• by Alex Lightman
  • July 28, 2018
  • 0

The mining industry produces resources critical to our modern lifestyle and the technological development of our society. We consume products that contain those resources. Every day of our lives – from the electronic devices we cherish, to the vehicles we drive, the appliances we use to cook our food and even the very houses we live in.

Below we discuss a suggested solution of several inter-related, large and important problems for both the mining projects and their investors. All mines go through a number of stages of development, with the early stages bearing the highest risk, consequently facing the greatest challenges in securing funding. Most investors avoid early stage mining projects because the already high perceived risks are exacerbated by lack of transparency and accountability on the part of the miners and lack of liquidity of the investment itself in the medium term.

Below we introduce the approach to build Blockchain Commodities Exchange (BCE) using tokenization to overcome both the funding and the investment challenges. BCE will deliver a Blockchain-based platform that will allow efficient promotion and discovery of mining projects, as well as funding by means of commodity pre-purchase. Funders on BCE will enjoy transparency and liquidity.

By bringing producers and funders into direct contact BCE removes the need for high-priced corporate funding advisors and brokers. The platform will use smart contracts, along with independent external verification, to provide trust and clarity around the pricing of pre-purchased commodities and ongoing management of how the pricing of a mine’s output evolves as each mining project progresses and develops.

Funding will be made available to producers in tranches, based on achievement of agreed milestones. Mechanisms within the platform will protect funders from excessive slippage in project milestones. This delivers accountability and transparency to both the funders and the miners, resulting in a build up of trust, and removing many layers of friction, which are inherent in the industry today.

We are building a complete funding and trading system for our mining projects. BCE will allow all participants to trade units of the pre-purchased commodity by means of smart contracts, providing liquidity. Once the platform is fully established, we envisage that it will be enhanced to offer a wider range of options for funders. The intention is to provide mining projects with a capital trajectory to take them from early stage to public listing on a single platform, while managing the increasing regulatory requirements in an incrementally increasing manner. Next section validates that the world and the mining industry will benefit from BCE.

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Alex Lightman is an MIT graduate (’83), attended graduate school at Harvard, and is the winner/recipient of four global technology awards, including the Economist magazine Reader’s Award for the “innovation that will most radically change the world” for this decade 2010-2020. He is a co-founder of Token Communities Plc., a Gibraltar corporation that invests in tokens; the CEO of a publicly traded energy company; and advisor to seven ICO/token sales, including Propy, Science, and Academy for Blockchain Technology mentioned in this article. He is the author of the first book on 4G wireless, Brave New Unwired World and the co-author, with Brett King, of the bestseller, Augmented: Life In The Smart Lane, which was no. 1 in seven different categories in 2016.