A Platform for Token Offerings: Interview with Tokenise CEO Mike Kessler

Clearly, the ability to issue blockchain-based tokens as a way of raising capital for new business ventures has revolutionised entrepreneurs’ access to capital and seems set to be a top choice for new startups from now on.

Regulation and technical toolkits are rapidly catching up, with platform builders emerging to offer investors and company builders a way to take advantage of a blockchain way of raising capital without reinventing the wheel. One of these is Tokenise, a brand of Kession Capital.

As part of our Insights series, we interviewed Kession Capital Founder and CEO, Mike Kessler:

It’s great to speak with you Mike: how did you first get into the blockchain world?

[Mike Kessler:] Kession Capital Limited is the owner of the Tokenise brand and prior to this, we have had a number of crowdfunding platforms operate under our umbrella structure. We originally liked the concept of crowdfunding, but it has a flaw: you can participate into the equity and buy shares in the companies, but the chances of exiting your investment are very slim.`

In 2015 we were looking to partner with an exchange to build a secondary market for crowdfunding using blockchain as the backbone. I see this evolution now taking place in 2018 whereby tokenised securities will come more strongly into vogue in the 4th quarter, and they will become the prevalent form of capital raising in 2019 and beyond. Unlike traditional crowdfunding, tokenised securities offer investors a direct route to an active market for their investment, as and when they are looking to exit.

What were the key ideas inspiring you to build Tokenise?

Tokenise was conceived from looking at two main aspects, regulated markets and tokenised securities.

The concept of having an orderly market with rules and compliance may sound boring, but ultimately you want to protect investors not only from unscrupulous actors in this marketplace but also against themselves for investing in tokens that are fundamentally there to enrich the owners.

In addition we saw a natural pathway from equities crowdfunding to tokenising securities. This is to help create liquidity, price discovery and transparency into an otherwise opaque and untraceable marketplace. I think the sector should be regulated and overseen using sensible parameters and working with exchanges like Gibraltar Blockchain Exchange (GBX).

Building a securities crowd sales platform will enable the industry to move into a new lane of the highway, safely.

Tokenise can act as a Sponsor Firm for companies listing on the Gibraltar Blockchain Exchange

Is tokenisation something specific to the blockchain approach?

I think tokenisation has existed in various forms over the last several years: this can be seen from the Green stamps, to loyalty cards, and if you think about it, a prescription is in effect nothing more than a token. In fact it is probably more akin to a smart contract as there are certain conditions that have to be met before being converted!

Another token usage that has existed for years are timeshares: here you own the utility of time and not the property. Therefore tokenisation itself is nothing new, but the use of recording property, transactions, and contracts on a blockchain is something that has only recently become a real life business tool.

How do you view the data protection pros and cons of operating with blockchains?

For years we’ve used databases for sharing data, but when you do this with blockchain technology there are a number of key differences. With a blockchain one of the things you have, and can prove, is immutability. This is an important principle when considering data issues, and it has its pros and cons. The advantage is it provides an indelible record of what has occurred and cannot be changed. However, this also has its disadvantages and in some instances with GDPR actually causes serious issues as people’s data are only meant to be retained for a limited time in corporate hands.

However, blockchain technology is also all about distributing the store of information instead of having one central locked-down database. Our world is already very networked but the advantages of better data sharing are numerous, if you consider life records that are indeed immutable and that you need to share in many places throughout your life. It could be used to record the birth of a baby – your birth – your health records, immunisations, education, results, jobs, salary levels, references, bank records, tax codes, house purchases etc. The list goes on, but the key is to ensure that only those that should be allowed access to certain areas of that ledger are granted access.

Having looked at these two sides to data on the blockchain, the reality is there is a huge potential conflict in GDPR for personal identity and the information contained therein. At this stage I don’t think anyone has a complete answer to how this is solved. If something is immutable and on record forever it is impossible to destroy and therefore the right to be forgotten doesn’t really exist.

One potential area being explored is that the private key needed to access restricted data could be destroyed after a period of time. This way, the owner of the data would effectively have it back under their sole control. The practical issue is whether the private key is destroyed, or how to enforce a moratorium on the ability to hold that data, i.e. how to trust the counterparties. I think this area has yet to be fully thought through and will cause serious issues for anyone trying to jump too far ahead without a solid approach.

Tokenise Founder and CEO Mike Kessler: “Blockchain technologies will significantly improve the financial ecosystem, and …create greater social and economic cohesion”

Do you see blockchain living up to the hype in the near future?

Within blockchain I think we are currently at the crest of the wave and as the word implies, it’s a big part of anyone’s job in the blockchain space to keep on top of things and keep up with the speed of progress.

We are consistently speaking to thought leaders in the space, attending conferences and talking to people within the sector. The blockchain ecosystem is going to mature rapidly from a hype stage to being a true enabler, whether it is to help bank the previously unbanked, or to create new paradigms and uses in the offering of securities.

By working with entities like the Gibraltar Stock Exchange and various other financial institutions whether they are exchanges, trading platforms, or wealth managers, there is the general consensus that blockchain if used responsibly in the right areas, it will significantly improve the financial ecosystem, and hopefully make it far more inclusive across the world to create greater social and economic cohesion.

What about jobs in the blockchain ecosystem – do you have advice for those thinking of this career path?

If starting out in your career it is important to brush up on your knowledge base. There are tonnes of free resources out there that are really good and some of the basic videos explain it really well. Going deeper, there are courses like edX Blockchain for business, where you can do a short course to help understand more about it.

It is possible to specialise, but the field is still very new: if you define an expert as someone spending 10,000+ hours on a subject, how many of those people are there? Therefore I think it is good to get broad industry experience, learn about a wide range of aspects, and speak to as many people as you can. The blockchain ecosystem is very community focussed and people are therefore generous with their time, but be warned once you go down the rabbit hole, it’s a lot of long nights and early starts as it really is a 24/7 business!

 

To find out more about Tokenise, visit: http://tokenise.io/

On Twitter: @TokeniseLDN

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