Episode 161 - Traxion Uses Blockchain To Give Bank

Welcome to Crypto Knights. Will we help you finally make sense of the trending world of cryptocurrencies? So get your virtual piggy bank and let's get started. And welcome to Crypto Knights Podcast. I'm Kant and I'm so excited to welcome you. I've been reading up about you and your project on traction and we cannot wait to have this episode with you. Very excited. Thank you, Kant, for

inviting me over to your Crypto Knights Podcast. I'm so excited and feel also to share about what we've been doing from the other side of the world because you're in London and I'm in Manila. Yes, yes, yes. Yeah, I'm here in Dallas and US and you're in Manila and the Philippines. You're literally on the other side of the world and very, very excited. So why don't

we start off with a little bit about the background about you and so what is your background and what brought you to this current point in time? Yeah, I'm I've been in IT or Information Technology for more than 20 years. I'm a mathematics degree graduate with a major in computer science. I've been exposed in banking payments and e-commerce. And for the last four years, I've separated

from corporate world and started my own fintech startups. I dealt with in the real world and more. Most problematic startups as startup entrepreneurs. Absolutely, absolutely. I totally relate to that entrepreneurship is not easy, especially fintech and all of that. So yeah, tell me about what is the backstory behind traction? How did you dream up about the vision behind traction and how did you come up with

that and what are your goals? Yeah. So just like any tech entrepreneur, we saw how blockchain is going to change all areas of business and even personal lives. It's a late 90s people were saying the internet is going to change the world. And now everyone saying blockchain would be doing the same thing. And we totally agree with that. And we see this opportunity. We see this

opportunity as, you know, total breakthrough for most business solutions that can feel the gap, especially on the fintech site on the banking side, where we would like to feel the gap for the end back and under bank. I see. Why did you pick that specific sector? Because we, there's a huge population on the end bank and they're served where, you know, our solution, this is an

opportunity for to benefit the groups of financial inclusion among the world's 1.7 billion and bank people. So in a nutshell, just to say traction, our companies seeks to promote greater financial inclusion among the world's end bank by offering an easy, cheap, quick, reliable and efficient one-stop shop for the financial included to perform all of its basic financial services. Wow. You could have a lot of time.

By positioning this, we can be one of the key leaders in push this for the greater financial inclusion globally. Great. You talked about a lot of concepts in the let's deconstruct each one of their plus or fall. Why are you doing it in the Philippines? Yeah. So of course, because we are here, we know the, we know the landscape, we know the culture, we know the

people and very well, we could say that because this is a tough market, whatever we do here, we could, you know, easily replicate in other countries with the most number of and manned also. And providing, there are so many challenges. There are so many hindrances and hurdles that we need to come across and we need to address here in the Philippines. And by doing so, we

are strengthening the muscle of not just of the company, but also the technology that we are using. I see. So you're not only, you're there. That's number one. Number two is, you see this problem of the unbanked or the underserved pretty high right there locally. So why not build a solution for the Philippines that you can then take global. I'm sorry, I come again. I didn't.

Now, I'm just saying that the reasons behind the Philippines is that, A, you are there and B, you have a lot of unbanked and underserved people like there with respect to banking services. So we could almost treat this as you're building a prototype for the Philippines. And once you Pro that you can take the global. Yeah, definitely. Yeah. Wonderful. So and how are you planning to

do that? It sounds great. You know, and in India, we hear the terminology. It's likely different, but it's similar concept. We call it bottom of the pyramid and talk about you heard about Grammine bank and things like that from the Bangladesh and all of that. So how? Are you planning to bring the bank to the unbanked? Okay. So we aim to adopt a universal code and

code universal banking model, which offers a suite of services aimed at appealing to the unbank, who tend to have an array of financial needs, but maybe the third by the, by the prospect of using several different platforms to perform different functions. So this universal banking model said instructional part for most other known judicial digital as well as blockchain enabled players who tend to be specialist in

one or two part. So we intend to utilize blockchain and hybrid your family technology, which that was the key concerns associated with incumbent financial services platforms, like the high transaction car operational inefficiencies, mistrust of the financial system and lack of chance. Okay. And how does hyperlaborated help you know them? So with this, because we believe it, especially in the financial sector is very highly regulated industry,

hyperlaborated fabric, as you know, is a permissioned blockchain technology that allows for certain layers of data to just. Or access to certain layers of data to relevant participants, you have them have this. On different layers on different access point. And are you just using hyperlaborated or do you have a deep partnership with IBM of some sort of data? Oh, yeah. We definitely we've chosen to leverage

our partnership with IBM as a former partner as well, because I've been in the banking sector for several years. I've close ties with IBM and I have great respect with with my previous partnership with them. And using the IBM platform, a blockchain platform that's based on open, source hyperlabor fabric, we together we are hitting the market by providing, you know, different use cases for different industries

using blockchain technology. I see. I see. Very interesting. So and I'm sure you evaluated a lot of options and then you picked hyperlaborated fabric. So what were the, what made you decide on how in favor of hyperlaborated fabric? There are several years or different several variants of hyperlaborated fabric. But we focus and we chose fabric for its robust and more flexible framework where you could trick

on the speed and be able to, you know, navigate on the on its infrastructure. That's further lowering the fees or the model, the business model that you can plan within your platform. Yeah. The reason I answered question is you have a theory of you have you have you have a your company upon the application, you have several platform alternatives. And so you decided to choose hyper

ledger. So is that because you have a team that's familiar with that technology or is it? Cost reasons or is it enterprise trend or busness that you need or is it all of the above? Rightfully put it is all of the above. We have experts on board that has had this use case and has gone live with hyper ledger in one form or another. Whether it

is a small scale or medium scale implementation locally. We've also have, you know, a very good support of IBM. Aside from its fame or we are also leveraging on the enterprise blockchain solution where we would like to have more businesses to be on our network rather than to have like silos of clients. Okay. So how does this? And so now let's let's connect hyper ledger to

the problem you're trying to solve. The problem you're trying to solve is provide banking services for the unbanked the unserved or the underserved. I get that. So I think that's the reason I'm trying to solve this. So there is a fundamental thesis there. We are trying to say that somebody may have a smartphone but may not have a bank account, for example. So these are people

that are not using a bank account, but they have access to a smartphone. What is the minimal requirement? I don't think you're able to address the needs of everybody who is unbanked, unserved or underserved. But you have a segment of those that you're trying to address. Is that correct, Dan? Oh yeah. So we in the Philippines, eight out of 10 families have no bank accounts. So

and there are even areas where we would like to, you know, implement the dissolution where there is very poor data connectivity and only feature phones or SMS connectivity works. So the target market would don't need to have a bank account. Smart phones, they any feature phone can work and can be utilized for this solution. Okay. So if eight out of 10 do not have the bank

account, but out of those eight, how many of them have some kind of a feature phone and therefore can access your services? Yeah, at least 50% or more from from the population or the unbanked that we are serving. And they don't since I mentioned, they don't need to have access to a bank account. We have a smartphone, we've designed the system to work through an existing

network that allows these stores to sell mobile phone top-offs. So essentially they can transfer money, they can cash by insurance or pay bills, do everything they could do with a bank, with a normal bank through SMS messages. So they don't even need to own a phone. The store owner can do it for them. Okay. So can you walk us through that part of the design? So

let us say Joe comes in. To the store, to the mobile store and buys a feature phone. And now what what is the next few steps he has to do with connect? Okay. Self-picture action and then use traction to pay the various bills that you talked about. Can you walk us through that use case? Yeah. So to illustrate the whole picture. One of the main reasons

why we are doing our first use case in the Philippines because many times, many people there are days out of the way from the nearest bank branch. Right. So one of our first goals is to turn the 600,000 size store stores or send me various stores or corner stores if you if you they so that across the Philippines into a virtual bank branch. So we it's

it's it's in the last mile is providing them this money, money out to small stores that are within which to essentially provide them access to the bank services to blockchain technology. Right. So so help me help me understand that. So I'm I'm I'm an average Joe. I have bought a feature phone from one of the nearby stores. And I never heard about traction. So tell me

about how do I get to know about you and how do I connect with traction and how do I use that to pay my bills? Okay. This is a very important thing. We don't need to know there. They don't even need to know they are using cryptocurrency or they're using blockchain. So all their transactions are tokenized. Right. So it becomes a digital asset that you move

within the blockchain and it they they still get their money in fiat form. But as they mature in terms of of awareness about blockchain, then we can move them to a cryptocurrency where where they can now, you know, choose which ones to use their fiat or the cryptocurrency or the tokens that are loaded on their phone. So in the meantime, during the first inception, they don't

need to know that they are using cryptocurrency. They're using tokens or or their transactions are being tokenized. Okay. So so I got the phone. I don't need to know that I'm using cryptocurrency. And I want to pay this bill of 100 pesos. What do I do? How do I pay that? What should I do to pay that? So you go to your new small store, right?

The acceptor has this facility. So first and foremost, like if you if you if we are providing for a close look solution or a wallet for for certain industries or for certain businesses. So for example, a farmer who would need to, you know, cash in his salary from the producer for the from the owner of the land, he would need to go to their send. Or

to load up their card, whether it is a physical card from a top up or his phone. So he gets his load. He goes to another. He goes another OTC or over the counter to cash it in or use the same balance that he has on the phone or in his card to pay for other merchandise or pay to the bill. In that form, the cash

don't need to get out of the system or the tokens don't. He'll be able to utilize that with him is ecosystem that we provide for him with the partnership or with a corporation. Of the of the client or the B2B engagement that we have. That's the part I was trying to get to. So you are building a network of business partners like utility companies or I

don't know. Are you also going to have banks as your partners? Yeah, definitely. So you have banks. You have utility companies and many other companies that typically people would send money to. And you're going to include them as a part of your network and you're going to integrate your technology with their sound presuming to make to enable these transactions. Is that a fixed. Yes, you are

correct. Okay. Wonderful. So that helps me understand underlying technology. So can you now explain the design of your token and your how does your token economy look and what kind is this? Is this some kind of a utility token? I'm imagining. Is that true? Yes. It is. So it all starts with the finances. The Philippines as the third largest in the middle of the meetings market

in the world with almost $33 billion flowing into the country last year. And the system is right with corruption and fees are extremely high at least 8%. So we can lower that to one or two percent. The these remittance money will fuel the token economy initially letting people store their money safely, rather than getting it stolen and use other services that will make their lives better.

So because we have. We are providing six basic features or six basic financial conception. I mentioned remittance like as a starting point for the token economy economy that we are creating for them. Second, for paying for the money. We are providing payments of it bill payment of merchandise and whatever. Sorry for access to the insurance. Life insurance or health insurance. Okay. Or to be access to

investment. Fave to access to the nation's charity and whatnot. And the six would be access to lending. Whether it is peer to peer or from from a microfinance point of view. Got it. Wow. So you have a feature rich offering. So and your token is going to support all the six of days. And are you going to be are any of these already built out is

your blockchain already live. Have you tested it? What is the data that you have to prove to you that. You are token design and economy is going to work. Yeah. Okay. So we are not building things from scratch. So the blockchain, of course, is from scratch that the blockchain core solution is from scratch. The access to financial products that I've mentioned are already. Out in the

market they have juxtapes. They have actually users. They have actual revenues. And we are just currently moving them into the blockchain platform. So we have a sure that come the personal finance. We have by any health for the health care. We have insurance for the non-life. So they have access to non-life insurance. We have GAVA gives for the nation's pay. We have juxtapes for the online

and offline payment and the GP tax for the remittance. So what I'm trying to figure out here and is. You roll out traction and the token. What is the guarantee that people will use it? So do you have any proof of concept? Do you have some kind of. In US, there is a tendency to call these kinds of things as MVP minimal viable product or market

hit. So what kind of prototypes and proof of concepts have you built out and tested? Do you have any data that tells us that a people will understand is be people will use it. They're happy and they will share it with others are. Can you share some of that information with us? Yeah, we are working with three use cases right now. So in three different industry.

First would be for the Filipino workers overseas. Filipino workers, which is with a certain cooperative with. Who would be onboarding up to one million of their members. So the it's an e wallet of course that we are. Enable them to remit. They're their salaries to their loved ones back here in the Philippines. Again, they don't need to know that they're on blockchain or they're using cryptocurrency

because they we are just tokenizing their transaction. But they need to to purchase certain amount of tokens to be member of this of this corporate and they need to hold this for. For number of months or years to have access. Memium access to those financial products that I've mentioned. And at the same time benefit from this this counts that we provide. So this is something that

we will be on beta in the coming month or so. And this is. Sort of will become the core product of traction where we could also provide a wide level solution opportunity for other businesses. Who would need a electronic wallet with this. And I think that's the reason I mentioned. Yeah. So and how long have you been doing this testing for several months right now. Half

a year. Less than half a year. Okay. And the other question I had is how are you funded currently. Who is funding you? So we with a first six startups. So because we we had the we had revenue of about three million dollars for the last three years. And we we started you know buildings. And we have several features on top of them. And also because

we're doing and token offering. We've closed several millions of dollars for our from our private sale. And that's the reason why we did the team is constantly growing. And there are lots of you know market operations is being open to us. Also through the partnership with IBM. Plus other you know opportunities that. Because of certain relationships with other businesses and in our media mileage. So you've

been very thorough in this and so you've been on your own. You exited the financial services. Where you were an employee and to be on an entrepreneur of your own in the same space for a few years. So you're not new to the entrepreneurial field. And it looks like on top of that you have understood the problem. You have built a team around that. You have

been. You're also pretty savvy to have developed. A profitable business in the past. And now you're kind of trying to bring all of that to bear to solve this new set of use cases that you've come up with. Well, the unbanked on served on the underserved type of population. And and then you have thought through over the last six months and market tested three use cases.

And done a private sale. Where you raised several million dollars. And currently currently your ICU is in what resale. What do you say? Yeah. We are on presale. And probably 30 million supply until we open the main sale. Is the 30 million the number of tokens that you're going to be selling or is that the dollar? It is 50 million. For the presale is 50 million

tokens. Okay. And for the main sale. It's 200 million tokens. Okay. And what is the price of each token? Point zero zero zero three five three zeros and 35 ether. Okay. And what does the translate to in today's dollar price? Approximately. Today's ether is less than 500 I suppose. Let's assume 500 just to make the math simple. Okay. So it'll be like 15 cents, 16 cents.

Okay. So the presale price is 15 cents. And what about the main sale? How much is that? It is the same. It's just that we provide bonus as during the presale. So we are. We have started with 50% bonus down to 40 every 10 million supply. He's got a year and now we're on the third tier, which is 30% bonus. Okay. Are you at Liberty to

share the numbers? How much have you already raised in terms of US dollars? We have raised almost four million dollars. And what is your hard cap? Forty five million dollars. And what's your soft cap? 10 million dollars. Oh, you're selling pretty safely into that soft cap. Yeah. Yeah. With all the pledges we were safe. We're pretty safe. I like that. Well, you deserve to be given

the amount of work that has gone in the idea that is safe. It has a blend of social cause as well as being a business. So are you running this as a nonprofit organization? Or is it a for profit business? Going back, one statement that you mentioned the advocacy and for the social causes. If you could, if you observe and notice the six startups that I've

mentioned, they're all backed by certain advocacy, which is to. Really provide afford for the health care. It is to provide affordable health care for small businesses who cannot afford the regular premiums of the bigger businesses. Right. So we my first baby or startup, which is Gava gives is that Gava gives that come. It's a leading charity crowdfunding platform here in the Philippines that addresses, you know,

the low. We have a very low giving index because of the accessibility to online giving where there's only three to five percent credit card users. And when we open the offline payment options, we allow more people to be in the network to be in the circle of generosity. So. And many other startups, they're all backed by certain advocacy. And that's to alleviate poverty and uplift the

lives of the many in that just of the. And all those six features you mentioned each one of them is a separate startup. Separate startups, but under traction. And they were all launched by you and your team. Yeah, here in many. That's pretty amazing. And and how long have you taken to bring all of them to life? For the four years. Average is four years. The

only one that's. Would be the in its 40 or no. Okay. So this is all extremely impressive. And. Because I was like I said, I was talking to Eric and I hope somebody who I respect a lot. And he was telling about the amazing work that you've been doing. I knew I had to dig deep into this. So you. This is traction. It's almost unfair to

call traction itself as it's not one of those white paper. And I want to raise money type of idea. This is in all fairness has been a startup in the making for four to five years. It has been revenue generating. You have created multiple startups under the traction. So you've been laying the groundwork and setting this stage for the launch of this traction token for four

years. Is that a fair statement? It is half fair. Okay. We didn't also see it until the middle of last year that we would be diving into this technology. It probably destiny and all of these circumstances brought us here. It's just because all of these six startups share the same advocacy. And they all fit together to be a one stop solution for the end bank and

provide this financial products as an access or gateway for them to have access to this to this bank products at the very least. I don't know why. So that's wonderful. So that's phenomenal. So what I'm hearing is amazing. So let's put on the American capitalist hat and ask you an investor type of a question. Right. So why would it be worth it for somebody like me?

First of all, are you? Is your ICU open to American investors? Oh no. It is not. Okay. So now let me shift my let's say I'm in some other country. I hope you're not American. I'm not. I'm not. I'm not. I'm not. I'm not. I can't see. You can invest. Let's let's pretend I'm in Singapore. For example, let's pretend I'm a Singaporean citizen and I'm in

Singapore. And I'm allowed to invest in your ICU. Why should I invest in your ICU? What is a potential? Now you may or may not be able to talk to, I mean, numerically to the details. I understand that. But I want you to from an investor angle, why should I get excited about traction? Would you want to? Would you want me to do this? Yes. What

do you have done as an analysis? I mean, you at the end of the day, you know more about this company and its future than anybody else. So and the fact that you are confident enough. I mean, I've been an entrepreneur. That's why I'm seeing this. So we entrepreneurs are like to take money from others. At least the ones that have integrity. Only when we feel

pretty confident that we can give them some kind of a positive return and give it all the work you have done and the people that have told me about you, I know that for a fact that you have the integrity and all of the other things that are required to be a good entrepreneur. So therefore I'm asking you the question, what is your analysis? Why should

someone from a country that's allowed like Singapore invest into traction? Yeah. So first, I'll give to types of answers. First is as to why you would support the traction and interaction team. And then the second would be on the economy. And economics of this token, why would the value of the traction token will be higher in the next few years or so? So first would be

to answer the question, why support us? First, because of the team that we have, we have relevant skills. We are not some you know, fresh college graduates. I hope we look like one, but we're not. We we have relevant skills. We we do. We focus and on the financial industry. Most of the key members are very seasoned. 20 plus years in the industry of banking finance,

e-commerce payments and so forth. We were we are not like a media company trying to do agricultural or vice versa. We are all in the index space. And second is because the product that we the space that we've chosen. Is something that's the market is huge and we are the choice of blockchain technology or the platform is very much relevant and very much. Apparent with the

current framework of our industry, which is very much regulated right now. We of course we all want to be in the decentralized format, but it is not practical. It's not going to happen. The next. Next year or five. So we we work with a permission blockchain, which allows for businesses to still have, you know, be fictionless with the banks and regulators and at the same time

still possess that kind of level of data integrity in the in the solution that they implement. With regards to aside from that, of course, we internationally market validation in terms of. We are proud to say that you know in Asia, the very least or in the Philippines, we've garnered the highest we things in the most, you know, waiting sites available or popular in the market for

the token economics or a lot of underbank participants running on our traction blockchain. They the reason why or what we are going to do is to get the money. What would influence the value of our traction token is that to avail of the lower we meet on fees or the discounts that we provide, they need to hold certain amount of token. So we are using taking

method for for that matter. We provide low transaction fees and payments, healthcare coverage and loans and they use tokens to pay suppliers and their employees. So with this kind of taking and the higher or the powerful. Utility the use case of tokens inside their platform inside their ecosystem. You are forcing both to hold more tokens. People to avail of this access by enforcing that taking method.

So hence, traction tokens is definitely not a speculative cryptocurrency, but for real practical reasons, real practical utility. We also use. diminishing supply method. So as you know, people pay and transact in our in our platform, we burn fraction of this fee. So the supply of the tokens are decreased, but we the demand is still informed. What percentage of your transaction profits are you using for repurchasing

and burning tokens? What percentage of them? I thought I heard you say that you're using a certain portion of your transactional revenues in order to repurchase tokens and then burn them. Did I hear that correctly? Yeah. Yeah. So we're using 70 30 method for this. So we're burning 30% of the fees or the revenue that we take as a form of rebate. So a significant number

of tokens will be held to access benefits. Right. And this specific token holders will sell their tokens. And as they use it, we the touch the fees and the transaction that flows within the system will be burned along the way. I say, I say. So in terms of numbers, we estimate that 10.8% of tokens will not be sold by 2019 and up until 2023. We will

be estimating 75 at least up to 75.3% will not be traded by year 2020. So you'll be down in supply to 25% approximately of what you're releasing right now? Yeah. Yeah. By 25 years or so. Right. There is a quadratic quadrupling potentially of value. It's in addition to many other factors that you're talking about two things, I think, what you're trying to express and is on

one hand, by the sheer reduction of supply, you're looking at potentially quadrupling of value. And on top of that over the next four, five years, you have a greatly increased demand, which could be, I don't know, five to 10X of what you're starting off with as you expand your operations in Philippines and beyond. So increased demand and reduce supply. So simple strategy, but pretty effective. Awesome.

I think we covered a lot of ground. And in the interest of time, I wanted to ask you, are there questions you wanted me to ask that I did not ask. Any other points you want to make to our listeners about traction? So far none that I can think of. Yeah. I think we've covered enough for them to understand what we are trying to do over

here. And onto the next 10 countries, we are not stopping from where we are right now. This is just the beginning. We're currently talking to different principles in different countries. As well, at least three countries have expressed their interest to do widely with us. And yeah, I think what we have not talked about are some real use cases, but never mind it. It was part of

our discussion anyway. When we talked about the first MVP user of traction. Exactly. Exactly. So listeners, head over to www.tot.com. www.tot.com.tot.com. And you'll see an ongoing presale that you can participate in. Again, we are not financial advisors. We are neither supporting nor otherwise. We just disseminating information through crypto nights. And we are very thankful to you and for joining us today and sharing some awesome information.

And we wish you the very best as you progress with your ICO. No, my thanks to you guys. This is a plan. Sure. And this is a very good opportunity that you have counted us. Thank you so much. Appreciate it. And all of your listeners, if you enjoyed this, please share it with your friends that may be interested in this. And also head over to iTunes

and Google Play and remember to rate us five stars. Thank you. Thanks for listening to the crypto nights. Never miss an episode. Subscribe now at www.cryptonights.io.