iHned.cz: We want to show companies a better way to raise capital. The future is in tokenization.
A Czech company, XIXOIO will soon introduce a brand new tool, which will fundamentally change the options for raising company capital. The key is a unique solution based on blockchain technology. Richard Watzke, General Manager of XIXOIO reveals more.
Richard, how did you get involved in this segment?
In my opinion, it was a logical development related to the many falls, which I have had to overcome in business. This kind of experience provides a broader perspective thanks to which you know that every obstacle only lasts a limited amount of time. At the same time, you also discover that overcoming obstacles is the certain way to reaching the goal. If you go through a continuous range of problems, you simply acquire a thicker skin, and that is basically a sensible attitude with which you can get where you need to go in business. At a certain point, you also learn that you are really responsible for everything that happens. As I have learned, the actual measure of business success only comes with the money, meaning the market. However, here I primarily mean people with money. They decide whether what you are doing makes sense and whether they love it and will use it or not. This gradually led me to finance. When working with money you learn that for some people the best help is that you don’t help them, and this is often the most difficult step.
You are currently the only company in the world, which is developing a tool that will enable companies to raise capital using blockchain technology. What does this mean to you personally?
XIXOIO is definitely not the only company in the world that is developing a similar tool. Perhaps we will be the first to introduce it to the world, but that is yet to be seen. This is, however, a clear trend, which is being followed by banks, financiers, fintech companies, as well as, investors and clients. It’s as clear as day. Many of us spend from morning to night looking at the screens of our cell phones, tablets or computers. If we are older (I’ll be 50 in a couple of years), we perceive this differently than younger people. I’ll give you an example: When my mother says „I’m going to the bank“, I know for certain that she will get on a bus that will take her to the square in Teplice and there she will walk into a branch, where she will be served by a person. When someone younger says the same thing, they generally pick up their cell phone at the same time. It is here and now. For this reason, we are forced to react to this change in behavior. The demographics are absolutely clear. In 7 years most people in the millennial generation will be of productive age. Will we force these people to visit branches, fill in stacks of forms at banks and recalculate exchange rate differences? Today it is already clear that such a person will open a bank account using his cell phone preferably at a foreign fintech company, a card will arrive by mail within three days and related services are only a matter of time. This is why a tool, where companies use TOKENIZATION, is extremely needed.
Could you describe what tokenization means in practice?
Thanks to our solution, a company issues tokens, which serve as money. People upload them to their cell phones. There will be billions of them. Cell phones, much better than people, always recognize which form of payment is more advantageous at the given moment. And that is the whole trick. It is simple, easy and inexpensive.
For me personally it above all means responsibility. We have a team of engineers from around the world, many with multiple university degrees and all with experience in fintech. Despite this, I have a natural respect for what I have now been entrusted to do, especially because our solution is collaborative. The vast majority of people, who are trying to create functional banking solutions on the blockchain, take the invasive route and therefore claim that banks will go extinct, but we will survive on the blockchain. In my opinion, this is nonsense. Bankers know very well how to work with risk and are for this reason a fundamental part of the whole process. Therefore, the role of XIXOIO, specifically tools for the tokenization of companies (raising capital using blockchain technology), lies in connecting the traditional world of banking with the new world of the blockchain. We are a kind of bridge between these worlds.
If my ten-year-old son were here, how would you explain the complete process of “tokenization”?
Very simply. Young man, do you like ice cream pops? Well, the company that makes those ice cream pops is now issuing tokens. If you buy one, you will own a share of the ice-cream-pop maker. The company could grow or decline. If it declines, you will receive less for your ice-cream-pop token. However, if it grows, you will receive more. You can judge for yourself whether the ice-cream-pop maker is so good that in your opinion interest in the company will continue to grow. Tokens are better than money. Tokens are smart money. Tokens are covered by the actual value of the company. It is also good for the ice-cream-pop maker when you purchase its tokens. If you purchase its tokens, the ice-cream-pop maker can invest in development, perhaps build a new ice-cream-pop plant or new flavors.
Let’s try to look at this from the perspective of the company owner. What does the emission of its own tokens provide the owner of a building supply company?
The actual value of the company is in the service, the process that is connected with it. Customers are a fundamental part of the process. If customers purchase his tokens, the value of which increases, because it follows the demand for his products and services, it is absolutely clear that the owner of the building supply company is doing what he does well. He can grow and serve more customers than he currently does thanks to the capital that tokenization raises.
When I purchase real estate as an investment, besides growth in value over time and rental income, I could also live on the property. What can I do with “tokens”?
Real estate is an investment that can be tokenized very well, exactly because tokens are held by many people. Thanks to this, a group of people can afford to purchase an expensive house intended as a rental property. At the same time, the exact parameters based upon which shares are paid out are known. Payout parameters are stated on the blockchain.
OK, so I understand the benefits for companies, but how can the investor, who purchases tokens, make money?
He can make or lose money. If the company is good, has good managers behind it and makes the right decisions, it grows and with it the value of the tokens. This isn’t anything new. Stock shares work the same way. However, tokenization has one small, but also absolutely fundamental difference. Anyone can trade tokens without an intermediary. Thanks to social networks, transparent communication and access to information, it’s possible to assess whether or not a company has a sufficiently credible rating. If it has and has a history of growth, it is worth purchasing its tokens. Moreover, now at the very beginning, when tokenization tools are just being created, primarily interesting progressive companies will be tokenized. For this reason, it is a simple fact that if someone has a tokenization tool, which meets all legal regulations, he will first choose the best of the best for tokenization. For this reason, in my opinion, many investors will grow economically at the beginning.
This all seems incredibly futuristic to me. Do you really think that now is the best time to launch such a project?
Not only do we think it, we know it. All you have to do is pick up a cell phone and open any banking app or other alternative. All you have to do is enter the word blockchain and add the word banks, banking, finance, or fintech etc. into Google. You will find that this has been worked on for many years and we are therefore now at the peak. We see 2020 as the launch year. In 2020 several tokenization tools will already be in a state, where they start to introduce real assets of companies on blockchain. In a few years, a companies without tokens will be about as interesting as a car driving on its spare tire. They will continue on for a while, but if they underestimate tokenization, they will remain standing by the side of the road.
This sounds very interesting. Where can readers learn more about tokenization?
In a few weeks an important event will be held in the Czech Republic. For the first time ever on an international stage, representatives of banking and financial institutions and leading global experts of the crypto community will meet at a joint forum. The XIXOIO First Crypto Banking Conference in the World will take place in Prague on November 29th and 30th and tokenization will be the main topic. How it works and how it can fundamentally influence the success and development of firms and companies. If you don’t want this unique opportunity to slip through your fingers, you should definitely attend the conference.
If we now move on from business, what do you do when you want to take a break from business?
Thanks for such a pleasant question. It leads me to reflect. At the moment, I devote 100% of my time to business. It’s like hanging from a sheer cliff below the summit of Mount Everest and saying to yourself that now I’ll devote myself to something else. This is simply the opportunity of a lifetime thanks to which our team of people at XIXOIO can serve many other people. We can make doing business easier for them by lightening their financial concerns so that they can concentrate only on what they do best, perhaps manufacture shoes, supply energy or play soccer. Anybody, even a soccer club, can tokenize. We already have many requests for tokenization, including those from breweries, factories and various manufacturers, etc.
But to at least partially answer your question, in the brief episodes of my free time, I have managed to write a book, to be accurate it is more a kind of manual, in which I describe tokenization (hopefully simply) in a way that anyone can understand. The manual is called: IPCO – How to get and properly use funding from investors in blockchain. The book comes out in November, shortly before Christmas, in both English and Czech language versions.
This article was published in www.ihned.cz