Blockchain’s BANKEX Seeks To Bridge Traditional Finance With Tokenizationbr>
Financial technology firm BANKEX is launching a proof-of-asset protocol that will bridge traditional financial models with tokenization.
Among the first to use BANKEX is film producer Christopher Woodrow (Birdman, Hacksaw Ridge) who is using BANKEX’s smart assets on his MovieCoin platform. MovieCoin provides access to entertainment financing opportunities for institutions and individuals looking to invest in Hollywood.
Traditionally, film projects are financed either on a one-off basis using bank loans secured by tax credits, government subsidies, pre-sales on distribution rights, and/or discounted value of future territorial rights sales, or via studio “slate” financing arrangements with investors, relying on box office performance to generate a return.
Now, through the issuance of digital tokens created on the blockchain platform, MovieCoin allows projects to bypass the system if they wish, while making investing in them more accessible for institutions and individuals outside of the Hollywood’ bubble.
Igor Khmel, CEO of BANKEX talked with BlockTribune about the process.
BLOCK TRIBUNE: Tell me, what was the origin on the proof of asset protocol?
IGOR KHMEL: Well, it came from the concept of tokenization or securitization. It’s also kind of comes back as to gold standard. So when there is some … all the cryptocurrencies that is technically backed by some value, and this is the same thing as [inaudible 00:00:37] by gold, like until 1947.
BLOCK TRIBUNE A proof of asset protocol — can you explain that a little bit more in depth and what it’s intended to do?
IGOR KHMEL: It’s basically a simple way to capture the value of the asset. So there are a lot of assets all together. Let’s go with an example. So, right now, for instance, we are working on MovieCoin. MovieCoin is a tokenization of future box office revenue for movies, so when somebody invests in the movie, they should wait til this movie goes at least 18 months, and then there’s gonna be the box office values, and there’s gonna be some streaming content sales, there’s gonna be some international tax credits, etc.
So those people they are waiting for their money back and we give them more simplified ways to trade this right so it’s a token, and the token is backed by this cash flow, so we build an accounting engine to check that there the money behind this token so they can trade this contract, this token, and they can validate almost instantly there is something behind it. It builds trust for this instrument and its cryptocurrency.
BLOCK TRIBUNE: So you have to be a rights holder to participate in this?
IGOR KHMEL: So it’s an ecosystem, so, yeah, the rights holders, they’re members of the ecosystem.,
BLOCK TRIBUNE: Okay. How will you validate that somebody, in fact, does have a proper stake in the film or whatever asset they are trying to monetize?
IGOR KHMEL: So there are companies that validate that somebody has the rights in the movie and played the role of [inaudible 00:03:25], so basically we make the technology code base for the same thing, so using their approach and bringing this on blockchain.
BLOCK TRIBUNE: Okay. What is the advantage of using your service to monetize?
IGOR KHMEL: The advantage is decreasing the cost of [inaudible 00:03:48] validation and … so decreasing the cost of lawyers or some trustees, so typical securitization requires eight different sides to participate in different companies like legal companies, payment agents, etc., and it’s very expensive, and it requires also to have all the assets in one place, like a bank who bought all the loans and then issued that against the loans. So those two things, high cost, high cost to enter, and then high concentration of assets, which requires to decrease their number of assets that can be securitized. So what we do with the cost, we decrease the cost of securitization, tokenization, and then we also enable working with the centralized assets so this means that somebody who has even small assets they can already start to participate in tokenization and get basically [inaudible 00:05:00] right away so if you have real estate, if you have something and you know you’re sitting on the money, but you don’t really have the money, the cash, so this is the situation where we come. We [inaudible 00:05:15] tokenization techniques and building them [inaudible 00:05:21] engines so they can basically really get [inaudible 00:05:25] out of their assets.
BLOCK TRIBUNE: Hollywood is known as a place where accounting sometimes gets creative and there have been a number of lawsuits claiming that some of the accounting was not up to snuff. You know there are other worlds out there where the same problem exists. How are you going to validate that the reports your coins are based on are, in fact, valid?
IGOR KHMEL: The direct overall approach is that one of them, the most traditional and the easiest, is we partner in some cases with established big financial organizations that are going to validate this for us. So it means if you use this protocol, so we have some insurance validation from the bank, and this is one. There is another approach when we validate this by third party providers so I [inaudible 00:06:27] providers who have advisors accompanying them, Balance Free, it’s a Consensys product. Consensys is the biggest blockchain company there is. The Balance Free is triple accounting, so those guys are in the business of validation of assets and they can validate this blockchain. Finally, there is another way to validate, through kind of an Uber model. So when you really crowd source some people who are going to be mystery shoppers or validators, and they’re going to get rewarded with small amount of coins for their activity and they can validate and this is really happening like [inaudible 00:07:12] or people so there is multiple.
So when, for instance, we are making some pilots right now for real estate contracts. When the contract is [inaudible 00:07:28] based on the number of participants in the event, for instance you need to rent a venue and you’re paying for the venue and you want to host a [inaudible 00:07:41] there and you’re paying for the venue based on the number of participants. We have the machine that is just counting people who are coming to the venue. Automatically reports this to the system to blockchain. Then the payments are going to be created, invoiced, it will be based on number of people who come to the venue. This is automatic validation.
BLOCK TRIBUNE: Now you’re using this on MovieCoin. Do you have any other projects or sites out there that this is going to be used on?
IGOR KHMEL: Yeah, the second big one that we’re starting right now … we’re starting this in Hong Kong and London, it’s tokenization of platinum metal. So we tokenize inventories of platinum metal that is kept in the refineries [inaudible 00:08:36] and we have already soft agreements with several banks in Hong Kong and Japan for providing this service for token holders so any moment they can basically open metal accounts with these banks and transfer the token to the metal account and grow them.
BLOCK TRIBUNE: What is the name of that project again?
IGOR KHMEL: The name of this project right now is Green Metal. Green Metal because all these metals are used to produce some component catalyst in the batteries like in Tesla batteries or fuel cells or Toyota batteries. So these metals usually have very high ratio of re-usage so they do not kind of harm nature and this is metals like platinum, palladium, and cobalt, and sometimes gold, but the gold is not a priority so we are mostly about platinum and palladium.
BLOCK TRIBUNE: You have a charity arm as well?
IGOR KHMEL: We plan for the second part of the year some [inaudible 00:10:05] and we’re already preparing technology for that so it’s to use the technique for proof of assets for validation of charity donations. So in this market it’s important to build a trust between donors and recipients and foundations. The technology used in the way that they people are buying some cryptocurrency that is backed by an end product. In this case that we’re working on the coin will be named WaterCoin and it’s backed by some bottle, a liter of drinkable water. If people donate for instance the drinkable water to Africans or Indians, so they’re buying this WaterCoin that will be automatically distributed to the wallets, by wallets of end recipients, so the people who need this in Africa and India, and we can track the consumption chain. So donors will know for sure how many people really consumed the water and in approximately which location. So no money or that kind of waste. Now like they donated this [inaudible 00:11:20] this bottle of beer was bought, so they know exactly the results. So this [inaudible 00:11:28] to make accountability for all these donations.
BLOCK TRIBUNE: So what is that project called?
IGOR KHMEL: There is no name for that project exactly. We’re gonna build … our goal is to build on top of one of the foundations that is next to United Nations. We’re gonna build gold exchange and gold exchanged for these kind of coins that represent particular causes and I’ve gone around, so I was invited to run the subcommittee or supply chain [inaudible 00:12:06] in this foundation of a blockchain, so I will be the head of this subcommittee. This subcommittee will kind of be dedicated to build these cases for supply chain to be used for nonprofit purposes.