The main problem of current blockchain projects is functioning outside any legal framework. Obligations and rights of crypto currency holders are not regulated by the existing legislation; therefore, property rights to digital assets do not have any legal basis.

Simcord LLC. Technologies offered a solution to this problem — the Bitbon system in which each digital contract is legally binding. Using smart contracts and the Blockchain technology, the Bitbon system allows registering and transferring property rights in digital form without intermediaries. Even at its current stage of development, the system can be used by companies, states, and private persons, as its tools function exclusively in a legal field.

How does Bitbon Work?

The system functioning is based on application of the Bitbon crypto asset. All transactions using Bitbon are recorded in the blockchain, which guarantees the inalterability of data regarding property rights. Each Bitbon has a unique identifier and cannot be forged. This crypto asset can easily be traded on the exchange and used to designate the value of other assets and financial instruments.

Each user has his/her own Assetbox — a virtual box with a unique ID, which is intended for storing Bitbons. An Assetbox can be compared to a bank account number or a Bitcoin wallet address: its purpose is to identify users and to exchange Bitbons between the system participants. For convenience, each Assetbox can be assigned a unique name, which will be used instead of an alphanumeric identifier. It is worth noting that Assetboxes are stored in the blockchain and cannot be deleted.

One of the essential tools of the Bitbon system is IBO (Initial Business Offer).

The main difference of IBO from existing methods of public financing, such as crowdfunding or ICO, is functioning in a legal field and compliance with all necessary legal formalities. Before creating a public contract, any person must go through a verification procedure, upload relevant documents, and specify his/her personal data. Another important feature is stage-by-stage financing of projects, which reduces the risks of non-fulfillment of an issuer’s obligations. The third distinctive component of the system is Bitbon capitalization fund. Due to the fact that participants finance various projects, the system is constantly developing, and the Bitbon capitalization volume increases.

Stages of IBO

Imagine that an entrepreneur needs investments to implement a project. To raise funds, he or she can use the possibilities of the Bitbon system and make an initial business offer.

Creation of a Bitbon public contract. 

Public contract is a set of rules for using raised funds, which is recorded in digital form. The contract states in detail the project tasks, the amount of raised Bitbons, and the possibilities of their use as well as the rules for distributing shares among investors. Each Bitbon public contract is digitized using technologies developed by Simcord and recorded as a smart contract. This solution guarantees the inalterability of the agreement between an entrepreneur and investors and excludes the human factor.
A Bitup-agency evaluates and audits each project, which guarantees protection of the investors’ interests. The rights and obligations of the agency are recorded in the main document regulating the system functioning — open public contract of the Bitbon system. Functions of the Bitup-agency include evaluation of business plans, digitization of contract terms, and legal accompaniment of projects at all stages of their implementation.
After a project is evaluated and verified by the Bitup-agency, the public contract of this project is published on the website of the Bitbon platform. From this moment on, the system users can invest their Bitbons in the project described in the public contract and become contributors of the project.

Each contributor is provided with Projectbon — the instrument designed to distribute shares in a project. Projectbon can be compared to a classic security whose holder can sell his or her business share to another person or claim dividends. In the Bitbon system, entrepreneurs undertake specific legal obligations to contributors; these obligations are described in the public contract. The Bitup-agency constantly monitors the project implementation and the fulfillment of stipulated agreements.

This way, the system offers double protection of the parties’ interests. Information on contracts is stored in the blockchain and cannot be changed, and should any legal disputes arise, they can be solved according to the formal procedure.

Possibilities and Prospects of the Bitbon System

The main advantage of Bitbon public contracts is legal guarantees of their fulfillment. Lately, economists often talk about the coming tokenization of the economy — the process whereby property rights to any assets will be increasingly designated in form of digital tokens. The Bitbon system possesses the functionality needed to create such instruments and, even more importantly, can be used entirely in a legal field. Rights and obligations of parties in the Bitbon system are not an abstract idea, they are legally formalized.

The possibilities of Bitbon can be used not only for fundraising, but also for transferring property rights to various groups of assets: currencies, real estate, bank deposits, securities, know-how, and shares in companies. Therefore, the system can store information on any asset, and the detailed description of its properties can be digitally recorded. Keeping records in a unified ledger allows decreasing the cost of data processing and guarantees safety of property rights.

Since all transactions using Bitbon are conducted within a legal framework, the system is already of great interest to companies and government agencies wishing to implement the Blockchain technology in their business processes. In the next few years, Bitbon solutions may become an integral part of our reality and actively contribute to the development of a new digital economy.

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