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Recently, in some blockhain projects born mostly by the brand new teams from around the world that are going to make an ICO, it has become very fashionable to show up or rather be brazenly proud that their project token easily and freely passes such a terrible and hated by everyone The Howey Test. Lawyers and advisors of such projects, without shame and most likely manipulating the essence of the test issues, openly put in danger the project itself, its ideation and the team that believed them, thus promising to open investment shores of the USA and the world for such projects. Moreover, even skillfully inspire confidence to the project’s founders that if to show that the project token — is an utility, it increases the interest in the project and its goodwill. From the side it all looks funny and comical. After all, in addition to the Howey test, the SEC (The United States Securities and Exchange Commission) appeals even a number of other tests and legislative acts, which in principle inflict a mortal blow to the legend of your token, as an utility. But many advisors and lawyers prefer to keep silence, if for sure they are in course of these things. All these tests, including Howey test, arose from the case law and the rich fantasy of legal practice and the government monopoly to control the financial flows in the US. What is the problem, let’s figure it out.

The blockchain token is created with the help of blockchain as part of a decentralized software protocol. There are many different types of tokens, each of which has different characteristics and means of application. Some tokens, such as bitcoin and monero, function as a digital currency. Others can represent tangible assets, such as gold or real estate, anything already today. Tokens can also be used in new protocols and networks to create distributed applications. These types of tokens represent the next stage of innovation in blockchain technology, and the potential for new types of business models that are decentralized — for example, as cloud computing without Amazon, social networks without Facebook or online marketplaces without eBay. However, there are a number of complex legal issues related to tokens. The main problem of legalization of this process is not to give a legal and practical assessment of such a phenomenon as the ICO, legally substantiating it. ICO is secondary. The legal nature of the token is primary.

Nowhere in the world is today the theoretical and clear legal definition of what is a token.

There are certain guides and explanations of regulators, which mean only a recommendation character and nothing more. There are no laws yet. Nodaway problem is that it is not yet possible to define a basic asset under the law for token. Legislators still declare intentions, and regulators — as it is not strange, show their passivity in solving this issue. Even such a position of regulators has an explanation. This is their retrospective and even retrograde policy, since they are still evaluating the tokens from the point of view of comparing it with something from the past, but they are not able to apprise it from the perspective of the future. Further, even if you refer to any regulator, including the most authoritative (SEC) with a request to evaluate your project token, the probable answer will be according to their compliance policy code — it is not subject to review, in order to avoid the policy of creating precedents. So far no one regulator has given a token definitions, unlike, for example, bitcoin and other crypto currency. Everyone is waiting who will be the first in determining the legal essence, who will be responsible for this precedent. Exactly from such a retrospective position, the SEC uses those tools that are familiar to it, in order to evaluate such now how phenomena as tokens in the financial market.

Accordingly, some tokens, depending on their characteristics, may be subject to control and monitoring by US federal regulators and securities market laws. This would mean, among other things, that it is illegal to offer tokens for sale in the US without their registration or exemption from registration. Similar rules are applying in many other countries of the world. However, the global crypto community is focused on the US federal legislation, as these laws are representing the biggest threat to the crowdsale of tokens. In many jurisdictions there may be problems with AML legislation or with general consumer protection laws, however, the most real threat to the crowdsale and token is presented by the comprehensive US law giving unlimited powers to the SEC and determining what a security is. I consider it just necessary, to quote one article from Section 2(a)(1) of the Securities Act of 1933: «The term ‘‘security’’ means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing». The bold font indicates those positions that so smoothly can fit the definition of your token as an utility, but finally, this law defines everything as just security. A similar comprehensive definition also gives Section 3(a)(10) of the Securities Exchange Act of 1934. Of course, based on these definitions of case law, as well as on the understanding of facts, we can conclude that if the token of your ICO project does not meet the definition for security, then your token is utility. It can be stressed out that this conclusion depends on the characteristics and nature of your token. But I do not see such opportunities at all, based on the above definitions. In fact, in most practical cases, your token does not have a chance of being utility under the US jurisdiction. This is my subjective opinion.

Therefore, I am very cautious about such projects ICO, which waved their passed tests Howey as a red rag matador, attracting the attention of the SEC and American private investors. And I always argue with the involved lawyers in the project if they are starting to put project founders up to let them pass the Howey test easily and show up what one wants so much to see. It should be understood that tokens can have different functions depending on how they were developed and which computer systems were used. In principle, you can assume with great reserve that if the token has one or more functional rights and technical capabilities, then it can be not considered as security. To wit, if such tokens in the ecosystem of your project perform a role of mean and rights to program, develop or create features for the system or to “mine” things that are embedded in the system; to access or license the system; to charge a toll for such access or license; to contribute labor or effort to the system; to use the system and its outputs; to sell the products of the system; to vote on additions to or deletions from the system in terms of features and functionality. Not much!!!

But at the same time, you can more confidently state that if your token has one or more investment interests and rights, then it can be exactly considered as security. To wit, if such tokens in the ecosystem of your project perform a role of ownership interest in a legal entity, including a general partnership; equity interest; share of profits and/or losses, or assets and/or liabilities; status as a creditor or lender; claim in bankruptcy as equity interest holder or creditor; holder of a repayment obligation from the system or the legal entity issuer of the Blockchain Token; and feature allowing the holder to convert a non-security Blockchain Token into a Blockchain Token or instrument with one or more investment interests, or granting the holder an option to purchase one or more investment interests. Most likely, based on the SEC practice of treating the question of nature and the essence of the tokens, even a combination in the token of features and properties both security and utility, eventually such a combined token will be considered finally as security. Further, more — based on the SEC practice, the presence of a share of ownership in a fund or other legal entity that buying non security (utility) tokens of various projects, will still consider and constitute such a share of ownership as in the security tokens, even if such a fund declares its investment interest in only utility tokens (non security). Such paradoxical interpretation is explained by investment plans and the presence of investment interests among the holders of tokens, even if this interest to matchboxes and soap bubbles. Further, even more confusing from the practice of SEC interpretations. The token itself, being in fact, a planning future structure, either utility, or security, before creating and implementing a system of its operational existence in blockchain, will be considered as security.

There is no clear legislative definition for this situation, but the SEC stands for this position. Therefore, the launch of the blockchain for your project and related tokens should occur as close as possible to the frame timing associated with each other. That is, it is better to run the system and tokens simultaneously, then the probability that the tokens of your blockchain system considered as security will be reduced. And this interpretation by the SEC follows from the special features of the Howey test, in part of the section “Risk of loss”. All this is just one example of the heterogeneity of the interpretation of the nature of tokens, and the profound difference between what the ICO project founders and their lawyers want to see, and what they actually able to see and how the SEC’s officers evaluate, whose instruments on the Howey test were deeply extended by the Supreme US court in 2004 in the case of SEC v. Edwards, 540 U.S. 398 (2004). The structure of the Howey test specifically focuses on the term “investment contract” within the definition whether your token is a security. It is worth noting that the test is used to classify such instruments that are “more variable character” and that can be considered as a form of “contract, transaction or scheme, whereby an investor lays out money in a way intended generating income or profits from his investments’’. Based on the SEC practice of applying the Howey test, tokens are most likely to be analyzed as an investment contract. Some of the investment interests listed above are more accurately described as traditional types of securities, so its combination with non security (utility) feature tokens is more likely to be assessed by SEC as security tokens.

The USA Supreme Court structured the Howey test in the following way: the arrangement is an investment contract that corresponds to the definition of security if the actions under the contract implying a list of the following activities and characters. Namely:

• investing / an investment of money;

• investing in a common business deal / enterprise;

• Participants in the common business / enterprise expecting a profit;

• profits are expected predominantly from the efforts and actions of others / third parties, regardless of whether the shares of the enterprise have been confirmed by official certificates or a nominal share in the physical assets used in the enterprise / for the common cause

• Is any profit received from investments largely or entirely outside the control of the investors?

Do not be so sure that you are able to bypass all the hidden pitfalls of terminology and analysis of situations in this test. Each of the above features has a number of additional definitions that complicate the answers:

Ø Investment of Money — Under Howey, and case law following it, an investment of money may include not only the provision of capital, assets and cash, but also goods, services or a promissory note. See, e.g., Int’l Bhd. Of Teamsters v. Daniel, 439 U.S. 551, 560 n.12 (1979); Hector v. Wiens, 533 F.2d 429, 432–33 (9th Cir. 1976); Sandusky Land, Ltd. V. Uniplan Groups, Inc., 400 F. Supp. 440,445 (N.D. Ohio 1975)

Ø Common Enterprise — Under the horizontal approach, a common enterprise is deemed to exist where multiple investors pool funds into an investment and the profits of each investor correlate with those of the other investors. Under the vertical approach looks to whether the profits of an investor are tied to a promoter and whether the success of the investor depends on the promoter’s expertise. If there is such reliance, then a common enterprise will be deemed to exist. See, e.g., Curran v. Merrill Lynch, 622 F.2d 216 (6th Cir. 1980); Wals v. Fox Hills Dev. Corp., 24 F.3d 1016 (7th Cir. 1994); SEC v. Continental Commodities Corp., 497 F.2d 516 (5th Cir. 1974) and other cases.

Ø Expectation of Profits — Under this element, profit refers to the type of return or income an investor seeks on their investment. Thus, for purposes of tokens, this could refer to any type of return or income earned as a result of being a Blockchain Token holder, which would be narrowed to the extent it is derived passively, i.e., from the efforts of others. More specifically, profits may include all manner of returns, such as dividends, other periodic payments or the increased value of the investment — whether it is a variable or fixed return. See, e.g., SEC v Edwards, 540 U.S. 390 (2004) and other cases as well.

Ø Solely from the efforts of Others — Typically, USA courts have been flexible with the word “solely,” such that, in addition to the literal meaning, it also will include significant or essential managerial or other efforts necessary to the success of the investment. See e.g., SEC v. Glenn W. Turner Enters., 474 F.2d 476, 482–83 (9th Cir. 1973); SEC v. Koscot Interplanetary, Inc., 497 F.2d 473 (5th Cir.1974), Hirsch v. Dupont, 396 F. Supp. 1214, 1218–20 (S.D.N.Y. 1975), aff’d, 553 F.2d 750 (2d Cir. 1977)

I think that even my easy explanation is enough to understand how serious and professional your lawyers in ICO projects should be when they start juggling with the capabilities of the Howey test. And how deep you can run into trouble. Always keep in mind the case with the MUNCHEE start up, and the fact that the Howey test through the power of SEC officers at their glance can become a guillotine for your ICO project. The US regards its legislation as extraterritorial, so in addition to Howey Test, you ought to be aware of the dangers of other tests that are less popular in the press and mass media, but this no make it less popular with the SEC. Namely:

· Reves’s Family Resemblance Test, 1990, US Supreme Court decision in Reves v.Ernst & Young (in fact, a test of investment expectations — if during negotiations and discussions you manipulate with investment income expectations or promises — then your token is a security, and the legal explanation of the nature of the “manipulation” is unlimited)

· Risk Capital Test, California Supreme Court Silver Hills Country Club v. Sobieski (1961) (even club membership falls under risky capital investments — a membership card is a security)

Here — all your tokens are SECURITY. Almost any token, when is passing the above tests, receives points and is in danger of being recognized as a security. But we must remember that before you begin ICO, you have to answer questions related to your project token:

· Who is the issuer of the token?

· What rights are given to the owners of the token?

· What is the economy behind the token?

It is the question of the economy of the token that will help you to understand and not to do stupidities with the lawyers. But usually, based on practice, it is the economy issue that is mostly lame and is a risk factor for the token in the dilemma — either security, or utility!!!

Join the chat — https://t.me/joinchat/AAAAAE84vCXg5PK-VpHADg

Sergey Golubev

EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

As you know, ambition from the Latin language means an aggravated self — esteem. There are many interpretations and definitions, but most likely in its primary essence, ambition is defined as a state of consciousness, expressed in an effort to prove one’s superiority over someone and something by achieving certain goals. It would seem that the factor of the goal achieving in this case is a positive and productive moment, and even more in the project environment — a thing that is more than necessary and useful. However, in practice, everything is not so simple and straightforward. The formation and further development of ambitions is influenced by many components. The basic role is still played by the level of self-esteem: carriers of high self-esteem often show appropriate ambitions. But at the same time the self-esteem of a person in most cases, not necessarily theoretical, but practical, from everyday life — is already infected with a virus of superiority and unsubstantiated pride. Therefore, from this side, ambitions are often negative, since an ambitious person tends to underestimate other people, while his own merits are greatly extolled. This model of behavior leaves its imprint on the formation of relationships with other people, complicating the team management; it can influence the promotion of the career, and in our case — negatively affects the formation of a productive project environment and the achievement of the set goals and objectives. To realize his real merits and demerits, an ambitious person needs to evaluate objectively the results of his work, comparing it with similar results of other people in similar business situations or a similar project environment.

In order to understand the meaning of project management, or to be more precise, the meaning of managing the project environment, you need to start by understanding the essence and role of the project environment itself. It differs in many aspects from the traditional and organizational working and business environment. To understand the answer to this question, it is necessary to take into account that the whole set of actions performed in one or another workplace, in one or another working environment can be divided into two groups — projects and current operations. To be simpler, it can be said that projects are any one-time work, or a cycle of actions with a clear start and a certain finish, while current operations are a regularly recurring works or activities. Considering each of these tasks separately, it is not difficult to see that to manage them are required fundamentally different approaches. However, often in general, such approaches are not taken into account, and the project environment, which has its unique qualities inherent in each specific project, undergoes routine approaches and organizational management styles. And after all, bad luck! It is the ambitiousness of the project initiators (the founders) that is at the head of the causes of the errors described above. Since the imaginary confidence that the initiators of the project know how to manage, and know what is a project and the priorities set in it, is often a hindrance to achieve results in the project. The existing experience in managing daily routine processes in their organizations creates for them the illusion of having the appropriate management practice to interfere with the main processes of the project environment.

This confidence fills their ambitions, and at the same time, conflicts with all components of the project environment (goals, objectives, consultants, results, stakeholders of the project, etc.), increasing risks. It is necessary to recognize that such confidence still has its reasons. After all, the traditional theory of management was based exclusively on current operations. Specialists in accounting, process improvement strategies, inventory management, personnel management and customer relations have always viewed the organization as a collection of ongoing recurring operations. Orientation to the current operations management continues to remain actual today, but now professionals and business leaders have to learn the methods by which you can manage work that is temporary and unique. This need is recognized with great difficulty, which, in principle, is the cause of conflicts and unwillingness to listen to those who know what the project environment is and how to manage it.

The implementation of the project is the result of the synthesis of knowledge and experience in managing the project environment, passing the necessary steps without which the project cannot be implemented, or its implementation will be difficult. The project environment also includes a number of draft processes where the need for possession of special knowledge and skills should dominate the ambitions and illusions that they imitate. After all, what does project management mean? This, above all, is management of certain draft processes, which are united by a holistic system of views on the problem, allowing finding out an approach to its solution. This is the construction of a model for a future project system that defines the main elements and their interrelations. It is also a necessity to collect and create an effective team for the implementation of the project. This is the development of a detailed strategy — in fact, a work plan for the project, where priorities and criteria are defined, costs and terms are determined, a set of tasks for each team member is determined, including, of course, the initiators of the project (the founders). Of course, it is impossible to do without presentation of the project to investors (or application submission of documents for a grant or targeted financing). Well, we should not forget about the design of the project implementation phase. This vision of the project process, first of all, emphasizes the problems that need to be solved when implementing the project itself.

I know that quite a lot of people, project teams, and consultants face problems during the above processes. The main reason is ambitions that ruin the project, idea and business. Here you cannot blame anyone literally, but you just need to learn from the mistakes, and not repeat them again and again. Let’s consider the categories of participants in the design process. The first category is people who earned and still earn money. Another category is people who have a huge thirst for self-realization. Third — those who have the necessary practices and experience, so that the first and second categories can obtain results in their projects. This is where the ambition’s front intersects. In fact, the third group is not needed and valued by first or second. The above groups want to find answers to their questions and problems themselves, while underestimating their time, which they will spend searching for answers that are most likely to be wrong. A strange situation with respect to time, however, this is constantly encountered in the project environment. Then it will be their personal mistake — a mistake of their personal ambitions. This alignment in professional relationships generates indifference, which destroys everything in its path. It generates the indifference from the third category of participants in the project environment. In addition, the dominance of ambitions generates not only a state of indifference, but also lowers the qualitative attitude to the obligations undertaken, negates the importance of a proper distribution of responsibilities when delegating certain tasks, destroys attention to the members of the team and their needs, lowers the speed of work and reaction to force — major situations, lowers the importance of large-scale thinking, dulls the development of one’s own intuition, destroys the balance between work and personal needs, and much more.

Again, the main dilemma of the conflict described above is the reluctance to understand, or better to say, to feel what a project is. One textbook will not answer directly to you, that, in fact, the project is not only a system of knowledge, skills and codes of conduct, but first of all it is respect for the structure, and if to be more accurate, respect for the project infrastructure. And the project infrastructure is those entire project processes described above, which form it. Very often personal ambitions of people ruin the opportunity to bring a brilliant idea to the infrastructure format of the project. Ambitions — all at once and now! This is not recognition of another’s opinion; it is not the desire to adapt your idea to certain success factors that are known to professionals. It is necessary to understand that uniqueness is not a success factor; it still needs to be proved and justified. It is here that conflicts are often occurring between the project (specialists who can do this) and the founder (those who are seeking funding for their project from different sources). Ambitions often ruin the project environment. And this phenomenon is everywhere — both in technological start ups (Initial Coin Offering), and in grant activity for NGO, and in traditional search of investments for business.

Therefore, what is the answer to the dilemma ‘’What is the first: project or ambitions?’’. I guess everyone should give himself, if the result is at the head of the process.

Sergey Golubev

Join the chat — https://t.me/joinchat/AAAAAE84vCXg5PK-VpHADg

EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

One of the main questions for discussion in the context of the topic is technological singularity, the moment when robots reach a level of intelligence that is superior to the level of human reasonableness, and as a consequence the economic, cultural and political singularity of human civilization follows. And although the singularity is still the subject of many Hollywood films and fictions, the possibility of its coming looks more and more real. The process of replacing the biological by technological has already approached the substitution of a human by some algorithm. Thanks to technological acceleration and the accumulation of historical time, the desire to go beyond biology brings mankind closer to the culmination point — the singularity. Acceleration of historical time, that is, the concentration of social events, followed by mankind in a unit of time — is an important factor in the concept of singularity. The singularity is really somewhere near. Moreover, its hypothetical date is real to calculation by scientists, and such data are presented to the public. After making calculations, scientists easily find the starting point of the “singularity”.

It occurs around the middle of the 21st century, which coincides with the forecasts by Ray Kurzweil, who, based on the dynamics of the exponential development of computer technology, predicts that:

· By 2029 the machine will pass the Turing test;

· By 2034 artificial intelligence will be created;

· By the 2040s the non-biological mind will be more powerful than the biological one;

· By the end of 2040 the Earth will turn into a reasonable “computer”, more precisely, a networked intelligent being;

· At the end of the century this computer will cover the Universe with its powers

In space rocket launches in the countdown, instead of “zero” one say “start”. That is, zero is, in fact, the transition point, the end of the countdown in the preparatory process. Therefore, “zero”, this is the beginning of some new countdown, for which, in fact, the reverse countdown is started. But what humanity is waiting for this new starting point, behind this launch? I do not know how the moment of transition to singularity will be technically made, what the future will look like. But I think that the key solution will not be found in the field of nanotechnology or operations in the field of chemistry and physics, or biochemistry, but in the field of digitization, that is, copying a person. The key work will be done not with the body of a human being, but with information that is technologically already real today and many experiments are conducted without much public attention today as well. This is the first step.

The next step is the transformation of the human body, which will be necessary in the framework of compulsive evolution and realization of singularity in the frame of economy, politics and culture. But for the preparation of this moment, the question of copying a person into an environment where all knowledge is instantly available must first be resolved. Therefore, a possible transition to a singularity will be prepared most likely, by cyberorganics and gadgetization of human nerves. Probably, it will be about some kind of synthesis of a person’s personality and machine, in which the human will move to the network environment, while retaining unique identity and gaining not only the entire available universal mind of mankind, but also the ability to instantly generate any new knowledge. Apparently, the developments in the field of body gadgetization, on the one hand, and work in the field of artificial intelligence, on the other, will somehow lead to the moment of singularity when it will be possible to combine personality with artificial intelligence. It can look like a synthesis of a man and an android.

Corporations and startups are actively engaged in artificial intelligence, including Google, IBM and others. The results of this work are real. As one of examples, a robot has been created that looks like a human and can support conversation, read emotions — or at least try to do it — and also perform different types of settled tasks. The concept of technological singularity has no technological or scientific basis, as it seems at first glance. However, the proponents of singularity are trying to draw a parallel with the evolution of species and technologies without any reason. They believe that the constant increase in the power of computers will eventually give artificial intelligence that will surpass the human mind. But conventional computing devices are not the human mind at all. We have about 100 billion neurons in our brains. Not only their number, but first of all, their structure and principle of interaction gives us the opportunity to think and act. All we can do is create certain kinds of algorithms to achieve certain goals and solve problems. In fact, all these systems are very limited in their capabilities. A possible conclusion is that the singularity is a new religion, but not a science that will be implemented in human historical development.

One can say that the technology is not bad and not good, it’s just an instrument. And this instrument becomes bad or good only in the hands that hold it, which control it. As for the singularity, people, nothing to do with it, all this only about the machines. They can break free from our hands, and the only thing that can be said with certainty is that we cannot predict the consequences of such an outcome of events. And we remember that based on the history of civilization, the public authorities always use religion as a controlling tool, which in turn uses many and varied tools of manipulation, influence and reaction. If, of course, the singularity becomes a religion. What needs to be done today is to think about ways to develop artificial intelligence technologies. Ideally, the fusion of human with artificial intelligence will bring people benefits and improve the quality of their lives. People will transfer their consciousness into the cloud and be able to “unload” the brains. According to Ray Kurzweil, this will lead to an increase in the neocortex — new areas of the cerebral cortex of humans that is responsible for sensory perception, conscious thinking, speech, the ability to create art and a sense of humor. Kurzweil is optimistic — he is confident that the merger of man with artificial intelligence is the future. People will stop thinking linearly, and this will lead to unprecedented progress. This is one side of the medal. And what about the other side? After the creation of the superhuman intellect, the human epoch may be completed, in the form to which we are accustomed and which is fixed in our historical memory.

So, let’s take as a working hypothesis that the capabilities of computers in the near future will surpass the human. At this level, it does not matter whether they “really” think, because the results of their work will be the same as if they thought faster and deeper than people. For the first time in the history of mankind, we will find ourselves in a society of beings more intelligent than ourselves. The first consequence is that we will not be able to fully understand or predict the further development of events, when not only people but superintelligents will rise at the head of civilization. This is the meaning of the term “Singularity” — the conditions in which habitual models and representations are losing their applicability, and something fundamentally different begins. This definition of this concept in 1993 gave Vernor Vinge. Technological singularity is a hypothetical moment in the future, when technological development will become so rapid that the schedule of technical progress will become practically vertical. The main idea here is simple: beyond the technological singularity, humanity is waiting for something inhuman, post-singular, and it remains to be wondered whether we can prevent this something frightening of our future.

To understand the logic of the subsequent arguments, it is important to note the inextricable link between the financial and economic system and scientific and technological progress in the evolution of human society. Economics as a phenomenon arose at the time of separation of two processes: production and consumption. What then will be a singularity in the economy? According to the understanding of the essence and function of financial and economic relations, it is possible to draw a self-evident conclusion: they will lose their significance in harmonizing the spheres of production and consumption. That is, the financial and economic component of society will lose all sense when each action of consumption will be maximally approximated in time to the effect of production, that is, the production of a specific product will be stimulated not by a consumer market factor but by the order of a specific consumer. What is needed for this? Most likely, the speed and flexibility of production. Automation of production, on the one hand, and networked communications, on the other, has now reached the limit beyond which the existence of any form of financial management of production and consumption becomes meaningless. That is, the level of modern technologies already in principle allows us to combine the production of a specific unique product with a specific individual order, which forms the basic principles of economic singularity. Of course, people included in economic and political relations are free to react to changes in it. How they did react earlier throughout the history of mankind. Their reaction (both positive and negative) is fully predetermined by natural events (mechanization, industrialization, militarization) and is a necessary element in the mechanism for coordinating the economic system itself.

Further, one can come to the conclusion that political singularity is inevitable. As a kind of development of the political system of society, when political management becomes meaningless. That is, in this reason, the need for the existence in the future of certain special political institutions for making meaningful decisions for the development and maintenance of social development, statehood, and society is being questioned. In fact, the entire political system performs only one function — giving some people the right to make decisions. Since the adoption of such decisions requires professional knowledge, the assessment of these decisions by society is difficult, and that is why the political system provides a choice not for the decisions themselves, but only for the people who must accept them, that is, the change of political management. As a matter of fact, political institutions realize the mechanism of allocation of subjects of decision-making that is providing legitimacy of these decisions and no more. On the one hand, for technological reasons — the time interval between the adoption of socially significant decisions and the achievement of the result is steadily declining. On the other hand, the implementation of the real-time management mechanism is the result of the development of information technology in recent decades. That is, the combined effect of such two factors as the development of information technology for forecasting and the shortening of the time interval between the adoption and implementation of the solution will inevitably lead in the future to a situation where the time interval between the decision and the assessment of its effectiveness is minimized.

One can say that one of the main achievements of post-singular technology will be the elimination of the gap between the adoption and implementation of solutions, any solutions in general. Then the political singularity means that the management problem is shifting from the procedure for selecting the decision-maker directly and immediately to assess the effectiveness of the result. It is unrealistic today, but it is quite feasible in the context of singularity.

Along with technological, political and economic singularities, we can talk about cultural singularity. The historical movement of culture appears to us as a succession of completely separate stages, characterized by a single cultural style, with unique distinctive features. As technological and economic singularities do not mean a catastrophe, but only the exhaustion of some forms of organization of society, so the cultural singularity does not mean the death of culture, not the finale of the aesthetic attitude of people to life, but only a change in the form of the culture development. The main feature of post-singular culture should be the transition from the priority of successively changing artistic styles to the parallel, simultaneous existence of all possible variety of cultural forms, to the freedom of individual creativity and individual consumption of the products of this creation. Completing the alternation of styles and directions does not mean stopping the evolution of culture, simply after passing the singularity point, the innovation in forms will appear not consistently, but in a single stream, not displacing or replacing each other.

So how can a comprehensive singularity come, under what conditions? Here it is worth to listen again to the opinion of Verner Vinge, who identified possible ways of forming a superhuman intellect, which will accelerate the coming of singularity:

· From artificial intelligence

· Through the increase in human biological capabilities — development and, cyborgization and application of other approaches

· To human-computer systems — combining the strengths of man and computer, the increasing use of information and communication technologies to enhance our intellectual abilities

It is unrealistic to predict the concrete forms in which the singularity will be realized. What will it look like from the point of view of human understanding? Possible looks like:

· Practical subjective immortality

· Ability to be in all places where the network is placed

· A huge number of tasks and problems for research and solutions — everything is exciting, everything has enough time and abilities

· If necessary, you can always complete yourself, both programmatically and functionally

As history shows us, the humanity is not able to find out a common universal justification for its existence. The achievements of individual civilizations, cultures, personalities, religions and philosophies do not converge with each other and are not able to convince doubters in the sense of their existence. Therefore, the possible global goal of our common civilization for the future is to achieve the Singularity and recognize its dictatorship over human civilization. But the victory of the singularity, in turn, will trigger the mechanisms of neo-technocracy. About this we will talk next time.

Sergey Golubev

EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

There is no such word today, which, if mentioned, would immediately plunge us into the world of blockchain projects and dashing ICO’s, like white paper. Someone immediately wrinkles his nose at its mention, and someone for sure begins to leaf through the stories written on its pages, believing in the real future. It is necessary to recognize, that not without disgust and not without hope. White paper today is the stigmata of the blockchain culture. And it is not worth to criticize my opinion right away, stigmata is not only a pain, but also a sign of God’s mercy. And what is blockchain — technology? No, this is a cult. Therefore, a phenomenon like ICO, which is in development, is leading to the fact that its conductor and the access point of information about it, like white paper, also is transforming. Accordingly, in the course of evolution, such a document is a subject to criticism, close analysis, and accordingly claims to it require an analysis of the primary reasons for dissatisfaction with its format, content and objectives. Now we will think, where did the reasons for the claims come from?

What it is? The term “white paper” arose from the British public government, when the British Cabinet in 1922 for the first time used this format of the report and coverage of the solution to the problem, proposed by the Minister for Colonial Affairs Mr. Churchill. The report got its name because of the color of the cover. At the same time developing the concept of democratization of governance, white paper were defined as instrument of democracy based on the role of representation of a firm state policy and attracting public attention to it. White paper was the way how the British government showed up its political preferences before legislation introduction. Further during the Second World War, as well as in the 50–60s of the 20th century, white paper was used in science and medicine. Later, with the advent of computers in the 80s, white paper began to penetrate into the IT industry and marketing. Since the early 1990s, the term “white paper” has been applied to documents used as marketing tools or sales in business. These white papers are a long content designed to promote the products or services of a particular company. For example, today, you can already come across the following definitions of the term for White Paper as a small motivating guide ordered by an organization as part of the whole marketing content.

Of course, this definition is too narrow and overlooks a bunch of important characteristics, without which no any white paper of marketing purpose can do. A huge number of varieties of marketing white papers are divided into 3 large groups:

Backgrounder

Numbered list

Problem / solution

All of them have their own features and scope of use. In addition, white paper can resemble:

instruction

guidance

special report

Market Review

Therefore, in terms of marketing, White paper is something like a free brochure that contains information that is valuable to its targeted audience, not of an advertising nature, which stimulates buying. And in the end, in its format, White Paper occupies an intermediate position between the technical instruction and the glossy magazine, between the dry scientific monograph and the annual report, between the falseness of obsessive advertising and timid descriptions of the perspective. Today, this tool can be either:

• Government statement explaining the policy;

• Reference document for corporate clients;

• Official documentation describing the solution;

• Documentation describing a new technology or algorithm

And further, there was one more transformation of purpose. On the 31st of October, 2008, white paper for bitcoin was published under the authorship of Satoshi Nakamoto — still the anonymous creator of the first crypto currency. In this document in a strict academic style, the technology of the new monetary system, which the author named Bitcoin, was described. Therefore, from this time on, the instrument as white paper has already acquired a new meaning and significance. Further white paper began to be used as a presentation tool for the concept of blockchain projects and from 2013 it was also used in the framework of ICO projects. The ICO theme continues to attract attention; hundreds of projects around the world are trying to raise funds through this mechanism. On the market, their own rules for the design of ICO are still developing, and one of them is that the project team should submit its description in a special document called White paper. Initially, it is intended to tell about how the technology of the blockchain will work. This file usually contains a detailed description of the architecture, as well as how the users interact with the system, information about the current market situation and growth forecasts, the conditions for the release and use of tokens, and a list of team members, investors, partners and project advisors. Without a properly designed white paper, it will be difficult for a project to carry out a successful ICO: few will be ready to invest in the absence of technically clever technology descriptions, as well as previous experience of team members and the availability of descriptions of basic economic prospects.

However, the definition that what is a well-written document today is like a room with a lot of doors. Therefore, what is observed on the market today is the opening of many doors, with unknown results and uncertain tasks of application of the document in modern already changed conditions. The teams are writing something, drawing something, making accents on the color and dominance of graphics, believing that the average person will have a beautiful candy wrapper. But among these philistines, many professional and institutional investors have already appeared which are simply annoyed by such empty advertising candy wrappers.

Initially, from 2013 to 2017 (the time of the so-called “pre-regulator attention”), there were certain requirements for the elements of this document. So, a good White paper should contain the following elements of sections:

The problem;

the proposed solution and product description;

description of the implementation of the token (how it interacts with the product, the economy and technical implementation);

Team;

Tokens distribution and further plans

In any case, it was desirable to highlight such issues. It is desirable, but not necessary. At the same time, it should always be remembered that so far there are no clear requirements or specific industry standards, as they are just outlining now.

Today, in the framework of the ICO White Paper is read by everyone who is planning to buy a token, to gain access to or finance the development of a new product or service within the framework of blockchain for their business or home, for private or corporate use. In the ICO business, white paper readers can perform many different roles. Among them:

heads of investment companies (make decisions);

heads of financial departments (recommend purchasing in terms of costs and their payback);

IT managers and ordinary staff (recommend from a technical point of view);

marketers;

users of various blockchain platforms and marketplaces;

people who decide to buy or invest

This is already quite a broad audience. White paper readers are looking for useful information that will help them understand the purpose of the product in which they are going to invest. Usually it is important for them to find out the technical and economic details of the product or service or to comprehend what benefits this project give them. And yet, why did white paper become so popular in the framework of ICO projects. The reasons are obvious:

collect leads for sales of tokens;

influence potential investors;

provide information to the media;

post information on the site;

build trust with customers;

Follow the competitors who publish white paper

These reasons, deriving from the marketing essence of the goal of writing white paper, while often forgetting even the technical component, have brought a number of defects today, like:

Justification the project value only using marketing and promotional material

Limited access to elements of economic and investment information

The style of writing the document was mainly oriented towards the audience that was exposed to the fashion hype in crypto business and crypto investment

Increased attention was paid not to content, but to design

Domination in the content of calls to action and bonuses

The devil is in the details — in shortcomings! Very often when analyzing the ICO market, experts primarily paying attention to the quality of many White Papers. And the main view is that the quality is terrible and shocking in many aspects, where mistakes were made or the description of the project was without justification. Also, in many cases, there was a clear conflict of interest between companies that release tokens and the customer community.

And the quality of information that presents such venture projects only adds fuel to the fire and causes suspicions already from regulators, since the obvious drawbacks are:

Total disregard to legal model of the forthcoming coin offering, for its incorporation, and for the ICO procedure itself

Ignoring the acceptance by the project of the guarantee obligations to potential investors. The lack of information on the project’s warranty obligations may indicate a possible vulnerability of its blockchain code and the reluctance of developers to bear responsibility for this to investors

Lack of originality of the idea of ​​the project and its implementation. Or originality is based on cloning and copying information from similar projects . Lack of expediency and justification for ICO. Projects, which in their essence are a financial investment in the operating business, do not disclose information in traditional way for business plans. Again, it is all around the design of pictures

The majority of ICO projects when drafting white paper forget about the economic model for justification of the blockchain platform. Times when the economy was pumped through marketing and community building — already in the past. Now is the time of big money, and they require an economic justification as well.

Many people constantly forget about one thing: Good White Paper cannot make a bad project successful, but at the same time a bad White Paper can completely ruin an excellent project.

To the already described shortcomings, we can add the following traditional problems of modern White papers as:

1. Domination of technical content

At the beginning, ICO aimed at a crypto community that was already familiar with the underlying technology. White Papers, heavily loaded with a technical description, earned the main attention. But as the ICO market is saturating and the cryptographic world is in line, the White Papers of the projects now need to serve a wider audience of future users of tokens, many of which are not crypto followers, but investors

2. Impossibility to determine why the project needs a blockchain

It used to be that “Decentralization” was a magical mantra for a successful ICO. Now the situation is different, and attentive investors want to know why your idea or product will benefit from decentralization.

3. Importance of the team

Who you are — your experience and knowledge — is more important than most of the teams understand it and get to know the problem when it comes in implementing a project and selling tokens. ICO investors not only want to get the confidence that you will develop the promised product, but they also need to be convinced that you are able to follow the project information so that it does not flow into a similar project of competitors

4. Inability to present information

Your White Paper should be more than a series of facts. Do not forget to add who, what, when, where, why and how. These phrases and the answers to them form the essence of the project description. The ability to write down correctly and clearly thoughts and skills in order to systematize and rank information about the project for investors is an indicator of your elementary business literacy

5. Either the opposite — an abundance of unnecessary rhetoric

Many white papers are so locked up in rhetoric that they forget to actually say something. Not observing the basic rules of drafting (PM standards), neglecting the main points of business planning, and reducing the role of traditions of the investment document are leading to the fact that even the dominance of marketing and advertising elements in white paper does not solve the main tasks and objectives of this document within the ICO campaign, as:

To make the difference in your project in order to benefit it from other projects that also goes to the ICO. Even if these projects do not directly compete with yours. The thing is that the amount of money from investors is always limited, and if the investor is choosing between several projects (and in practice it happens), then your project should catch his attention with targeted information more than others, and not with the help of tinsel and promo slag

Raise trust. A person should see the value of the idea of ​​the project, the opportunity to implement it, use and develop it. Therefore, in white paper there should not be logical inconsistencies or insane ideas that cannot be realized.

Convince investing money. Not always direct advertising and PR influence the decision making. Often a convincing analysis of the project’s prospects and trends in the current market for an investor should cause a causal case relationship with the project. If not me — then who? The main thing is that as a result of the marketing analysis it was clear that the project needed the market and would be in high demand with a high probability. However, in fact, we see an abundance of hysteria about uniqueness in a project that is not in fact

All of the above shortcomings and claims so far indicate one thing: the scam or ignorance of the initiators of projects dominates the market of venture investments in technological projects. Among the noise of this shit, it is very hard for real and talented projects and teams to break through and to attract the attention and finances of investors. Therefore, the attention of regulators is quite natural and approved.

So far today in the market, white paper is basically just a handiwork of copywriters who have nothing to do with what ICO really is and why it should be viewed from the position of the project, as regulators and serious investors already demand. The copywriters who came from the advertising business continue to destroy the sense of the document and do not understand the changed modern requirements for the document, both from a legal point of view and from an economic aspect. Therefore white paper should not be written by false copywriters, that pouring information from empty to empty, decorating the text with beautiful and cheap graphics, so the document should be compiled by a group of professionals (project management, finance, lawyers, technical personnel). If the copywriter for writing WP on freelance sites requires a fee of $ 80, then what are you expecting from him and who then is trying to use such services, as not charlatans or swindlers! Regulators are already beginning to pay attention to this problem with the quality of White Paper and in the process of establishing a number of requirements, which we will consider in the next article.

https://t.me/synergygolubyev

Sergey Golubev

Crynet Marketing Solutions, EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

In September 2017, the Office of Financial Conduct Authority of the UK (FCA) issued a warning about the risks associated with the ICO. In particular, they directly pointed out to the weak level of White Papers, and did describe it like the risk of the “imperfect documentation”. Instead of a prospectus for securities and an investment project, companies that are going to the ICO usually provide only White Paper, a document that basically does not contain comprehensive information about the project, and often it is misleading, while for a full understanding of the characteristics and risks of tokens it is necessary to have the view on complex technical and economic issues, taking into account the legal content. So it was said by regulator, and not only British.

Whitepaper is the central document of the ICO. It should clearly and briefly convey to potential investors the essence of the concept, its technical aspects, and the perspectives for investing in it. This document should receive special attention, since most investors decide to invest in the project based on its analysis. According to institutional investors opinion, based on comments and remarks in the press regarding the manifestation of interest in the ICO, the following conclusions on evaluation priorities can be summarized briefly what is a qualitative document that must meet the following criteria:

IDEA

 understandable from the first lines

 is presented in an accessible style for business, taking into account the development parameters

 innovation is revealed

MARKETS

 the current situation is described

 describes the impact of the project on markets

FORECASTS

 adequate to project possibilities

 adequate to the scale of markets

 do not contain unreasonable assumptions

FUNCTIONAL

 general description of business processes

 the token functions are detailed

 the need for a token in the project is obvious

VALUE OF CRYPTOACTIVE

 for the project audience

 for investors

 for the project sector of economy

WHITEPAPER STYLE

 structured document

 completed quality product

 revealing and selling the idea

In turn, regulators often pay attention to the criteria for evaluating ICO projects through their white papers. Particularly FINMA is interesting for its recommendations regarding the writing of such documents and the filling in of relevant project information in applications for authorization of the project under Swiss jurisdiction. The general tone of the recommendations has two priorities in principle: economic logic and security. The system of information disclosure embodied in the laws of many countries on securities is largely based on the fact that the founders of crypto projects are providing information about their company, management and securities (if their token is a security and not only), but also about the expected use of the investments raised.

This information is filed out with the SEC, FINMA, any other similar regulator in a particular jurisdiction. Accordingly, under the example of FINMA, you can understand the main criteria for evaluating the WP and the project itself and those moments that need to be covered:

Founder / promoter location

Very often in the ICO it is impossible to identify the origin of the issuing organization or promoter. This creates a serious information asymmetry on the part of the investor. Without this information, it becomes impossible to know or determine what rules and legal protection can be provided to investors. Therefore, in the information documents ICO should describe in detail where the issuer is located. Without verifiable geographical addresses, ICO-documents do not have any evidentiary meaning and will not be accepted for consideration

Problem and proposed technological solution

For investors, there is no more important information than the issuer’s financial statements. However, there is no such reporting for startups going to the ICO. ICOs tend to serve a slightly different purpose in comparing to traditional primary offers (IPOs). ICO is raising funds to solve technological problems. In exchange for funding, promoters / founders offer tokens with various functions (currency, utility or security). Therefore, it is important in WP to describe in detail the technological problem that the crypto project is resolving, and what exactly its token gives — what functional it has. It’s just one thing to describe the problem and the solution, it is necessary that these words be subjected to a third-party audit. It’s worth paying tribute to those projects that publicly post their codes on GitHub if they are available in the project — an important point. It would be nice to post publicly the financial statements of the crypto project after the ICO. Being able to analyze balances, cash flows and income statements, investors could assess the company’s performance, make sound assumptions about its future effectiveness and profitability and assess the value of the company’s securities.

Token description

Tokens can have many different qualitative and economic functions. If the coins meet certain rules, such as the ERC20 standard, the disclosure should clarify what this means for the average owner. It is also necessary to justify the choice of this or another standard of the token. The token descriptions should indicate the intended use of coins issued at placement, their number quantity, whether the founders have reserve coins, and how / when they can liquidate them. Justification for the above actions and choices. Also, the regulator needs to notify when the token will be generated, when the platform, what ICO terms, how the token transfer to users/investors, give a clear functional and economic description of the token. What rights will guarantee and provide the project’s token for investors, how they will be documented, how and where the token can be purchased or sold after the ICO.

Blockchain control

Investors should be informed about how the auxiliary infrastructure works — the blockchain, and how this will affect the management of the token. There should be disclosed a mechanism for consensus for the blockchain, the parameters of software updates for the virtual currency, and also how the decisions of the soft developers will be coordinated between the holders, miners and other members of the network. The choice of the type of blockchain (especially since today there are more than 40 types with different technical and functional characteristics) should be justified. If you develop your own private block. It is also worthwhile to justify this decision, additionally paying attention to the description of its competitive advantages in the market.

Team Qualification

Information on the business experience of executive directors is a general requirement when disclosing information in registered public offerings. They give investors a sense of quality management and a belief in the success of the company. In ICO, where firms have a limited life history, and the technology in question can be exotic, similar information can be particularly useful about the technical skills of the whole team and its advisors from various related fields of science and economics. Therefore, founders must provide all relevant information regarding key engineering skills, qualifications and so on. In turn, FINMA within the framework of this requirement has, if necessary, the right to conduct interviews with team members.

Risk factors

ICOs should describe the possible risk factors that can affect token holders in the proposed document. Coin holders should be aware of the current status of projects and products, at what stage they are, whether they function. Investors should be fully aware of potential vulnerabilities for hacking, data loss and network failures. All possible risks should be considered and ranked according to the degree of probability of the realization, and methods for their minimization and elimination of consequences.

Budget and schedule

When a project is financed by investors, the question of the value of the investment and the distribution of the shares between the investors and the initiators of the project always arise. The project team in its white paper should reflect the elementary assessment of its crypto-currency start-up, because such an assessment serves as a basis for making informed decisions by both sides. In this perspective, the leading regulators are paying attention to the fact that it is desirable to consider the following parameters in the document:

· An estimate value of the start-up before to attract financing

· Possible appraisal of the project value after ICO investments

· Justification of the allocations between the investors and the project initiators

· Estimating the future value of the project under various scenarios of the crowdsale

· Analysis of the declared expenses for ICO (analysis of budget costs and its justification within the project and its development)

· Analysis of the declared lower and upper threshold of project financing (so-called soft cap & hard cap)

One of the important things that both institutional investors and regulators point out as a necessary requirement for WP is that almost all documents do not present a clear schedule of work after ICO for the project. Road Map — only shows the intentions and milestones in the development phases of the project, but what kind of work and in what time frame they will be implemented no one shows that does not give ICO advantages.

Further, regulators and institutional investors cannot ignore the question of compliance policies in White Papers, as they will monitor:

Legal analysis of the token, which is planned to be released on the ICO;

Analysis of contracts with counterparties of the initiating company and advisers;

Token Sale Agreement (TSA) analysis.

Analysis of the Privacy Policy (PP), which defines the ways of processing, storing, using personal data of ICO participants;

Analysis of Terms and Conditions, which describes the rights and obligations of using the services on the project’s website;

Analysis of the AML policy, which determines what measures are taken combating the financing of terrorism and money laundering in the company, their algorithm and implementation;

Analysis of legal decisions on the distribution of profits drawn between the following groups of persons during the ICO: developers, consultants, users, exchanges, other persons

Analysis of the General disclaimer, legal disclaimer, and Warning on the risks inherit to the ICO in order to prevent possible consequences

Analysis of documents in accordance with AML and KYC requirements

Analysis of the User Agreement;

Analysis of electronic contracts concluded in the form of click-wrap and browse-wrap agreements, public offer agreements, and other

Analysis of the Privacy Policy / NDA for employees;

Review of employment contracts with employees

Are regulators disgusting in the eyes of crypto activists? Perhaps so — they are bad. However, the sence of such analyzes and monitoring is obvious — minimization of the scam and preventive protection of investors.

Also, first of all, when analyzing white paper, there are a number of specific things that the regulators already pays attention to:

The use of open blockchain and ICO

An open blockchain is a slow and expensive database that provides a guarantee of consensus between independent transaction participants without the involvement of centralized middlemen. Despite of many predictions, the practical use of public blockchains in other areas is difficult due to the low speed and high transaction costs in the presence of effective centralized solutions. The absence of a well-grounded need to use blockchain and own currency (token) is the most frequent problem of White paper ICO projects. As a result, many platforms and marketplaces remain at the idea stage, or their implementation is different from the declared one. Projects that reach the industrial launch, even begin to accept for payment the fiat, reducing the value and cost of the token. Most White paper is silent about the need for blockchain. Many try to attract investments through the introduction of blockchain in new industries. The substantiation of the need for it, as a rule, is absent.

Platform selection and smart contract

For ICO one uses either a readymade or own blockchain. In the second case, it is necessary to create a network, to attract and pay for the services of miners to confirm transactions (consensus). Most use ready-made platforms as: Omni, Waves, and Ethereum that is the leader with a large margin. Due to the popularity of the Ethereum network is overloaded, the growing demand raises the cost of the Ether currency and, as a consequence, the cost of the ICO. The ICO terms and the functionality of the token are formulated in a smart contract that carries risks to all participants. A smart contract is a program code that can contain random errors or deliberate “bookmarks”. If the network is overloaded, execution is delayed, that can affect the result.

Token valuation

Valuation of the token is more like a valuation of gold or a fashion thing in high season, when a limited supply is not able to satisfy the rush demand. With a balanced demand, it should be determined by traditional methods — project development forecasts and the nature of the token. But in most cases it is still determined by PR, White Paper marketing and ICO-sales techniques.

The traditional evaluation of a token as a currency depends on parameters that are difficult to determine at the beginning development stage. In addition, the token is of a dual nature, which makes evaluation more difficult. Investors expect the increase of a token price, marketplace customers — a fall of the service costs, which is expressed in tokens. The value of the token is inversely proportional to the cost of the service unit. Therefore, preparation and technique of ICO is still the main thing that determines the capitalization and cost of the token. That is the problem.

Security issues

ICO participants are immediately targeted for attacks. The volumes of ICO cause a surge in the interest of hackers. On average, more than 10% of ICO funds are lost as a result of attacks. Hackers are helped by the hype, the absence of a centralized arbitrator and the irreversibility of transactions in the blockchain. The founders focus on attracting investors, security often goes to the background. Hackers successfully use this. The more “untwisted” and large-scale ICO, the more attractive it is for attacks. For the project — it’s a loss of reputation. For investors — this is the loss of personal data that is necessary for the KYC procedure or for trading on crypto-exchanges. Therefore, security issues and methods, as you will decide in the project, are part of monitoring your project.

https://t.me/synergygolubyev

Sergiy Golubyev

Crynet Marketing solutions, EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

In project management, there are several key success criteria for the possible implementation of any project: from building a plant, developing a software product, opening a new supermarket to something else. They are time, budget and quality. That is, it is possible to name a successful project that was completed within the established period, the cost of its implementation did not exceed the budget, and the result of the project meets the quality and conditions agreed in advance.

At a glance, project management is obliged to managing these three main components. An important place among them is the budget (which affects the other indicators in the same way as they do for it), because any investor evaluates the project primarily on financial indicators: how much is spent on the project and how much is earned as a result at the end. In addition, most important — how the money were spent!

To manage effectively the project budget, you need to clearly understand and determine what it is. There are many definitions, but we will focus on the more widespread. Therefore, the project budget is an investment that, in order to achieve the desired result, is distributed over timeline and is tied to the stages and sub-stages of a particular project. Or, to be more precise, the project budget is a clear cost plan necessary for its execution.

The budget of the project always includes the costs for the procurement of materials, payroll, third-party services, administrative expenses and other expenses related to the scope of the project and its implementation. As a rule, the budget is formed in the context of the project stages — work sites, the implementation of which is controlled by the project team. The main parameters affecting the project budget are the duration of the work, the number of participants and the equipment used, and specific requirements for the result. However, as the practice of venture investment shows, start up teams mainly with great difficulty understand such a tool as a budget. The main problem of managing the project budget for them and not only is the distribution of responsibilities and delegation of authority. These problems negatively affect the effective management of the project budget.

If you look at the budgets of startup projects that go to the ICO — it’s basically always a big secret, covered in grey shadow. The amounts of the desired fundraising are announced for the project, at the same time, in 99% in whitepapers there is not any word about how the money be spent on the investment, at best, we will see the Fund Allocation diagram — for undefined priorities as a percentage, without a clear reasoning and justification of the amounts claimed in the form of expenses.

In addition, there is no question that in whitepaper there must be a result of documenting the scope of work and the timing of the project. Documenting the project budget is a special case of project cost planning and budget development, as everything depends on the declared goals in the project, methods of problem solutions and the scope of the economic implementation of the project. Constantly in the ICO, one forgets that your start up is a classic project that can be called a project if you work in it the priorities indicated at the beginning of the article, where the budget is assigned a dominant position.

Statistics tell us that the issue of managing the resources of an enterprise or a project is a headache of many startups and, as it is not strange, already experienced commercial organizations as well. According to the report of Panorama Consulting solutions (a consulting firm specializing in project support, including the IT industry), only 36% of the projects managed to meet the planned budget.

At the same time, the same report (https://www.panorama-consulting.com/resource-center/erp-industry-reports/panoramas-2018-erp-report/ ) shows that in 64% of cases, projects and companies failed to manage be within the declared budgets, most often these were cases of its unplanned excess.

Further, the report shows even more interesting reasons of such excesses and not getting into the frame of planned budget. According to experts this is:

• Unanticipated technical and organizational issues (45% of cases)

• Unrealistic budgets (43% of cases)

• Additional technology requirements and claims needed for the project implementation (41% of cases)

• Underestimated project staffing (35% of cases)

• Expanded scope and additional costs (31% of cases)

This information can be trusted, in principle; such errors are peculiar not only to IT projects, but in general to any kind of project from a wide range of economic activities.

In addition to this problem, I would still point out the manic hysteria surrounding Hard Cap and Soft Cap of the projects going to ICO. It is the rampant performance of hard and soft cap that breaks the huge value of the budget itself, as the main core of a successful presentation of the project, and its implementation. How do the founders and project teams set specific financial goals for the ICO? Basically — ‘’nothing at all’’. This ‘’nothing at all’’ — is the secret of the Madrid court. At best, teams are discussing the amount of necessary investment superficially.

Logically, long before the ICO procedure in principle, the team and the founders are developing the idea; they should make a business plan, try to think about the development strategy, and so on. As a result, specific tasks must be created that need to be solved in order to obtain the desired result. Implementation of decisions requires money, and for collecting these funds, the ICO is conducted if they do not want to take a credit, attract venture funds, and so on. As a result, the ICO project team should have a clear idea of how much money they need to run the project and develop the project product. All these phenomena like soft and hard caps sometimes just turning into a comedy. If we will proceed from the declared logic, then the setting of basic characteristics and ideas for the realization of the project product is a soft cap, and the development and production of a product with a full range of planned characteristics is a hard cap. Sorry, but it works like this — we will develop an aircraft with one wing (it is soft), and with two wings it is hard. And with three wings?

Then Soft Cap is the amount that is necessary to run those components of the project, without the implementation of which, according to the developer, is a potential failure. Hard Cap is the amount that is needed to implement all the possible ideas and intentions of the developer. Then what is the product behind the project soft — hard caps? If it can be unfinished (soft cap) and full packed (hard cap). Anarchy with the concept of the end — product of the project as a result of the implementation of the same project — it hits the product itself and the definition of what is the end — product, respectively, this also jeopardizes the unprecedented priority of the ICO project’s founders — like the budget. In 95% of the cases in the projects the logic is the following: we want something, it is such a big and super modern, we have such a technology here, give us some money, and we maybe give you something, and finally — we will show you Big Fish, and if you give us more money — TOTHEMOON !!! Perhaps, all the same is possible in venture projects, where there is a certain sense in establishing a minimum and maximum of fundraising, but the core will be — if we can see and read in whitepapers the rationale budget justifications for such soft and hard caps. In fact, never seen such budget justifications at all.

In principle, today there is no clear regulation and standard for ICO and, accordingly, the standard for the preparation of project documentation. The founders may not indicate at all how they intend to spend the funds, this is their right, since no one obliges. However, the regulators are already beginning to identify this problem in the whitepapers as a significant shortcoming and potential risk for ICO projects. In September 2017, the Financial Conduct Authority in UK (FCA) issued a warning on the risks associated with the ICO. In particular, they indicated a weak level of WP, high risks and unclear project documentation (https://www.fca.org.uk/news/statements/initial-coin-offerings).

This significantly reduces the level of investor confidence in ICO and the evaluation of rating agencies. Regardless of how soft and hard caps are presented to investors, their designation impose on the team some obligations and restrictions, which are mostly forgotten in the part of the budget transparency of the project. If there is a gap between the indicators of soft and hard cap, then most likely it means that the founders and the project team:

• By any methods they want to collect at least some money

• Have no idea how much money is required to implement the project. Consequently, they have no business plan and development strategies. No any budget!

• In this case it is not a start up project — but the scam hype!

It should be understood that if they declare $1 million to create the product of the project, but at the same time they do not refuse $1 billion, then nobody seriously is thinking about the product and the budget for its implementation. Hence, the misunderstanding in many ICO projects of the importance of presenting a detailed budget. The budget is the most important part of the project. It is not always necessary to describe in detail the existing problem, not all investors will be meticulously interested in the methods and technological processes that you applying, but the budget interests a lot of them.

The effective way to plan is to start from the activities envisaged and then move to budget them, through a three step system of budget monitoring.

It is vital that projects start to consider financial issues from the beginning. Even though an estimation of the funds potentially available can be an important factor in defining the scope of the project, experience has shown however that saving time on proper budgeting almost always results in tensions with the programme management. Finance staff needs to be aware of such practices and develop application, assessment and monitoring procedures that keep them to a minimum. The more effective way to plan is to start from the activities envisaged and then move to budget them.

And there is a three step process that should provide the right level of accuracy:

• Resource Planning

• Cost Estimation

• Cost Budgeting

These steps form the basis for cost control once the project is operational.

Resource Planning consists of:

• identification of the objectives and sub-objectives of the project;

• defining the work packages and determining how the project objectives will be achieved, by whom and what physical resources (people, equipment, material, etc) will be needed;

• defining a time plan with milestones;

• identifying the additional tasks required for the effective cooperation of the partnership followed by allocation of the resources to the partners who will incur these costs.

Cost Estimating consists of:

• developing an approximation of the costs of the resources needed to complete the project activities. Whereas some costs are reasonably easy to calculate (e.g. cost of staff ), others are more difficult to estimate at the start (for instance when they are based on a preparatory work / research to be carried out as part of the same project) and is better to define a realistic maximum price for the activity;

• aggregating the “bottom-up” estimate costs of individual activities to get the total estimated amount.

Cost Budgeting consists of:

• re-organising the information gathered so far (main activities, the estimated start and end dates, the approximate resources (budget) required) into the main categories of expenditure according to the structure of the budget template — the budget headings, lines and sub-lines;

• scheduling the project and allocating resources per individual activities and partners. The schedule includes planned start and end expected finish dates for the components of the project to which costs have been allocated.

Different venture funds and private investors make different requirements for budgeting and can ask additional questions to which the team should be prepared in advance.

Therefore, if the ICO project team has the main goal — to implement the project with the help of collected funds, it is worth paying attention to an example of a budget that will satisfy most organizations and with little changes can be used for public.

The classical budget consists of three main areas:

• Salary

• The main direct costs

• Indirect costs

When planning a budget, it is useful not to forget about “Goals and Tasks” and “Methods” to develop a suitable plan. It is necessary to take into account all the details on what you will spend money (resources), as well as the main factors that affect the costs.

Before you begin to distribute money by budget line items, carefully review the tax laws and the specifics of financial statements that are acceptable in the jurisdiction of conducting your ICO or the location of the main office of the project, so as not to be in a situation where half of the revenue you receive will go to unforeseen taxes and payments. Here it is worth working with your lawyer and accountant.

Here is an indicative list of the minimum items of budget costs and the required resources:

• Human resources: staff workers, experts involved, consultants, contracts with other organizations

• Wages: salary, cost of contract services, taxes, insurance, take into account the inflation

• Administrative costs — office: payment of rent (purchase), communal payments, insurance

• Administrative costs — Other costs: expenses for office operations, consumables — office supplies, rent of vehicles, other unforeseen expenses

• Travel and transport costs: the price of tickets for airplane, train, etc., per diem, the price of accommodation in hotels, take into account the inflation level (after all, the team will carry out marketing and PR programs for events that need to be present)

• Equipment and infrastructure costs: the price of a unit of necessary equipment for the implementation of the project, the price of consumables, insurance and guarantees, other expenses

• Other costs: marketing, PR and advertising company, community building costs, legal support for the project and office, costs for compliance monitoring, costs for possible printing products, other unforeseen costs

All of the above items of expenditure are included in direct costs. As for the indirect — we refer to the indirect “costs that are difficult to relate to any particular activity or project, but, nevertheless, necessary for the normal functioning of the organization and the successful performance of its tasks”.

Also, as a rule, specific organizations determine their own level of overhead costs as a percentage of the total wage fund or from all direct costs — this should not be forgotten. Well, it’s important not to forget about contingency as well. There are two types — for unforeseen circumstances and managerial reserves. The size of the contingencies is extremely individual for each project and organization. Many factors — and the maturity of risk management, and the quality of assessments and forecasts, and the level of project managers and teams, as well as the allowable for each particular venture fund the percentage of contingency in the budget. They are also very practical when their goal is not to “wash out” of the project all the revenues and cash at the end of the period.

From the point of view of documentation, the total budget planning for the project is as follows:

• Estimates of the costs received on the basis of the Project harmonograms, that giving us an understanding of the detailed cost of the project for operations and work packages

• The project budget, which includes the budget of costs, project financing requirements and contingencies

When working on a budget, it is necessary to be guided by the standards of PMBOK and ISO21500. This is of course in ideal. However, the perspectives for the ICO will be significant if the teams using it will strive to improve the quality of the material presented to investors. The secrets and non-transparency of the budget planning process will not give the potential for increasing interest in such an alternative investment instrument as the ICO.

Sergiy Golubyev (Сергей Голубев)

Join the chat — https://t.me/joinchat/AAAAAE84vCXg5PK-VpHADg

Crynet Marketing Solutions, EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

“Philosophers only explained the world in different ways; but the thing is to change it” — Karl Marx

During the time of rapid growth in the possibilities for scientific and technological progress and accelerated implementation of its results, we increasingly began to hear about technocracy as a new form of social and public management. We are living now in the era of dynamic and regressive changes in the ruling regimes — a period of major political changes, where the dramatic pullback of the half-century socio-economic gains of society is aggravated by a deep and prolonged economic crisis, and the onset of world financial capital and its rules on civilization. Already now, in Europe and in the US, as well as in leading Asian countries, one can observe the transition from oligarchic democracy to a colonial-technocratic dictatorship. How dangerous or useful are these processes? Is it worth to be afraid of a technocratic dictatorship? You will not get answers today at all. Only with time and after us it becomes clear where the next experiment will lead the human civilization.

Where did the terms come from?

The term technocracy has several meanings:

1) The caste of technical specialists who are members of the top management functionaries;

2) A theoretical concept, an ideology that recognizes the leading role in society of technology and technical specialists.

Technocratic ideas were preached by F. Bacon, A. Saint-Simon, O. Comte and some others. The essence of ideology is that society can be regulated by the principles of scientific and technological rationality. The modern technocratic theory of the state originates from the publication in 1919 of the work of T. Veblen “The engineers and the price system”, which entailed in the 1920s a series of studies that came the era of power engineers. T. Veblen wrote that technical specialists must replace the bourgeoisie and financiers. Already in the 30-ies in US, a social movement has emerged, promoting the idea that social welfare is possible with an industrial revolution and scientific planning of production.

However, the 21st century is already dominates, while the bourgeoisie and financiers are not going to surrender their dominant positions. In any case, they think so. In the 70–80’s of the 20th century in the US began to circulate the idea that the public administration needs professionals who able to develop the concept of “post-industrial society”. At this time, they began to believe that the main driving force of social progress is knowledge. Technocracy, according to modern followers of this theory, is able to solve global problems: environmental, energy, economic, social, wars, demographic and others. In this case, the concept of a postindustrial society is actually identified with the technocratic management of society.

Post-industrial society is based on the “game between people”, in which, against the background of computer technology, the dominant position is occupied by intelligent technology based on information. In these conditions, the main resource is information. The priority shifts from semi-skilled workers to engineers and scientists, further improvement of human knowledge of the world occurs primarily through the use of abstract models and system analysis, the central importance is the codification of theoretical knowledge, and the most important task of scientists becomes a promising forecasting of economic and social processes. The rapid development of science and technology in a post-industrial society makes the social revolution superfluous, since its place is occupied by the scientific and technological revolution. For example, the ideologist of post-industrialism, D. Bell points to the following five characters of a “post-industrial society”:

1. Transition from the economy of manufacturing industries to the economy of services;

2. The growing predominance of the “class of specialists and technicians”;

3. The dominant role of theoretical knowledge as the basis for innovation and policy formulation;

4. Orientation in the future on the monitoring and evaluation of technology;

5. Decision-making based on a new “intellectual technology”

Wait, doesn’t that remind you of something? After all, such signs are already everywhere around us. Even this ghost fifth sign as “decision-making based on a new intellectual technology”, even a couple of years ago, is the development of technologies based on Artificial Intelligence, a phenomenon that is widespread today and has potential for application. Post-industrial society is a society of knowledge in a dual sense:

1) Research and development, based on theoretical knowledge, is increasingly becoming a source of innovation.

2) The progress of society is uniquely determined by advances in the field of knowledge. The postindustrial society is also a communal society where the social unit is rather a separate community of individuals than the individual, and the goal is to achieve a “social solution” that is different from the simple sum of individual decisions. One can foresee that to some extent we are actually returning to castes.

Such a separate community is determined by technocratic methods of problem solving. Therefore, the term technocracy itself can be supplemented — as a direction in social and political thought, according to which the society should be regulated by the rules of rationality, which holders are technocrats: engineers, production organizers, technical experts, information and monitoring decision-making systems (in fact, the role is assigned to artificial Intelligence). As a control system, technocracy can dominate government institutions and corporations. Such institutions will have to attract a number of specialists and information technologies to develop scientific and technical recommendations and decisions on issues of industrial, economic and social activities in order to ensure their effectiveness, objectivity and usefulness.

Technocracy — a chance for the future?

From the social standpoint, the ideas of technocracy are virtually synonymous with Plato’s “Republic” and other meritocratic concepts. Only here the Plato “philosophers” are replaced by scientists and engineers who are called to manage the economy, and in the future, in fact, artificial intelligence, as the highest degree of fair decision-making. However, various authors have brought technological determinism to the fore as a key idea, suggesting that it is the development of technology and science that is primary in relation to the development of all other spheres of society. In fact, technological determinism is a bourgeois view on the laws of history, originating in the works of Enlightenment philosophers. On the one hand, technological determinism was engendered by the rapid development of the productive forces of developed countries at the beginning of the twentieth century, on the other hand, by economic problems that were the reverse side of capitalist progress.

One of the most complete options for developing the future of technocracy is the concept of “technostructure”. In fact, it is a think-tank or, to go even further, it is a global software (decision-making platform), including the totality of opinions of scientists, engineers, technicians, specialists and technologies. It will become the leading force in the era of globalization of the world and the world economy.

To replace the profit maximization, the technostructure sets its goals that are not determined by the market, but determined by the higher intelligence (the same technostructure). First, we are talking about a “protective” goal, the dynamic preservation of the status quo, in which public administration remains in the technostructure, as a balance between technocrats and artificial intelligence.

So what is the future with technocracy? Moreover, it is a project of a technocratic system with a resource-oriented economy based not on commodity-money relations, but on the most efficient allocation of terrestrial resources, the use of alternative energy sources, and automated machine control (using artificial intelligence) on a global scale. Naturally, not only resources, but also the results of labor, i.e. goods and services, with a new distribution model will be available to everyone. In principle, it sounds utopian, but it’s real as well.

In the twentieth century, the development of monopolies actually destroyed competition within the state, and it remained at the world level, only as competition for spheres of influence. In addition, in the 21st century the world economy steadily began to move towards a crisis. The global economy and the global division of labor, which gave effective production, stumbled upon the imperfection of the democratic system and its defects. The current situation in the financial markets clearly determines the impossibility of the existence not only of the global financial system, but also of the world economy in their previous form. It is not necessary to imagine that the modern political capitalist economic system is capable of correcting the consequences of its global rule. Thanks to God, that it could not destroy the world order at all.

Democratic free competition and an uncontrolled market will never fit into the principle of freedom within the framework of the state’s need. They will rather choke the state itself, than they will get by their “ideals”, for any framework turns out to be close to animal instincts, awakened by greed for gain. Lack of control exists not only in what is not taken into account, but also in the fact that no one is responsible for the economic consequences.

Democracy demonstrates its impotence, its wild conservatism as a political system. The modern state management system no longer corresponds to the current stage of the scientific and economic revolution. Prospects of liberal bourgeois democracy are unenviable, both in resolving the crisis, and in trying to start all over again, trying to take into account the mistakes of the past.

The only solution is to change the system until it explodes. It is a shift from the power of classes to the power of professional institutions, from political parties to professional parties and their factions, and is the basis of the technocratic state of the future. The theorists of democracy and autocracy are sure that it is enough to set a task, and professionals will solve it. It is known that the correctly posed problem is half of the solution, and the incorrectly stated problem is the wrong decision.

The practice of democracy and autocracy shows that when a nonprofessional sets his task, professionals solve it inefficiently, but most likely fail it. In this color and under such conditions, technocracy has the chance to become the basis for a new social order and world order.

Where is the Devil?

The technique began to penetrate intensively into the culture. New terms appeared: “artificial intelligence”, “computerization of education”, “automatic translation”, “machine music”, “artificial intelligentsia”, etc. At the same time, the image of society itself was changing, thinking was deformed. Information began to replace basic knowledge, and mediocre and superficial education — culture and spiritual values. Such a transformation of human intellect testifies to the lack of spirituality and triumph of technocratic thinking.

What is technocratic thinking? This world view, the essential features of which are the dominance of the means over the goal, the private goal over the meaning and universal human interests, the symbol over the being and realities of the modern world, the technique over man and his values.

For the technocracy, there are no categories of morality, conscience, human experience and dignity. An essential feature is the view of man as a trained, programmable component of the system, as an object of a wide variety of manipulations, and not as an individual, for which not only amateur performance, but freedom also is characteristic.

In recent decades, there has been a qualitative evolution in the public consciousness, in its social and philosophical assessments. Solving the global problems of mankind, we must each time, on the one hand, realize that the destructive power of the intellect is now estimated by planetary scales, on the other hand, when characterizing technocratic thinking, we should not lose sight of the meaning of human existence.

Consequently, the main advantage of the progressive educational system should be a humanistic orientation and orientation to universal human values. But gradually progress has turned towards the person, and to the surrounding nature is not a virtue, but scientific and technical predation. A whole generation of people with technocratic thinking has been formed and educated, for whom the main thing is the day-to-day fulfillment of the plan, specific tasks.

Over the years, these people, lost the ability to think in universal human categories, dehumanized, hardened. Hence, land, forests, rivers, lakes, seas are destroyed with such ease, material and spiritual values, culture, morality are destroyed. The danger of technocratic thinking is associated with scientific and technological progress, but is not a consequence of the scientific and technological revolution.

The fact is that the greatest achievements of science in various spheres of human activity were realized by outstanding minds and generated by non-technocratic thinking. However, the excessively rapid dissemination and realization of the results of technocratic thinking observed in recent years led to the fact that as science approached technique, it alienated from human.

Because of all this, the term “scientific and technological progress” did not look at and did not take into account social and humanitarian progress. Scientific and technological progress has become an end in itself, but beyond the concern for social development, it will inevitably become meaningless over time. When introducing any technical means into practice, it is necessary to take into account the human factor, take into account the role and importance of this tool for the subject, to meet the needs and interests of the individual.

Today, technology considers a person only as one of the components of a complex socio-technical system, and not as the most important central link in the most valuable and unique conscious activity. This is just the Devil! Now humankind is excessively involved in the development of its technosphere to the detriment of humanitarian knowledge. This imbalance is catastrophic.

Already there are dangerous experiments with the use of living material as a resource for the development of technological systems. If humanity still treats space, nature and its neighbor as a resource for a certain “competitiveness,” then it risks in the not so distant future run into exactly the same attitude, but already from the techno-generated monsters — negative towards the person cyber systems (including artificial intelligence), turn into slaves of this cyber system or be destroyed by it, this is at best. In the worst case, we are waiting for the eternal technocratic slavery, electronic and technological hell.

In general, utilitarianism and technocracy alienate man from both spiritual reality and physical reality, wholly superseding his activity in the field of a virtual, potential, not yet accomplished. Instead of authenticity and Being, the world includes calculation and existence for the sake of existence.

Coming Noocracy?

The nature of modern civilization, the features of interaction with nature, based on mechanical principles; dictate to human a way of thinking, which is called technocratic. It prevents a person from revealing his spiritual wealth, going beyond the bounds of synthetic limitations, mechanistic thinking.

Technology is seen as a suprasocial, superhuman phenomenon with its own inner logic and its laws of development. When viewed from the outside, the development of technology seems to be a progressive phenomenon, but scientific and technological progress breaks the harmony between material and spiritual forces. This leads inexorably to an imbalance between culture and civilization.

In our time, scientific and technological progress outstrips the social and cultural development of man. The advanced development of technology leads to the techno thesis of society, technology occupies a dominant position over the human community, dictates its will and laws.

The modification of the technology condition in society asserts the consumer attitude towards nature leading to an ecological, moral and spiritual crisis. Universal automation creates a material world of anthropogenic civilization, which leaves the control of man. This world is uncontrollable and aggressive, replaces the world of human values, forming a new type of personality — the type of consumer.

The potential imbalance described earlier can lead to the destruction of human civilization, therefore, as one of the ways out, to avoid such an end; it is quite realistic for a technocratic dictatorship to be in control of the mechanization of civilization.

In this case, noocracy may become a form of such neo-technocratic dictatorship. In fact, this is the power of the intellectual elite with rational thinking, acting as the main guiding force of scientific and technological progress and the social and economic prosperity of society. At the same time, in the perspective of the domination of globalization, noocracy will manifest itself in the form of a balanced collective intelligence (most likely the same Artificial Intelligence) that will be over people and will be the last instance of making balanced decisions.

As far as the technocrats of the future will be able to control this collective intelligence, today it is not possible to predict. However, the fact that the victorious technocrats will give the power to make decisions to the collective intelligence is beyond doubt. What the rest of the non-technocrats caste should make? I think, as always, to adapt, react, survive and take the most useful for our individual evolution. Do not be afraid of future, it is worth living through and gaining experience.

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Sergiy Golubyev (Сергей Голубев)

Crynet Marketing Solutions, EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

Dicit ei Simon Petrus: Domine, quo vadis? Respondit Jesus: Quo ego vado, non potes me modo sequi; sequeris, autem postea.

Ideally, White paper is a document that details the idea of the project, its technical characteristics and schematically shows why it should be invested. In this document, the founders of the ICO give a detailed account of the work already done and the future of the project.

In many aspects, the mood of investors depends on the details of the description and the originality of the project. The fact is that some founders do not always bother about White paper. There is a bunch of templates that are used to write this document. This is the problem, since white paper is a commercial document of the project and if it repeats the structure and content of existing projects, then loyalty from investors will be less. Therefore, it is very important that this instrument emphasize the individuality and uniqueness of the whole project. Moreover, one should start with the fact that white paper need to formalize properly.

In general, not all investors look at the project documentation. Some investors invest in those projects that are popular and on hearing. However, there are those, including institutional investors, who meticulously scrutinize every line of all submitted materials.

In addition, if there is a mistake or an item containing contradictions, there is a high risk that this issue will receive wide publicity and resonance in the special press and social networks. At the same time, we should not forget that there is a difference in the process of preparing project documentation, including white paper for private and public sales. In private sales, the bet goes to an accredited investor who is already spoiled by the high level of investment projects and documentation that such projects accompany.

White paper is a presentation of the project. While there is no clear structure of this document, however, professional investors have a clear checklist of the items they usually want to see in the white paper: the concept of the project, its history, the stages of realization of the idea and the legal component. This is the necessary minimum set.

If your familiarization with the White Paper is problematic, it is worth to think about the reasonability of investing in such project. If the founders are not very attached to the description of the idea, then you can imagine how they will behave during the ICO and further implementation of the project.

The White Paper is an important document in the ICO. Just a beautiful advertising description is not enough; domination of statistics and complex technical parameters is also not good. Even the same statistics, should have referral links to primary sources at least. Everything should be simple, understandable and on business. The project team must work with criticism and correct mistakes. However, it is important that the provisions change not only on paper but also in real deeds.

Since 2016, regulators and various controlling bodies, such as the SEC, have reacted to the ICO. SEC is known by position that all tokens born by ICO are almost always potential securities, which should be appropriately entered into circulation and registered with regulators. In turn, it is possible from 2017 to observe certain changes in the format of white paper of the projects, which their tokens are more associated with securities or with a hybrid form.

Taking into account the opinion of the SEC, ICO projects, implementation and market of which are still aimed at the US, have to take into account such views of the regulator now in shaping the policy of implementing its project and the documentation that gives birth to such a project.

In turn, the basic elements of the Security Offering Memorandum began to be used increasingly in White Paper. The offering Memorandum is an official legal document prepared by the issuing company, approved by its Board of Directors, and contains significant information about the issuer and its securities.

The role of the Security Offering Memorandum is ambivalent — on the one hand it is used to stimulate sales of issued securities, that is, it should reflect positive information. On the other hand, according to the requirements of the law and the controlling regulator, it is necessary to disclose all information about the company (including risk factors).

Accordingly, regarding ICO projects, white paper should contain information about the Token issuer company and economic and technical information about the project’s tokens. Approved by the project’s founders. In turn, the following sections of the document will be used by the ICO from the IPO world:

Description of the company and its business

Type of securities offered (tokens in our case)

The amount of emission (a description of the type and details of the token emission)

Purpose of the raised money (project budget information)

Postal address, phone numbers, e-mail;

Internet site of the company (website lending of the ICO project)

Risk factors (description of risks and methods of their minimization)

Unfavorable development of business and loss of profit;

The need for additional funding (emission of tokens)

Trends in business development or seasonal changes (forecasts for the development of the marketplace and services platform)

Concurrence;

Information on material contracts or licenses (the need for additional licenses and etc)

Influence of the legislative framework;

Changes in technology (forecast for the development of the use of blockchain)

Use of collected funds

An important element for attracting investors is the discussion of the use of raised funds as a result of primary placement. It should be taking into account that SEC requires a report on the placement of these funds after the completion of the IPO process. It should not be mentioned that these funds would be used to repay debts, pay dividends, close settlements with suppliers of previous periods, etc.

The most attractive for investors are options for expanding business, M&A, R&D. In turn, within the framework of ICO projects in White paper, taking into account the format of the Security Offering Memorandum, it is necessary to describe and justify the targeted expenditure of raised funds in the budget format by types of work and types of costs. In addition, the purpose of the issue is to finance a prospective start-up project (if this is a new business) or to attract an alternative source of financing in the form of digital assets.

Underwriters and distribution of securities

It is necessary to provide information on the value of securities, participants in the underwriter syndicate, underwriting type, description of all the relationships between the company and each of the underwriters. However, under the ICO such underwriting services are not implemented in its pure form, but it already provides for the participation of a pool of investors (accredited) in the private sales of tokens at a discount.

Description of the company’s business

It is necessary to provide as much information as possible about the company’s business:

Business plan;

Features of the company;

Work in foreign markets;

Expenses for R&D;

Legislative provisions affecting the company’s operations;

Existing and potential legal issues;

Data on incomes, profits, assets, products and services, product development, key customers, existing and prospective orders, inventory, patents, suppliers, market position of both the company itself and its subsidiarie

In the case of ICO, we have a different nature of business, since it is a pure venture or start up, which does not have the necessary historical information for analyzing and forecasting the results of future activities useful for investors. Therefore, in this part of WP we should specify the necessary minimum information about the parent company and the business of the founders, which would emphasize the availability of the necessary management and investment experience. If the main goal of the project is the implementation of the blockchain in the real sector of the economy, the presentation of an additional business plan for the development of the project, the forecast of the marketing program for implementation in various national markets, and indicators of economic sustainability are considered necessary and welcomed.

Financial Information

The requirements of the SEC on the content and timing of financial information are quite complex. In general, the following are presented:

Audited balances at the end of the previous three years;

Audited reports on income, cash flow, changes in shareholdings in the company’s capital over the past three fiscal years;

Separate financial reports on the acquired businesses (or planned for purchase) — within one to three years;

These requirements for information from the Security Offering Memorandum in the WP are not available due to objective reasons, since the ICO is startups that do not have such a basic financial history for audit and presentation.

Information about the team and key shareholders

It is necessary to describe:

business experience of company executives and directors;

nature and amount of their salaries and bonuses

distribution of shares between directors and principal shareholders;

Transactions and compensation to founders

The presence of this information in the WP will give an extra plus to the priority of transparency.

Comments of the key shareholders and top managers

In this section, Management informs investors about the information useful to evaluate the company; a special emphasis should be placed on its future perspectives. In the ICO, however, it should be shown that there are direct and indirect competitive advantages with the platform and product, shown the forecast of the main financial indicators of the project.

Liquidity

Identify well — known directions, requirements, events that may cause an increase or decrease in the company’s liquidity (in the case of an IPO). In our ICO format, it is worth to specify and show those services that can generate the maximum number of transactions on the platform and within the marketplace of the project, since the maximum number of transactions is the main source of the project’s revenues, and not the speculative growth of the token.

The capital of the company

Description of planned capital outlays, their purposes and sources of obtaining the funds; describe the significant trends in capital changes — in the classic IPO version. In our case, it is worth to detail the description of the token distribution and Funds allocation. In this case, each shown percentage of distribution should be justified and explained the use of the necessary amount or proportion (justification). Most likely this format in the form of the Security Offering Memorandum will be adapted soon as STO (Security Token Offering) in the near future.

Besides, of Security Offering Memorandum, the ICO’s WP is increasingly influenced by the business planning standards. A business plan is a program product developed in the course of business planning. This is the definition of the goals and ways to achieve them, through any planned and developed actions, which in the process of realization can be adjusted in accordance with changed circumstances. The business plan serves two main goals:

1. It gives the investor an answer to the question of whether to invest in this investment project

2. Serves as a source of information for team directly implementing the project

The business plan helps the entrepreneur to solve the following main tasks:

· identify specific areas of activity of the company (project)

· target markets and project location in these markets;

· formulate long-term and short-term goals, strategy and tactics for their achievement

· identify team members responsible for implementing the strategy and the project;

· choose the composition and determine the indicators of goods and services that will be offered to consumers under the project

· evaluate all possible costs for their creation and implementation;

· Determine the marketing activities of the project as to study the market, advertise, stimulate sales, pricing, sales channels, etc.;

· assess the financial status of the project and the compliance of available financial and material resources with the opportunities to achieve the set goals;

· foresee difficulties, risks

There are many generally accepted standards for writing business plans for investment projects, compliance with which helps to get funding. Among the leading standards are:

· TACIS Standards

· KPMG Standards

· EBRD Business Planning Standards

· UNIDO Standards

The most flexible and optimal option for adapting WP is the UNIDO standard. UNIDO — United Nations Industrial Development Organization. Structure of the business plan within the UNIDO standards:

summary (in fact in the ICO it is a pitch deck)

description of the industry and the company (in the case of a WP, this is Market Research for the project sector of economy or service)

description of services (goods) (in WP, we describe in detail the products or services that will be used on the project blockchain platform)

sales and marketing (to formulate an approximate forecast of supply and demand for the product and services of the marketplace project)

Production plan (in WP — today it is actually a detailed description of the technical characteristics of the blockchain as new, if it is developed, and available other public blockchains. The justification of the choice and the detailed description of the technical model of the token, the present features in the smart contracts. If there is too much information and it is aimed at innovation, then this section makes sense to perform in a separate format as Technical WP or Yellow Paper).

Organizational plan (actually including, like the project incorporation plan, and the coverage of special features in project management)

financial plan

evaluation of project effectiveness

guarantees and risks of the company (partly such information can be stated in the disclaimers, but it is also possible to show the classification of the identified risks and the ranking by the degree of probability in order to indicate the minimum actions to minimize in case of emergency)

applications and additional information

In turn, in addition to the Security offering Memorandum and the business plan, the main instruments of project management are increasingly influencing the WP of ICO projects.

The key to the success of project management is the availability of a clear pre-defined plan, minimizing risks and deviations from the plan, and effective management of changes. The projects that go to the ICO are classical start-ups or venture investment projects. Such inherently high-risk enterprises require increased organizational and managerial attention, knowledge, practices and skills that the project management instruments can provide.

In the last year, certain trends appeared in the management of start-up projects, including ICO:

· More and more startup projects in determining what is the success pay attention to whether the project ended on time and to the budget, and whether it brought real benefits

· Project offices are beginning to play a vital role for the company that goes to ICO and implements the project program. This role often includes the responsibility for agreeing a project with a strategy, monitoring, progress and optimization of strategy implementation, risk management, benefits management, talent management as well

· The success of the ICO projects largely depends on how professionally the team and the project’s founders manage the tasks. Practice shows that the actively involved founder or initiator is the key driver of the project success

· Using various management techniques from Agile to the classic PMBOK in the implementation of ICO projects. A separate place is also occupied by hybrid approaches.

· Project Management Talent. In long-term projects with clearly defined objectives, there is a need to provide project management training for its employees and team members

The relevance of the use of the basics of international standards of project management in the organization of the ICO and the implementation of the project:

· ISO 10006: 2003, Quality management systems — Guidelines for quality management in projects

· ISO 21500: 2012 Guidance on project management

· ANSI PMI PMBOK 5th Edition — A Guide to the Project Management Body of Knowledge (PMBOK Guide)

· PRINCE2 (PRojects IN a Controlled Environment)

Therefore, answering Quo Vadis, the option is obvious — synthesizing the best practices of project and investment management, white paper is already transformed from a graphic advertising booklet into an investment project document that is understandable to financial institutions. Those who follow this path have a chance for serious dialogue and investor attention.

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Sergiy Golubyev (Сергей Голубев)

Crynet Marketing solutions, EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

No doubt, crypto-currencies and tokens are still a small global market. Now there are more than 1000 crypto-currencies, the total capitalization of which is around $ 200 billion, and this figure continues to grow. On average, according to Coinscedule statistics, from 2,000 to 24,000 people participate in each ICO, while their spending ranges from $2 to $35,000 (private sales are not taken into account).

In the rapidly expanding ICO market not regulated by the government, rating agencies are almost the only one protection of investors from scam and loss of funds, since few potential investors are able to assess the financial and technical basis of each project qualitatively. It would seem that ICO is something completely brand new, but in the end it all comes down to the long-established rules of venture investment, taking into account some differences in the instrument.

Now, the market of crypto-currencies and ICO is actively developing the activities of specialized rating agencies that assign ratings to ICO projects.

Ratings allow you to assess the reality of a business project and the trustworthiness of its founders on a variety of criteria. The term “rating” is a prioritization, assessment, order, classification. Rating means the definition of an evaluation parameter or a group of parameters according to the accepted evaluation algorithm, according to a given ranking scale. However, such ratings are based on very different mercantile interests, and not on the real state of things in the project and its ideas.

The main methodology for assessing ICO so far is the evaluation methodology for four indicators: Team, Tech — technology, Theme — concept; Token — legal status of the implemented crypto assets. In this case, for example, in the analysis of the Team, the following is monitored: the founder’s reputation in the blockchain community, the PR of the founders company, the history of successful previous projects, and the degree of involvement in the project.

Team — is the project provided by specialists of all levels, the availability of competencies necessary for the development of the project, experience in the field directly related to the ICO project, successfully implemented venture projects that provided the investor with an acceptable level of profitability.

Theme — to determine how successful the concept will be. Unfortunately, the definition what is success — just weak and with vague priorities.

Tech — evaluating the technology of using blockchain and the potential of additional opportunities, which often simply come down to the Ode of Joy to overpraise the empty technical concept of the most projects.

Well, other parameters — a similar verbiage and eloquence. The rating objectivity is the main problem of this service. It is still impossible to ensure the independence and reliability of the assessment results under the current practice of commercial project evaluation, fragmentation and struggle for the client of rating agencies, lack of a unified systematic methodology for assessment and complexity of verification, the closure of some information by rating agencies research, if any.

In fact, at this time, the rating ICO agencies cannot cope with their direct task — an unbiased assessment of the project that goes to the ICO. Mainly, a number of curious questions are constantly in the head and more likely claims to the majority of such agencies as:

· How fair is the analysis provided by existing rating agencies and whether there is no conflict of interest between rating platforms monetizing through the placement of hype information on projects

· Use of the classic “venture approach” to assess the investment attractiveness of ICO, consideration of such categories as “market”, “product”, “team”, “business model” and “financial characteristics”, how effective it is and comfort to such high Risk projects

· Very often the rating agencies do not have a common opinion or consensus on the evaluation of projects, since the same project can have different ratings, which indicates still the lack of standards and assessment methodologies, as well as professional experts

· Is it appropriate to use the collective opinion of the community members in the evaluation of projects and to calculate the average score from this collective opinion? How far are community members (who are not experts) not involved in and relevant to the assessment process itself (examples of ICObench and TokenTops)

· Is it effective that other agencies use their own project evaluation categories, most of which are not related to the classical screening system used in the venture industry, refers to the topic of evaluation and can be trusted (example ICOrating)

The principles of all projects of the digital economy — transparency, openness, accessibility of information. However, these principles do not yet find their application in their evaluation. To my opinion, the reason is the mutual flirtation and the absence of a status quo. Rating agencies are fighting for their fees, not for the safety of investors and truthful informing the community about the projects. ICO projects are fighting for our money by any truthful and untruthful means, manipulating the ratings, in most cases.

So how do ratings work and how do they get into rotation?

To get into the watching list of rating agencies, and then get an expert evaluation, you can in five different ways, two of which are paid, and three — free. The procedure for compiling express reports is almost the same in all cases.

1. The first paid method — the startup asks to do an audit of the project to identify weaknesses or attract large funds by means of a rating. In this case, the agency, after analyzing the project, sends a report to the team and makes it possible to correct errors discovered by the expert team before it is published in the public. In this case, the criteria identified errors or interpretation can be discussed in order to reach a compromise. The main threat to objectivity here is this compromise and PR assessment as a factor of professionalism.

2. The second paid method — the investor orders an audit of particular project in order to obtain an independent opinion, which he considers relevant, before investing in. Here everything depends on investor’s trust to the professional opinion of the rating agency. Moreover, such an assessment is often ordered at once in several agencies. The threat here is a high chance not to get a common opinion, as there are no professional standards.

3. If we talk about free methods, then there are three. The first option is when analysts of the rating agency are interested in some ICO, and they decide to study and rate it for free, but for PR and self-marketing as well.

4. The second — in the ICO market appears scam project that making an active advertising campaign, then the agency conducts a full audit and demonstrates to investors that it is dangerous to invest in this start-up. Unfortunately, in this way agencies can troll decent projects and teams, playing on the side of competitors. The threat here — the truth and objectivity is being eroded, and further it will be harder to believe the expert opinion of the rating agencies.

5. In addition, you can get for free in the watching list through participation in large hackathons, where agencies are often members of the jury. Winning projects are usually awarded with certificates for a free assessment.

The rating scale is usually used from the IPO market, but some agencies in the ICO part can use their own methods in the evaluation. We do not have hard standard for evaluating ICO projects on the market. The threat in this technique is that the ICO cannot correspond to the IPO in many ways, and it is not always appropriate to assess the ICO using the IPO metric.

After all, ICO is a start up, where it is not possible to provide financial, managerial, accounting statements of past periods for evaluating. Where will they get it from? And the ratings from the IPO are used when estimating the ICO. Moreover, what then is evaluated instead, as one of the examples, of the specified parameters? And this is just one example in the anarchy of evaluation.

The high risk of fraud and loss of investment combined with the current golden rush around the ICO creates a dangerous cocktail, and rating agencies are playing along, as they can manipulate ratings, giving false estimates in exchange for bribes from projects. There are already enough examples!

However, another disrupting trend in the development of rating agencies for ICO projects is the desire to unify the evaluation methodology. In my opinion, in this situation with unstable standards in the assessment, the situation can correct the use of SWOT analysis for project evaluation.

At this time, this approach has the right to be used! Already some agencies are starting such a promising approach to use. SWOT-analysis is a method of strategic planning, which consists in identifying factors of the internal and external environment of the organization (project) and dividing them into four categories:

· Strengths

· Weaknesses

· Opportunities

· Threats

The task of SWOT analysis is to give a structured description of the situation, regarding which it is necessary to take any decision. The conclusions drawn on its basis are descriptive without recommendations and prioritization. The increasing use in the rating of SWOT and its implementation in the projects — is a direct consequence of the impact of the principles of project management on ICO. Today, ICO projects are already been evaluated by SWOT. Therefore, there are several positions that are worth founders thinking about and trying to enlighten to the maximum. As normal rating agencies look primarily at the following basic parameters and priorities of your project:

What is considered a strength

· Is the blockchain the necessary component of the project (proof)

· Did the team make detailed description of the business model in the project

· Does the project have a clear Road Map and Gantt chart of works and tasks

· Does the project have a detailed financial plan

· Whether the token emission is capped, if not, how justified is the solution for uncapped

· How clear is the legal structure of the project

· Is the project popular in social networks and thematic forums

· Is the project actively discussed on the news sites of the blockchain media

· Are the founders and project managers professionals in their field and / or in the blockchain industry

· Does the team have significant experience and impressive achievements not only in the field of blockchain, but also in the area of project implementation

· Is the advisory board of the project adequate and useful

· Do the founders of the project have the practice of implementing a successful business

What is considered a weakness

· The team did not describe in detail the competitive environment of the market and the competitive advantages of the project

· The project does not provide the tools (for example, an escrow agreement or an escrow instrument) that would guarantee a return on investment in case of misuse by the team of raised funds

· There are no any major well-known companies among the project partners

· The team does not have a MVP (minimum viable product)

· The project source code was not published on GitHub

Project Development Opportunities

· Is there a chance to scale the sales or to create a new niche in a market

· Will there be an increased demand for the company’s product

· The growth of the token’s rate in the medium and long term — how realistic is the nature of its growth

· Is there an increased demand for tokens among ecosystem participants — how diversified are the instruments and the need to use it

· Is the project activity in the legal field of the contractual relationship

· The project’s relation to the requirements of the GDPR — the project activities are carried out within the requirements for the processing and storage of personal data

· The company’s operating activities are conducted in the legal field of entrepreneurship

Threats

· The seriousness of the project to AML policy

· Low competitiveness of the product and project (no justification)

Special attention to the following

· a detailed description of the project competitive environment and advantages

· the implementation of tools (for example, an escrow agreement) that would guarantee a return on investment in case of misuse of the raised funds

· Development of partnerships with major well-known companies

· Providing a MVP

· The source code of the project is published on GitHub

· Comply with the AML and KYC requirements

· increase the competitive ability of the product and project

More information about

· Compliance with the requirements of securities market legislation (if security / asset token) and taking preventive measures in order to avoid problems with regulators

· Big venture investors of the project

· Security audit of the smart contract

Do not forget that now there are a lot of sites that are making ratings, but the main problem is that the high position in the rating does not reflect the real situation, since on the overwhelming number of sites the position of the project determines by the paid amount for the publication. Therefore, before making a decision on investing in the project, be guided by SWOT and find answers to your questions in the WP of the project or directly ask the project team.

If you do not receive answers to these questions or if such answers are from the realm of fantasy, than the final decision and responsibility are apt to you. There will be a chance for you to become a part of a soap opera or save your investment!

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Sergiy Golubyev (Сергей Голубев)

Crynet Marketing Solutions, EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business

After the Bitcoin appearance in 2009, governments and research institutes around the world gradually turned their attention to technology and, since 2013, began to fund research and development projects to further advance and evaluate its potential in regional economies.

Among the major financial players using the subsidy instrument, the European Union comes out on top. The EU is known for its various targeted structural funds (http://ec.europa.eu/regional_policy/en/funding).

However, in the field of promoting science and innovation on the continent, Horizon 2020 gained popularity as the largest research and innovation program in the EU, with a total budget of 80 billion Euros (https://ec.europa.eu/programmes/horizon2020). Some part of the Horizon 2020 budget in 2017 has already been allocated for research and development of the leading technology Blockchain.

I can state that such a cumbersome bureaucratic machine of the EU budget policy rather quickly in 2017 made the appropriate adjustments in terms of the development of grant programs for the development of blockchain technology. The speed of such a reaction to changes in funding priorities (after all, the main budget of the Horizon 2020 program was adopted in 2013, when the EU did not know about the blockchain at the state level) that even a snob like the EU sees potential in the technology itself and builds direct prospects for its implementation both in the field of public administration and monitoring, and in business, and in the social aspects of the inhabitants of the EU.

The overall goal of Horizon 2020 is to ensure that Europe produces world-class science, removes obstacles to innovation, and facilitates a collaborative process in the public and private sectors for innovation. By combining research and innovation, Horizon 2020 helps foster economic development and create jobs with an emphasis on excellence in science, industry leadership and the solution of social problems.

As for the blockchain itself, the EU has already invested almost 6 million euros in 2017 in startups, which connect their business with blockchain technology. According to publicly available information, there are six such startups. They are developing and exploring the use of the blockchain for subsidized investments attracted through the Horizon 2020 innovation program. And now a few words about what has already been done in 2017.

Horizon 2020 is the largest project in the history of financing and supporting innovative research in the EU in the period from 2014 to 2020. The Small and Medium Enterprises Group (SME), a member of the European Commission, announced the details of the activities of three companies at the beginning of September:

· The Billon Group

· Authenteq

· Signaturit

These are all startups whose research priority has been declared as security and identity of payments. According to data provided by the European Union, under the Horizon 2020 program, six business projects received a total of 5,471,131 euros. The above companies are more than 1 million euros each.

In 2017, the following blockchain projects were also financed:

· D-CENT, decentralized citizen engagement technologies, design of social digital currency;

· DECODE — a plan of the virtual machine Smart Contracts for the implementation of a decentralized ecosystem of citizen data;

· PIE NEWS, a social digital innovation to address poverty, lack of income and unemployment.

In August 2017, EU representatives announced plans to create a “Blockchains for Social Good” contest, which would work together with Horizon 2020. “Blockchains for Social Good” is a project dedicated to using blockchain technologies to solve acute social and environmental issues. The researchers also dealt with the financing of business projects related to cryptocurrency.

In early 2017, the EU set about preparing the ground for Blockchain Observatory, a platform for promoting and further researching technology. The main requirement is transparency. EU citizens must understand all administrative and production processes. The priority will be considered the use of the blockchain.

In February 2018, Valdis Dombrovskis (Vice-President of the European Commission and European Commissioner for the Euro and Social Dialogue in the Commission of Jean-Claude Juncker) (http://europa.eu/rapid/press-release_IP-18-521_en.htm) said that the Commission wants to create a Financially Transparent Gateway to allow commercial and national databases to collate information. Legal entities and individuals from both the European Union and other countries can participate in the competition. Registration of participants will take place until the middle of 2019, and the winner will be determined in 2020. Examples of funded blockchain projects in 2017:

№1 Billon

Polish blockchain start up “Billon” received a grant of 2 million Euros in the framework of the Horizon 2020 program to study the use of the alternative payment market. The company stated that it received a grant on the basis that its distributed accounting technology (DLT) could use an alternative payment market.

The project specifics are the first cloud and mobile peer-to-peer solution for everyday currencies using DLT, where the project product offers partnerships with banks for PLN and GBP.

Billon is now beyond the scope of solutions so that consumers pay for services with digital currencies and participants can spend their digital and fiat money online. The funding provided will be used to expand the blockchain technology beyond urgent corporate payments, support the launch of e-commerce and content solutions and provide additional investments in sales, marketing, compliance and operation.

Today’s payment solutions include clumsy prepaid vouchers and premium SMS, and Billon can turn it into a digital form of payment on a mobile phone and with a full audit. Based on the company’s successful testing, the management said that it plans to launch commercial e-commerce and content monetization services in the autumn 2018 in Poland, and in the UK in 2019. Then the company will start looking for possible entries to emerging global markets.

№2 Signaturit Solutions (Spain)

Signaturit is an electronic signature service that guarantees 100% legal force in commercial digital transactions. This is supposed to minimize the risk of cybercrime and increase productivity. For delivery, Signaturit adds biometric and blocking encryption to ensure cybersecurity in email transactions. He argues that smart contracts will improve productivity. Signaturit received € 1.22 million in the SME Instrument 2 phase.

№3 Authenteq (Iceland)

Authenteq has developed an online authentication service (Authenteq ID) that is automated and protected from unauthorized access for smartphones. It uses multifactorial biometric authentication. The project aims to meet the needs of online / mobile markets. These include KYC (Know Your Customer), as well as other services that require or can use ID verification, for example, bets, games, and even dating sites. To do this, the identifier Authenteq, which received 50 000 euros in the form of financing within the framework of the stage SME Instrument 1 phase combines:

· an application for smartphones, where the end user creates his certified ID by scanning a passport and engaging in self-service

· backend-proprietary services that perform face recognition

· image analysis of security elements ID

· third-party security checks

· blockchain for verification purposes (presumably impossible to redesign and crack).

Also, the project team said that in 2018, according to the results of the SME1 research grant, it will apply for the SME2 phase.

№4 Yetta

An example of a project funded by the EU that goes to ICO

Announcement: server inaccessibility – European Commission

Europa provides an access to information (press releases, legislation, fact-sheets) published by the European Union and…

ec.europa.eu

This project uses several project products and their technologies that have been tested and funded by the EU and its Horizon 2020 program. Using these technologies, Yetta Blockchain offers significant improvements over Bitcoin and Ethereum with its Tier-3 network node architecture and Blockchain consensus algorithm under called Proof of Trust (PoT).

Other improvements include several types of wallets, three levels of irreversibility, encryption with multiple signatures (CypherSig) and a hundred-fold jump in scalability and transaction speed.

Yetta plans to release Yetta Blockchain and the Yetta virtual machine based on the OC DECODE. The goal of the ICO project, Yetta, is to raise funds for the transfer of existing EU-funded technologies from the laboratory to the real world and to support the development, development and implementation of intelligent contractual innovations.

Now I think it is worthwhile to briefly talk about the blockchain contests for 2018 and 2019. The following information will be based on data from the press conference (https://webcast.ec.europa.eu/19-12-2017-horizon-2020-blockchain-and-distributed-ledger-technologies-topics ).

In addition to the hype around the cryptoindustry, this technology is still at the stage of maturation, and in order to facilitate the perception there is a need for innovation, research, development, piloting and proof of the concepts for existence. It is for this reason that the various themes of the Horizon 2020 work program for 2018–2020 relate to the Blockchain and consider DLT.

Coordination activities in Fintech will also be supported in 2018 by this program. Since 2017, the EU under the Horizon 2020 program has already allocated 83 million euros for grants. And the plans for the budget years from 2018 to 2020 for the blockchain projects under the Horizon 2020 EU can allocate up to 340 million euros.

List of grant competitions where the blockchain is already supported by the EU budget:

№1. Advanced technologies (Security/Cloud/IoT/BigData) for a hyper-connected society in the context of Smart City (EUJ-01–2018)

Advanced technologies (Security/Cloud/IoT/BigData) for a hyper-connected society in the context of…

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment the action is closed, but it will be open again for 2019. Grant format — RIA (Research and Innovation action). The size of grants from 3 to 5 million euros. The proposals should consider one of the following two areas using the blockchain:

1) Advanced technologies combining Security, IoT, Cloud and Big data for a hyper-connected society

2) Interoperable technologies of IoT devices/platforms in the context of Smart Cities

№2. An empowering, inclusive Next Generation Internet (ICT-30–2019–2020)

An empowering, inclusive Next Generation Internet

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is open until March 28, 2019. Grant format — IA (Innovation action) and CSA (Coordination and support action). Grants of up to 3 million euros. The proposals should consider one of the following two areas using the blockchain:

1) Innovation Action: Digital Learning Incubator (format IA)

2) Coordination and support action in the area of Digital Learning (format CSA)

№3. Blockchain and distributed ledger technologies for SMEs =(INNOSUP-03–2018)

Blockchain and distributed ledger technologies for SMEs

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is closed, but it will be open again for 2019, you should follow the announcements. Grant format — CSA (Coordination and support action). The size of grants up to 50 thousand euros. The Action will be a piloting scheme for the uptake of DLTs by SMEs. It will aim at testing in real conditions the opportunities, challenges, risks and necessary conditions associated with DLTs in different context and sectors. Thereby it will stimulate:

· the uptake of DLTs by SMEs and inspire others to follow, and equally

· it will sensitize intermediaries to develop their expertise in this respect and

· it will help draw lessons for policy makers and regulators.

№4. Digital health and care services (SC1-DTH-10–2019–2020)

Digital health and care services

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is open until November 14, 2018. In 2019 and 2020 will also be held. Grant format — PCP (Pre-Commercial Procurement).

The main objective and priorities of this grant are mainly focused on providing support to health care providers to ensure the development, testing and implementation of digital services and communication concepts that can facilitate the transition to integrated health care models in health and social services and intersectoral settings for specific countries, including decentralized procurement and inter-agency cooperation.

№5. EIC Horizon Prize for ‘Blockchains for Social Good’ (Blockchain-EICPrize-2019)

EIC Horizon Prize for 'Blockchains for Social Good'

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

Earlier we talked a little about it in this article, now more details. The action is open until September 3, 2019. The format is IPr (Inducement Prize). The action should find people who have new solutions to public and social issues. Thus, the blockchain technology should provide increased transparency and decentralization. The action page states that the winning project must have a real social impact, be decentralized, at the same time completely transparent, as well as useful and scalable.

The Commission expects the use of distributed registry technology (DLT). The priority will be considered the use of the blockchain. The Commission wants to create a Financially Transparent Gateway to allow commercial and national databases to collate information. Legal entities and individuals from both the European Union and other countries can participate in the action. Registration of participants will take place until the middle of 2019, and the winner will be determined in 2020.

№6. Fintech: Support to experimentation frameworks and regulatory compliance (ICT-35–2018)

Fintech: Support to experimentation frameworks and regulatory compliance

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is closed, but it will be open again for 2019, you should follow the announcements. Grant format — CSA (Coordination and support action). The goal of the action is to strengthen the role of “Fintech” as it is on the merging of various digital technologies, financial areas and business, with many startups and scalable offers on the DLT. The challenge is to increase the role of Europe in Fintech so that European startups can scale better across Europe and globally. In this context, projects are particularly relevant, where the promotion of interaction between innovators, supervisors and regulatory authorities is a priority.

№7. Future Hyper-connected Sociality (ICT-28–2018)

Future Hyper-connected Sociality

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is closed, but it will be open again for 2019/2020, it is worth following the announcements. Grant format — RIA (Research and Innovation action), IA (Innovation action), CSA (Coordination and support action). The size of grants is from 1 million euros to 5 million euros. The proposals should consider one of the following areas using the blockchain:

1) Content verification

2) Secure Data Ecosystem

3) Support of new Social Media initiatives on blockchain

4) Support of Social Media ecosystem community building

№8. Internet of Things (ICT-27–2018–2020)

Internet of Things

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is closed, but it will be open again for 2019/2020, it is worth following the announcements. Grant format — CSA (Coordination and support action). Grant up to 1.5 million euros. The main goal of the grant is to develop a broad consensus on a person-centered IoT evolution strategy that improves usability, in particular by enhancing security, privacy and user confidence by developing the concept of a technology cluster using IoT benefits.

№9. Interoperable and smart homes and grids (DT-ICT-10–2018–19)

Interoperable and smart homes and grids

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is open until November 14, 2018. In 2019 and 2020 will also be held. Grant format — IA (Innovation action). The grant budget is up to 30 million euros. The goal of the competition is to use IoT reference architecture models that allow combining services for home and office comfort and energy management based on platforms that integrate relevant digital technologies such as IoT, AI, cloud and large data services and, where applicable, in combination with blockchain technology.

№10. Next Generation Internet — An Open Internet Initiative (ICT-24–2018–2019)

Next Generation Internet – An Open Internet Initiative

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is open until March 28, 2019. Grant format — RIA (Research and Innovation action). The grant budget is from 300 thousand euros up to 3 million euros. The main objective of the grant is to attract the best modern Internet innovators to address technological opportunities arising from cross-references and achievements in various fields of research, from network infrastructures to platforms, from applications to social innovations. In addition to research, the scope includes validation and testing of market-based products with minimal viable products and services, new economic, mobile, and social models and in the early stages include users and market participants.

№11. Transport: InCo Flagship on Integrated multimodal, low-emission freight transport systems and logistics (MG-2–9–2019)

InCo Flagship on Integrated multimodal, low-emission freight transport systems and logistics

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is active until September 12, 2019. Grant format — RIA (Research and Innovation action). The budget of grant projects — from 3 million euros to 7 million euros. The goals of the action are to find the most unique logistics proposals and concepts based on taking advantage of new technologies and their combination, like the blockchain, Industry 4.0, 5G, 3D printing, unmanned aerial vehicles (UAV’s), vehicle automation or new business models such as “crowdshipping” and circular models of the economy that will affect the global freight transport, its optimization and the ecological footprint, which needs to be better understood.

All of this should be aimed at finding and presenting the best and most effective model of a decision support system aimed at helping public authorities and private companies to identify the most likely scenarios and promote a higher level of cooperation between various stakeholders in the field of global logistics and transport.

№12. eGovernment: Transformative impact of disruptive technologies in public services (H2020-SC6-TRANSFORMATIONS-2018–2019–2020)

Transformative impact of disruptive technologies in public services

Research Participant Portal is your entry point for electronic administration of EU-funded research and innovation…

ec.europa.eu

At the moment, the action is active until March 14, 2019. Grant format — RIA (Research and Innovation action). The project budget ranges from 3 million to 4 million euros. The action goal — the use of disruptive technologies (such as block-chain, big data analytics, Internet of Things, virtual reality, augmented reality, artificial intelligence, algorithmic techniques, simulations and gamification) in public administrations, public goods, public governance, public engagement, public-private partnerships, public third sector partnerships and policy impact assessment is growing and can be very beneficial.

As a result, deploying these disruptive technologies in public administration requires a thorough assessment of their potential impact, benefits and risks for the delivery of public goods. Proposals should pilot the technology and should engage multidisciplinary partners, stakeholders and users to examine how emerging technologies can impact the public sector and explore in a wide-ranging fashion the issues surrounding the use of these technologies in the public sector. Proposals should also lead to the development of business plans that would ensure the long-term sustainability of the services offered based on the used technology.

It is not enough to consider in details all the features of various grants within the Horizon 2020 regarding the blockchain promotion in one article.

However, my goal is, in addition to ICO, as a source of funding for your start-ups, to show other instruments for financing venture technology projects on the example of EU granting for blockchain ideas.

In the next article I will consider the following features of Horizon 2020 as formats and types of grants, participation criteria and selection methods, as well as features of blockchain project participation in a SME instrument (EIC-SMEInst-2018–2020) for small and medium businesses.

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Sergiy Golubyev (Сергей Голубев)

Crynet Marketing Solution, EU structural funds, ICO projects, NGO & investment projects, project management, comprehensive support for business