2017 will go down in history as the year that Cryptocurrencies shook the world. Bitcoin started the year priced at $963 per coin. By the end of 2017, it had hit $20,000.
Much of this growth was driven by a phenomenon known as the Initial Coin Offering (ICO), a new way for early stage Technology companies to raise Finance for projects via a form of crowd funding, where participants are given tokens instead of equity and is similar to an Initial Public Offering (IPO).
“ICO as a new business model leveraging blockchain technology will sustain as the digital way, combining crowd funding and (a) new hybrid asset class of equity ownership and currency,” Oliver Bussmann Advisory, Crypto Valley Association, Innovate Finance
The rise of the ICO has surprised many in the Finance and Tech industries, helping early stage companies raise close to £6 billion in 2017 alone (according to CoinTelegraph). Unidentified sources even claim that the money raised by start-ups via ICOs actually surpassed early stage Venture Capital funding for companies in 2017.
Up Until now, the ICO space has been driven by Technology start-ups, to fund complex projects which aim to unlock the potential and benefits of the Decentralized Ledger Technologies such as Blockchain.
However in 2018, another trend has started to emerge — established Bricks and Mortar companies using ICOs as an alternative way of raising corporate finance.
One such ICO is fromPower Snooker Group, a sports and entertainment company based in London. I was granted an exclusive interview with their Chairman, Costas A Joannou to talk about his story.
Simon: Tell me more about the Power Snooker project?
Costas: Power Snooker is a new and exciting version of the traditional game of snooker, with its own rules. The vision is to introduce an alternative format of the game, attract new audiences and fans to the sport across the globe, in the same way the Twenty20 cricket has revitalised cricket. Much like test match cricket, the traditional form of snooker takes a long time to play and is proving to be less popular with younger audiences. We want to change that by making snooker more exciting to play and to watch. This the attractiveness as we want to take the sport into the 21st century.
Simon: How do you know there is a demand for this?
Costas: In 2010, the 1st Power Snooker championship was hosted in London, this was won by 5-times World Champion Ronnie O'Sullivan. In 2011 we hosted the 2nd UK championship in Manchester which was televised by ITV4 and shown in 193 countries. It was an incredible achievement for a new sport and it verified the fact that the world is hungry for new sports. There are an estimated 450 million snooker fans across the world. Since then we have spent years in perfecting the sport, perfecting the rules, testing the market on a global basis.
Simon: What did you learn from the pilots?
Costas: That there is a great demand. That we have got the rules right for our audience and for attracting the younger generations. We have plans for the future in the form of mixed championships, not just men but ladies too. And there is the strong possibility that we will host a UK championship event later this year or in early 2019. We will carry this out on the model we have tested.
Simon: So the concept is based around sporting events?
Costas: We have taken the group to a different level since 2011. We are also looking to combine the events with the concept of E-Sports, which is becoming more and more popular We have already created a Power Snooker App which you can download from the Apple Store or Google Play today and is free to download.
This week we are having discussions with our developers to implement plans to introduce the PowerSnookerCoin into the game. This will give players the options to buy a better cue or a better ball so they can improve their game and chances of winning.
We also plan to introduce a number of new games. In a few months we should be in a position to introduce the concept of Power Pool, to appeal to the North American market.
To play the more advanced features of the games, such as entering tournaments, players are going to need to buy PowerSnookerCoins. This will create an internal demand for the token. We are extending the business model from the sport into e-sports.
Simon: Can you tell us more about the PowerSnookerCoin?
Costas: The PowerSnookerCoin (PSC) will allow people to contribute to our community, and to avoid complications of transacting in multiple currencies. It will also allow the group to raise funds and carry on its expansion.
The next area for expansion will be to the clubs scene where we will create Power Snooker clubs. We will start in London and progress into other major towns like Beijing, Mumbai, Moscow and New York.
A substantial amount of the money we are looking to raise via the ICO will be invested in Bricks and Mortar. This is very unique application of blockchain technology. Automatically this means the cryptocurrency it will have substantial support from a group which owns not just intangible assets like the Intellectual Property Rights of a popular Global Sport and Software but also Tangible assets such as Bricks and Mortar.
The model which we had in mind for investment is to find multi-level properties where the bottom two floors can be used for the club while the upper part can be rented out to tenants. It is envisaged that each unit will be self contained and the money coming from the rental part will be enough to subsidise the operations of the club. This is a concept that will be very beneficial to the holders of the PowerSnookerCoin because the group will be debt free with a lot of tangible assets. And through the E-sports and live events, we will also create further demand for the PowerSnookerCoin.
The next level of expansion for which we have already had a number of enquiries, is a franchising model. We will operate through our group in the UK and use franchising partners with local knowledge to expand into places like China and Russia. We are already talking to people in Ukraine, Cyprus and Greece. When we have the event in the UK later this year, we will invite them over so that they can experience the concept for themselves and set up a franchise agreements with us.
Simon: Where do you think the biggest demand for Power Snooker sport will come from?
Costas: In the Far East, especially China. It has been proven in the last 2 events that we had, that the majority of viewers that we had were in that part of the world. We also had fans in 25 other European countries, also Russia and India. In the western part of the world in North America they watch mainly Pool. That is why we are a looking to expand into Power Pool as well. There is a strong possibility of Power Pool tournaments as well but we may need to change the rules to adapt the Power Ball to Pool.
Simon: Tell me more about the Power Snooker Coin and your journey into Cryptocurrency
Costas: 15 months ago, we started to think about how we could apply Cryptocurrency to an existing business model. I used to be the Chief Internal Auditor in a bank and that's how I started my career in the City of London. Subsequently I qualified with the Association of Chartered Certified Accountants and in 1989 I moved into private practice. This combination of the Financial and Commercial experience, helped a lot in understanding and designing our own cryptocurrency, in such a way that it can be differentiate from any others.
Simon: How did you get into crypto currencies?
Costas: I have been involved in the crypto economy for the last 5-6 years through my profession as a practising Chartered Certified Accountant and as a Registered Auditor. A lot of businesses are accepting cryptocurrencies, especially Bitcoin and from an Audit point of view, the audit risk is different. Therefore I needed to familiarise myself not only with the underlying terminology, but also on how it worked from the initialisation of a crypto transaction through to finalisation of such transaction and the associated risks surrounding it.
I have always been interested in Corporate Finance and indeed the Financial Markets since my University days as well as my banking days and the crypto economy was just a normal extension of that interest.
Simon: What do you think of the Financial Regulations that have been introduced over the years?
Costas: Some of these Regulations so far have been very heavy handed, I'm concerned that such restrictions will kill innovation and entrepreneurship. Did we have these Regulations when the Sterling was created 323 years ago? What Regulations did we have in the 1950s and the 1960s?
In the last 20 years, there have been many financial and commercial collapses where billions of pounds have disappeared. Even countries are running into deep financial difficulties such as Greece, Cyprus, Venezuela, Italy, Portugal etc. What happened to all these regulations and why they haven't prevent such financial catastrophes? The existing monetary systems are failing the world economy while the crypto economy although is still in its infancy and despite the constants attacks from every angle, are still growing. The world debts are in excess of US$300 trillion and at what point it will reaches an equilibrium?
Do the regulations actually help? I don't know. The world is changing and the financial systems in existence are not keeping up with current technology, this is one of the reasons for the credit card crises and the constant global fraud surrounding them.
The monetary systems need to be brought up to date. For the last 20-30 years all we hear in the financial world is about globalization and computerisation. What is ironic is that Blockchain technology is a by product of those initiatives, so we cannot complain now about it. This is how Bitcoin came about.
Simon: Having worked in a bank, you will be familiar with ways that you can raise Corporate Finance, why did you choose the ICO route?
Costas: We are a sports company using current technology and it was easier for us to go through an ICO rather than via a traditional routes of equity and crowd funding. We have the technical resources to do so and let's face it the blockchain technology is a powerhouse and no business should ignore it.
In our case, our coin the PowerSnookerCoin or PSC for short, offers a utility, this is one of the main reasons why we believe we are different. There is a value, it gives you rights to attend events and rights to the all the products and services we are going to create within the group. For many ICOs, there is not an immediate intrinsic value, this is a major reason why these currencies are so volatile.
In the traditional world, any currency has to have some kind of support. For example when sterling was created 323 years ago, it was backed by gold. Since then the link to the gold standard has been removed and has been replace by a promise. In most of the cryptocurrencies that I have come across, there is no intrinsic value or support behind it.
Yes there is a blockchain and smart contracts but tomorrow these platforms may become obsolete. That's why I think the PowerSnookerCoin is different from other cryptos due to the fact that there is a quantifiable value depending on the amount a participant holds. Furthermore, this is supported by an existing group which has already spent millions of pounds on testing its intangible assets and will have the backing of tangible assets as well. We are aiming to make the Power Snooker sport a global sport where a global community, that is the Power Snooker Community will enjoy it for many years to come. Such a global community needs its own global currency, the PowerSnookerCoin.
Simon: What does short term and long term roadmap look like for Power Snooker?
Costas: We will start investing immediately. If we raise £5m, we will then start investing that into properties. In each of our clubs, we want to have a restaurant, a bar, a lounge and depending on the premises, maybe a small business centre. We want to use these clubs as international hubs where members they can come together, socialise and play Power Snooker.
The major area we have our eye on is Kings Cross which is an up and coming international hub. As we advance, we will go to other major towns in the UK like Manchester and Birmingham and eventually outside the UK.
Simon: Is the PowerSnookerCoin a Security Token or a Utility token?
Costas: It is definitely by its nature a utility token. It is like a membership. Depending on how many you own, you will be given progressive membership rights. If you own so many, you can come to all of our events and enjoy the privileges of the club. When we have the UK championships, a VIP ticket will cost around £500. If you have the right amount of PSCs you will be entitled to come to all of the Power Snooker events in perpetuity. If you take the net present value of this benefit, you will see that the PSC is heavily discounted. There is a reason for the heavy discount - we want to build a large Power Snooker Community. The larger the community the better it is for us all. Our aim is to build a Power Snooker Community of over 1 million members.
Simon: This is really like a community coin. As the community gets bigger and more successful, this will support the price of the coin and you get to share in the success of that community. Is that right?
Costas: Absolutely, especially as we progress into China. They love the sport and they love Power Snooker. We think the demand is going to be huge and don't forget Russia, India and also the UK which has over 70 million people.
Simon: The ICO has become synonymous with the word Scam. How can you reassure our audience that this isn't an ICO Scam?
Costas: There are a lot of these ICO Scams and this is unfortunate. This is negative for the industry and it does bother me as not all ICOs are scams.
This is why we opened the ICO on the 15th January 2018 and we are going to leave it open until November and which is a very long period for this kind of fund raising. No other ICO has done that before. This allows participants to do their checks and due diligence on our group and find out about the business model, get familiar with the team behind it and generally as to what we are doing. We are giving them plenty of time to do all of the checks they feel they should do. We want investors to be 100% sure of what they will be participating in before they go ahead. We want them to have 100% confidence in our group.
These scams are worrying because they create a bad name for the crypto industry and it's not fair on those companies who are looking to do things the right way. Automatically, those who do not understand the crypto world will label all ICOs and all crypto currencies in the same category.
As the technology matures I believe these scams will disappear. We are not playing the deadline game that other ICOs may be playing — they want you to invest now and want you to believe that you will miss the golden opportunity if you don't.
In contrast, we want people to spend time, reading the documents, asking the questions and to meet us in person in order to make their decisions.
Simon: A Sports and Entertainment company is not a typical use case for Blockchain. What would you say to those who say that this is not a relevant application for Blockchain?
Costas: We are applying the concept of blockchain to an existing business model, that is unique. We have sat down and thought about it whether this was the right thing to do and how it will be received by the Crypto Community at large.
Many of the existing ICOs have been launched to support an idea or concept that will materialise sometime in future. However their business models have not been tested, and as they are start-ups, there are no guarantees, it is just a promise.
Here with PowerSnookerCoin, we are talking about something tangible, an idea that can be easily understood, it has been tested, there is a value in IPR in the sport but also there will also be an investment in tangible assets like property which will support the value of the PowerSnookerCoin.
Although the first applications of Blockchain were mainly in Fintech in the Financial side, there are so many ways that it can actually be applied, one of them is the Land Registry, there are so many problems with this in every country. Another is in the sharing of police records and the healthcare sectors. The application of the technology to an existing business is a very important application. Mainly up until now, what we have actually seen is the application of the blockchain onto a technology project. We need to start looking beyond this as blockchain technology can also be applied to the Food industry, Housing industry , Sports etc.
I'm aware that the crypto community may not welcome this approach because the community is mainly the highly technical individuals, who live and breathe tech only so automatically they will be more attracted to the more innovative developments. But if they look into the potential for the application side, it has the potential to revolutionise not only Finance, but in just about every other industry.
Simon: So, the idea is to use the Blockchain to provide an alternative way of raising corporate finance and also to help build a communities?
Costas: Absolutely. I mentioned earlier on about Globalisation initiatives and one other by-product of that initiative was the creation of Global communities that have a common interest.
Our aim is to bring the PowerSnooker Community together from every part of the world and unite them. This is a very important concept. The blockchain technology will help us to do that and the way it is going to help us is by raising the funds without expensive intermediaries. If we raise the funds, we can go and implement our business plans straight away. This is how the technology can help a traditional business in the sports and entertainment industry. The money we raise will allow us to support the sport with something tangible like the property industry. We think it is a great story — Creating a UK company with a global reach.
Simon: Another question that comes up in the context of an ICO is the team. Can you introduce a few members of the PSC team?
Costas: The ICO Leader is Olga Pisarenko, who comes from a Financial and Legal background. She has held very senior positions in a hedge fund industry and she is very knowledgeable in cryptocurrencies, and in touch with ICO trends. We also have a Cryptologist on board Dr Theodosis Mourouzis, who is a University professor in Russia who lives and breathes in Cryptography and he looks after the security of whatever we do. Then we have an IT specialist, Michael Papapavlou, who looks after the security of the wallets, wallet transfers and the token economics. He is also overseeing the administration of the website.
Simon: I couldn't help but notice that you also have very famous Boxing promoter on the team. Could you tell me a bit more about he became involved?
Costas: Yes of course and who doesn't know Frank Warren!! Frank is a very well known boxing promoter on the world stage, and has managed some of Britain's best boxers of the last twenty five years, including 'Prince' Naseem Hamed, Nigel Benn, Joe Calzaghe, Ricky Hatton, Dereck Chisora, Nicky Piper and Amir Khan. He is also a major shareholder of the Power Snooker Group with myself and Michael Gruber. Michael is a property professional and with Frank Warren they are the joint Chief Executive Officers of the group. Frank has been involved in Power Snooker sport from its inception in 2010.
Simon: What have your experiences been so far dealing with the UK authorities and regulations around cryptocurrency?
Costas: I am a practising Chartered Certified Accountant and also I have onboarded a UK barrister as well as an external firm of Solicitors who will advise accordingly.
As far as the Financial Conduct Authority (FCA) is concerned, we believe that the PowerSnookerCoin is a utility token and not a security token, so it is does not come under their jurisdiction. We have also taken external legal advice on this matter.
We are complying with whatever legislation we have to comply in the UK, starting with the Companies Act 2006 and we are also compliant with the Data Protection Act and after the 25th May, will be compliant with GDPR.
In terms of the Taxation, we believe any fundraising is exempt for VAT purposes but any income for the company will be subject to Corporation Tax which will we declare with HMRC in due course. We will of course, invite them to check whether they are happy with our adopted policies. We have already done this with the VAT Authorities and everybody was happy.
We will also be in full compliance with the Know Your Customer (KYC) procedures and the Anti-Money Laundering (AML) Legislation. We want to inspire confidence in the Crypto Industry. Unfortunately cryptos have been blamed unfairly for tax evasion and money laundering. Tax evasion and money laundering have been around since immemorial times while the crypto economy only came to existence in 2009. I feel it is an unfair comment for some well known people to make such comments as if there was no tax evasion or money laundering in the pre-bitcoin era.
Simon: That is a very detailed answer Costas. I think it is very important to be open and transparent and this is the feeling I get from speaking to you about Power Snooker Group.
If people are interested in buying the PowerSnookerCoin, what is the next step?
Costas: Please leave a comment on this interview or send me a Private Message via LinkedIn at Costas Joannou. I will be very happy to assist anyone who wants to find out more and support this project.
Simon: Thank you Costas it has been a pleasure to talk to you. I wish you the best of luck with the ICO.