lxc coin ltd - complete white paper
TRANSCRIPT
LXCCOIN LTDWHITEPAPER
The following pages describe the LXCCoin and its related business. It does not purport to be “all-inclusive” documentation; for further info on any part described herein; please get in touch on [email protected]
Prepared by H Ellefsen[Co-authored by Gravgaard /
Wong /Castberg / Nielsen]Updated 20 August 2014
2
“The government is to explore the role that digital currencies such as Bitcoin could play in
the financial system and whether they need to be regulated. [We have] set out measures
that will make Britain the global centre of such financial innovation".
-Chancellor George Osborne to BBC, 6th August 2014, speaking on the subject of
Cryptocoins (http://www.bbc.com/news/uk-28670414#story_continues_1)
bit.coin.je, an industry body set up to promote and campaign for cryptocurrency,
wanting to make Jersey a "Bitcoin Isle“ comments:
“[Cryptocoins] is a sector that could hold significant opportunities. Our infrastructure of
world-class financial services and digital expertise gives us the tools to be an early leader
in the field. Innovation will be central to Jersey's future prosperity. We are keen to
support local businesses by helping to create a well-regulated and responsive
environment for investment in the sector.“
-Treasury Minister Senator Philip Ozouf
(http://www.bbc.com/news/world-europe-jersey-27921445)
© LXC Coin™ 2014
3
EXECUTIVE SUMMARY
LXCCoin Ltd is a UK company with two main
business areas: P2P investments and
cryptocoin facilitation, which are combined in
one product – the LXC cryptocoin
Our cryptocoin is like no other; targeting a
yield of 15% per year, derived from P2P loan
investments, and strict regulation of demand
and supply by financial measures, governing
trading and use, in a stabile and forecastable
manner
Our seven strong team includes two lawyers
and six specialized experts within finance, IT
and crypto currencies. We have spent more
than a year developing the concept, including
thorough testing, discussions with financial
authorities, self-regulation and funding;
readying for a Q4-14 launch and a 2015
listing target for visibility and transparency
We’re a second generation crypto currency company, with real asset value based + interest
bearing coins, and a framework structure surrounding it to maximize profitability and usability
Big Idea: Aim:
“Real”, safe, stabile cryptocurrency
Solve main problems of cryptocurrency today. A
supplement and not a competitor to all other
cryptocoins. Limited number POS coin
Increased liquidity enhancing value for P2P lenders
Create a P2P second-hand marketplace to ease
P2P investing exits and make P2P more investor
friendly, plus a supporting trading fund to ensure
activity on the platform
Bridge P2P lending and vast cyberspace funding resources
Create a P2P-investing crypto currency,
independent of countries and/or legislations, with
international freedom of movement and
ownership, allowing all the billions in cyberspace
to be used for P2P lending
Use cryptocoins for multinational P2P lending – doubling capacity and profit
Enable P2P lenders to operate worldwide, and
effectively doubling their financial capacity by
using safe cryptocoins as a new lending
instrument, combined with current P2P platforms
© LXC Coin™ 2014
4
EXECUTIVE SUMMARY: THE BIG IDEA
We move the new world of cryptocurrency on from
the first generation of development and hype to an
ordinary business with multi billion dollar potential.
Based on years of cryptocoin development and
mining, and years of P2P business experience, our
team wants to evolve and combine P2P and
cryptocoins, making both better. We have created the
first stabile, real and steadily profitable cryptocoin,
opening the world of crypto currencies to a well of
new opportunities. We’re also building a bridge
between crypto currencies and P2P lending, creating
numerous new possibilities for peer-to-peer lending
worldwide. Our cryptocoin will also help bringing
these currencies towards regulation, making it easier
for authorities to label parts of crypto currencies as
real and financially viable
With a second generation cryptocoin, we open up a well of new opportunities for the use of
cryptocoins in larger trades, providing safety and stability
LXC Coin is the first cryptocoin constructed with
implicit interest and a “hybrid central bank” support
© LXC Coin™ 2014
5
EXECUTIVE SUMMARY: THE BIG IDEA, EXTENDED
With a secure and stabile cryptocoin
currency, it will be possible to engineer
several innovative financial industry uses
including a Cryptocoin-based P2P
lending service, a strong cryptocurrency
exchange, bank service applications
such as mobile phone based credit cards
or debit accounts (replacing bank
accounts and credit cards), P2P
Investment Funds, bond-structured asset
classes with cryptocoins as its source,
and a variety of other products and
services. Many of these would simply not
be able to exist without a cryptocoin in
their base, as they would rely on the old
banking system and its high cost level
and other shortcomings
When sufficiently implemented and used, the LXC Coin can be used for a number of new
business areas, further increasing the coin value and corporate profit potential
© LXC Coin™ 2014
A stabile and secure cryptocurrency provides a new platform
for international financial innovations and services
6
“The massive changes the world has gone through since the invention of the
internet and email has finally caught up with the financial paradigm of the
past century. We’re seeing a lot of financial inventions really moving the
game on; reaching from peer-to-peer operations within lending and funding,
to fantastic production/invention risk-sharing and -supporting through
crowdfunding and crowd equity movements. This is creating more
momentum and higher success rate for entrepreneurs, SMBs and inventors.
With cryptocoins moving the boundaries even further, the financial sector
needs to prepare for a new way of operating in the future.”
Henrik Ellefsen, Founder & CEO, LXCCoin LTD
© LXC Coin™ 2014
7
+ Crypto Exchange business case
+ Exchange features
+ P2P Exchange business case
+ Exchange setup
+ Partners
+ Tehcnology
+ P2P Cryptocoin lending gateway
+ Cryptolending as a P2P service
+ White label services
+ Cryptobanking
+ Debit Cards
+ P2p Fund
+ How P2P changed the world
+ Case study: The Mp3 murder case
+ Case study: The death of Kodak
+ The cryptocoin space explained
+ Case study: “Bitcoin”
+ Case study: “Dogecoin”
TABLE OF CONTENTS
+ The code
+ Security
+ Network
+ The slow rise
+ Value and launch
+ The “Hybrid Central Bank”
+ Legality
+ Future regulation
LXC Coin cryptocurrency
Exchanges Future business areas
Deeper understanding
01 02 03 04INTRO
Pages 64–94Pages 54–63Pages 45–53Pages 32–44Pages 1–25
LXCCoin Ltd Introduction
P2P EQT (c) 2014© LXC Coin™ 2014
+ The concept
+ The LXC Team
+ Profit model
+ Base Asset Value
+ Valuation and financials
+ Platform/IPR
+ Roadmap
+ Risk factors
8
LXC COIN: THE CONCEPT
LXC Coin is a 100% asset-backed cryptocoin; built on secure official contracts with leading P2Pplatforms – creating a new level of trust for crypto currencies
The world would greatly benefit from a new currency regime, circumventing traditional banks and allowing safe low-cost transactions
without borders and high-cost facilitators. This has led to a lot of positive sentiment revolving the new hybrid currency class named
cryptocoins, which to a certain extent provides a solution to this. Built on open source code the key to making these is widely
available, which has lead to 500+ different coins being created. Sadly, this variety represents more problems than benefits, as there
are too many meaningless “me-too” coins and a lot of scam-attempts or pump-and-dump operations around. And while cryptocoins
are great at transactions, they are a horrible way of storing money. Which is why we’ve created the LXC Coin, which changes that
The LXC Coin is a “standard cryptocurrency”, built on an adapted Bitcoin/Blackcoin code platform, but there the similarity with its
500+ siblings ends. The LXC Coin cannot be mined, it runs mainly on its own dedicated transaction confirmation node network to
secure and protect it, and starts out “fully mined” with all coins owned by the issuing company. Coins will only be released into
circulations in exchange for cash or instantly cashable assets, securing the coin base value. It will increase in base asset value by
roughly 15% annually, making it a value-coin in more than one way. The 15% increase comes from the average profit from the P2P
investment pools the base asset funds are invested in, which has a history of around 15% yearly profits
© LXC Coin™ 2014
9
BEYOND THE COIN
Having our own crypto currency exchange
gives a range of advantages and creates a
lot of opportunities. Securing a fast, safe
and efficient trading floor for our coins,
and giving customers great rates and fees.
A liquid exchange with low fees will also
be instrumental in utilizing the safe crypto
currency for P2P lending, which we aim to
launch once the main structure is in place.
For effectively controlling the price range,
a cryptocoin exchange we control can be
also become an invaluable asset.
LXC Coin is planned with a
dual support – a cryptocoin
exchange creating liquidity for
the coin on one side, and a P2P
Exchange creating liquidity in
the assets the LXC Coins
represent on the other
There are already P2P exchanges active
today, but these are constructed by or for
single key P2P platforms. They have high
activity, and improve the P2P product
dramatically for both the company and the
P2P lending investors. In addition to being
a great business area, it is expected to
become an important tool for maintaining
a steady flow of P2P loan engagements,
and quickly converting LXC Coin funds to
cash if necessary. Currently in discussions
with an initial test customer from the world
of P2P, we hope to become the first multi-
P2P platform in the world.
© LXC Coin™ 2014
Crypto Currency Exchange P2P Loan Exchange
-creates liquidity for the LXC coins -creates liquidity for the LXC assets
Stabile Crypto Currency
-a solid investment, anda great transaction tool
10
LXC COIN: WHAT CAN IT BE USED FOR?
P2P EQT (c) 2014
We expect the second-generation cryptocoins to become the backbone of
merchant business in crypto currencies. The reason for this is simple;
second-generation crypto currencies take out all the cryptocoin risks;
including the obvious volatility and liquidity issues, but also removing fears
of future bans, fraud, restrictions, lack of transparency or accountability,
and risk of “federal-agency-seized” coins being dumped destroying the prices
P2P EQT (c) 2014
Obviously, the LXC Coin can be used for investments and savings. But what about other
uses – such as those currently filled by first-generation cryptocoins? As many first-
generation coins have well developed mainstream usage-constructions, being accepted
as legal tender by giants such as Amazon.com and ebay.com and being accessible
through ATM systems, the framework for implementing any crypto currency into these
systems are open and easily accessible, should the need arise. There is already a
selection of payment gateways catering for first generation coins; connecting cryptocoins
with fiat money and
merchant transactions,
that our coin could
link up to. But with
second-generation
cryptocoins, a lot of
extra opportunities
opens to merchants,
banks, payment gate-
ways and on-line
businesses, and this may become a serious leverage in the payment industry , especially
but not exclusively within the field of micropayments. It also solves the present needs for
business-users of cryptocoins to either continuously exchanging payments for fiat money
or running the volatility risk of having first-generation cryptocoins in stock, awaiting the
next sharp decline in value. As such, we hope the LXC Coin will be used in every way the
Bitcoin and other popular coins are used today.
© LXC Coin™ 2014
11
“A cryptocoin which is stabile is a key to solving the micropayment puzzle.
With no currency volatility risk, and close to zero-cost of transactions, micro
payments can be done virtually free of charge and with maximum security.
We are certain that there’s going to be a lot of top-level industry players
investigating this sector once stabile cryptocoins become mainstream.”
Ragnvald Hoel, CFO, LXCCoin LTD
© LXC Coin™ 2014
12
LXCCOIN LTD MANAGEMENT – OVERVIEW
The management team in LXCCoin Ltd is set up to cover four different areas, with two
specialists in each area, shortening decision time and increasing decision quality. For a
complete overview, please see the separate document on Management
Crypto team
Our technical team consists of a
cryptocoin- and IT-security expert and a
systems architecture specialist, coupled
with an external dev-team with a solid
track record. The team has, amongst
other things, created online stock
exchanges & payment gateway solutions
Management
The management team is the active
core of the company, with full day-to-
day focus on LXCCoin, consisting of
two people from the financial team and
one member from the crypto team. The
team is expected to be increased from
two to five over the forthcoming months
Financial team
The team has four financial specialists; two in the
management team, with backgrounds mostly coming from the
world of corporate finance, and two external parties well
known for creating successfull startups, and a track record of
bringing several companies from seed financing stages to
flotation on international stock excanges
P2P EQT (c) 2014© LXC Coin™ 2014
Legal team
Our team includes two legal advisors, of which one – our
chairman, Allan Nielsen– is a former division leader in the
Danish Financial Authority, and the other – Erik Gravgaard –
has a wide spanning track record from top positions in the
Danish IT/ internet industry, also specializing in tax and
financial law
13
LXC COIN: THE TEAM (CONTINUED)
Allan Nielsen (MSc Law)
Allan Nielsen (Chairman - MSc Law) is the former FCA chief
deputy director in Denmark, and few people have been
instrumental in the close of more risk-exposed banks than him.
Having literally written the book on modern compliance, he is an
expert in banking compliance and financial law. Since starting his
own legal consulting company in 2012, he has taken a keen
interest in financial invention, studying P2P, crowdfunding and
crowd equity funding throughout Europe, publishing a major
report on the subject in August 2014. He is currently also
employed as “of counsel” with award winning Magnusson Law,
one of the best law-firms in the Scandinavian/ Baltic region. He
serves on several boards of directors, and is the key connection
between LXCCoin LTD and the financial authorities. He has
been a major part of the LXCCoin Ltd management since the
team’s original foundation in Denmark in 2013
Erik Gravgaard (MSc Law)
Erik Gravgaard (co-founder, MSc Law) is CEO at Juristhuset
lawfirm and “of counsel” with Magnusson Law, specializing in
corporate and commercial law, Internet law, contracts and
negotiations. He has previously worked in the Danish taxation
authority, has been the CEO of Telepartner A/S (later listed on
NASDAQ in the US) and on the board of 360 Holding AB (listed
on NASDAQ First North) which later became P2P lender
TrustBuddy. He has also been president of the Danish Internet
Industry Organisation, board member of the Danish Internet
Forum, active with the central Danish Internet DNS Registrar
“DK Hostmaster”, and member of SME-Committee of “Danish
Industry”. He has a solid track record within financial inventions,
having been an early adopter of several technologies ranging
from IT solutions through financial hybrids such as the NASDAQ
FN listed Finansbet, and a row of online gaming ventures
P2P EQT (c) 2014© LXC Coin™ 2014
14
LXC COIN: THE TEAM (CONTINUED)
Henrik Ellefsen
(Founder & CEO)
Henrik Ellefsen has been a successful internet entrepreneur
since the mid-1990s, founding the Aker Securities online broker
house (the first real-time online broker house in Norway), an
OTC Stock Exchange which was the first of its kind in
Scandinavia (NorexOTC.com), the environmental processing
company EnPro (later listed at OsloOTC), and a range of other
ventures. Apart from a disastrous transaction in 2003, selling a
trading license to what turned out to be a pyramid scheme
(getting him into all sorts of trouble including a conviction and a
large fine in Norway), he has been instrumental in successful
start-ups and the listing several companies on stock exchanges
and OTC-lists, and his entrepreneur track record includes diverse
ventures like Aker Securities, AMT, A-Viral (OsloOTC), BeWell,
EnPro (OsloOTC) and Xelicity (an online lending project where
two of the group executives moved on to founding TrustBuddy).
The original idea behind LXCCoin was derived following a P2P
funding discussion between Henrik and the CEO of TrustBuddy
Ragnvald “Rags” Hoel
(CFO & fund trader)
During the early 1990s “Rags” was a Financial Information
Systems Executive with a Fortune500 Company, heading banks,
treasuries and commodities. During Deregulation of the Power
Industry, Rags coordinated the first Information system launched
and used today for trading spot electricity. Rags went on to
brokering & trading becoming a Chief Dealer of Derivatives
before CFO of Stocks, Commodities and FX Brokerage. Rags
was part of the first team at the online broker house Aker
Securities alongside LXCCoin’s CEO. A former board member of
the technical analysis foundation in Norway, he has published
news bulletins for two broker houses and as a standalone
venture, before a decade of oil & FX trading, with side interests in
financing and managing start-ups as an ad-hoc CFO. He joined
the LXCCoin team in early 2014, as a part of the relocation to the
UK, and will alongside his work in LXCCoin continue his trading
efforts in the LXC Share/Coin, on behalf of the company and its
shareholders
© LXC Coin™ 2014
15
LXC COIN: THE TEAM (CONTINUED)
Thomas Wong
(IT security- & crypto expert)
Thomas Wong is the father of the LXC Coin code adaptation. He
is a top certified security expert, certified in most current security
standards including is a former Fort Consult white-tie hacker and
security specialist, having written top-priority classified reports for
Scandinavian Ministries of Finance and other government
agencies, lectured in online security, and having been a reference
for the media in relation to web security questions. He is certified
in most top-level on-line security standards, including the latest
ISO certification. Having been a cryptocoin miner since 2009, he
has extensive experience with cryptocoins and cryptocoin code
since their infancy, having co-created several coding projects
before joining the LXCCoin team. Thomas has a full-time position
with an internet tech company, and works with LXCCoin on project
as an advisor, board member and key shareholder.
Wilhelm Castberg
(IT specialist)
Wilhelm is an IT guru with extensive track records within online
security and trading systems. The former Norwegian CTO in
one of the largest IT-companies in Scandinavia, Wilhelm
started out as a system integrator in the 1990s before being
hired by the current LXCCoin CEO to construct the first real-
time online trading system in Norway. Having successfully
completed the system, Wilhelm moved on to creating the most
advanced online trading and funds platform in Norway ever, for
the Fund Manager ACTA (with platform investments of more
than £40 million). He is currently Client Director Manager in
ATEA, an IT company listed on the Oslo Stock Exchange, and
is a part of the LXC team only as an advisor and board
member, following early efforts on software and IT solutions.
P2P EQT (c) 2014© LXC Coin™ 2014
16
LXC COIN: THE TEAM (CONTINUED)
Peter Forchhammer
(Finance/media expert)
Being a serial entrepreneur, Peter has founded and run a long list
of ventures, including Capinordic Bank, Tropical Island and a
range of high-tech start-ups, reaching flotation with several of his
companies listed in Europe and a company listed on NASDAQ in
the US. Like many other VCs, he was hit when the financial crisis
emerged in 2008, subsequently returning to active assignments
and start-ups, which include LXCCoin Ltd. His special areas of
interests include finance and IT ventures, and he is also well
internationally connected within media and finance. Peter has
been on-board since 2013 as a company adviser, being largely in
charge of marketing strategy and media efforts, and will be
instrumental in- and ahead of the listing process in 2015, where
LXCCoin Ltd will be benefitting from his extensive experience with
such processes
Anders Holmstedt
(IT investor)
A seasoned “listed company” executive, Anders has been on the
board or executive committee in too many companies to list.
Most prominently (and importantly) the founder of Venture
Capital World which went on to become a part of TeleTrade, now
a part Nordnet [of one of the largest online stockbrokers in
Scandinavia], and one of the few listed gaming companies in
Sweden (360 Holding AB Publ., listed on NASDAQ First North)
which was later purchased by the P2P lending company
TrustBuddy. He is currently the CEO of one of the most
advanced Big Data & Artificial Intelligence companies in
Scandinavia (Aitellu Technology), and has recently joined the
board of LXCCoin LTD, bringing on board massive Big Data
knowledge and massive investor relations networking
opportunities
P2P EQT (c) 2014© LXC Coin™ 2014
17
LXC COIN: THE TEAM (CONTINUED)
Focus on running costs
LXCCoin has focused on the lowest
possible running costs, protecting the
company from resource draining and
keeping management highly motivated
to perform well over time – only getting
rewarded if the company value ends
up as being high and with a viable exit
strategy. Therefore, the company has
a low spending budget, and a high
percent of shareholders have active
roles in the company. We feel that this
Is a fortunate situation, giving the
maximizing shared goals with a
minimum burn-rate and low spending
of investor funds on personnel
Rigged for utilizing powerful management resource qualities at the lowest possible running
cost, all non-exec directors in LXCCoin Ltd is in on a share-driven no-cure, no-pay basis,
keeping the burn-rate to the absolute minimum
Focus on powerful management resources
Built over a span of 18 months, the founder has had ample time to hand-pick the
necessary resources. Targeting an FCA license in a suitable European country, a
listing, one or two cyberspace exchanges and a banking hybrid, this called for legal
aides, stock-/derivatives/asset-traders, IT/Cloud Computing advisers and a top-of-the-
line security expertise. Obviously, cryptocoins had to be covered by an in-house
expert, and media and strategic decisions needed to be catered for. Since the team
was formed (in three phases), the activity has been intense, taking a final run of 6
months from the team completion to the point where the company wanted to form itself
and surface (spring of 2014). The decision to launch in England and to crowd-equity
fund on Crowd for Angels was the final part of the road towards launch, aimed at
taking place in the fourth quarter of 2014 with the launch of the first product (the LXC
Coin)
The targeted listing process is expected to take 6-12 months from its initiation, and
with 7 of our 8 executives having previous listing experience, this should be a
manageable operation
P2P EQT (c) 2014© LXC Coin™ 2014
18
THE LXCCOIN LTD PROFIT MODEL
Company revenue derives from the following:
o Most LXC Coin investments give a 5% bounty to the LXCCoin company. With coins worth more than 1.1 billion Euro
and rising in value, this accounts for a minimum of around £50 million over a number of years
o Through the LXC Coin trading operations, and the “hybrid central bank” trading efforts, LXCCoin will have a few
additional percent of profits on the yearly turnover of internal LXCs, estimated to give the company an income of £20-
30,000 in the initial phases, rising to several million pounds of yearly activities, target of £10-15m per year fully issued
o With 15% base asset value increase per year, the coin will pay a 1% p.a. commission and 20% of all earnings above
10%, the commissions should amount to around 2% per year on issued LXC Coin BAV. Initially marginal at around
£15-20,000 per year, this will become a massive earnings area with full issue, at more than £20 million per year
o The P2P Exchange is initially a mere necessity for the prevention of “running out of P2P investment targets”, but
should in addition to providing flow, investments and easy exits in the event of needing repurchase-cash quickly,
improve the LXCCoin Ltd margins slightly, both in company revenue and in LXC Coin profitability. It is expected to
add between £100-200,000 in yearly profits for LXCCoin Ltd when fully operational
o The Cryptocoin Exchange will from the LXC trading alone give the company savings of 1% of all LXC trading, in itself
making the exchange a profitable operation. With solid volumes of LXC, near-zero risk of fraud and serious owners,
the exchange may also become a great source of income of trading with other cryptocoins, further increasing the
potential earnings. Once other asset class catch on to the potential of using cryptocoins as an extra layer on their
investment, the Cryptocoin Exchange can in reality become a “stock” exchange for companies and assets alike
o The earnings in the company are highly dependent of the success of the LXC Coin, where a successful coin in full
issue with a BAV of €2-2.5 and a price of €4-6 will give a £50m+ revenue every year for the LXCCoin company, plus
commissions of £20m over a number of years, making it a real cash machine if successful
o With the LXC Coin rising in value more than the BAV, the company will own an implicit increased value in the coins
that are kept in “cold storage”. With 1.1 billion coins, every 10% increase in the premium on coins the vault value will
rise by roughly £ 100 million, thus actually being the major value factor in the company
© LXC Coin™ 2014
19
UNDERSTANDING LXC COIN BASE ASSET VALUE (“BAV”)
The LXC Coins are either
“released”, which means
they’re paid for in cash which
is invested, or they’re in “cold
storage”, with zero base asset
value. When coins are released
from “cold storage”, they’ll
have to be sold at the going
base asset value to avoid
dilution
100% value
of coins in
cold
storage
Base asset
value
increases
15% or
more per
year
New sales-/
release-
price and
BAV of
coins in
cold
storage
The Base Asset Value (BAV) of released LXC Coins start at €1. Expecting 15% interest, they will be worth €1.15 after one
year. When LXCCoin Ltd releases more coins after one year, these will be sold at € 1.15 or above. LXCCoin Ltd does not
profit from this (only if they are sold above €1.15), as all the revenue from sale of coins must pay BAV (Y1e: €1.15) to the
LXC Coin BAV-account with our P2P partner. After two years, the BAC should be >€1.32. If the market value is far higher,
LXCCoin Ltd has the option of putting more than the BAV into the BAV account when selling coins; increasing the average
BAV of all coins, compensating for the gap between BAV and premium price, and further increasing the yearly BAV profits
© LXC Coin™ 2014
20
EXPECTED BAV DEVELOPMENT
0
0.5
1
1.5
2
2.5
Q4
-14
Q1-
15
Q2
-15
Q3
-15
Q4
-15
Q1-
16
Q2
-16
Q3
-16
Q4
-16
Q1-
17
Q2
-17
Q3
-17
Q4
-17
BAV [est] Price [exp] Repurchase [est]
With the Base Asset Value
(BAV) climbing by around 1%
per month and compounding
interest, the LXCCoin
company may sell coins at the
going price and use parts of
the profit to increasing value
to the BAV. Profits can also be
used for re-purchasing coins if
the market price falls, even if
it is still above the BAV, to
protect the stability a value of
the coin
© LXC Coin™ 2014
21
ANTICIPATED PREMIUM RANGE
With our base-case scenario, the
LXC Coin should double its BAV
base asset value in a few years
The intrinsic value should secure
that it trades higher, regulated
by supply/demand, usage and
merchant acceptance
As projected here, the coin should be trading
at a premium of 1.5/2 times the actual base
value after a few years, which is in the
extreme-low range in terms of cryptocoins –
there is however no guaranteed premium,
and apart from the BAV price increase
making the minimum performance on the
coin, premium performance will be
depending on supply and demand, other
uses of coins, and external factors
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
2014 2015 2016 2017 2018
BAV (est) Price (exp)
P2P EQT (c) 2014© LXC Coin™ 2014
22
LXC COIN LTD: PROFIT SCENARIOS
0
0.5
1
1.5
2
Year 1 Year 2 Year 3
BAV (€ bn) LXC price Premium
With the expected performance, the LXC Coin will generate the following revenue:
0
500
1000
1500
2000
Year 1 Year 2 Year 3
Vault (€ m) LXC Premium
0
2
4
6
8
10
Year 1 Year 2 Year 3
Crypto Exchange Trading
P2P Exchange Total
There are two key elements in the
company profits; the income from activities
and the vault value of LXC Coins. With a
slowly rising premium, the vault value
increases. And with trading and
commissions on invested funds, the end
result is a strong positive cash flow with
low costs
Even with a slow rise in value, the results
for LXCCoin Ltd are dramatic; At every
10% premium, the vault value rise equals
around £100 million in pretax profits.
To sustain this, several factors must be in
place, including supported liquidity in the
coin market, stability in price, marketing,
solid performance in the underlying P2P
instruments, and a rising coin popularity
Disregarding the vault value; exchange
commissions and trading arbitrage alone
should create a strong positive cash flow
for the company, regardless of the coin
performance, giving the LXCCoin
company several revenue centres
© LXC Coin™ 2014
23
LXC COIN LTD: PROFIT SCENARIOS (CONTINUED)
00.5
11.5
22.5
3 m coins 6 m coins 10 m coins
Commissions Trading
CryptoExc' P2PExc'
Total
Here are three profit scenarios of the running business, based on 10/50/100 million coins sold
0
5
10
Y1: 10mcoins
Y2: 25mcoins
Y3: 50mcoins
Commissions Trading
CryptoExc' P2PExc'
Total
0
5
10
15
Y1: 20mcoins
Y2: 50mcoins
Y3: 100mcoins
Commissions Trading
CryptoExc' P2PExc'
Total
Profits from low sales of coins, low activity
on the exchanges and little trading, mean
the company will make between € 0.4 m
and € 2 m in its first business years –
ignoring the vault value increase. Despite
being a low and unlikely scenario, the
company is still profitable
With a small but rising interest in the
coins, the company is set for a turnover
from €2-5 m, making solid profits, again
without including any vault value increase
At a 10% issued rate of coins, reaching
100m coins in circulation over a three year
duration, internal revenue from activities
should reach £10 million in year 3
The exchanges are constructed to be independent of the success of the coin, and should have success on their own regardless of the coin performance
© LXC Coin™ 2014
24
“To summarize all the opportunities the company has in financial terms
would be somewhat pointless, as the all-important LXC Coin vault value
completely overshadows everything else. Leaving that out of the figures, the
study of numbers become easier and more understandable. A target turnover
of between £2-5 million, with anticipated margins of more than 50%, the
company should be able to get a solid pricing once operational, and
everything else we’re doing will boost the valuation even further.”
Ragnvald “Rags” Hoel, CFO, LXCCoin LTD
© LXC Coin™ 2014
25
LXC COIN: THE PLATFORM
The P2P software platform
can be used for everything
from P2P Exchange functions
to small-business loans, to
offering finance solutions such
as leasing or factoring.
Depending on the range of
partners, LXCCoin Ltd may
enter all booming segments of
P2P, but will start slowly with
pilot projects with strict
control, to create a secure base
for its investors
The LXCCoin software platform is a fully
functional stand-alone software, based on
three main components;
* The Cryptocoin Code
* Our own Exchange software
* Tailored version of Zidisha open-source-
P2P platform for microloans
Our platform covers the coin and the
exchanges, but also contains accounting,
payment transaction systems, ID-control,
registration and verifications, and all other
necessary aspects of P2P finance for
future use. Using the cryptocoin and
exchanges or payment gateways as the
backbone, a well of new features or
products can be created for future use,
which will be once the technology/security
is fully proven and the LXC Coins gain
momentum.
The LXCCoin P2P-platform has to be set
up in complete installations for each new
business segment the company ventures
into, and it is therefore a feasible solution
to go into a few joint ventures instead of
launching our own P2P service which can
not be 100% automated.
The platform is based 100% in the cloud,
in a distributed solution securing 24/7
operations and the lowes cost available.
The platform is open to integration with
most APIs, and is therefore spec’ed for
use in all markets within all target areas
the comany aims to become active in
P2P EQT (c) 2014© LXC Coin™ 2014
26
LXC COIN: PLATFORM OVERVIEW The LXC Coin software platform is based
on our own proprietary systems, with
several extensions for funds, exchange
functionality and cryptocoin asset
management, and external APIs
LXCCoin Ltd proprietary platform
CoinNext CryptoExchange platform
LXCCoin Ltd Platform
-built by LiteBreeze/LXCCoin dev.
P2P Exchange Platform
Crypto Exchange module
API towards P2P Lenders
Bitcoin open source code
Blackcoin open source code
LXC Cryptocoin Platform
-built by LXCCoin dev.
Cryptocoin platform(Coin, block explorer, crawlers etc.)
Crytptocoin
Asset Fund
© LXC Coin™ 2014
27
LXC COIN: INTELLECTUAL PROPERTY RIGHTS
LXCCoin Ltd owns software,
web domains, graphics,
multimedia, trademarks and
licenses. These could be
considered as white-label
opportunities, but we’re more
focused on the use of our own
technology and its
security/protection than of
licensing it to third parties
As a valuation element it has
been summarized here briefly,
but we advise investors to
ignore any high intrinsic value
these may have
Trademarks:
2 different USPTO U.S. Trademark
Applications, assigned serial numbers
86340927 and 86340919, relating to
the name “LXC Coin” and the modified
“£” logo used on the LXC Coin.
Software platform:
The LXC Coin code is based on open
source, and we’ve put our version of
the code up as open source as well in
respect of the open source work done
in all crypto currencies
The P2P Exchange is developed in-
house, and is a fully owned code under
our own license- Our Crypto Exchange
is a partly purchased- and partly
customized software
Our platform also utilizes other open
source systems to a lesser degree
Web domains:
LXCCoin.com
LXCCoins.com
P2PLoan.exchange
Cryp2p.com
P2PUs.com
P2PYou.com
P2PBee.com
P2Bee.com
P2PEqt.com
Graphics:
LXCCoin coin graphics
Website graphics
Movie “Meet the LXC Coin”
Movie “Crowd Equity funding LXC”
Modified currency label “£” with the line
extended from top and bottom of the
symbol, not crossing it
P2P EQT (c) 2014© LXC Coin™ 2014
28
LXCCOIN LTD: ROADMAP
The roadmap for LXCCoin and the P2P Exchange is to start up with the “safe” crypto currency,
its own exchange and later the P2P Exchange, before optioning to moving on to becoming a
broad P2P Fund company based on cryptocoin investments and/or regular fund investments
P2P EQT (c) 2014© LXC Coin™ 2014
Business plan development
2013 2014 2015
Legal framework(s)
Software development
New derivatives
Funding
Cryptocoin launch
Crypto Exchange launch
Software updating
Listing
P2P Exchange launch
Platform design
Compliance updating
29
2013 2014 2015
LXCCOIN LTD: FUNDING / VALUE GUIDING
LXCCoin Ltd was founded and
seed funded by founders, but
will be inviting third party
investors to join through three
rounds of finance in 2014/15:
one or two rounds of minor
Crowdfunding / Crowd Equity
placements before targeting
an IPO and flotation on a
suitable stock exchange
The initial price of the company has been
set to £ 2 million, with around 10% of the
company seeking new owners
The company is currently owned around
60 % by its founders and employees, and
roughly 40% by private seed investors
The initial Crowd Equity placement is
limited and priced to attract minority
shareholders, aiming for a 300+ strong
shareholder list before the initiation of the
expected listing process (requiring a
minimum number of shareholders)
The LXC Crowd Funding process is aimed
at bringing in both equity and customers,
increasing brand-awareness and hopefully
boosting both the cryptocoin customer
mass and the P2P Exchange user group
The crowdfunding-processes will be done
in the UK/US depending on negotiations
with partners and new owners
The world’s first Cryptocoin crowdfunding
was done in April 2014, filling up $7m in
five hours in cryptocoins; indicating huge
interest in these kind of ventures
P2P EQT (c) 2014
Founder Bootstrapping
<DKK 1 million valuation
Crowdequity funding
£ 2 million valuation
Pre-IPO etc.
£10-20 million est. valuation
© LXC Coin™ 2014
OTC trading
£ 5-10 million est. valuation
30
SUMMARY
The team
We’re a tight-knit team
of seven experienced
executives and lawyers,
covering all the needed
bases and technologies
involved. We have put
our own money into this
and are determined to
succeed.
We’re in a continuous
dialogue with the
financial authorities, to
make sure our setup is
in compliance with all
legal regulations and
forthcoming laws, with
an ex-financial authority
executive in charge of
the process on our side.
LXCCoin Ltd is a Crypto/P2P conglomerate, aimed at optimizing and evolving cryptocoins,
changing how P2P Lenders are funded, and empowering the massive cryptocoin potential
P2P EQT (c) 2014
Financing
The foundation and
development have been
financed by the team,
and there will be two or
three rounds of further
financing in 2014/15.
Financing includes at
least one round of
crowd-equity funding (in
preparation for an IPO),
aiming at making the
brand and products
marketed towards a
broader audience, and a
crowdfunding sale of
cryptocoins as an early
marketing effort
© LXC Coin™ 2014
SW/Platform
Our software platform is
built by LiteBreeze on
the backbone of several
proven components, as
a proprietary stand-
alone financial platform.
It covers the cryptocoin
services, the fund model
and the exchange
setups, targeting the
P2P lender APIs on one
side and our own
Cryptocoin asset
management system(s)
on the other, working as
a dual transaction
platform and a fund
management platform,
with multiple extension
opportunities
The cryptocoin
Our LXC cryptocoin
(Lending eXchange
Currency coin) is a dual
financial bridge, linking
cryptocoins with real
asset values and giving
cryptocoins a real
profitability. It is also
linking P2P lending
investments to the huge
resources of cryptocoins
and creating a whole
new paradigm for
borderless financial
derivatives. It is a fully
secure coin, based on
the Bitcoin/Blackcoin
fork, with altered mining
functionality and other
customizations
Partners
We have initially chosen
P2P lenders with long
track records and solid
profits, to secure a safe
allocation of LXC funds,
aiming to provide a solid
funding muscle for some
proven and well-known
companies from the
start, and to support the
clear overall impression
of the sincerity and
solidity our company.
We are also in
discussions with other
P2Ps, and important
partners should help to
assure that the cash put
into our products are in
safe hands
31
RISK FACTORS
Risks related to the success of the company range from performance to worldwide legal changes for cryptocoins – investors should inform themselves thoroughly about risks prior to investing. Here are a few, which the company considers the key risk factors:
o Legislation – new or altered legislation may prevent the business from developing or may prohibit the business entirely – this may effect some or all crypto currencies (the Russian Duma is expected to ban the use of virtual currencies shortly, claiming they have no underlying value)
o Partner problems – we are somewhat dependent on our P2P investment partners performing well for our coin to be attractive over time – and even though we target to diversify our portfolios and leverage this risk, we are dependent on our partners to a certain extent
o Competition –other second generation cryptocoin contenders may enter the market with competing products, with better profitability, or faster than our product
o Technology – with the technological development it is difficult to project whether our solutions are current also for a distant future with technologys not presently forseen or anticipated
o Management dependence – like most companies, LXCCoin Ltd is somewhat dependent on its management team, and despite having shares and options, there is a risk involved in the team resources and losing one or more of the team members
o Security – despite the best efforts of the company, there are risks involved with both the crypto currency and the exchanges
o Financial underperformance –in case our business underperforms, the company may run at a loss and require new capital, which may not be readily available at the time and level the company desires/needs
© LXC Coin™ 2014
32
LXC COINCRYPTOCURRENCY
+ The Code
+ Security (On-line/Off-line)
+ The proprietary network
+ The slow-rise paradigm
+ Launch strategy
+ Legality
+ Welcoming regulation
01© LXC Coin™ 2014
33
“Cryptocoins want to take over for regular currencies, but until now they’ve
failed to provide exactly what makes the world trust and depend on existing
currencies. I’m not referring to the governments guaranteeing them, because
we’ve seen that fail numerous times – I’m talking about stability,
exchangeability, dependability, and a guarantee for future use. When crypto
currencies can tick those boxes, they are ready to take on the world. Until
they can do that, or they have a few guiding ones that can [which the others
can exchange into], they will continue to be a curiosity – a footnote in the
history of currencies. But when they make that move, there will be no
stopping them.”
Henrik Ellefsen, CEO/Founder, LXCCoin
© LXC Coin™ 2014
34
LXC COIN: THE CODE
The LXC Coin code is based on Bitcoin and Blackcoin – coins with high activity
and near-immediate error correction. These have never compromised or broken,
are thoroughly proven and are considered completely stabile and secure.
To make the LXC Coin the non-volatile currency we wanted, our design had to
sacrifice mine’ability and bounties that other crypto currencies use to gain quick
popularity. We also had to re-think the way transactions was being done, and
how to charge fees from the transactions that were being done. We wanted to
maintain speed, targeting >10 second worldwide transaction times, and
maintaining a minute dilution for the coin owners through transaction fees
instead of mining. Following our coding and adaptations, we’ve run a six month
testing program, creating and test-mining the coin before transaction-testing it
thoroughly. Then, a new genesis block was created, and the coin fully mined and
locked in “cold storage”.
The result has been a modernized Bitcoin-Blackcoin hybrid, on a network of fully
controlled transaction nodes and through private wallets using “staking”
functionality, giving the wallet owners transaction fee participation without
requiring/consuming the vast resources of most other coins.
© LXC Coin™ 2014
A cryptocurrency can be created in hours using the open source code available; instead, our team has spent a full year, making way for a better product and not just another carbon copy
35
LXC COIN: ON-LINE SECURITY
Implementing the highest level of security available – and then some
To avoid the notorious ”51% attack”, where intruders control more than 50% of the network calculation power and thereby
can manipulate all transactions, our coin is based on ”Proof-of-Stake” which relates to coins and not to power, implicating
owning more than 50% of the coins to manipulate it (minimum €550 million worth of coins), and even then it is unproven
and highly debated whether or not such an attack would be successful
Our code is rife with checkpoints, aimed at preventing any attempt at a ”blockchain roll-back”.
Our sites will randomly be run through the safety checks ordinated by PCI and SANS (http://www.sans.org/ and
https://www.pcisecuritystandards.org ). Our crypto team carries both certifications, including GWAP and GPEN
Our proprietary node network has restricted access an maximum security precautions, and are not password-based.
We’re using a customized version of the NSD harding of Linux, outlined here:
http://www.nsa.gov/ia/mitigation_guidance/security_configuration_guides/operating_systems.shtml#linux2
Within the expected listing of the company, we aim to certify under the ISO27001, yet another standard to which our team
is certified
© LXC Coin™ 2014
36
LXC COIN: OFF-LINE SECURITY
Most other coins are mined and are therefore slowly rising in numbers under
continuous distribution – ours is the complete opposite. As we’ve mined all of the
coins ourselves, the risk of fraud and mishaps can only be deemed as highly
important to contain. Which is why the coins are divided into 100 wallets (large
ones), which are all listed online and kept track of. The wallets are stored offline,
on multiple sets of encrypted hard-drives, encrypted UBS and written media, all
securely stored. The codes have been produced in attendance of our legal team,
and have all been split for separate safekeeping. With two safety deposit boxes
and two lawyer vaults, any intruder would have to procure documents and hard
drives from several different places and know several of our internally kept
encryption passphrases, which would be close to impossible to do undetected.
To add an extra layer of difficulty, the offline stored USBs are purposely
mismatched so intruders would for practical purposes require all discs and
encrypted media just to get the hacking process started – making the task of
intrusion outright impossible. In addition to this, there are other undisclosed
safety measures in place, further increasing security
© LXC Coin™ 2014
With 1.1 billion coins, security is paramount
37
LXC COIN: THE NETWORK
P2P EQT (c) 2014
To protect our own network, guaranteeing transaction security and maintaining a 100% uptime, we’ve created a node network handling 50% of our transaction traffic
One of the most destructive sides of cryptocoins that are rarely addressed, is the energy consumption many cryptocoins have. Bitcoin
in particular, is hugely energy consuming. To give an example: KnC, the Bitcoin mining company based in Stockholm, has energy
bills related to its Bitcoin mining of more than $ 500,000.00 per month. Yes, month. And this is only one of hundreds of mining
companies and mining pools “mining” Bitcoins. There are many coins, our LXC Coin included, that run on different algorithms, which
restrict the difficulty in transaction confirmation to a bare minimum. To continuously decrease the creation of new blocks of coins, the
algorithms used in mining are increasingly raising the difficulty of mining, thereby increasing power consumption as the coin in
question matures over time.
To avoid this, all our coins are pre-mined – and placed in “cold storage” off-line. Thereby, the whole mining-process is effectively
stopped, restricting the power consumption to a bare minimum. The flipside of this is that there is no upside for miners to dedicate
nodes to our coin, so we have solved that by creating our own nodes around the world, on all continents and with 99.97% uptime.
An added benefit is, that with all transactions giving a small transaction fee – around 50% of these fees end up in our node wallets,
increasing company profits. The risk of sabotage where a group owning many nodes can manipulate or take over control of the
transaction flow is also mitigated, and as a POS coin intruders would need to control >50% of the coins to control the network
P2P EQT (c) 2014© LXC Coin™ 2014
38
LXC COIN: THE SLOW RISE PARADIGM
P2P EQT (c) 2014
All cryptocoin creators want
their coin to skyrocket in value.
Except us.
The “normal” currency world is dominated by a few main currencies, which have three main features: they are accepted worldwide,
they are extremely liquid, and they are highly stabile over time. Therefore; they are trustworthy, they can be counted on to provide the
holders with security for their funds, and they won’t leave their holders “stuck” in them at any given time. Also, they can be counted
on for future payments
As the world turns to accepting Bitcoins and other cryptocoins as legal tender to pay for goods and services, the most essential
questions are “how much did I actually just get paid?” and “how do I recollect the value I just got in cryptocoins?”. With Bitcoin, you
don’t know if you got 10% more or less for the goods you just sold, and there are fees from selling or converting. Bitcoin is handling
this well, by providing a highly liquid transaction network. But the coin itself has no real asset value, and can tumble in seconds. Also,
if hit by trouble with legislation or technical issues, holders may lose their complete value in seconds. This is ok if you sold a bottle of
soda in Bitcoins, but if cryptocoins want to become a usable payment for high value assets such as cars, houses or boats, or a tanker
load of oil, they need stability. This doesn’t sell well for miners, short-term profiteers and bounty hunters that plague cryptocoins, but
for all serious contenders it is an absolute requirement. Therefore, we don’t view a huge increase in value and high volatility as a sign
of success. We see it differently. We’d like our coin to rise in value more than its anticipated 15% yearly rise in asset value, but not by
much. Say 15-25% per year in total, in a controlled fashion. That creates a cryptocoin the merchants of the world can trust. An up-to-
date cryptocurrency that opens the doors to future usability and tradability – which is exactly what we have been aiming for
P2P EQT (c) 2014© LXC Coin™ 2014
39
LXC COIN: REGULATING LIKE A HYBRID CENTRAL BANK
P2P EQT (c) 2014
We expect to release the full amount of
LXC Coins over a 5+ year period,
selling when it rises “too much” and
repurchasing if it falls back down or
there is surplus cash, in fact operating
as a “LXC Central Bank”
P2P EQT (c) 2014
With huge un-activated reserves of coins, and with the role of market
maker in its own coin, LXCCoin Ltd is taking on the role that a central bank
has to any regular currency - a function no other cryptocoin enjoys today,
and groundbreaking in the world of cryptocurrency. To the anarchistic part
of the cryptocoin world this may be negative, but it is not that part of
cryptocurrency die-hard’s we are aiming for as primary users. While we
cannot alter interest rates as other central banks, we have more powerful
ways to influence the price movement: restriction on sale of new coins,
steering arbitrage profits into the BAV reserves to increase profitability and
earnings, buyback programs, support purchasing, regulation of conversion
from both P2P loan portfolios and from other cryptocoins, and lockup-
/support agreements with key LXC owners, in a way no other central bank
can or have historically been able to (a few dictatorships not included)
When selling/repurchasing, the “LXC Central Bank” will have the
opportunity to split some of the difference/arbitrage with the asset base,
creating higher-than-average profit, which could easily see yearly interests
climbing towards 20% (BAV increasing)
Using the BAV reserves, the hybrid central bank may also cash out
owners of coins with withdrawals from the asset base, paid out at the
exact BAV at the day of withdrawal, thereby preventing the coin from
falling below the BAV.
© LXC Coin™ 2014
40
LXC COIN: ENOUGH COINS?
P2P EQT (c) 2014
There are 1.1 billion LXC Coins, all
owned by the LXCCoin Ltd company.
We think it is a perfect number – here
is why
P2P EQT (c) 2014
The fully issued LXC Coin amounts to 1.1 billion coins, equal to € 1.1
billion. This is a lot, compared with most other coins (there will for example
«only» be 21 million Bitcoins when/if it is ever fully mined) and with the
amount of money it is possible to invest in P2P with sufficient profits.
However, LXCCoin Ltd plans to carefully release coins worth € 500 million
over a few years, reducing its holding of coins by some 30% (selling at
climbing base asset value), thus giving itself ample time to create bonds
with the world leading P2Ps and investing carefully and securely. With
billions of dollars flowing into P2P, billions of dollars flowing into cryptocoins
and an opportunity for a cryptocoin to leverage the possibilities of both
sectors – 1.1 billion coins may also seem to be too few. Still, with that
amount, the LXC would come to represent 5-6% of the turnover of P2P
lending over a few years, which is a tangible market share that we can both
reach and handle
So why 1.1 billion coins? The order was originally for one billion coins
exactly, but as this is the result of calculations and mining, the extra 100
million coins derives from a management-developer discussion, where one
party was correct and the other was wrong. The result is 1.1 billion coins,
and that may turn out to be a perfect number. At least, we’ve come to think
so, and have in the process learned to leave our developers in peace
© LXC Coin™ 2014
41
LXC COIN: CLOSING THE GAP
P2P EQT (c) 2014
To ensure stability and make the coin a lasting currency, it will be important to avoid huge price drops, which the company will try to enforce
With the premium rising, there will
become a significant gap between the
market price and the BAV, which can
damage the stability of the coin and
make it drop. Thus, while selling off to
prevent too much increase, LXCCoin Ltd
may choose to invest profit into the coin
at higher-than-BAV value, or to use
profits for support-purchases. With much
of the core value of the company relying
on the premium of the coin, the company
recognizes that it is still more important
for long-term business that the coin is
stabile than to have an artificially high
vault value
P2P EQT (c) 2014© LXC Coin™ 2014
0
0.5
1
1.5
2
2.5
Q4
-14
Q1-
15
Q2
-15
Q3
-15
Q4
-15
Q1-
16
Q2
-16
Q3
-16
Q4
-16
Q1-
17
Q2
-17
Q3
-17
Q4
-17
BAV [est] Price [exp]
Repurchase [est] STABILITY SUPPORT
42
LXC COIN: LAUNCH STRATEGY
The LXC Coin is targeted for
launch in Q4 of 2014, with a
one-month pre-trade period
The team will spend a lot of
time promoting the company
products and services,
aiming for a one-year roll-
out period encompassing
two rounds of crowdfunding,
an IPO and several key
partnerships
The LXC Coin will need a through build-up
towards future world-wide attention, and
management is not leaving this to
coincidence. The funding and launch will
provide the initial press coverage plus a
high level of proficiency and security, and
following that up will be a broad long-term
PR/IR strategy and financial results
We have already formed bonds with the
media and with several industry
specialists, ensuring initial launch
coverage
LXCCoin Ltd also aim to do a
crowdfunding sale of coins in the UK (or
on one of the main US sites) to market the
coin and show its presence
The mother company is conducting a
small crowd-equity funding round for itself,
to raise awareness of the company and to
secure sufficient number of shareholders
ahead of its floatation
Over the first months, there will be a
steady flow of news, namely the launch of
the company, the new “kind” of currency
(asset backed), the LXC pre-trade release,
the crowdfunding launch and later its
completion, the company crowd-equity
funding, new partners, new exchanges
trading the coin, hopefully some new P2P
partners coming in on the investment side,
the fund, the IPO plan and all news
leading up to the actual date of floatation
We expect the LXC Coin to be followed by
sub-reddit “writers”, 4chan trolls and a
variety of internet subgroups, which we
aim to encourage through direct presence
The team aims to get the LXC Coin traded
at several cryptocurrency exchanges, and
on its own proprietary exchange
P2P EQT (c) 2014© LXC Coin™ 2014
43
LXC COIN: LEGALITY
Our legal team has special
focus on management of risk
and on new financial sectors,
and are both actively
participating in the legality
process revolving cryptocoins
and the LXC Coin
We’ve registered with the FCA
in the UK to ensure an open
and positive dialogue, and to
be included in any future talks
on the legality of cryptocoins
and our other business areas
In most parts of the world, cryptocoins are
legal to create, trade and own. New
legislation is expected to be introduced
over the forthcoming years, but there is
little doubt that cryptocoins are here to
stay. They are currently non-tax objects in
some countries, but this we expect will
change. Crypto currencies are by nature
unrestricted, which we expect will
continue. Our investment base P2P is
legal, but it is under a lot of focus and
forthcoming legislative restrictions are
expected across all sectors of the industry
The Cryptocoin is already issued, being
fully legal in its jurisdiction
The Crypto Exchange is considered an
asset exchange, and is not (yet) covered
by financial authority legislations
Our P2P Exchange is regulated as a peer-
to-peer asset platform, without issuing
loans and only working as a bulletin board,
and should be viable for P2P transactions
throughout Europe (and should not be
affected by the UK consumer credits law)
With a forthcoming listing in mind, the
mother company in the group has been
incorporated in the UK, With flotation in
mind, we need to stay fully compliant at all
times, and all aspects of the company,
reaching from the cryptocoin to the P2P
platform, is fully compliant legally. Our
legal team will follow up closely for
adaptation to any regulatory changes, and
develop our legal compliance routines
continuously. We’ve registered with the
FCA in the UK to ensure an open dialogue
with the authorities
P2P EQT (c) 2014© LXC Coin™ 2014
44
LXC COIN: WELCOMING REGULATION
LXCCoin LTD is already
taking part in discussions
revolving cryptocoins and
future regulation, which we
expect to see happening
worldwide within a very
foreseeable future. We
welcome this regulation, and
hope to see it widening the
gap between second
generation cryptocoins that
can be fully transparent and
legally compliant, and first
generation coins which will
possibly become left behind
Having spent close to two years in launch
preparation, we’ve been in discussion with
financial authorities since 2013. As of
today, the situation is highly volatile, with
no regulation and a high market share of
amateur operations and more or less
vailed scams. The market has to a large
extent been hype-driven, which is
expected to remain a continuing factor
with first generation cryptocoins. Over
time, we expect that this will create a
divide between the early and first
generation crypto currencies, and the
ones that can make the move on to a
regulated and officially recognized
currency family
Our legal team has since our foundation
been occupied with what could lie ahead
of challenges to move towards a fully
compliant stage for cryptocoins, and the
company is well prepared for this change
which we expect to happen within 2015
and 2016.
The similar sector, P2P finance, has had
the same development, where the first
competitors appeared in 2005 and it took
10 years before they got regulated. Still,
they were not as revolutionary as
cryptocoins are today. When regulation
finally came, it was warmly welcomed by
most P2Ps, recognizing that regulation
would help the serious contenders and
halt the less serious ones
This is the same process we currently see
happening in the world of cryptocoins,
which is why our company develops its
legal compliance routines continuously,
and will try to stay ahead of the legislative
development and attempt to be an active
participant in driving it
P2P EQT (c) 2014© LXC Coin™ 2014
45
EXCHANGES
+ The business case for the P2P Exchange
+ Setup and software platform
+ Partners
+ The business case for the Cryptocurrency Exchange
+ The software platform
+ Potential partners
+ Legality & IPR
02© LXC Coin™ 2014
46
“Creating our own cryptocoin exchange was a “must”. Based on our expected
level of arbitrage trading alone, the cost of using other exchanges would fund
the whole development and operations of a fully owned exchange in itself.
Consequently, we went out and bought a complete exchange – securing a
proven platform and making way for a fully secure and publicly known
crypto exchange, providing much needed structure and safety to cryptocoin
traders. Safe, liquid exchanges will be an important part of the future
stability and usability of cryptocoins. Not just our coin – all coins.”
Thomas Wong, CTO/co-founder, LXCCoin
© LXC Coin™ 2014
47
CRYPTO EXCHANGE: THE BUSINESS CASE
The crypto currency market is in a steady
growth, with around 40 exchanges world
wide handling a reported compiled volume
of more than US$ 20m/day in bitcoins
alone, and several marginal exchanges
for specific coins trading minor amounts
outside the main exchanges. The total
market is estimated at between $ 30-40m
per day and rising. Following the highly
public Bitcoin price collapse in 2013, when
cryptocoin giant Mt.Gox went off-line
reportedly taking more than $100 million in
customer funds with them into the
darkness of anonymity, the crypto
exchange market has been ridden with
distrust and risk of fraud. The result was a
new wave of un-anonymous exchanges,
with varying success but with improved
customer security, which makes room for
new exchanges and improvements
© LXC Coin™ 2014
48
CRYPTO EXCHANGE: COINNEXT BASE
Our cryptocoin exchange is
based on CoinNext; a complete
crypto exchange platform,
thoroughly tested with zero
stability- or safety issues.
Our development team has
improved it further, creating a
great offering for cryptocoin
traders, offering the safety of
a publicly known partner and
the strength of a platform with
a proven track record
With a publicly know company behind our
crypto currency, and with a listing target in
2015, owning our own exchange was an
obvious path to take in relation to our
crypto currency position
Sourcing an existing cryptocurrency
exchange and modifying it to suit our own
needs was decided in 2013, ending up
with the purchase of a proven exchange
which has had a “bounty” on its own
safety, making it the target of mass
hacking activity, of which all have failed.
Our safety measures increases the
already secure platform, making it a safe
and publicly recognized exchange, which
should provide the maximum performance
for cryptocoin customers worldwide
The purchase was concluded in 2014, and
our platform was widened with another
exchange and more functionality, with a
target of a Q4 2014 launch alongside our
cryptocoin
Our aim is to become a maximum-
security, high-quality, low-cost exchange
of all liquid and justified crypto currencies..
With cryptocoin trading fees being high,
the volatility in coins being fierce, our
focus will be on our own LXC Coin,
Bitcoin, LiteCoin and the most exchanged
altcoins. As the crypto currency market
matures, it may be decreased to only
include the second generation coins and
Bitcoins
P2P EQT (c) 2014© LXC Coin™ 2014
49
CRYPTO EXCHANGE: FEATURES
We can provide the safety and
trust that few other exchanges
can today – but we can also
optimize the exchange with a
lot of other features;
* One-stop-shopping
* Mining pool partnering
* Liquidity support
* Low fees
* Strong support
* Later “auto-trade” target
We bring three great features to the
cryptocoin exchange services market.
First and foremost, our company is highly
serious and would not be perceived by
customers as a risky counterpart, taking
out the biggest issue of purchasing coins;
fraudulent intermediaries. Secondly, our
payment solutions and direct-purchase
accounts mean that customers can do all
their transactions in one place, and not
having to buy coins one place and
exchange them another. Thirdly, we’ll try
to maximize the liquidity by linking up with
other exchanges, doing all our LXC Coin
trading through it, and keeping a minimum
content available for the coins we’re
dealing in (only the relatively popular
ones, and not taking huge risks)., primarily
in connection with mining operations with
a constant flow of coins
Our Cryptocoin Exchange is a trading
platform, functioning like any normal
currency exchange, with accounts,
payment solutions, a trading-”floor” with
visible buy-, sell- and last price functions,
plus transaction volume overview and
other extended trading features. There is
no auto-trading module, but this will be
attempted programmed or purchased as a
future functionality
Our business model is to charge a small
transaction fee on both sides, starting at
0.25%. Apart from the risk of fraud, which
is very small and implies having full
access to the targeted account anyway,
the risk involved in running an exchange is
near zero
P2P EQT (c) 2014© LXC Coin™ 2014
50
P2P EXCHANGE: THE BUSINESS CASE
The P2P industry is booming, but funding is
slow to come in and illiquid once invested. A
shared P2P-exchange solves this, improving
P2P for all parties
As P2P gains popularity, a massive second hand market will
open up, and when these markets become liquid, the P2P
investment option will truly become mainstream
Another problem with P2P lending is that the popular loans
originating from the main US providers are filled up in seconds,
favoring major players and making P2P lending investments
harder for the general population. As a result of this, many P2P
funds are emerging, providing an easier entry into P2P for
ordinary people. Once these become popular, it will be even
harder to get into P2P investments, again emphasizing on the
need for an everyday loans exchange
[The scale of P2P loan overall size on this figure is highly
misleading as the total value of P2P loans are hardly visible if
using the same scale – less than one percent of the total market]
P2P EQT (c) 2014© LXC Coin™ 2014
51
P2P EXCHANGE: THE SETUP
P2P EQT (c) 2014
To ensure the continuous profitability in the coin, LXCCoin Ltd has created a P2P loan market place, to secure access to P2P loan portfolios once P2P becomes harder to invest in
With LXC Coin revenues directly invested in our dedicated P2P partners, providing top-level profit with low risk, this is in fact a prime
class investment with virtually no loss history. Many international P2P lenders have been maintaining year-long track records of 10-
20% performance and less than 1% losses, but as these are becoming increasingly popular, we need to secure our access to P2P
loans issue. Therefore, we’ve created a P2P loans exchange, like several other P2Ps have or are launching. This way, we secure a
steady flow of P2P loan engagement even when these become harder to acquire. The LXC Coin team will also be partnering with
selected P2P companies with solid track records, loss-reduction guarantees or high average yields justifying any implied risks. Once
P2Ps gain mainstream momentum (which is already present in the US, and is expected to take a few years to reach in Europe), we
have the advantage of utilizing our own P2P Exchange to secure the continued placing power in P2P investments – thereby making it
easier to stay fully invested and maintain profit performance with low risk. In the event of a major sales initiative in the LXC Coin, we
can rapidly liquidate loans on the exchange to meet sales pressure and buy back coins at a profit. We’ve secured two domains for
this: p2pme.com (“P2P Market Exchange”) and P2PLoan.exchange, and have prepared our trading platform for multiple P2P API’s
P2P EQT (c) 2014© LXC Coin™ 2014
52
P2P EXCHANGE: PARTNERS
P2P EQT (c) 2014© LXC Coin™ 2014
We expect both current and new P2Ps to be interested in a liquid second-hand market for their
loans, and LXCCoin Ltd aims to partner up with several P2P lenders to both invest in their
portfolios and to get their loans interfaced with our trading platform – ensuring happy
customers better exit opportunities and increasing growth for both parties
Obviously our key interest in the P2P Exchange is the P2P lenders where there is no
current second-hand loans market, and where customers have been known to be
«stuck» in otherwise brilliantly performing products for years. With a continued LXC Coin
sale, our investments in P2P loans could be done through these companies in new loans
issues, but it may also be done by purchasing existing loan portfolios
External customers interested in loan portfolios may obviously also purchase loans on
our exchange, and by the LXC asset base being able to offer both buy- and sell-side, the
exchange ought to provide a continuous flow of trading, making it an ideal place to come
for new P2Ps in search of lending capital
As the LXC Coin improves its profitability, the company may enter into even more
beneficial deals for the coin’s performance, combining the offer of investment capital and
loan liquidity to rapidly growing or new P2P ventures. With a P2P Exchange that has a lot
of activity, this will become a serious growth tool for P2P, while in the process creating
liquidity and profits for LXC Coin Ltd, beyond the exchange fees
53
EXCHANGE TECHNOLOGY
Our Exchange technology has
been used over the span of six
months (www.coinnext.com),
with around 2000 customers
registered and close to 40,000
trades, even offering a
“bounty” reward for anyone
being able to break through its
security – a bounty that still
stands un-claimed
Our exchange platform is a complete
stand-alone trading platform, built from
scratch by top-end cryptocoin specialists.
Originally developed as a high-end crypto
currency exchange, it has been used “live”
since January 2014. The trading
application has been designed without a
back-end towards normal banking, as it
has mostly handled virtual funds
exchanged for other funds, and it is
currently being customized to our
specification and thoroughly stress tested
and scrutinized for safety issues
Once tailored for our primary needs, the
currency exchange and the P2P lending
exchange, the platform is planned for an
extension towards handling third party
applications and/or extended features,
covering P2P lending transactions in
Cyberspace (comprising put-/call-options,
payment gateways to local markets and
coin lending derivatives), where once
operational, LXC Coins themselves may
be used for issuing loans too, doubling
the profits on holding the coins
The exchange may even be deployed as
an online OTC stock exchange, or as the
base for crowdfunding platforms wanting
to use cryptocoins as a funding source
P2P EQT (c) 2014© LXC Coin™ 2014
54
FUTURE BUSINESSAREAS
+ P2P CryptoLending Gateway
+ P2P CryptoLending
+ Cryptocurrency derivatives
+ CryptoBanking
+ Cryptocoin based debit cards
+ P2P Fund03© LXC Coin™ 2014
55
It is important to emphasize that these business areas are not fully developed
in our business plan today, nor are they reflected in any way in the valuation
or financial projections/estimates of the company. They will demand
investments, time, extra management resources, software development and
possibly external partners to be initiated. They may also demand separate
licensing – in particular those where our crypto currency is linked directly
up with fiat monies, such as banking services or payment gateways. We’re
also highly aware of the many compliance complications in relation to KYC
procedures and prevention of illegal activities that these activities require,
and this chapter is only describing possible new or secondary business areas,
and are not a part of the company roadmap today
For more information, please see our presentation of Asset Based Cryptocoin
Services, or request the presentation directly from the company
© LXC Coin™ 2014
56
FUTURE BUSINESS: P2P CRYPTO-LENDING GATEWAY
The P2P Lending market is in
explosive growth in many
countries, but there are many
obstacles to worldwide use,
and in terms of size and reach.
Even with billions of dollars in
turnover, P2P lending doesn’t
even show up with a visible
margin in the lending
statistics (below 1%). It still
has a long way to go, and
cryptocoins can facilitate its
growth and disintermediation
powers significantly
As cryptocoins are legal worldwide, and
can be connected to whichever payment
system necessary, the two are easy to
couple with P2P Lending. P2P Lenders
can approve their customers just as with
any other banking customer, but instead of
issuing a loan they can issue a
certification code for a P2P Lending
Gateway in cyberspace, whereby the
borrower would get cryptocoins instead of
a loan. After the designated time, the
cryptocoins would be bought back at a
pre-set price, terminating the loan as
agree with interest paid in a raised price
and not in interest. Thereby, P2P Lenders
would be able to take the step into full
worldwide presence, independent of local
laws and banking availability, leaving only
the credit screening and customer
approval to them.
For all existing P2P lenders, a critical
variable in the possibility to do this is a
secure and stabile cryptocoin, but with that
in place, all options are open. The next
problem is credit worthiness control, and
debt recollection, which can be solved by
using current local operations in the
designated markets.
Whilst we don’t encourage illegal services,
we support the free flow of capital, and the
availability of risk capital to creditworthy
individuals irrespective of their geographic
location. These services, just like all other
third party services, would be outside of
our control, but based on our crypto
currency exchange, cash reserves, access
to LXC Coins with massive stability and
controllable prepayment, a P2P Lending
payment gateway to facilitate such a
lending service would be low-cost and
quick to set up and implement.
P2P EQT (c) 2014© LXC Coin™ 2014
57
FUTURE BUSINESS: P2P CRYPTO-LENDING
With the massive pricing P2P Lending
companies are getting, and Google creating a
worldwide marketplace for loans, this is a
natural focal area for LXCCoin Ltd.
With our own cryptocoin, and a need for
generating interest on its base asset value,
becoming a crypto-to-peer lender will be a
prime business area for future activity
P2P Lending has been an un-regulated area for quite some time,
but in 2014 the first legislations were introduced and this is
expected to become the standard in all P2P markets. The
industry is in the process of moving from first generation un-
regulated participants to second generation regulated
professionals, just like the cryptocoin industry, and in several
places there is a huge overlap between the two sectors.
Once P2P lenders are able to utilize crypto currency tools, they
may invest their funding through cryptocoins and effectively
double their lending capital. This is done by paying lending
capital in via cryptocoins, so the P2P Lender gets the cash funds,
and the loan funders get cryptocoins. Then, they may in turn also
issue loans with their cryptocoins, getting twice the value and
profits. For the loan funding investors, it doubles their interests,
and the P2P Lender can double their loan volumes. This
obviously requires a market for the coins, but as it will enhance
the value of owning coins this should stimulate the demand.
P2P EQT (c) 2014© LXC Coin™ 2014
58
FUTURE BUSINESS: P2P CRYPTO-LENDING (CONT’D)
Future LXC Coin owners may be
offered to pool their LXC Coins in a
“Lending Reserve” for Crypto-to-peer
lending. This way, they can both get
interest/ profit on their coins
performance (through the BAV
increase and thereby rising price),
and get an extra 10+% profit from the
Crypto-2-Peer-program, pushing
yearly investment performance up
from 12-15% into the 25-35% range
It will demand a lot to become a P2P lender of high quality – including KyC,
credit worthiness control, debt recollection, support and other practical
services, and either a link to “regular” banks or an interface with a proprietary
payment gateway; primarily one with a mobile payments solution. But with
this set up, LXCCoin has the potential to become a dominant P2P lender or
a strong P2P partner; especially in new or immature markets
Maintaining a successful P2P Lender position requires a lot, and it is a work-
intensive and risk filled business. By partnering up with existing P2Ps with
solid track records we know our funds are well protected, but we don’t get
any ownership participation. On the other hand, when starting up Crypto-to-
Peer lending, great caution has to be taken in relation to credit worthiness
control, recoverability, anti-fraud procedures, customer identification
routines, and a well of other complications that we know from our own P2P
experience, but being risk-averse we’re aiming to either cover this area in
connection with major size partners, or through a slow and caution approach
in selected markets. It is, however an important element in the fact that all
successful P2P Lenders reach astronomical valuations, so it will be worth
our efforts to consider targeting this sector as a future core business area
P2P EQT (c) 2014© LXC Coin™ 2014
59
FUTURE BUSINESS: WHITE LABEL 2ND-GEN’ CRYPTO FULL-SERVICE
With the superb means crypto
currencies are for use as a
hybrid liquidity tool in all
large transactions (as long as
one may control the rest of the
value chain), we’ll have the
ability to create synthetic
financing platforms for all
companies and ventures, and
trade/support them through
our online exchange under
license and lock-up
agreements
All companies issuing stock, options,
goods payments and/or other high value
transactions where one or both parties are
stuck over time, should consider utilizing
value-coins such as ours for their fixed-
setup transactions. We can provide the
complete package for this kind of future
service – possibly including, at some
point, the financing muscle. This will
increase our exchange liquidity, cash flow,
fees, usage, and will be instrumental in
elevating crypto currencies into new areas
of use
We may also offer complete P2P lender
service packages to corporate customers
in need of such tools, and have already
had interest from communities with a large
number of users wanting to broaden their
scope and range of services. Especially
those with multinational marketplaces
have trouble adapting to many local laws
and restrictions, and are therefore unable
to offer services to all their members and
will unintentionally discriminate parts of
their members if they don’t use
cryptocoins
Our coin is in itself relatively easy to
replicate – and we’ve even put our source
code up as open source, freely available.
This is partly because we don’t just
provide the tool: we provide the whole
toolbox. This may take time to teach the
market, and it may take time to convince
legislative authorities to acknowledge, but
if done right this will become a fully
legitimate alternative to a lot of the existing
financial services for large corporate
transactions today
P2P EQT (c) 2014© LXC Coin™ 2014
60
“Cryptocoins are extremely good transaction tools, but are poor investment
tools as they’re constantly diluted and have no underlying asset value.
However, they have the potential of becoming the best investment tools in the
world. Our LXC Coin creates a bridge between investment targets and crypto
currencies, which makes any investment done with the coins independent of
jurisdiction and barriers, plus adds an extra layer of liquidity and exit-
options. It is, in short, the way any asset-class instrument should be set up. It
is meant as an investment tool and a supplement to all other cryptocoins –
Bitcoin in particular – adding asset value, stability, predictability and
profitability, which the world of cryptocoins needs to move on the a broader
level internationally.”
H. Ellefsen, CEO/Founder, LXCCoin Ltd
© LXC Coin™ 2014
61
FUTURE BUSINESS: CRYPTO-BANKING
With no cost related branch offices, no high-
cost systems and a general product cost
structure banks have now possible way of
matching, the “virtual central bank of crypto”
that LXCCoin Ltd already de-facto is will at
any time have the opportunity to move into
regular banking
The leap from being a hybrid bank to a real bank doesn’t
necessarily have to be all that massive. There are dozens of
closed-down or nearly-closed down banks in search of new
partners an new business, and with the cryptocoin tool, the
hybrid fund setup, the payment gateways and exchanges, the
Bank of Crypto could easily become a reality. We have already
investigated the option of purchasing a bank, which will be too
costly until the LXC Coin gains momentum, but once it does it is
only a natural progression. The prospects of 6-10% interest
savings accounts shows some promise
Of the banks we’ve been investigating, all but one have been
localized in Denmark. With our highly specific knowledge of the
Danish market, and with Danish banks being pan-European
certified, it would make a lot of sense to move into banking there.
As a result of the way the financial troubles of 2008- was handled
in Denmark, many banks are left with only one or two employees
cleaning up former loan engagements, some in search of new
business, some looking for new owners, and others just looking
to close down in the best possible manner.
The purchase of a bank will take from 6-12 months to complete.
Moreover, new owners of banks have to be approved by the local
authorities in their home market (in this case, Denmark), which
means there is no guarantee that LXCCoin will ever be approved
as a bank or a bank owner, and for this reason alone, the
banking opportunity is hidden away in the late enclosures of this
document. It may be in the best interest of the company, and it
may be financially viable, but due to the nature of cryptocoins
and the related legal issues revolving their infancy, we’ll keep
investigating our options but expecting nothing
© LXC Coin™ 2014
62
FUTURE BUSINESS: DEBIT CARDS FOR CRYPTO CURRENCIES
There are many crypto currencies
investigating the option of issuing fiat-world
debit cards, utilizing the current banking
system gateways and VISA/MasterCard debit
cards. This option was approved by the
LXCCoin board in Q3 of 2014, and will be one
of the key focal areas of management.
The first Bitcoin-based debit card was ordered
in a limited quantity, grossly underestimating
its demand. It was fully sold out in less than 24
hours, proving the need for these kinds of debit
cards
With the solid knowledge base the LXCCoin management has
from previous ventures, implementing a ready-to-use debit card
is merely a question of time and partnerships. With the new wave
of technical solutions, moving from fiat money in cash and old-
school credit card systems, this may seem like a step in the
wrong direction. Still, these cards are expected to have a long life
span due to the slow adaptation of new technology in the large
mass of users, and providing our LXC Coin holders with a debit
card opportunity should not be ignored
The management team is also investigating banking partnerships
including new-age banks and online payment systems, targeting
a LXC Coin payment app in combination with one or more
standard debit card payment systems
We see the task of linking crypto currencies with current systems
as highly important as well, and therefore we’ve chosen to
include these efforts in our business model. However, with the
long implementation times and many legislative and compliance
barriers, we expect to spend many months (if not years) in
creating sufficiently stabile and easy-to-use systems, and for
those reasons, it is allocated as a future business area and not a
current business area
© LXC Coin™ 2014
63
“Why wouldn’t you have your current/savings account in cryptocoins in the
cloud with 15% interest, and all payments through your smartphone, as long
as it was proven to be profitable, secure and effective? Such change will
obviously take time, but the movement is strong and the savings and
initiatives are massive. Early adopters [who are the important users of
future technology] love this kind of progress and generally hate the old banks
anyway, and will seek out alternative solutions once these appear. We hope
to have created one of the key mediums to leverage modern financial
innovations with our stabile and trustworthy cryptocoin – opening a well of
opportunities for both ourselves and others.”
Erik Gravgaard, MSc Law, co-founder, LXCCoin LTD
© LXC Coin™ 2014
64
LXC COIN; A HYBRID P2P FUND
In 2012, there were no real
P2P Funds. In 2013, a few
were initiated, and in 2014,
many have been launched
With the LXC Coin invested in
P2P, and with the link to the
P2P Exchange, it is in fact a
P2P Fund in itself. Only better,
as the liquidity is high, there
are tax benefits from investing
in cryptocoins over funds, and
the long-term investment
stability and in-flow should
persuade P2Ps to give LXC
Coin investments beneficial
terms
The LXC Coin is in fact a full P2P Fund,
even through it is run through a private
investment company in accordance with
the current regulations in the investment
fund market, and not as a full-fledged fund
in connection with a legally certified
partner or under its own license. This may
change in 2015, where the LXCCoin Ltd
mother company considers to launch a
complete P2P Investment Fund
Such a venture would be based solely on
investments in P2P lending capital, where
we aim to linked to several P2P lenders.
Our investment model is in whole to
support a P2P with which we have strong
relationships, that have proven many-year
track records of continuous profits and low
losses, so that our customers have an
easy-to-understand fund product at hand,
generating high-interest but enjoying
premium-bond security
The business model is to charge fees on
the invested capital, by 1% p.a., plus a
20% share on any annualized
performance exceeding 10% profit, similar
to what the LXC Coin is providing today,
but catering for a range of investors and
funds that will have restrictions to only
buying other funds or shares, who would
otherwise not be allowed to invest in our
products
There are numerous opportunities once
the key fund is operational and profitable;
structured bonds, gearing, diversification
with certain percentages geared, one or
two percent exposed to our own LXC
cryptocoin trading (with huge coin
reserves under management and great
arbitrage possibilities) and P2P Exchange
trading, yielding solid profits with low risk
This may in turn also increase the value
and desirability of the LXC Coin
© LXC Coin™ 2014
65
DEEPER UNDERSTANDING
+ The P2P Revolution explained
+ Understanding the Cryptocurrency phenomenon 04© LXC Coin™ 2014
66
“To inform our customers, shareholders and potential investors, we’ve
created a short “deeper understanding” chapter, where readers through case
studies is given a glimpse of how P2P and Cryptocoins have developed, why
they are here, and what impact they make.
I often get the question of why anyone would buy cryptocoins, and what on
earth they would use them for. I could answer “everything”, but that
demands a deeper explanation. It is often better to tell the stories behind
inventions like these, and have people figuring it out on their own, than to try
to convince them of our beliefs”
Henrik Ellefsen, CEO/Founder, LXCCoin Ltd
© LXC Coin™ 2014
67
DEEPER UNDERSTANDING:
THE P2P REVOLUTION
EXPLAINED
+ How P2P has changed the world
+ The death of Kodak
+ The 5MB MP3-file murder case
+ P2P moving into the banking sector
© LXC Coin™ 2014
68
BACKGROUND: HOW P2P HAS CHANGED THE WORLD
Since the internet came and turned what
we know about conventional business
upside down, most lines of business have
found themselves in a much fiercer
environment, with international
competition and more players hustling for
position. Companies are constantly asked
to do a little bit more, a little bit faster
The exception to this rule has been Banks.
Banking is tricky, costly, and carries heavy
regulation (not necessarily helpful to
anyone, though), It has been labor
intensive, and has been a suit-filled world
where the internet was at best used as a
way to make customers self-servable to
save costs. That is all changing in 2014
Internet and online mobile
communications have
reconditioned people to prefer
new transaction methods
In the process, “old school
banks” have lost a lot of their
former glory, further fueled by
the financial crisis
Today, content not boiled down to its
essence is a time-waster. With new
technology, a lot of the former well-
established intermediaries are gone;
flushed out by leaner business models
leaving no room for middle men
One of the key new paradigms that enable
this change to continue is P2P; Peer-to-
Peer communications, where the two end
users are in direct contact. On the
following slides are a few examples of how
P2P killed industries
P2P EQT (c) 2014© LXC Coin™ 2014
69
BACKGROUND: HOW DIGITAL FILM ANDP2P IMAGE SHARING KILLED KODAK
The failing business was sold off in parts,
and the profits were not enough to bring
Kodak well into modern times. The last
spool of Kodachrome film rolled out of
Kodak’s Mexican factory in 2009; a
dramatic ending to a brand that was once
as globally recognized as Coca-Cola
Digitalisation and P2P is what changed
the setting for Kodak. Over a few years,
almost all pictures were taken digitally on
cell phones or digital cameras, not on rolls
of film. Worse yet; only a tiny fraction of
consumer images taken on cameras got
printed to paper; most were shared on
P2P platforms online, or stored ion discs
or electronic vaults for future generations.
Who needs stacks of fading printed
pictures in their drawers, when they can
be shared P2P on social media networks?
-Who develops their film at
the chemists, when you can
post your pics on Facebook,
immediately and for free?
Sadly, Kodak went from 90%
of the world market to
bankruptcy after years of
failing to adjust to digital
photography, P2P image
sharing, digital media usage
and shunning printed pics
Kodak was founded in the late 1880s, and
at its peak in the 1970s it owned nearly
90% of the film and camera market. Then,
it had a head-on collision with the image
world of P2P and the digital era
This may come as a surprise, but Kodak
engineers actually invented the digital
camera, in 1975. Sadly, Kodak’s executive
management deemed the idea “not
particularly useful”, as the company was
deeply cemented into its dominant
chemistry/print based film business
In 1982, Sony launched their digital
camera series, and within the blink of an
eye; all the old camera manufacturers
thundered into the digital market. Kodak
launched its Easyshare-cameras a decade
later, and by then it was far too late
P2P EQT (c) 2014© LXC Coin™ 2014
70
BACKGROUND: HOW DIGITAL FILM ANDP2P IMAGE SHARING KILLED KODAK cont’d
Kodak owned more than 11,000 patents
when it went into bankruptcy; around
1,100 of these were for digital-imaging.
Failing to use them, the dying company
sued everyone, including Samsung, HTC,
Apple, and FujiFilm. With no glory of its
former world dominance, and a worldwide
spanning high-cost infrastructure, could
not survive as an old-school business.
Their burn-rate were reduced dramatically
over the years, but was still $70 million per
month in 2012 when they filed for Chapter
11 Bankruptcy Protection. The new
competitive pace, low profit margins and a
marketplace overflowing with short
product cycle technologies, effectively
killed it
P2P EQT (c) 2014
After 131 years; the Kodak Moment has definitely passed
© LXC Coin™ 2014
71
BACKGROUND: The 5MB file murder case – how MP3 killed the music industry
In June 1999, a guy named Shaun
wrote a music distribution program to
share music with his friends. It was
named “Napster”, and was quietly
released. It took advantage of a
new compression technology
called MP3, a file format that
dramatically shrank the space
used by a digital song file. Suddenly
everyone’s favourite music was
available with the click of a mouse. It
was available for free as P2P; peer to
peer sharing of music, and gave
people exactly what they wanted. That
it was free (albeit illegal) was no
obstacle to its explosive growth.
The record industry fought tooth and
nail against digital music, a national
superpower versus a five megabyte
file. Lawsuits were issued. Napster’s
creator was sued and forced to shut
down. FBI warnings were burn-
marked onto a billion audio CDs, and
famous rock bands all joined up in the
fight against piracy. The record
companies, previously hostile
competitors, suddenly became friends
and threw the entire collaborative
weight of their industrial bulwark
against the new problem, desperate to
remain in power, to no avail.
Because the 5MB file won
In two years, Napster hit 10 million users; what happened next is the stuff of history
© LXC Coin™ 2014
72
BACKGROUND: HOW THE MP3-FILE KILLED THE MUSIC INDUSTRY cont’d
Back in 1999, the music industry was
experiencing record revenues, around $19
billion. Then, P2P platforms and new
technology showed up on the scene
By 2009, just ten years later, the music
industry was reduced to 40% of its former
size, with digital music close to 50% of the
overall revenues
Today, the record companies have been
relegated to a humble corner of the music
ecosystem, making profits from the sales
of digital music in the dreaded MP3
format. They still promote artists and
produce music, but their power has been
greatly diminished. Artists can now create
and promote themselves, and through the
use of crowdfunding – another P2P
invention – they are now supported and
funded by their fans and customers
P2P EQT (c) 2014© LXC Coin™ 2014
73
BACKGROUND: HOW THE MP3-FILE KILLED THE MUSIC INDUSTRY cont’d
So – what happened to Napster; the
banned disintermediator who upset the
music industry and made the people of the
world happy? Well, it is still an application
tool for online digital music, but it has now
put itself on the right side of the law with a
subscription based service for millions of
MP3 files.
Napster is another ultimate P2P provider,
creating an on-line market place with
complete transparency, without room for
any intermediaries. In the end, Napster
regulated itself and started charging for
services and paying artist fees for the
music sold, but at a fraction of previous
costs and with a supreme degree of ease
Napster is a perfect example
of P2P in action, removing
intermediaries and cutting
down the product to its core
values. Obviously it carries a
new business model, but it
leaves everyone as winners –
except the old industrial
conglomerates within the
selected industry; previously
making a ton of money on
intermediation
P2P EQT (c) 2014© LXC Coin™ 2014
74
BACKGROUND: P2P PRESSURING TRADITIONAL BANKING
The P2P Finance sector is booming right
now; new companies appear almost daily,
in both old and new segments.
The massive advantages of P2P Finance;
transparency and low-cost operations, is a
serious threat to the banks of today. Banks
are slowly moving online and to mobile
platforms, reducing their bulk slightly by
closing down certain offices and reducing
staff, it is just like Kodak an old-school
player from a bygone time. It will certainly
take many years for P2P to put the “bank”
in “bank-ruptcy”, but P2P is very effective
in what it is doing. It is muscling its way
into the high-margin area of lending; a key
profit center for many banks, and is slowly
starting to spread to other parts of the
banking services as well. Watch this
space
The banking industry is an
easy target; huge costs and
enourmous infrastructures,
plus millions of employees, are
not ready for competition with
the efficiency of P2Ps
With the huge gap/profits
between savings interests
(0,x%) and interests paid on
loans (5-25%), P2P can inflict
massive damage on
profitability in the world of
banking
Nobody stops at Blockbusters to rent a
video anymore. Very few people shop
without verifying prices online. Everything
from groceries to clothes are being sold
online, and the process is not stopping
Some sectors have been «immune» to the
effects of the internet; such as the banking
sector. online banking has not brought
interst on credit down, and it has not
increased interests on savings accounts
either. However, with the wildfire spread of
P2P, this may finally see some change
Financial P2P started quietly, much like
Napster, but is gaining momentum. The
first Finance P2Ps were launched in 2005.
In 2013, the industry passed the $1bn
mark in turnover; both in the US and in the
UK. In 2014, it should hit $ 5bn
P2P EQT (c) 2014© LXC Coin™ 2014
75
BACKGROUND: DEFINING P2P
Peer-to-peer lending is private loans from
people with money to people in need of
money, Lenders invest money in a loan-
pool, or buy into portfolios of loans or
single loans, and get interest when their
money is returned; interests range from
5% p.a. at the lowest (Zopa) to 20% in
extreme instances (Bondora)
As the P2P Lending giant
TrustBuddy models it:
P2P is simply People lending
money to/from other People,
through a P2P website,
circumventing the banks
P2P is anonymous loans via a third party
(the P2P platform); usually facilitated by a
website, where anyone can apply for
loans.
P2P Lending is a cheaper way of lending
money than credit card overdrafts, but
more expensive than normal loans;
however, if your loan is very short term,
fees and banking charges will make bank-
P2P EQT (c) 2014
loans more expensive than P2Ps
A large proportion of borrowers would like
to avoid going to the bank asking for
money – they’d rather just send a text
message to a P2P lending site; this is the
customers of the future of banking;
wanting to do all their business through
mobile devices with immediacy
© LXC Coin™ 2014
76
BACKGROUND: UNDERSTANDING DISINTERMEDIATION
The term “Disintermediation” was
originally applied to the banking industry in
1967; disintermediation referred to
consumers investing directly in securities
(government and private bonds, and
stocks) rather than leaving their money in
savings accounts – later to borrowers
going to the capital markets rather than to
banks. The original cause was a U.S.
government regulation which limited the
interest rate paid on any interest bearing
account that was insured by the Federal
Deposit Insurance Corporation
Back then, the gap between borrower
rates and lending rates were huge,
causing a massive flow of funds from bank
account savings to bonds, shares and
other profit-yielding assets. Just like the
situations is today
In the 1990s, the term became more
widely used in commerce, with regard to
“cutting out the middleman“, though the
financial meaning remained predominant
The P2P Finance sector is a prime
example of disintermediation, where
intermediaries have been enjoying a
stronghold for decades; charging high fees
and giving litle or nothing in the other end.
That they have access to cheap funding
through central banks and bond structures
makes the case even more compelling
Other industries positively influenced by
disintermediation are travel, stock broking,
hardware, software, consumer electronics
and many forms of entertainment – going
all the way down to easily accessible
things like contact lenses
P2P EQT (c) 2014
Disintermediation means to
remove the middle men
(intermediaries) from a given
setting
Ironically, it derives from the
banking industry; when the
conditions were exactly like
they are today, and customers
shifted massively towards
interest bearing products
© LXC Coin™ 2014
77
BACKGROUND: WHO P2P FINANCE IS FOR
P2P Finance is broadening its scope.
From the start, only personal loans (for
spending or for education) funded by other
individuals were available. Then, the
industry pushed forward, entering into
loans with collateral, such as mortgages
and other financing options. Next came
P2P for businesses, where individuals
could finance business loans where banks
had turned down loan applications. In
2010, P2P gained traction, and major
investors started pouring cash into P2Ps.
Crowdfunding and Crowdinvesting
became popular terms, and the new
paradigm in finance was cemented. In
2013, the sector went one step further,
getting regulated and suddenly considered
a serious sector of world finance. Some
governments (i.e. in the UK) fully embrace
the new upcoming industry; giving tax-
exempts for people investing in P2P, and
investing government funds in P2Ps
P2P Finance is the strongest
growing financial sector in the
world, capable of replacing
large parts of the expensive,
high-cost banking services
seen today in just a few years
In 2014, the P2P sector has manifested its
stronghold as a fully established financial
future growth sector. Now, several banks
are buying into P2Ps (Barclays Bank,
WestPac), and some of the world’s largest
funds cannot contain their investments to
single P2Ps but are buying into several
P2P companies (Tiger, BlackRock,
Arrowgrass, etc.). The sector still needs
maturity, but that is coming quickly
In 2015, it will be difficult to say who P2P
Finance is not for, instead of who it is for
P2P EQT (c) 2014© LXC Coin™ 2014
78
BACKGROUND: THE RISE OF P2P FINANCE
2014 will see P2P finance
taking a quantum leap, with
key players listing on major
stock exchanges, volumes
spiking, and institutional
capital being poured into the
market
Today, loan portfolios are
being funded in seconds
through LendingClub and
Prosper, and the P2P market
will become saturated and
need new places to invest
Google has bought into Lending Club; the
largest P2P in the world in terms of size.
LendingClub is aiming for a listing in 2014,
weighing in at a reported $5bn valuation.
Prosper, the second largest in the world in
terms of size, has seen Sequoia Capital
and BlackRock (the largest asset manager
in the world) throw tens of millions of US$
into their operations. NASDAQ-listed P2P
TrustBuddy, the largest in the world in
terms of the number of loans issued per
month, has seen BlackRock, Tiger Assets
and several other funds investing in them.
The sector is reaching mainstream
maturity fast – as is the surrounding
industries. There are several P2P funds
being founded, several P2P exchanges
being set up – and just as with any other
booming industry; P2P Finance is drawing
a lot of attention to itself
The next step for P2P Finance is to
increase its growth even further, and to
solidify its current business areas. New
business areas will open regularly, and at
some point in the near future, P2P
Finance will be as mainstream as normal
banking. At that point; the scenary will
change, and P2P will enter into a
saturation phaze, industrializing through
listings and M&As. Up until this point,
P2Ps will not need to be profitable, just
like every other player hustling for space
in any new business domain (think EBay,
Amazon.com, Google, Facebook, LinkedIn
etc.). But – at the point of maturity, that will
change, and the real business case for
P2Ps will emerge. Some sectors will be
best handled by banks, but most sectors
of finance will do well with some
competition from P2Ps
P2P EQT (c) 2014© LXC Coin™ 2014
79
BACKGROUND: THE RISE OF P2P FINANCE
P2P is no fad or quickly vanishing industry: it is being embraced worldwide, even by its fiercest
regulators (local government agencies), and lately even by their hardest competitors – regular
banks. The need for lowering cost on finance and increasing capital gains is a key to creating
new jobs, new business and increasing tax bases, speeding up the general social development
P2P EQT (c) 2014
(...)
© LXC Coin™ 2014
80
DEEPER UNDERSTANDING:
UNDERSTANDINGTHE CRYPTOCOIN PHENOMENON
+ Bitcoin: Case study: Bitcoin
+ Case study: Dogecoin [“Doshkoyn”]
© LXC Coin™ 2014
81
“Almost all crypto currencies originate from the Bitcoin code – a code which
has never been hacked or broken. Yes, there are scams and corrupt ventures
surrounding cryptocoins, which is devastating for the future of cryptocoins.
Luckily, there are a few great ventures that we hope will move away from
the first generation of coins to create a second generation, which is actually
viable over time. We’re looking for a supreme transactional coin (which we
hope will be Bitcoin) with worldwide acceptance and usability, a secure
investment coin which we hope to provide with the LXC Coin, and service-
coins such as a possible PayPal’ish Coin or other quasi-banking related coins.
Then, cryptocoins will not only be a viable option to the banking empires –
they’ll also be a tool for empowering the third-world individuals, new or
small businesses, people “off the grid of finance”, and the many people in the
world who simply don’t have access to banking at all today.”
Thomas Wong, CTO/Head of Development, LXCCoin
© LXC Coin™ 2014
82
BACKGROUND: THE CRYPTOCOIN SPACE EXPLAINED
Cryptocoins came about as a
pure internet hype, catering
for traders of illegal assets
(drugs, pornography, guns)
needing anonymous payments
Then, in 2011, the market
leading “Bitcoin” made it into
internet fame, becoming a
household name and seeing
billions invested in; surviving
attacks from all sides and
multiple ban attempts
Some 200 different coins exist
today, with varying success;
new coins are created daily
Cryptocurrencies (Bitcoin, Litecoin, NXT,
Protoshares, Dogecoin, etc.), are synthetic
currencies, not linked to any actual real
assets, only found in cyberspace, and with
no official control whatsoever. Most can be
“mined”, where the network facilitating
their existence and affirming their
transactions get minute traces of new
coins issued all the time. This sounds
absurd, and it is definitely quite mad. But it
is out there, and it works. You can now
buy books on Amazon, a car on eBay, or
withdraw your coins in ATMs. Instead of
writing them off, the financial world is
slowly starting to include cryptocoins in its
vocabulary, providing trading solutions,
exchange solutions, online cryptocoin
wallets, and surely there are cryptocoin
funds coming up shortly. The main
argument is that the US Dollar is close to
equally poorly managed, and that no
currency is perfectly founded
The cryptocoin space is based on open-
source solutions, it is hosted in
cyberspace, and there are many top-of-
the-line systems behind their creation and
use
They are here to stay.
Even though most gangster activities have
been stopped following some major FBI
inception and a through cleaning in
2012/2013, there will always be some
discrepancies revolving cryptocurrency.
Unless someone finally finds a way to
bridge synthetic currencies and actual
currencies. Many are trying, and it is
expected to become clear during
2014/2015 which coins that survive and
which who will be abandoned. In this new
and booming space, all new players have
the chance to make a difference
Welcome to the world of cryptocurrencies.
P2P EQT (c) 2014© LXC Coin™ 2014
83
BACKGROUND: THE CRYPTOCOIN SPACE EXPLAINED CONT’D
Cryptocoins work because of
block-chains of verifications, a
decentralized registry with
keys to all coins, and a
network of supporting nodes
and merchants wanting to
trade and use them
Everyone can create a cryptocoin, and
with some hype, these can catch on
despite having any actual value of any
meaningful reason to exist. This is both
the advantage and disadvantage of the
coins
Some coins were even made as “real”
coins, with holograms inside and full
readability by any online terminal and
scanner, but these were banned before
they could get into circulation (some still
exist and have high collectors value)
The cryptocoin market regulates itself; it
has several online 24/7 exchanges for
other coins or money, its own trade
association, its own exhibitions and
conferences, plus massive investors
backing them once they gain popularity
(the Van Winklevoss twins, who allegedly
co-started Facebook, are the leading
investors in cryptocoins today)
Cryptocoins may be controversial, but the
technology behind them is solid. It is still
an open question as to the legality of
issuing coins, but they are legal to own,
invest in, and trade
P2P EQT (c) 2014© LXC Coin™ 2014
84
CASE STUDY: BITCOIN
The story of the Bitcoin is, in
financial terms, the epitome of
madness
The Bitcoin story is worthy of a Hollywood
action movie. However, the story is true,
ongoing, and highly current.
Bitcoin is a peer-to-peer networking-based
coin, created by Satoshi Nakamoto. To be
blunt, it was made to facilitate anonymous
transactions and the laundering of money,
and to make online sale of narcotics/guns
possible without credit cards. The coin
was born in 2008, and was put into use in
2009, primarily at the infamous Silk Road
online narcotics store. It soon became the
darling of the underworld, commencing
billions of dollars worth of illegal
transactions every year. Over time, it was
used also randomly and in increasing
sizes on an increasing number of other
sites too, gaining popularity outside the
darkest corners of the internet
Then, in 2012, it caught the attention of
world finance. It started by dozens of
investors placing hundreds of millions of
US$ in the cryptocurrency, mostly through
purchases of coins, and was confirmed
when a few of them, led by the alleged
Facebook co-founding Van Winklevoss
twins, declared that they were going to
make Bitcoin a legal tender. Bitcoin was
immediately rocketed from alley cat to
international stardom. Overnight, it was
the center of attention of a much wider
audience, sending the values flying
Bitcoin started 2013 at $5, but topped out
at around $1200 per coin. All those who
had bought some borderline pornography
in 2010 and had a few hundred coins
floating around in change, were suddenly
buying Lamborghinis for the leftovers
P2P EQT (c) 2014© LXC Coin™ 2014
85
CASE STUDY: BITCOIN
Once the Bitcoin hit fame, it was hit by a
wave of problems. First, through several
major busts, federal taskforces seized
sites, wallets and hundreds of millions
US$ in value, busting open international
rings of narcotics and guns trade. Then,
the technology took hard hits, user sites
being repeatedly hacked, forged and
manipulated, sending hundreds of millions
of dollars into the wrong hands and
causing massive losses in theft and
missing coins. Amidst all the troubles,
partner sites had their share of problems
too; several key Bitcoin transaction sites
have gone bust, resulting in more huge
losses for Bitcoin owners. Wallet sites
where people stored their Bitcoins for
safety just vanished off the internet taking
the walleted Bitcoins with them. Then, the
main Bitcoin exchange in China was
closed down. Still, Bitcoin kept on gaining
momentum worldwide
The Bitcoin code itself is open source,
available to anyone. It has never been
broken or compromised, and is considered
to be completely secure (it has been
attempted hacked by the best in the world
for many years). From the code, several
varieties have sprung through separate
ventures, all available freely as open
source, developing the crypto currencies
further. There are now a myriad of
versions – all based on Bitcoin.
Our coin uses Bitcoin and Blackcoin code.
It is specially adapted for our use as a
100% pre-mine proof-of-stake coin, with
proprietary wallets. Our code is also freely
available, as open source, in respect of
how the world of crypto currencies work
© LXC Coin™ 2014
86
CASE STUDY: BITCOIN
The first purchase done with Bitcoins was two pizzas, costing
10,000 Bitcoins. They were reportedly quite good pizzas. But
in hindsight, perhaps still a bit expensive
Today, despite all the problems, theft,
insecurity, lots of new coins being made
all the time and no actual real value, the
Bitcoin keeps strong and healthy
Nobody knows how long it will last, if it will
become legal or banned, if it will become
taxed at some future point, if it all will be
seized in the future due to its criminal
origins, or if the 1.12 million bitcoin the US
authorities own after seizures will at some
point find its way back into the market,
completely killing the trade and making
mining impossibly expensive – through
which the Bitcoin network will crumble. It
doesn’t seem like anybody cares either.
Because, this is the core of cryptocoins;
present trading value matters, underlying
value and intrinsic valuation has no
meaning. Which is odd, but which may
come to change
P2P EQT (c) 2014© LXC Coin™ 2014
87
CASE STUDY: BITCOIN
2013; the Bitcoin takes flight:
from around 5 US$ to 1,200
US$ in a few months of
trading
In its October 2012 study “Virtual currency
schemes”, the European Central Bank
concluded that the growth of virtual
currencies will continue, and, given the
currencies' inherent price instability, lack
of close regulation, and risk of illegal uses
by anonymous users, the Bank warned
that periodic examination of developments
would be necessary to reassess risks. In
2013, the U.S. Treasury extended its anti-
money laundering regulations to
processors of bitcoin transactions
In June 2013, Bitcoin Foundation (board
member Jon Matonis) wrote in Forbes that
they had received a warning letter from
California's Dept. of Financial Institutions
accusing the foundation of unlicensed
money transmission. They denied being
engaged in money transmission at all, and
said they viewed the case as "an
opportunity to educate state regulators”
In late July 2013, the industry group
Committee for the Establishment of the
Digital Asset Transfer Authority began to
form to set best practices and standards,
to work with regulators and policymakers
to adapt existing currency requirements to
digital currency technology and business
models and develop risk management
standards
It is beyond question that the world will at
some point legislate in crypto currencies,
but it is difficult to know how that will effect
the existing coins out there. Presently, the
financial legislative authorities allow the
use of Bitcoin and other cryptocoins as
legal payment of goods and services, and
as that has been allowed to develop, it will
be almost impossible to outright ban
cryptocoins at any point in the future
P2P EQT (c) 2014© LXC Coin™ 2014
88
CASE STUDY: DOGECOIN (“DOSHKOYN”)
In December 2013, “Dogecoin” took cryptocoins from mad to absolutely ridiculous. But, all
smirking smiles froze quickly when the joke-coin hit $81 million in the first month of trading
For readers finding the Bitcoin story a bit bizarre, the story of the
Dogecoin is going to seem completely outrageous. Meet the dog who
generates financial cyberspace love; The Shiba Inu nicknamed «Doge»
In 2010, a japanese schoolteacher posted som pictures of her Shiba Inu
dog on the internet, and it was quickly snapped up as a «meme». For
three years, the «Doge», was used as a humorus meme, appearing in
chat forums spreading love, good luck wishes and compassion - all in the
«broken english» humorusly used by chat forum users
Then, «Dogecoin» happend
On December 8th 2013 a new cryptocurrency named Dogecoin appeared
out of nowhere, after two(!) days of coding. It was built on Litecoin code,
and was carrying the head of a Shiba Inu dog on its logo (a gold coin,
obviously). It had no value at all, but could me «mined» in large
quantities, virtually for free. The internet went berserk – everybody
wanted Doge
Dogecoin rocketed from zero to a valuation of hundreds of millions of
dollars, catching the cryptocoin sphere completely off guard
P2P EQT (c) 2014© LXC Coin™ 2014
89
CASE STUDY: DOGECOIN CONT’D
P2P EQT (c) 2014
Dogecoin peaked at US$ 400 (valued measured in its last traded exchange-rate against Bitcoin),
when the currency was worth a grand total of close to US$ 3 Trillion. Yes, Trillion. Bitcoin, here
valued at around US$ 10 billion, looks outright cheap in comparison. Dogecoin has since fallen
back to levels measured in cent fractions, not in dollars (Chart is a screencap from coinmarketcap.com)
© LXC Coin™ 2014
90
CASE STUDY: DOGECOIN CONT’D
Gimmics and marketing stunts have
propelled the coin to stardom, such as a
Dogecoin fundraising for the Jamaican
Bobsleigh team who qualified for the 2014
Olympics, but couldn’t afford to go. A
Dogecoin fundraiser started on Reddit
chat forum produced around $30,000 for
the bobsled team, who raised a total of
$185,000 from crowdfunding and
Dogecoins. Another well documented
case of Dogecoin madness is a home-
owner in the US selling his home from 135
million Doge, expecting to use the
proceeds for payment of goods purchased
online in Asia
Massive attention is currently ensuring the
continued popularity of the coin, which is
now past its puppy infancy. It has
currency exchanges, ATMs, store
purchasing functionality, and is the most
widespread cryptocoin based on several
factors – even bigger than Bitcoin
The Doge Cryptocoin was created by
programmer Billy Markus from Portland,
who hoped to create a fun crypto currency
that could reach a broader demographic
than Bitcoin. In addition, he wanted to
distance it from the controversial history
behind Bitcoin (mainly its association with
Silk Road online narcotics marketplace)
He certainly succeeded.
Dogecoin. Very currency. Much bizarre.
So crypto. Wow.
P2P EQT (c) 2014
“Doge to the moon!” is the
popular terminology used by
the “Shibes” (self proclaimed
Dogecoin believers), for the
journey to riches they expect
the Dogecoin to undertake.
Others argue it has indeed been
to the moon, and well beyond
it, already
© LXC Coin™ 2014
91
LXC COIN: INTRINSIC VALUE ALL currencies involve some measure of
consensual hallucination, but LXCs is a
provable cash-based system, connected
to the Euro and the strong Scandinavian
currencies, making way for a new view
on valuation
Intrinsic value is the actual going value of a company or an asset
based on an underlying perception of its true value . This
includes all aspects of the asset, in terms of both tangible and
intangible factors. This value may or may not be the same as the
current market value. Value investors use a variety of analytical
techniques in order to estimate the intrinsic value of securities in
hopes of finding investments where the true value of the
investment exceeds its current market value. For example, value
investors that follow fundamental analysis look at both qualitative
(business model, governance, target market factors etc.) and
quantitative (ratios, financial statement analysis, etc.) aspects of
a business to see if the business is currently out of favour with
the market and is really worth much more than its current
valuation.
In terms of crypto currencies, any form of real-world financial
analysis may seem futile, but there are a few early-adopter ways
of projecting future value being launched. We expect the LXC
Coin to change this. Here is a coin which is accountable and
liquid, not based on thin air and with an actual accounable base
in real-world assets. That fact makes it analyzable, which makes
the question of its intristic value interesting from a real-world
perspective.
Firstly, the coin is 100% asset backed, and thus more «real»
than most other currencies in the world today. Secondly, the coin
generates profit to is owners, thereby having a rising asset
value. Thirdly, the profit is decent and not minimalistic, making
the coin a real investment proposition. Lastly, it is connected to
the Scandinavian currencies and the Euro, which are strong and
solidly founded. Then, there are a lot of secondary issues that
makes the intristic value potential a lot higher. Primarily,
conversion from other cryptocoins secures the owner of coins
against most of the dangers of cryptocoins, including losses if
cryptocoins should become banned. A large conversion towards
LXC Coins would mean that there would be a lot of cash-selling
of cryptocoins, making other coins slide in value against the LXC
Coin, further enhancing the value of it against other coins. With a
limited supply, the pressure on the coin could generate both a
strong following and a prime market. These are all factors which
are novel in the world of finance, which are hopefuly strongly in
favour of the LXC Coin.
P2P EQT (c) 2014© LXC Coin™ 2014
92
LXC COIN: ONLINE PRESENCE
LXCCoin Ltd will have online presence through its websites (the Coin homepage, the Crypto
Exchange, the P2P Exchange), its blog, and media channels
Our key websites
contains blogs, info and
LXC/P2P functionality
– linked to partners
and performance
We create descriptive
videos covering all
our products and
platforms – like this
one, made for our
crowd equity funding
Our exchanges also
make use of blogs and
customer support and
contact bulletins
We’ll be actively online
through our blog,
through shareholder
communication and
other activities –
aimed at raising
awareness and
generating publicity
for the company/coin
P2P EQT (c) 2014© LXC Coin™ 2014
93
We’ve invested a lot of time and effort in creating a broad-spanning
document describing our business and its environment, but it is always a fine
line between must-have’s and need-to-know’s.
Should readers still have questions related to our business, we warmly
welcome these – either in written form, or through our online communities.
LXCCoin Board of Directors / Management team
© LXC Coin™ 2014
94
ENGAGING WITH LXCCOIN LTD
Research
With a high level of P2P
and Crypto expertize,
LXCCoin will engage in
debates, papers, data
gathering and other
marketing or research
activities according to
specialization. Please
get in touch if you have
a project in which you’d
like our participation
As a part of our open-environment policy, we’re happy to engage with our partners, third
parties and interest groups like shareholders or media. We do however reserve the right to
ignore trolls and spammers, encouraging polite and to-the-point requests
Blog and papers
Our blog is authored
from five different
sources, and we would
love to guest in other
blogs or to publish
relevant P2P- or Crypto-
based articles from
others on our blog. Let
us know what you have
or what you need, and
we’ll do our best to get
involved
Publishing
We’re a transparent and
highly compliant
company. We welcome
media scrutiny, so if you
are engaged in a story
on a related subject and
would like industrial
comments or to
interview anyone from
our team, please get in
touch
Events
Our team is regularly
featured in the press,
guesting as lectures and
at conferences. To invite
a member to participate
in events or other
arrangements, please
email the designated
team member directly
Multimedia
We occasionally publish
whiteboard videos and
other media pieces on-
line. These can be
found on Vimeo or on
our YouTube channel
named “LXCCoin”
P2P EQT (c) 2014© LXC Coin™ 2014
95
CONTACT US
We are online at:
Email:
LinkedIn:
Henrik Ellefsen
Twitter:
#LXCCoin
Facebook:
www.facebook.com/L
XCCoin
LinkedIn:
Linkedin.com/
LXCCoin
Blog RSS:
Blog Feed
SlideShare:
TBA
YouTube:
LXCCoin Channel
Contact the author:
P2P EQT (c) 2014
Website:
lxccoin.com
© LXC Coin™ 2014