license assets as a group, reducing the financial barrier for entry to the market.
Finally, smart contracts mean that the IPX can further simplify the process of exchanging intellectual property, by automatically defining the price, duration, and entitlements, of the purchaser; as well as compensation of the asset provider. Thus, removing the need for a middleman!
Why did you choose a Token Sale for raising funds?
MindArk has always been an independent company focused on providing the highest quality gaming experience for its customers. This has always served us well, and is undeniably a large factor art in why Entropia Universe is one of the world’s most popular massively multiplayer online role-playing games (or MMORPG). We believe maintaining this independence is vital to ensuring continued success.
Traditional funding methods can be disruptive, and usually will involve investors taking some level of control in the business. We wanted to keep total control of our business plan; it’s the same business plan we’ve had for many years. After almost three years of research and investigation into blockchain and cryptocurrencies, it was clear to us that a token sale would allow us to maintain the independence that we consider so vital.
Fundraising like this also allows our wider community to contribute to the development of game that they love, whilst receiving something in return!
Why is MindArk uniquely positioned for this type of raise?
As developers of the Entropia Universe, we have over 20 years of experience managing a virtual currency and digital marketplace. Over one billion microtransactions take place every month within the Universe, which results in a Gross Universe Product of over $400 million USD – larger than seven real-world sovereign nations.
Additionally, we have a huge repository of digital assets and several planet partners that would immediately benefit from the collaborative aspects of the IPX as they develop new features for the Entropia Universe.
Many of the companies raising ICOs or token sales are start-ups with no immediate utility for their tokens. As mentioned earlier, our players will be able to use DeepToken from the outset.
We believe this makes us uniquely positioned for such a raise – not many can boast such knowledge and experience.
What do you see being the biggest challenge for your company?
The biggest challenge DeepToken faces is reaching audiences and investors outside the gaming community. We have a strong presence among gamers, but our token has wider application and relevance to the global intellectual property market. This is the only venture of its kind and it has huge potential, we just need to make sure people understand it!
As a gaming company, we face typical industry challenges. In the gaming industry things change quickly, being an online MMORPG allows us to develop and change content when we see new trends or different hardware/software coming on the market, whereas traditional “box” games find it difficult to adapt quickly.
How will you change the world?
Initially the platform will allow developers to monetize digital assets created for Entropia Universe, and other gaming environments. However, the IPX will be open to the global market, and will equally provide service for non-gaming companies and developers; who will find value in the digital assets the IPX provides, such as blueprints for 3D printing or virtual reality employee training programs.
Our platform will facilitate the international exchange of digital assets, backed by the security that is inherent to blockchain platforms. It will be the central custodian of digital assets in the global intellectual property market.
Overall, our mission is to create a global ecosystem for digital intellectual property which will allow individuals from all over the world to share, sell, and fund new digital assets for the first time.
A bit about MindArk and the team: How was MindArk founded? How did you come to be part of the team?
Founded in 1999, MindArk has constantly endeavoured to push the boundaries within the virtual environment, positioning itself at the forefront of innovation in the market. Over the past decade, MindArk has developed its core business product – the Entropia Universe – in parallel to working towards its longer-term vision of deploying and operating a digital intellectual property ecosystem (the IPX).
David Simmonds – I have 15 years’ experience working in virtual reality environments with virtual currencies. I have been at MindArk since 2005 and worked across the business – I was Chief Executive Officer of MindArk between 2011-2014 and now I work as Vice Chairman of the Board and Head of Business Development. I have always loved new, exciting and unusual projects, which is why I have always loved working at MindArk.
Henrik Nel – I joined the company in 2016. I was a passionate gamer growing up, and with the rise of eSports I saw an opportunity to combine my educational background with my passion. Previously I studied Industrial Engineering and Management, followed by a Masters in Management and Economics of Innovation, both at Chalmers University of Technology.
Tell us about Entropia…
The Entropia Universe is a massively multiplayer digital reality. Players in the universe develop skills and earn experience across a full range of activities; from mining, to manufacturing, to combat.
MindArk manage the reality, introducing commodities and capabilities, such as blueprints for in-game items. MindArk, in collaboration with its planet partners, design these capabilities, and on occasion specific items, which are then released into the game. They are distributed to players based on a proprietary secret, black-box algorithm; key considerations in these distributions include players’ game and real-world skills, location, equipment, and activity.
The Entropia Universe has registered three million accounts since inception and continues to consistently attract hundreds of thousands of new players per year.
The Universe is built on a proprietary technology called the Entropia Platform. The Entropia Platform has its origins in Crytek’s CryEngine. The Universe currently contains six planets; five of which are owned and operated by independent companies from around the world (the planet partners), and a sixth (Planet Calypso) owned and operated by MindArk.
The IP assets – what are they usually? Why did you decide to deal with this sector?
A digital asset is anything that exists in an electronic form, that comes with rights of use and ownership, including trademarks and patents. Content without these rights are not considered assets. These could be more traditional, like photos, logos or illustrations; or they could be newer forms of digital assets such as those used in gaming like in game items or skins for characters.
As we ourselves have over 70,000 digital assets and have been monetising them since 1999, we are well positioned to take the market to its next level, as opposed to say a start-up.
Are you a disruptor or a collaborator?
We “disrupted” the real cash economy in gaming, and still lead the field. And we believe we’ll disrupt the intellectual property market in due course!