by Guest Post
Funding is an essential part of business, both in the early stages and for purposes of expansion. Prior to the emergence of blockchain technology, businesses relied on bank loans or interventions from venture capitalists and angel investors to achieve the funding that they need.
These systems involved some form of forfeiture, in terms of equity or otherwise, requiring business owners and developers to relinquish control and parts of their companies in the process.
Blockchain induced revolution
The advent of blockchain technology has gone a long way in changing the narrative within the business and general fundraising ecosystem. The secure, transparent, inalterable and global accessibility of blockchain technology has opened up an environment for businesses to achieve unrestricted access to global crowdfunding opportunities. This process was originally exposed by the concept of Initial Coin Offering (ICO).
The ICO process involves the purchase of protocol tokens that represent the digital assets of blockchain products. This tokens then generate their values based on the economic forces of demand in the global cryptocurrency market. This value may be as a result of speculative demands, or the original demand of the parent product.
This system has grown in popularity in recent years, finding implementation by various emerging projects as well as existing businesses that seek expansion. However, recently the ICO concept has come under a lot of scrutiny. No doubt, there have been cases of fraudulent players who set out to simply extort money from unsuspecting victims, these players pretend to create genuine products, only to vanish with people’s funds, leaving them with tokens of almost no value. Also, the inability of governments to regulate the ecosystem has given rise to mixed reactions from different regions leading to outright bans in countries like China, and extensive taxing in the US.
In other to protect both the business owners and investors from these unclear narratives, blockchain company, Blockhive is partnering with Identity management establishment, Agrello to provide a new kind of fundraising system, Initial Loan Procurement (ILP). This system, rather than leaving investors with tokens of uncertain future, empowers them to earn interests on their contribution. After Blockhive’s initial ILP, tokenote.io will serve as the ILP platform which companies will use to fundraise.
Eliminating the doubts
The ILP is conducted in form of loans on a global scale, allowing contributions through the Blockhive’s blockchain platform. This structure is simple, comprehensive and tax free, since the contributions are in the form of debts, rather than income.
The ILP structure issues Future Loan Access Tokens (FLAT), which are a form of “access tokens”, so creditors can transfer their loan agreement to others. Tokens will be issued to the creditors who lend funds to the company, while each company, using ILP structure can brand their tokens as they wish. These creditors can offer loans in cryptocurrencies, including Ethereum.
Fulfillment of legal requirements
Through the Agrello ID, a digital identification and signature solution provides the support for necessary KYC and anti-money laundering solution, ensuring that the system fulfills all legal requirements.
By implementing Ethereum smart contracts, creditors are entitled to receive an interest of 20% of the total annual operating profit of the Blockhive platform. This represents a guaranteed investment that will be based on the organic growth value of the parent project rather than being influenced by the unseen forces of the speculative market.
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