( MIR.network )

MIR.network: Market Inclusion Registry

How we create value

Solving a problem at the core of our societies

Limited liability companies fuelled the economic rise of the West – no individual could fund a railway. Society made incorporation possible through laws and public records offering secure property rights. We have made the financing of large, foreseeable projects easy, but we still struggle to finance, small,  high risk – high impact ideas. Our future depends on the ability to allocate capital to such ideas. If only we could unleash the creative forces of capital for the rather smaller, innovative and creative concepts of the new economy…

The lack of transparency and trust is arguably the main problem in creating and growing a new venture. Even with a clear value proposition, the act of funding ventures is risky, slow and inefficient. The lack of transparency greatly increases friction.

  • A man may be keen to invest, but does the chairman really have power of attorney?
  • How can I use my shares as collateral – or even prove my ownership to the shares?
  • Who are the other owners? My competitors or maybe fraudsters?
  • What is the purpose of owning a share if it cannot be sold and follows me to the grave?

By mid 2018, a powerful idea emerged and took shape: we can write the “rules of the game” into code and let businesses and investors build a transparent, European shareholding registry on blockchain. In effect, we build a platform where an ecosystem of innovative use cases may emerge on top. We create value through simplified compliance and corporate governance, but mainly by lowering transaction costs. The early effects is to make unlisted shares an efficient vessel, capable of shifting idle, intelligent capital onto unorthodox, creative ideas.

How blockchain adds value

The one and only focus for MIR is to solve a persistent problem for society: inefficiency, unfairness and fraudulence in the funding of small enterprises. A lot of efforts have been made to run centralized registries or uncoordinated and dispersed solutions to make shareholding more transparent. Neither have worked, except in the highly centralized and formalized setting of a stock exchange. Blockchain may make a difference.

Blockchains demonstrate the origin of an asset and can be employed to deal with the double spending problem

It will require a leap of faith for anyone not intimately familiar with a small and medium sized enterprise to buy equity. It is nigh impossible to establish whether that share I am promised really is yours to give, and whether it carries much weight in the running of a company and the sharing of its profits.

Rules of the game

MIR is designed to track ownership of a share and the “rules of the game” associated with trading in this share.

Blockchain allows for a greater transparency of administrative processes

Transparency is essential when trading shares and exercising shareholders’ rights. MIR provides transparency and visibility into the fabric of corporate governance and may unlock the creative forces of capital markets. One particularly interesting aspect of MIR is the combination of blockchain as a trust-building mechanism and government as a trust building mechanism. The blockchain handles all tasks where a smart contract is efficient. However, when a degree of discrepancy and contingency planning is required, a public authority can assist in the consensus building mechanism - all in a matter that is predictable and transparent.

Blockchain enables democratic decision-making by enabling accountability and participation

MIR shifts ownership rights onto tokens and makes these tokens visible, predictable and transferable. This resolves a series of problems and issues related to decision making. Our vision is to create an equalizer between large, publicly traded companies and the small entities that spur growth and universal employment. MIR will ensure that a new shareholder can exercise her rights in the same manner as the majority shareholder or the entrepreneur, allow every shareholder a say in the running of a company and allow shares in SMEs to be used in much the same manner as a traded equity.

Blockchain enables the development of decentralized platforms for the collaborative economy.

MIR will allow a registry of cap tables and a market for equity to emerge with no extra effort apart from what companies are already doing in their internal databases. The decisions made in a boardroom or a general meeting of shareholders will be the source of truth, recapitulated on the blockchain and used directly for the purpose of public registries. My commitment to buy a share is directly transferred into the company’s system for paying dividends and the tax authorities’ system for collecting taxes.

Blockchain makes possible the managing of property, land registry or other public records

Very few jurisdictions sport a single, up to date, record of share ownership for non-listed companies. MIR is the engine that in effect creates such a registry. In effect, it builds itself (we are teaching the garden to weed itself). Furthermore, MIR may link to outside unique identifiers and collaborate with existing public records and enhance their usefulness and authority.

Blockchain may contribute to financial inclusion

With the cooperation of a bank, MIR enables shares to be used as collateral. Anybody investing in property or listed shares, will be able to use these assets as collateral to finance other investments. Anyone placing a bet on a localized market or a distributed economy will struggle to find an efficient investment vehicle – MIR may in principle allow services that allows an investor to buy into one hundred mom-and-pop shops – it is possible if not entirely feasible.

Blockchains may reestablish trust in society

MIR will greatly reduce third-party risks (the angst of being co-owned by Hells Angels or the Mafia). By making shareholding transparent, it makes the link between risk and reward more visible, hence showing that profit was the result not of a favour or an insider deal, but the early and bold bet on a non-obvious idea. Trust, furthermore, can be built by democratizing the concept of shareholding, lowering the transaction costs and improving the usability of shares to a point where ordinary employees might consider shareholding a relevant option.

Who gains from using MIR?

For the entrepreneur and the small company

  • Simplified incorporation
  • Simplified corporate governance
  • Simplified compliance and reporting
  • Lower cost of raising equity and loans

For shareholders and owner-employees

  • De-risking investments and governance (fraud, conflicts of interest, etc.)
  • Simplified tax reporting
  • Enjoy the full legal protection and governance routines of shareholders in legal entities
  • Speed up the process of investing and de-investing

For banks and business support

  • Simplified accounting
  • Simplified audit
  • Simplified credit assessments
  • De-risk loans (because of transparency and access to equity)
  • Innovations in Fintech

For society and public authorities

  • Better allocation of capital, less bureaucracy and less fraud
  • More ideas are turned into viable business because of the increased speed and reduced risks in matching capital and entrepreneurs
  • More investments: simplifying trade in equity, lowering the risk of investments
  • An enabling technology for crowdfunding
  • Turning shares in unlisted companies into a bankable asset – i.e. making unlisted shares a source of collateral
  • Improved ability to scale successful businesses
  • Reducing the scope of money laundering
  • Simplified data gathering

How does MIR impact a company, from birth to maturity?

Mobilizing resources is an eternal challenge, from the earliest stages of a business idea to the very end. How may MIR help at various stages?

What’s in it for me? The various stages where MIR makes a difference.

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