BABB is an acronym for Bank Account Based Blockchain, and with their presale tokens all sold out, and their phase one token sale happening tomorrow, I chose this company and token to do our first ICO analysis.
To learn how to do your own evaluation click here.
The Company, The Team
The website nicely details a very large team. The main players seem to be:
- Rushd Averroės – Founder CEO
- Jorge Pereira – CTO
- Adam Haeems – COO
- Paul Johnson – CIO
- Dean Refaat – Head of Research
- Nonu Rocha – Head of Engineering
- João Gonçalves – Senior Software Engineer
- Jingwei Li – Researcher
All of their LinkedIn profiles are available on the BABB website and most of the team has a history of working in the fintech sector.
Having an experienced team coming from the banking sector is great considering the market the team intends on targeting. The team is spread globally which is also a positive as they will not be limited to seeing only the market in front of them. When developing a product for global infiltration, you need global perspectives.
BABB is attempting in this whitepaper to make a case that there is a need for a fully decentralized banking system. They claim in the introductory paragraph, that they will be able to demonstrate how their solution will be able to improve “individual well-being, support businesses and improve the financial resilience of communities, countries and the global economy as a whole.”
1. The Problem
BABB makes the case that there are 7 billion people on the planet, and over 2 billion of them do not have bank accounts. They use the term “unbanked” and define it as being reliant on cash, making it hard to save money, take out a loan or send money across any kind of distance.
The company states that this means that 30% of the population is being held back by not having access to these services. They note a project in Mexico to “bank the unbanked” has found that opening bank accounts for low-income customers led to a 7.6% increase in the number of business owners, a 1.4% increase in employment and a 7% increase in the average income.
The paper then goes on to say that the current banking system isn’t working for those who have access to banking services.
They then ask the question: Why when the unbanked market represents a $380 billion market, do banks not target these people, and they answer it by saying:
I think that throwing out the figure of 2 Billion people who do not have access to banking is irresponsible, I don’t see this number as accurate and cannot find a reliable source to corroborate this, so a source would have been great.
It would have been nice if BABB included the source of the Mexican study, I did, however, find it online here. It is a report drawn up by The World Bank Development Research Group. It is also dated June 2009. Another bit of a flag for me, but if it’s the only data available, I can’t’ blame BABB for using it. The figures BABB uses are consistent with the report.
2. The Solution
BABB wants to use blockchain based technology to offer bank accounts to anyone, globally. Their platform would have access to crowdsourced financial services. The company intends to have all account holders act as nodes in a peer-to-peer network that is managed by smart contracts to connect people with ideas to people with money.
The company believes that their solution will also end high prices caused by stagnant competition in the banking sector as well as data leaks linked to poor security. The last claim is that their system could make the global economy less susceptible to shocks like the 2008 financial crisis by decentralizing decision making.
The offering of a bank account to everyone is one on the BABB platform, which is compliant with regulations in the United Kingdom, without the need for a credit history.
To open this account, users will need to supply BABB with a valid form of ID, such as a passport or national ID card. Access to basic services will also be made available by using biometric authentication and peer-verification from a fully verified user.
BABB accounts will also be issued an IBAN for European and international bank transfers, as well as an account number and sort code for domestic transactions within the UK.
This allows integration with the old banking system as well as BABB’s platform.
BABB will provide a mobile application, which will allow you to create your bank account “as easily as taking a selfie and humming a tune” with no ID required for the basic account. Uploading one form of ID or getting referred by a fully verified person will give you access to the basic account. In addition to the regular banking services, BABB will allow for smart contracts as well as peer to peer financing such as currency exchange, loans and earning of fees, much like banks already do.
The company also plans on releasing a card called the “Black Card” which will link to your BABB account. The card can function like a debit card, or it can be issues as a pre-paid card for third parties such as friends and family. The card will have a QR code or NFC chip, so no pin or chip.
The card will only be able to be used by retailers or other people if they also have the BABB app and an account.
The whitepaper goes on to list various use cases:
- Peer-to-Peer Cash
- Peer-to-Peer Borrowing
- Peer-to-Peer Fundraising
- Payments and Payroll
The company states that their hiring process is strict and staff access to systems requires multiple factors and authentication.
BABB also claims that they will follow all the mandatory requirements for KYC and AML regulations with the relevant programs in place to detect and report suspicious activity.
BABB is registered in the UK as a financial institution and has applied for a UK banking license. They note that even though they have applied for a banking license, it’s not a requirement to achieve their goals as laid out in the paper.
BABB will issue the BAX token to raise funds for the development of the platform and mobile app as well as to cover infrastructure costs.
It has not been determined if BABB (the platform) will be incorporated as a Foundation or a Limited Company.
The BAX token will be created by BABB and 50 billion will be created and allocated as follows:
- 60% to the public
- 20% to the team
- 18% platform reserve
- 2% BAX bounty campaign
BABB mentions the following regarding fees:
This is a noble pursuit, and I like the idea. I do however feel that their idea isn’t particularly unique, and their goals are quite ambitious. I would prefer a business model which is a little more conservative. Right now I still don’t feel like there are any major red flags, I would just prefer to see a more balanced approach. Perhaps we will see it in the roadmap.
I like the idea’s behind verification, if you are truly looking at servicing lower income people, I can anecdotally confirm that there are many people out there who do not have ID documents available to present, so I do like the idea of being “vouched” for by someone else. My concern here might be that I could potentially vouch for someone who doesn’t exist to create an account to launder funds. Now I’m not saying I would do this, but I am saying that criminals might, and Governments might not like that, so it would be interesting to see how BABB plans on combatting money laundering and fraud. The other point of concern for me is the biometrics. Who is storing this data? Who will have access to it? I don’t want my biometric data being held by any individual, company or government without my permission, so clarification on this would be good. If it’s a case similar to Apple’s TouchID, then I would have no issue, as the data is stored locally.
The idea of integrating smart contracts isn’t new, but I like it, and I like the idea of using BABB to loan others money and collecting fees, I would, however, like to know how collections are to be enforced.
I also question how easily the poor might be able to access smartphones which seem to be a requirement for their system to work. Some of the use cases use examples such as a person in Ethiopia being supported by a family member in London with $300/month. With an income like this, it might be difficult to purchase a smartphone, as well as data (and having a good enough data connection to the smartphone).
The use cases seem like good uses for their system, however, it would be nice (and interesting) to see how the company intends on marketing their products to the public in low-income areas globally.
The developers have experience in the Fin-Tech sectors as well as with blockchain technology and the team is well publicised.
The developers seem very competent based on their LinkedIn profiles and seem to have very credible references.
The roadmap is as follows:
This roadmap seems feasible and buying this token would be for a longer term hold (+6 months) The Pre-Sale for tokens has already happened and the first phase of the token sale will commence on 6 February 2018. The application is due in Q3/Q4 2018.
The second phase of the token sale will commence in 2019 and the more advanced features will also be released in the same year.
The team has a Telegram channel, Twitter, LinkedIn, Facebook, Medium and YouTube accounts.
The Telegram channel is lacking representatives who are better versed in the product and the technology in general, this seems to be fairly common with a lot of ICO’s as social media managers generally don’t have much experience in this field, and technical people are generally doing technical jobs.
The Twitter account is fine, it is mostly advertising for their upcoming token sale, with much of the same on LinkedIn and Facebook.
The YouTube channel is a little better with engaging videos and discussions. These are worth a watch.
The Medium page is also quite informative with blog-styled releases regarding various topics on the token sale as well as lessons learned.
All in all, I believe this to be a legitimate ICO and intend on investing some Ethereum into the token sale on 6 February. If this summary has assisted you, I would encourage you to read my article on how to evaluate an ICO here and do the full research required to compliment my summary.