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Bitland Initial Coin Offering (ICO): A Review

Bitland is currently holding its initial coin offering (ICO). Bitland's goal is to create a decentralized, secure land registry, with an initial pilot project in Ghana.

Smith+Crown is focusing efforts on ICOs and crowdsales. Digital Currencies are emerging as a way to quickly raise capital (link to LISK), and many hope the chapter of scamcoins is over.

For many ICOs, particularly lesser-known ones, we will provide a detailed overview of the project, with the goal of standardizing information about them as much as possible. Many projects are complex – both technically and politically. Scammers likely still exist; so do trolls on forums. We will provide information, not a judgment, and we encourage potential investors to learn as much as they can.

Our current approach focuses on a number of questions that would be important to understand for investors, including the following.

  • What is the business model and how does the token fit in? We also try to explain the role of the token in the project and why they ultimately might have value. Sometimes projects simply sell tokens because it seemed required for the ICO, but their role in the project is poorly thought out and their potential value to investors is misrepresented. This may not be the only reason to invest: some people may think of themselves as donors instead of investors and simply like the project’s goals.
  • What is the roadmap? How the team will spend its ICO money is an understandable question, even though answers will vary in level of detail. A roadmap should also reflect project challenges and the team’s thinking behind them. We do not provide project evaluation, but we do probe on how realistic the project seems to be and how honest the team is about them.
  • Who is the team? Many projects unintentionally or deliberately obscure founders’ identity. This doesn’t necessarily prove a scam, but transparency and responsiveness can signal some level of legitimacy.
  • (In their own words) what makes them different? We ask companies to explain what makes them different. This typically leads to a discussion of cryptocurrencies broadly that sheds light on the philosophy of the company. We don’t try to validate or criticize these claims, but we include them to provide context and color to the project.

This article was informed by a series of interviews with Elliot Hedman (COO) and supplementary web research. Please review our announcement of this ICO for some details and links.

What is Bitland?

Broadly, Bitland is an effort to create a blockchain-based land registry in Ghana. In many countries around the world, land ownership is poorly recorded and poorly enforced, denying land owners a crucial asset they could sell, borrow against, or legally develop. An immutable registry could create a market where once there was none.

The project is similar to Factom’s (stalled) efforts in Honduras and Bitfury’s recently announced efforts in Georgia. Bitland’s first market will be a pilot project in Ghana through an NGO Bitland Ghana. Following a successful pilot, Bitland will expand to other countries in Africa and elsewhere. Their efforts been written about by Forbes and various cryptocurrency news sites.

What is the business model?

The ultimate business model of Bitlands Global is for an LLC corporation named Bitlands Global to manage a land-registry blockchain and a digital currency, Cadastrals.

Bitland Global (note: represented by the url bitland.world), as an LLC, will leverage public, private, and philanthropic capital. It will have a number of associated NGOs for each land market it helps create. Bitland Ghana (note: represented by the url bitlandglobal.com) will be the first. Having an NGO will enable the project to qualify for locally targeted grants, enter into contracts as a local NGO, and provide an additional international level of scrutiny.

The currency name  (pronounced Cuh-da-strals) comes from Cadastral maps, which show boundaries and ownership of land parcels. The two blockchains will be separate and both managed by Bitland Global, which will initiate blockchain changes based on Cadastral transactions.

Keeping Bitland as the owner and maintainer of these blockchains was intentional. This provides a face of the blockchain to buyers and sellers who may not care about the decentralized nature of many blockchains. Bitland COO Elliot Hedman emphasized that this provides accountability, and that many similar efforts to register land also have a responsible entity.

“Having both a legally registered LLC and an NGO will provide a level of accountability rarely seen in the cryptocurrency world. We could be sued on multiple levels.”

In theory, it also allows Bitland to keep Cadastrals as the primary currency so buyers and sellers don’t simply resort to other currencies for the transactions. It also allows Bitland to sell licenses to use the registry blockchain, which they think institutional investors and governments would willingly pay and would help fund operations.

What are Cadastrals and what would give them value?

Cadastrals are the token that would be used specifically for transactions on the land-registry blockchain. This would include purchases of land, real-estate loans with land ownership as collateral, and other real-estate services, such as surveying. The marketcap of Cadastrals would be the marketcap of land represented in transactions at any given time: to conduct a transaction, someone needs to acquire enough Cadastrals to represent the value of the land or service.

There will only be 30 million Cadastrals created, and all will be distributed during this period. 21 million will be available through an ICO, and 9 million will be used for various strategic purposes.

With a fixed supply and an initial theoretical marketcap of around $1.7 million, the value of an individual Cadastral should rise when people need to acquire more than $1.7 million worth of Cadastrals to buy and borrow.

Cadastrals will be registered on OpenLedger, chosen because of the flexibility it provides for the team, and it will be tradable immediately after the ICO.

Bitland is also building a fiat-currency reserve based off 20% of its revenue to stabilize the value of Cadastrals: effectively buying and selling tokens to minimize volatility. The reserve is not built yet, but presumably it will a bank account managed by Bitland.

What is the roadmap and how does the ICO fit in?

The team recognizes that the technology is not necessarily the critical bottleneck in this project. Developing a successful blockchain-based land registry in Ghana requires three things in addition to an actual cryptographically-secured ledger.

  1. Internet infrastructure to access the blockchains: part of the team’s plan is to build an system of solar-powered wifi towers to provide reliable internet access and mitigate the impacts of rolling blackouts that would otherwise frustrate any efforts that require internet connection. They plan to fund this with public and philanthropic money after the ICO.
  2. Enforcement of land ownership: the team recognizes the need for government enforcement for the property rights represented on the blockchain. Chris Bates was quoted as saying, “In Ghana, Bitland will be working with the Land Administration Project, which was created by the Lands Commission and the World Bank. Every country that Bitland operates in will necessitate government cooperation.”
  3. A system for exchanging Cadastrals into local currency (or cell phone minutes), so Ghanans can use the proceeds for local commerce. They are not focusing on this and believe there are enough exchanges for Ghanans to do this.

The team has already spent two years conducting outreach about land registration and claims to have 28 communities on board to participate in the pilot. This outreach hasn’t necessarily been focused on the blockchain, which entered the business model in the last year, but its goal was to lay the groundwork for an NGO to help digitally register land. Part of this outreach has involved building prototype software, parts of which are viewable on the website.

The total 3-year anticipated budget is close to $8 million. A completed ICO is estimated at $1.7 million assuming a stable BTC price and that all Cadastrals are sold. The team plans to use this to further demonstrate project legitimacy and fund operations while it seeks grants to build the rest of the project, particularly the infrastructure.

Who is the team?

The team has been responsive on forums and to requests for interviews. There are three core members we spoke about with Elliot.

  • Narigamba Mwinsuubo (founder and CEO) is a native Ghanan and has been writing about this topic for several years.
  • Chris Bates (CSO) is telecommunications specialist with past links to Factom.
  • Elliot Hedman (COO) is an Arizona-based entrepreneur. He was initially brought on to build a website but was quickly recruited to direct operations. Elliot is also a musician and spent 13.5 years in the US Air Force.

In their own words, why is Bitland unique?

The Bitland team—and Elliot in particular—is passionate about cryptocurrency but critical of how the field has approached it.

  • Currently there is too much speculation with Bitcoin: people buy it but don’t plan to use it. This is detrimental to the long-term health of cryptocurrencies. Bitland wants to create a system that actually moves money around and encourages people to engage in commerce.
  • Bitland didn’t have to do a cryptocurrency but they wanted to legitimize the technology as a currency. In their words, “we want to create a successful and meaningful company – and drag the cryptoworld with us.”
  • Bitfury’s efforts at land registry in Georgia could be successful, but Bitfury has been operating there for years. Those relationships won’t help in scaling and whatever arrangements work in Georgia aren’t likely to work in Africa; it certainly won’t help Ghanans anytime soon. Bitland’s solution will be grown in Africa, where much of the world’s unregistered arable land is.

Smith + Crown’s articles about  ICOs should not be construed as investment advice or endorsement. In addition, some of the information contained above may be changed after we posted this; we urge the reader to read all source material before investing or passing judgment. If you see anything that has become obsolete, let us know.