When we first started to circulate the concept of LEXIT as an online marketplace on which entire companies and their Intellectual Property can be bought, sold, and licensed, we were often asked why our proposal relies so heavily on blockchain technologies, and especially why our marketplace needs to be tokenized.
This is a very justified question, especially in this day and age, where tokens seem to pop up anywhere like mushrooms after the rain. After all, LEXIT is a platform marketplace, not that different from P2P commerce veterans such as eBay or AirBnB, which managed to disrupt their respective industries heavily without invoking “blockchain magic”. Selling a company or licensing its assets, however, is a much different story than renting your guest room to strangers on the internet.
Involving batteries of corporate lawyers, investment bankers, financial advisors, and appraisers, selling a company or assets thereof entails complex processes and many stakeholders, all of which have to earn each other’s trust in an often long and painstaking process. It is this complexity that has until now prevented M&A to migrate to a platform economy format, and it is jumping this hurdle where LEXIT, our token, and the blockchain have a chance to shine.
Trust in an open, global market
The LEXIT marketplace accommodates for three categories of participants: Sellers, offering their companies, patents, or corporate assets; Buyers, browsing the marketplace to acquire exiting startups or buy their IP; and Service Providers such as appraisers, patent lawyers, and specialists, competing to provide buyers and sellers with due diligence services. These three parties engage on the LEXIT platform to cut capital intensive deals, while residing in separate jurisdictions, often without meeting in person.
Would it theoretically be possible to get all these players on one virtual field to exchange millions of dollars online without the help of blockchain technologies? Theoretically? Yes, probably. This would entail costly and slow fiat-escrow services, large legal- and auditing firms, and the physical exchange of hand-signed, notarized documents. Pretty much the way M&A works today.
However, relying on blockchain and smart contracting technology, we are able to escrow payments, hash negotiation logs in an immutable ledger, verify identities, create incentives for a distributed network of independent service providers, and much more at a fraction of the standard costs.
An internal vehicle of value
Service Providers operating on LEXIT, such as legal- and patent experts, are subjected to a rating system that assists buyers and sellers in hiring the right services. Given the sensitivity of the subject matter, this rating system operates on a “put your money where your mouth is” basis. This means that buyers or sellers wishing to rate a service provider will have to pay in order to do so, while a “spam” rating might have negative monetary consequences.
This rating mechanism works best when based on smart contracts, while a cryptographic token is used as an internal vehicle of value. This, again, would probably be possible without tokens, but much more complicated and harder to secure (we checked). The same is true of the automatic contribution-tracking mechanism for LEXITs, independent service providers, and our Global Partners.
Our research has shown this time and again - for value to flow through LEXIT as fuel flows through a well-tuned engine, a cryptographic token is absolutely necessary. If we want to streamline a complex process like M&A, relying on cutting-edge technologies is an absolute must, and blockchain technology is this cutting edge when it comes to the transfer of value, immutable record keeping, and the facilitation of trust among remote agents.
At this point, we should clarify that buyers and sellers on LEXIT are not obligated to settle entire deals in LXT. We’re talking here about millions, often tens of millions of USD changing hands. For various reasons, some of them legal in nature, it will often be the case that fiat money will have to be exchanged using traditional methods.
However, LEXIT’s commision payment, service provider’s fees, listing fees, rating fees, escrowed down-payments, and access to advanced services will all be charged and settled in LXT.
As the blockchain space matures and blockchain-fintech solutions become more institutionally accepted, we presume that LXT transactions will gradually displace all fiat transaction on LEXIT. This is why from the very beginning we will also allow and encourage our users to settle the lion’s share of their deals in LXT. This method of cryptographic value exchange has proven itself to be faster, more secure, and above all programmable - meaning that smart contracts can govern payment terms and conditions according to verifiable events mentioned in agreement clauses.
We firmly believe in the future of blockchain technologies in general and tokenization in particular, and we are glad to have found so many like-minded supporters sharing this view with us. For more information about the LXT token, its utility, and future distribution events, visit us at https://www.lexit.co/token, join us on Telegram, and subscribe to our newsletter.