PROJECT -2

COMMUNITY WELFARE PROGRAM FUELED BY BLOCKCHAIN AND CRYPTO

What does a real and sustainable solution to the wealth gap look like? This Community Welfare Program initiative gives you that insight. It is a strategy to bring the unbanked community into the banking system. A response to the endless politically influenced debates about a universal basic income. Blockchain and crypto will embrace this trajectory and give the project security and robustness. That’s the topic we’ll cover and much more.

Author: YS Koen, Klaten, 03 September 2021

PROJECT -2, Community Welfare Program fueled by Blockchain and Crypto

What the pandemic has made us all realize is that there had to be a moment of reflection, the realization that we had to get through this together. Schooling, career, relationships, individual growth, everything was put on the back seat for a while, nothing seemed to stay the same and yet there was the feeling of togetherness. Governments came up with all kinds of initiatives to support their citizens, aid programs that provided financial resources to the needy, loan programs for companies were started. Many private initiatives have also been started to help each other. Suddenly, something like a Universal Basic Income seemed necessary and not far away.

The discussion about tackling the wealth gap has been going on for some time, but what kinds of initiatives have been developed so far that offers long-term solutions? We believe that no one will morally object to solutions that address the wealth gap. The question is how to achieve these solutions and how can we prevent that what seems like a wonderful initiative today from being shut down tomorrow because it is not so realistic after all? Our biggest objection to an initiative like a Universal Basic Income is that no one offers a solution for how this should be financed in the long term other than through tax increases. Moving budgets from one Social Security program to another is like robbing Peter to pay Paul, when we do that with our company’s balance sheet we will be immediately ordered to stop. That are not long-term solutions, but a way to clean up the balance sheet.

Then there are the objections like how much is enough and what is considered sufficient today, will that still be enough in the future? Besides, we don’t hear anyone talking about keeping these kind of programs away from politics. In general, history is not kind when it comes to such initiatives. There is a great danger that if we allow political interference with Universal Basic Income, it will be used as a negotiating tool during elections. If for some reason the program cannot continue, what will they do for all beneficiaries of these types of social programs? Are they left to their own devices? Do they have to figure out for themselves how to close that financial gap? That’s like giving a heroin addict free methadone first, only to send them back onto the streets a few years later because the free-dispensing program has ended. But in this case, it is the government itself that is the drug dealer.

It shows a lack of intellectual depth within a society if we cannot come up with a sustainable solution to reduce the wealth gap and then opt for the easiest way out by handing out free money. There may be no conditions attached to providing cash, everyone should be eligible. But what does this mean for the further development of an economy of the country in question? We can guarantee that this can only be sustained if the amounts are adjusted over the years and then it is a perfectly valid question, when will it be enough and how much is really going to be enough?

Let’s be very clear in one thing, we are absolutely not against solutions to close the wealth gap. The problem of the wealth gap should have been addressed much earlier. But these kinds of discussions regularly get bogged down in endless conversations without a solution being proposed. News from all over the world is available to everyone, here in Indonesia we also hear about the discussions going on in countries in North America and Western Europe. Everyone here also wants access to the stimulus checks, social security should be a fundamental right for all citizens of the world, but unfortunately that is not the case. Should we leave the discussion to the leading politicians, or should initiatives come from within the society? These are the problems that give us sleepless nights. The pandemic has put the issue of the wealth gap back on top of the agenda. So now it’s time to do something about it. We offer a solution for this. Something that we want to implement here from the beginning and can be expanded around the world in the future. Hopefully, other initiatives will benefit from the road we are paving and the data we will collect will contribute to the adoption of those initiatives.

PART 1 The Proposal

Providing a Credit Reserve to members in a group context. Each individual member of the group receives his Personal Credit Reserve. A member can be an individual or a composition of persons such as a family. The group can consist of members of a specific community such as a neighborhood, district, village or can consist of a target group that one wants to reach with this program. In the structure in which we want to roll out the plan, the members will be all families within a particular neighborhood community. The Credit Reserve will consist of 2 x the average annual income per family of that community. The amount is the same for all members, this is not adjusted to each individual member. Each group is united in a “community bank” [1]. The individual members do not receive the money in cash but will be made available as a Credit Reserve.

We propose that each group has its own foundation/Association of which each individual member becomes the beneficiary. The funds ultimately belong to the individual member, the foundation/ Association carries out the fiduciary management of the funds. We choose to bring all individual beneficiaries of this program together in a foundation/Association because of the group dynamics that can arise. This kind of program, if done right, can help not only an individual member, but also lift the entire community they are a part of to a higher level. In order to get the maximum benefit from the program, information, education and assistance will have to be provided to individual members.

Each member, in our case a family, is allocated a fixed amount. This amount is made available as a Credit Reserve. It can act as a sort of overdraft facility, where money from the individual reserve can be withdrawn and repaid by the specific members. If members decide to use the amount in full and not repay the debt, the membership will be terminated immediately, and they will lose access to the program. In addition, they will no longer be eligible for support and will lose all other benefits of the program.

In the community that we are going to serve with this project, the project is going to make a very big difference. Especially for the members whose annual income is below the community average. By participating in this program, the beneficiary will build a credit history. Every transaction is recorded from the moment of participation, this can be used in the future when the beneficiary applies for a loan with financial institution. “Giving the unbanked in this society access to the banking system”. Hopefully, this program will also serve as a financial safety net for the beneficiaries. Due to the very limited financial options available to the beneficiary, there is a greater chance that an imbalance will arise when an unexpected event occurs. It is easy to judge that they must learn to save money, but from what? This program provides a financial buffer to fall back on. This may have a positive effect on the mental awareness of the members.

We propose a Credit Reserve system in which the participant does not have to pay interest on the loan from their own reserve. But there should be a reward and penalty system. Members will be rewarded when they repay on time and will receive a penalty if the money is paid back late or not at all. The latter also applies if participants withdraw more from their individual reserves within the foreseeable future than is justified for the longer term. In addition, it will also be necessary to encourage members to help each other when they need more money than what is available in their own reserve. The community could decide to lend available money to the local business community, of course for a predetermined cost reimbursement and with the borrower providing shares in the company to the joint members. After the loan and the fee due have been paid, a divestment can take place, provided that part of the shares in the company will remain at the disposal of the joint members to be able to opt for future dividend income.

[1] Community banking is a non-traditional form of moneylending. The funds that community banks lend to borrowers are gathered by the local community itself. This tends to mean that the individuals in a neighborhood or group have more control over who is receiving the capital and how that capital is being spent.

What is a Credit Reserve and why do we choose this model?

We have chosen to give the program the term Credit Reserve. Although it’s not an official legal term, or a well-known micro-economic term, we think it covers it all. Let us explain: Each individual member gets their own Personal Vault (to use another popular word) with a certain amount of money in it, or in other terms a financial reserve. The amount is not provided for consumption, members will derive the most from the program if the principal remains intact, so to achieve this purpose it is provided in the form of credit. Members can withdraw money from their Personal Vault if necessary but are expected to return it when they are able to. It is not a gift, seen from the right perspective it is a financial safety net for unusual events.

Members can withdraw up to a third of the money from their own reserve, but this must be accompanied by an instalment schedule to maintain the benefits of the Community Welfare Program. Up to 5% of the principal can be withdrawn each year without affecting participation in the Community Welfare Program, but we will continue to motivate members to maintain and increase the amount through savings and investments. At least one third of the principal can be used for savings and investments and up to one third of the principal can be used for lending to third parties. Why do we apply so many rules and restrictions? Shouldn’t the program just be unconditional, and shouldn’t we give members unlimited access to the money they’re allotted? Important questions that require a clear answer. But one can assume that we thought this through carefully and thoroughly before coming to this conclusion.

The main reason why we have opted for rules and restrictions on the use of the funds lies in the long-term use of the social program. We don’t want the program to end after a few years and for the members to have had a nice moment at most, but after that everything stays the same. That would be an unnecessary waste of time, burning large sums of capital, but in the end the members are left empty-handed. We do not impose any restrictions on who is eligible for the social program within a particular cohort. In fact, once we accept a particular group as a beneficiary, each member is allocated their Personal Credit Reserve, we will not ask in advance whether or not they want to use the social program, we do not make an exception for an individual member of that community. We believe there are certain benefits to designating a neighborhood community that can participate in the social program and then giving each family of that neighborhood community access to their Personal Vault, regardless of each family’s personal situation, whether they need it or not. We even assume that up to 10% of a target group independently has a higher annual income than the average of the group. The average annual income of the target group is the most important component for the composition of the amount allocated per member. Members with a higher-than-average annual income are less likely to use the Community Welfare program to borrow. But that can actually have a positive effect on the group process, because they can use their Personal Vault to help others in the community when needed. So, no rules and restrictions on the allocation of participation in the program within a certain target group, but certainly rules and restrictions on the use of the principal amount in their Personal Vault by the individual members.

UBI vs. Cash Transfers to Personal Credit Reserve

The question remains how did we arrive at the Personal Credit Reserve model? The Universal Basic Income has been discussed several times in this document. The rationale behind the why of a universal basic income is absolutely good, once again the global pandemic has proven this. But if you’re on a continent other than Europe or North America, you will wonder why they have the luxury of having this discussion at all. One of the compilers of this document was born in Europe, worked in his young adult years (total 16 years) on all continents and is now based in Asia since 2008 and mainly in South East Asia since 2012. In other words, two feet in both worlds. Then you start to think that it is precisely here (Indonesia/South-East Asia) that the need for something like a Universal Basic Income is strongly present. This raises the question of how such a thing should be financed? Tax hike for the rich among us – a drop in the ocean that barely adds anything to make it possible. Increase VAT? In other words, you’re asking the public to pay more for everything in order to enjoy a universal basic income. Maybe we don’t quite get it, but in our opinion that is just pumping money around to keep the machine running and thereby please the public with a universal basic income and at the same time stir public anger by raising VAT.

It becomes even more dangerous if its financing is not properly substantiated, citing as a good example the “Ontario Basic Income Pilot Project”, which was initiated for a period of 3 years. To stop it after 10 months because they thought it was too expensive after a political change of the guard. If these kinds of initiatives are not properly initiated, but you put them in the hands of the government, there is a very great threat that the projects will become the plaything of politics. That may be good for the popularity of the politician at the time, but very threatening for the beneficiaries of the projects. You cannot say that the project in Ontario was not well thought out, see: “Finding a Better Way: A Basic Income Pilot Project for Ontario”, A discussion paper by Hugh D. Segal^[2]. But financially not well substantiated to withstand any political wind. It should be noted that it was a pilot project, so it was also something that could be dropped if it wasn’t quite convenient^[3]. To keep it under the attention of everything and everyone and maintain the popularity of the initiators, all kinds of catchy names are used and molded into other forms such as social dividend, commonwealth dividend, who doesn’t want such, who wants to object to that?^[4]

Better documented, better studied and also well thought out are the cash transfer projects in Africa, Kenya and Uganda to be precise. Very well documented projects over a period of many years with clear conclusions. Although they were both projects with a limited duration of one-off up to 3 years, the effects of the programs have been measured and documented over a period of up to 10 years. The conclusions do not differ much from each other, if there are differences in the outcome of the projects, it is at the micro level and certainly not in macro factors. The link to the reports follows at the bottom of the page^[5] – ^[6], but the bottom line, and that is the humble opinion of the author of this paper, is this: The projects immediately made a big difference for the target groups that were allowed to participate in the project, compared to the groups that were surveyed but were not given access to the cash transfers. It provided the beneficiaries with a significant short-term benefit. The benefits even extended beyond the project’s direct beneficiaries, as they actually spent the money.

Over the life of the programs, there is a clearly measurable benefit to the beneficiaries compared to their peer group that does not have the cash transfers. But that benefit immediately diminishes when the project ends, although they still retain some benefit for a period of time built up over the life of the project. Any benefit has completely disappeared within a maximum period of 4 years after the end of the project. Then any advantage is completely wiped out and they are back on par with the others. However, there are many lessons we can draw from the available study material. The most important lesson we can learn from the cash transfer projects is that we need to maintain the social programs for as long as possible to get the maximum benefit for the beneficiaries. Objectives and regulations contribute to clarity about how the resources are spent, a significant part of the resources is well spent when this is reflected in the objectives, at least 70% of the principal is then actually spent on the relevant objective. In this way, dilution of funds can be avoided.

Another clear lesson to be learned from the available reports is that the projects also had measurable benefits for the entire community. The benefit was not only in financial terms, but the projects certainly had measurable positive social impacts. All this has led to how we have designed the social program. We give the participants access to a certain amount as a reserve, part of it can be used to temporarily extend disposable income, but it is not an increase of it, because they are responsible for replenishing the reserve with the same amount they had withdrawn from the reserve. In short, a Credit Reserve. In addition, a significant portion can be used for savings and investments, allowing them to significantly expand their financial wealth for the future, which they would not have had access to otherwise. This means that they will have less worries about the future and will not have to put pressure on others to make a financial contribution for them, which is common now.

[2] https://files.ontario.ca/discussionpaper_nov3_english_final.pdf A discussion paper written by Hugh D. Segal in 2016, which preceded the pilot project and on which Ontario’s Basic Income Pilot Project was based.

[3] https://maytree.com/wp-content/uploads/Lessons-from-Ontario%E2%80%99s-Basic-Income-Pilot.pdf A report by Michael Mendelson, published in 2019, on lessons learned from the Basic Income Pilot Project in Ontario.

[4] https://assets.website-files.com/5f07c00c5fce40c46b92df3d/5fcf8ed17fb77568bd94cfcb_Potential%20Impacts%20and%20Reach%20of%20Basic%20Income%20Programs%2020201203%20FINAL.PDF.pdf A recent research paper “Potential Economic Impacts and Reach of Basic Income Programs in Canada” published by The Canadian Center for Economic Analysis (CANCEA) in December 2020.

[5] http://cega.berkeley.edu/assets/cega_events/53/WGAPE_Sp2013_Blattman.pdf “The economic and social returns to cash transfers: Evidence from a Ugandan aid program” A research paper by Christopher Blattman et al., published in April 2013

[6] https://econweb.ucsd.edu/~pniehaus/papers/cash_transfers_ge.pdf “General equilibrium effects of cash transfers: experimental evidence from Kenya” A research paper by Dennis Egger, Johannes Haushofer, Edward Miguel, Paul Niehaus, Michael Walker, published on December 22, 2020

A Credit Reserve, no interest, how is that possible?

The members each receive a Personal Vault containing a certain amount of money. If the member in question needs a loan, this is done by means of a withdrawal from the Personal Vault. So, to whom should interest be paid, to the Personal Vault? This complicates the transaction and has a longer repayment period than is strictly necessary to ultimately becoming the beneficiary of the interest payment. There is no reason why we should charge members with interest payments if it serves no other purpose than to complicate the transaction. This also applies in the event that members provide a certain amount of money to other group members in the form of a loan.

In this context, borrowing means that the property of one party is transferred to the other party, who can use it temporarily. This does not mean that the title is transferred, the right of temporary use is granted to the borrower, but there is a time limit on which the amount must be returned to the owner, this can be the whole amount, or in installments in a predetermined amount and timetable. All costs associated with the transaction will be nil in the beginning, there will be little to no reason to transfer physical assets other than currency. The transaction may be entirely in cash as it is a community transaction and involves relatively small amounts of money. Any costs associated with the transaction shall be borne by the borrower.

But as for business loans to third parties, are those non-interest-bearing loans too? The most direct answer to this question is yes, especially when it comes to members’ ability to provide funds to third parties of a business nature. Interest income is not the only revenue model for providing funds and, above all, not the ultimate solution. If a progressive interest rate is applied, there is clearly a ceiling on earnings. Now others will mainly say that it also serves as security, or to cover risks, but is that really the case? The risk is 100% if the borrower cannot repay the principal. Aside from the risk and limited revenue model, interest hides a very cheap message devoid of any intellectual wealth. A message that strongly contradict the ideas of the social program. Interest has selfish characteristics, when entering into the agreement between lender and borrower, only the interests of the lender are considered. Interest is devoid of confidence in the borrower’s ability to deliver a good result. Interest does not consider the situation of the other, the borrower repays a certain amount according to the agreement of time and amount, whatever comes his way, if the borrower cannot meet his obligations, he is immediately in default, regardless the reason.

There are other options for establishing a revenue model for providing funds to third parties. The ideas of the social program are more in line with the characteristics of Islamic banking and finance. Below we will list its main features and more specific a particular part of it.

Brief overview of Islamic finance

The contemporary movement of Islamic banking and finance prohibits a variety of activities:

Paying or charging interest. “All forms of interest are riba^[7] and hence prohibited“. Islamic rules on transactions (known as Fiqh al-Muamalat) have been created to prevent use of interest.
Investing in businesses involved in activities that are forbidden (haram). These include things such as selling alcohol or pork or producing media such as gossip columns or pornography.
Charging extra for late payment. This applies to Murabaha^[8] or other fixed payment financing transactions, although some authors believe late fees may be charged if they are donated to charity, or if the buyer has “deliberately refused” to make a payment.
Maisir. This is usually translated as “gambling” but used to mean “speculation” in Islamic finance. Involvement in contracts where the ownership of a good depends on the occurrence of a predetermined, uncertain event in the future is maisir and forbidden in Islamic finance.
Gharar. Gharar is usually translated as “uncertainty” or “ambiguity“. Bans on both maisir and gharar tend to rule out derivatives, options and futures. Islamic finance supporters (such as Mervyn K. Lewis and Latifa M. Algaoud) believe these involve excessive risk and may foster uncertainty and fraudulent behaviour such as are found in derivative instruments used by conventional banking.
Engaging in transactions lacking “material finality“. All transactions must be “directly linked to a real underlying economic transaction“, which excludes “options and most other derivatives“.

Money on the most common type of Islamic financing — debt-based contracts — “must be made from a tangible asset that one owns and thus has the right to sell — and in financial transactions it demands that risk be shared.” Money cannot be made from money. Another statement of the Islamic banking theory of finance is: “Money has no intrinsic utility; it is only a medium of exchange.” Other restrictions include:

Risk sharing. Symmetrical risk and return on distribution to participants so that no one benefits disproportionately from the transaction.

Profit and Loss Sharing (also called PLS or “participatory” banking) is a method of finance used by Islamic financial Institutions to comply with the prohibition on interest on loans. Many sources state there are two varieties of Profit and Loss Sharing used by Islamic Finance Intermediaries – Mudarabah (“trustee finance” or passive partnership contract) and Musharakah (equity participation contract). Other sources include Sukuk (also called “Islamic bonds“) and direct equity investment (such as purchase of common shares of stock) as types of PLS.

The profits and losses shared in PLS are those of a business enterprise or person which/who has obtained capital from the Financial Institutions (the terms “debt“, “borrow“, “loan” and “lender” are not used). As financing is repaid, the provider of capital collects some agreed upon percentage of the profits (or deducts if there are losses) along with the principal of the financing. Unlike a conventional bank, there is no fixed rate of interest collected along with the principal of the loan. Also, unlike conventional banking, the PLS Institution acts as a capital partner (in the mudarabah form of PLS), serving as an intermediary between the depositor on one side and the entrepreneur/borrower on the other. The intention is to promote “the concept of participation in a transaction backed by real assets, utilizing the funds at risk on a profit-and-loss-sharing basis“.

Profit-and-loss-sharing is one of “two basic categories” of Islamic financing, the other being “debt-based contracts” (or “debt-like instruments“) such as murabaha, istisna’a, salam and leasing, which involve the “purchase and hire of goods or assets and services on a fixed-return basis“.

One of the pioneers of Islamic banking, Mohammad Najatuallah Siddiqui, suggested a two-tier model as the basis of a riba-free banking, with mudarabah being the primary mode, supplemented by a number of fixed-return models – mark-up (Murabaha), leasing (ijara), cash advances for the purchase of agricultural produce (salam) and cash advances for the manufacture of assets (istisna’a), etc. In practice, the fixed-return models – in particular Murabaha model – have become the favorite model to use, as long-term financing with profit-and-loss-sharing mechanisms has turned out to be more risky and costly than the long term or medium-term lending of the conventional banks.

Mudarabah

Mudarabah or “Sharing the profit and loss with venture capital“, is a partnership or trust financing contract (similar to western equivalent of General and Limited Partnership) where one partner (rabb-ul-mal or “silent partner“/financier), gives money to another (mudarib or “working partner“) for investing in a commercial enterprise. The rabb-ul-mal party provides 100 percent of the capital and the mudarib party provides its specialized knowledge to invest the capital and manage the investment project. Profits generated are shared between the parties according to a pre-agreed ratio. If there is a loss, rabb-ul-mal will lose his capital, and the mudarib party will lose the time and effort invested in the project.

Musharakah

Musharakah is a joint enterprise in which all the partners share the profit or loss of the joint venture. The two (or more) parties that contribute capital to a business divide the net profit and loss on a pro rata basis. Musharakah is often used in investment projects, letters of credit, and the purchase or real estate or property. In the case of real estate or property, the bank assesses an imputed rent and will share it as agreed in advance. All providers of capital are entitled to participate in management, but not necessarily required to do so. The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by each partner strictly in proportion to respective capital contributions. This concept is distinct from fixed income investing (i.e. issuance of loans).

We are not becoming an Islamic financial institution; the Community Welfare Program is an institution for everyone. The key features of Islamic finance are what appeals to us to let our members use them. No hidden costs, no dominant division of roles between parties, clear agreements in advance, no hidden agendas. The social program will not only serve parties with an Islamic background. You can eat the food prepared according to the Kashrut dietary laws without being a member of the Jewish faith, you don’t have to be vegan to not eat meat and you don’t have to be a diehard fan to listen to a song by a certain musician.

The 2007-08 crisis caused a lot of public anger, changes had to be made. All things that made us think and put us on the path of learning, research and development. People like to present things as if they were final, cast in concrete, as if they were statues, but everything is subject to development. The banking system, fiat system, capitalist system and its excesses, but also the reactions to them, it all comes together for us in this project. Things are not as black and white as is often described, something isn’t just right or wrong, that’s not how the world works. First of all, we are all human, almost 8 billion together, we have to keep it all together. Humanity has been on this planet for a while, let’s make sure it stays that way for a long time to come.

That’s why we like to think in concepts, we want to see the important things as a concept, which we can give a twist to so that we all feel comfortable as individuals. We don’t have to blindly accept everything that others determine, everyone can give it their own color, taste and sound. That made us investigate what kind of concept we want to present to the members of the Community Welfare Program, and we came to the conclusion that key features of Islamic finance as a concept better fit with the social program. In fact, we think that if the traditional banking world had adopted more features of Islamic finance, the banking and financial crisis of 07-08 would not have happened so dramatically.

More involvement from all parties is needed to close a deal, but what’s wrong if our members have more insight into what they want to invest money in? There is especially more fairness when an agreement is reached, all parties will have to agree on all fronts, including the division of roles and how the outcome will be distributed. The Community Welfare Program stands for Sincerity, Equality and Opportunity through Cooperation. Then we also have to ensure that that message is properly propagated, and we think this is the best way to do it.

[7] Riba (Arabic: ربا ,الربا، الربٰوة‎ ribā or al-ribā, IPA: [ˈrɪbæː]) can be roughly translated as “usury”, or unjust, exploitative gains made in trade or business. There are two principal forms of riba. Most prevalent is the interest or other increase on a loan of cash, which is known as riba an-nasiya. Most Islamic jurists hold there is another type of riba, which is the simultaneous exchange of unequal quantities or qualities of a given commodity. This is known riba al-fadl. More on Riba: https://en.wikipedia.org/wiki/Riba

[8] Murabaha (Arabic: مرابحة‎, derived from ribh Arabic: ربح‎, meaning profit) was originally a term of fiqh (Islamic jurisprudence) for a sales contract where the buyer and seller agree on the markup (profit) or “cost-plus” price for the item(s) being sold. In recent decades it has become a term for a very common form of Islamic financing, where the price is marked up in exchange for allowing the buyer to pay overtime. Murabaha financing is similar to a rent-to-own arrangement in the non-Muslim world, with the intermediary (e.g., the lending bank) retaining ownership of the item being sold until the loan is paid in full. More on Murabaha: https://en.wikipedia.org/wiki/Murabaha

Substantiation & Execution

For the long-term success of this project, we must ensure that beneficiaries receive professional information, education and assistance. It is likely that without this help, a large majority of beneficiaries will want to spend the money immediately. This will at most give a temporary boost to the local economy and commerce, but in the long run it will do nothing about the wealth gap. Then the project completely misses its goal, at most the beneficiaries will experience a feeling of happiness in the short term, but in the long term this has no effect at all. That is why we want to collaborate with local colleges and universities. This collaboration will be 2-fold, an information and guidance program must be developed, in addition we want to collect data through surveys among members to determine the social impact of this program. The data should provide insight into whether the program has an impact on employment and income, health and mental wellbeing and what this means for its members. Does the project have other positive impacts on the beneficiaries besides the financial aspects? This data is important for the continuation of the project in the long term.

Once members become convinced of the project’s full potential, that these funds can be used for more than just personal purposes, the entire community will benefit from it. We hope there will be interaction within the community. For example, during an impactful event for an individual member, such as hospitalization, death, etc. Then the community could collectively help the individual member by providing financial support for a certain period of time. This can be important when a reward and penalty module is applied. Because the individual member may need more money for the impactful event than their usage limit allows, (more on this later). In addition, we hope that a dynamic will arise that gives people the feeling that more is possible to increase their income independently. For example, by starting a (micro) enterprise for themselves, or by supporting other members in expanding their business.

For business use of the funds, we suggest that the borrower submit a business plan detailing what the funds are needed for, the required investment, term, and repayment schedule. A local investment committee (consisting of the members of the local foundation/Association) will study the project in more detail, in addition a request for advice will have to be submitted to the Head Foundation. If both bodies agree, the local branch, possibly with the support of the Head Foundation, can make the investment.

Personal use of the Credit Reserve

This is the most important aspect of the program, the Credit Reserve for personal use. The target group and community that we serve with this project has little financial scope. They often have not more than their monthly income, no savings, no assets. A project like this will bring significant benefits if each member has access to a Credit Reserve equal to 2 times the average annual income of the members of the community. The project will have to be promoted in such a way that it is a Credit Reserve and cannot be regarded as a supplement to the wage income. That is why we are introducing an annual usage limit[9] of 5% of the principal. In the most unfavorable conditions, the whole community will consume its personal usage limit, then the project will end within 20 years. This is not conducive to the survival of the whole project and it loses power for the beneficiaries. Members will begin to view the project as a supplement to their annual income, without opting to experience the long-term financial impact of trying to maintain or even increase principal.

Each individual member can withdraw up to one third of the principal from the Personal Credit Reserve if a repayment plan is executed for this. In this way, the member retains all the benefits of the entire program. However, strict adherence to the repayment plan must be ensured otherwise the member will lose access and benefits of the plan. In order to enable a significant withdrawal from the personal reserve, the beneficiary will have to submit an application. It will have to be described what the necessary funds will be spent on, accompanied by a repayment proposal including how many installments and the installment amount. The request to withdraw money from the personal reserve is dealt with in a personal meeting with the beneficiary, possibly with a counter-advice. In that conversation, the beneficiary will be informed about the possible consequences if the repayment plan is not strictly adhered to. The responsibility for withdrawing funds from the personal reserve and complying with the repayment plan rests entirely with the beneficiary and must be respected.

The individual Credit Reserve can be used in whole or in part to put together a savings and investment portfolio that can increase the principal in the long term. The capital gains accrue directly to the beneficiary and can be spent as the beneficiary chooses. The capital gain can be paid out after a certain period as a supplement to the annual income or can be kept in the savings and investment portfolio to maintain and further expand the capital. There will have to be clear communication with the individual members about the risks associated with any investments. That is why a risk profile will be mandatory, in which certain agreements will be registered. The Head Foundation is responsible for strict adherence to this protocol.

[9] Annual Usage Limit: Members can withdraw up to 5% of the total amount of the Credit Reserve annually without refunding this amount and still retain access to the program.

Making funds available to third parties in personal capacity

Members within a group are expected to support each other where necessary. We recommend that members, for arbitration purposes, notify the local foundation/Association in advance should the transaction occur between members. If the members concerned jointly decide not to inform the local foundation/Association in advance about the transaction, neither of them can claim support if a dispute arises between the members about the transaction. The Foundation does not wish to promote transactions with third parties outside the group and will therefore not be a party to this. Members are strongly advised not to become personally involved in transactions outside of their own group.

We do not prefer transactions by one or more members in a personal capacity with a commercial party (company). Especially because the right of recourse for private individuals is expensive and limited. We advise everyone to make such a transaction through the local foundation/Association. In the event of an emergency, several parties jointly bear the burden and not a limited number. On the other hand, if the Foundation rejects the transaction, members in a personal capacity or in a group context, can still decide to financially assist the commercial party. If one or more members still decide to enter into the transaction with the commercial party after a negative assessment by the Foundation, then no claim can be made for assistance from the Foundation if things threaten to go wrong.

Making funds available to third parties from a group context

All group members are given the opportunity to apply for a business loan within their own group. All individual members are given the opportunity to invest up to one third of the Credit Reserve in companies through such credit applications. Each loan application must be accompanied by an investment plan with principal and repayment schedule. The loan application is first processed by the Board of the local foundation/Association and then submitted to the Head Foundation for advice.

If both bodies agree with the credit application, it is put to the vote of the members. If the project is accepted by the members after a successful vote with an absolute majority of two thirds (66.7%) of the votes, the project will be accepted for funding by the whole group. A member of the group who has voted negative can request not to participate in the group investment. If the members vote positively with a democratic majority of at least 51% of the votes, only the members who voted positive will participate in the investment. If the funds within the own group are not sufficient, an appeal can be made to the Head Foundation for additional investment funds. If a funding application is accepted by the group with an absolute majority of votes, the Head Foundation is obliged to make up any shortfall in funds.

Pledge of the Credit Reserve

If one of the members needs external financing, the relevant member can submit a request to use the Credit Reserve as collateral for external financing. If the member concerned has used part of its individual Credit Reserve for purposes other than the future loan, the outstanding part will have to be repaid, or that amount will be deducted from the collateral on the Credit Reserve. Double pledging of the same collateral cannot be permitted under any circumstances.

The Credit Reserve may only be pledged to an official financial institution. The Foundation must be informed by the lender about the conditions of the pledge. Exercise of a claim based on a pledge of the Credit Reserve by third parties may affect further participation in the program for the member concerned. If the claim exceeds one-third of the Credit Reserve, further participation of the member concerned in this program will have to be reassessed after the claim transaction. If a claim is made due to the member’s breach of contract, participation in this program will be irrevocably terminated. All agreements and provisions for the use of pledge will be documented and processed until the transaction (collateralization) is terminated.

In all cases, individual members can count on support and guidance from the (local) foundation/Association. From the beginning of this program, all the procedures of the program will seem complicated to members, so we want to continue to emphasize the importance of information, education and support. The program will lose momentum if members are left to their own devices and there is a good chance that individual members will pursue only short-term happiness without realizing what this program can do for them in the long run. Once the project is fully developed and all possibilities can be exploited, all procedures will be more efficient for the benefit of all members.

Project Infrastructure

Head Foundation

This Foundation will be established in Indonesia, where we will roll out the project. It is therefore logical if the initiators want to establish the Foundation there. This Foundation will take care of the management and governance of the (local) projects that we have under direct management. The Head Foundation has no executive tasks in the various “local” projects other than a controlling and supervisory task. The Head Foundation will have an Executive Board of at least 2 members, chaired by the Chairman, who comes from the initiator P.T. Emas Cemerlang Bersama. The Board is supported by a Board of Commissioners and an Advisory Board. They will be jointly responsible for the general policy of the project and where necessary changes in the policy will be applied to ensure the longevity of the project.

In addition, the Head Foundation is responsible for managing the funds that have not yet been allocated to the various “local” projects. A manager will be created for management of the funds, who will explain and implement the policy in this regard. In addition, this manager must ensure that the cash reserve for the various projects is maintained and they will have a monitoring function over the spending of the funds at the local projects.

Local Foundation or Association

This will be a legal entity that will carry out the operational activities of the project. They will be responsible for allocating and managing the funds to the target group. The local Foundation or Association will be subordinate to the Head Foundation and will have to report to the Head Foundation from its executive role. The local Foundation or Association does not have a decisive vote in the admission of new candidate members but can at most advise the Head Foundation.

The local Foundation or Association must have a physical presence in the community they serve. They must support the beneficiary members of the program. From this position, the local Foundation or Association will have to carry out activities so that the beneficiaries can use their Credit Reserve. In addition, the local entity will be responsible for informing, assisting, and educating the beneficiaries and has an executive role in the reward and penalty system that the beneficiaries have to deal with.

The local entity must establish a Council of Members representing the group of beneficiaries, these individual council members must attend at least the monthly meeting to report on the implementation of the program. In addition, loan requests from third parties can be discussed and loan requests from individual members that exceed the set limit can be approved or rejected. The Board of the local entity chairs the monthly members’ meeting and sets the agenda but leaves room for input from the members’ council. In addition, the Board must provide the individual members with a report on the state of affairs of the local entity at least every calendar quarter. This can be done in the form of a newsletter to all members, in which there is also room for information and education.

Board of Commissioners and Advisory Board

The main task of the Board of Commissioners will be to monitor the performance of the social projects. Together with the General Board of the Foundation, they determine the policy of the project in all facets. In addition, they ensure that the General Management fulfills its duties properly. The Board of Commissioners will consist of at least 3 Board members from the start of the project. The members must have sufficient experience in general business operations, legal affairs, and Fund Management. The Board of Commissioners reports directly to the Chairman of the Foundation, independently of the General Management, who in turn also reports to the Board of Commissioners and the Chairman. The Board of Commissioners has an official character, and, in its role, it is held responsible for the policy and regulations of the project.

The Advisory Council will be established to advise on matters such as structure, legislation, procedural matters, permits and legal obligations, but will not be limited to advising on the aforementioned matters. The Advisory Board is not affiliated with the General Management or the Board of Commissioners. However, both administrative bodies can approach the Advisory Council for advice in all kinds of areas. Both the General Management and the Board of Commissioners can nominate candidates who are eligible for a position on the Advisory Board. Members of the Advisory Board do not have to be elected by vote. However, the entire Board, or at least a majority of the Board, will have to support the appointment. There is no term attached to participation in the Advisory Board.

The Head Foundation, but also the local Foundations or Associations can make use of both bodies. The Board of Commissioners can mainly be consulted when it comes to the implementation of policies. The Advisory Board can be consulted when the local entity wants to propose changes in operational policy and activities, however the local entity should not make any changes on its own without clear instructions from the Head Foundation. The local entities are executive bodies, the Head Foundation is in charge of the policy and structure of the entire project.

Fund Management

Fund Management is entirely separate from the General Management of the Foundation, it will be a separate department directly under the responsibility of the Chairman of the Head Foundation and the Board of Commissioners. Fund Management makes the policy for the funds that have not (yet) been allocated or spent to/by the members. The task of Fund Management will be to maintain and possibly expand the funds under management so that more members can use the program in the future. A clear policy plan will have to be implemented in which various issues must be explicitly answered. Once the policy plan is approved by the Chairman and the Board of Commissioners, the Fund Manager is fully responsible for the implementation of the policy. The policy plan should be made public available so that everyone has access to it. Reports must be published quarterly and annually, with the Fund Manager being accountable for implementation in accordance with the policy plan.

There will have to be a clear policy for 3 phases:

Short term: up to 1 year, this will mainly be about the liquidity of the funds for direct allocation and use to the individual members.
Medium term: 1 to 5 years, investment, and spending policy for funds under management and funds allocated to individual members but are left unspent.
Long term: more than 5 years; The focus for this phase will be mainly on the funds under management of the program which will be allocated to new members in the future, or which will have to ensure the stability of the whole project.

In addition to managing the project’s general funds, the Fund Manager will also be responsible for developing savings and investment products for individual members. This can be done in-house or outsourced to third parties, as long as the Fund Manager provides sufficient options. When it comes to product range of third parties, the Fund Manager is responsible for the risk assessment of these products and the Fund Manager will have to communicate clearly with the external Product Manager the risk profile of the individual members.

The Fund Manager will also have to play an explicit role in providing financing to third-party commercial parties that submit a loan application to the project. The Fund Manager is responsible for a thorough risk analysis when providing the financing. In addition, if deemed necessary, the Fund Manager makes an amount available to cover the financing. The Fund Manager will also serve on the Board of Directors of the Company, which receives the funding, on behalf of the members of the project. This will be a supervisory role and not an executive role as a borrower’s Board Member.

In the next part of this documentation, the role of the Fund Manager and the weight involved in carrying out the work will be discussed in more detail. That is also the reason why we believe that the Fund Manager should not come under the General Management of the Foundation. The Fund Manager will have his own Executive Board that will fall directly under the responsibility of the Chairman of the Foundation.

Independent auditor

The independent auditor is instructed to review the financial reports of the Foundation and the Fund Manager on a quarterly and annual basis and provide an opinion. Both the General Board of the Foundation and the Board of the Fund Manager will have to determine independently of each other together with the auditor in which standard format they report. The auditor is expected to process his findings in his report and submit this to the Board of Commissioners and the Chairman of the Foundation. A request will also be made to the auditor to publish this report. More on this will become clear in part 2 of this documentation.

Summary & Conclusion Part 1

With this we would like to conclude part 1 of this document. This Social Program is a workable alternative to all the good intentions surrounding the Universal Basic Income. This is not a temporary solution to the wealth gap problem, but a sustainable project that can last a lifetime. The members do not have to worry that the Social Program will stop as soon as the allocated government budgets are empty or if someone else thinks it is too expensive. Each individual member is allocated a budget in a Personal Vault at the start of the program. The members themselves are in control of the budget and determine the spending policy. We hope that with what has been described above we have made clear what our intentions are and how we intend to implement the social program.

“Never let a good crisis go to waste”, the famous words attributed to Winston Churchill, as well as to Rahm Emmanuel, President Obama’s chief of staff at the time, he also came up with similar words: “You never want a serious crisis to be lost,” at the occasion of the banking and financial crisis of 2007-08. If we have learned anything from the crisis, it is that the public has become more aware of what money is and all the excesses that come with it. But otherwise much remained the same, less than 2 years later the major banks acted as if nothing had happened. Governments went into debt to clean up the mess from the banks and it was the public who got presented with the bill and ultimately had to paid for it.

The rich among us have not suffered, the richest person on earth had an estimated net worth of $62 billion in 2008, the richest person on earth has amassed about $175 billion in wealth in 2021. The public doesn’t notice such when they look at their bank account. However, we cannot say that nothing happened at all. Soon after the 2008 crisis, the talks around a Universal Basic Income became louder and louder. In fact, less than 10 years later, America had someone running for office on this subject, Andrew Yang. It is therefore a subject that needs to be looked at seriously, especially its possibilities and impossibilities. Then we automatically come to one of the most difficult issues, how should that be financed? There doesn’t seem to be an appropriate answer to that.

This also translates into all initiatives that have been carried out, if they are not cancelled prematurely, then often it stays silent after the first trial period. The world doesn’t seem to be ready for it. One can point to low interest rates and then suggest that we can borrow cheaply. But that is of course extremely dangerous, because you are walking on slippery slopes when it comes to the longevity of the project. Because what happens if the interest rate rises sharply, or do we hold monetary policy hostage because the interest rate cannot go up, otherwise we have to disappoint many people. Look at Japan and then think again. It should come as no surprise that a reaction from the public was to be expected in this area. The answer came in the form of crypto tokens (Bitcoin etc.) and blockchain technology. This was long dismissed by the establishment as a gambling element and not to be taken seriously, but they also started working with blockchain technology. With a market cap of $2 trillion in 2021, we can no longer speak of something that cannot be taken seriously. It’s still speculative, but what else could we expect?

Then the world plunged into a global pandemic and now no one can deny anymore that something like a universal basic income really needs to be looked at seriously. But if we follow the discussions on this, there is still no suitable answer ready for the financing issue. What we think is even more important is that there should be an initiative from the public, but what is being done so far, it is being debated and beyond that it is only looking at why governments are not doing anything. So, we came up with an initiative ourselves. It is not presented as a gift, because: “There ain’t no such thing as a free lunch”. But with the alternative we came up with, we’ve created something that will last a lifetime. The details can differ for each target group, but the framework is in place and we will share the data in due course in the hope that others will also take up this project for their region.

In part 2 we take a closer look at what drives this project, how it is made financially possible without having to facilitate large amounts of money every year. What is the ecosystem driving this project?

PART 2

We may assume that with Part 1 it has become much clearer what the Community Welfare Program will look like. The question to be answered in this section is: How do we want to make this financially possible in the long term, without relying heavily on fundraising, to ensure the stability of the project? Part of the answer, of course, can be found in the title: “Community Welfare Program fueled by Blockchain and Crypto”. Nice, but is there a necessity in it other than to dance to the hype of the market?

We will not ignore the fact that this project will be made possible because blockchain and crypto-world offers an excellent opportunity for fundraising. However, this project was not created for that reason. The wealth gap needs to be addressed. As the pandemic has exposed more than ever. Besides that, it is a noble endeavor to provide a bankable future for those who until now had little or no access to banking.

The way we want to set up the whole project means that investors immediately will have something that represents some value, and they can trade it whenever they want and not just depend on a profitable future from an uncertain outcome of a project. We believe we hold the key to substantiating this project in a way that it not only has an imputed value but will in the future also have an intrinsic value that can be distributed among the token holders in the form of a cash dividend or something comparable.

In the remainder of this document, we will explore the structure and foundation of the project, the interaction between the token holders and the social program and the benefits to be gained for them.

The Basics

We want to issue a crypto token that will become the lifeline for the Community Welfare Program. It will have a circulation of 1-3 billion tokens. The Genesis block will contain 50% of the total supply. The other 50% is used for network maintenance and future purposes for which the token holders will have to vote. We will discuss this in detail later in this document. 50% of the Genesis Block, or 25% of the entire supply, will go directly to the social program. This 50% of the tokens will serve as collateral for the social project. The remaining 50% of the Genesis Block tokens will go to the organization, from which all development costs, fundraising and other costs will be covered. A limited part (± 4.4%) of these funds/tokens go to the founders and employees. These tokens will be allocated in limited amount each time, after achieving certain objectives.

The 50% tokens for the Community Welfare program will be fully used to provide a Credit Reserve to the targeted members. The operational costs for the program are fully borne by the company until the Community Welfare Program can operate independently. In particular, the start-up period will be a time when the costs will exceed the amount earmarked for the members. This cannot be justified for all stakeholders of the project, which is why we choose to have these costs borne by the company. The tokens that are allocated for the Founders and employees will have to be viewed in this light as well. It is a guarantee that these costs can be covered by future capital gains from the allocated tokens. At the same time, allocating tokens to the employees also helps to keep labor costs relatively low, while still demanding the utmost effort and involvement from our employees.

Initially, the tokens allocated for the Community Welfare Program will serve as collateral for the Credit Reserve. In the future, members should be able to get their own tokens directly. We refrain from doing so at the beginning of the project, because every issuance of tokens is accompanied by high volatility and price instability in the value of these tokens. This would mean that many more tokens would have to be allocated to individual members initially, which could later lead to an extremely high increase in value. Then we create an imbalance between the members who will participate in the project, based entirely on the moment of participation that the individual members cannot determine themselves.

The problem will not be that we must look for suitable members, there are plenty. From an organizational point of view, we do not want the project to get out of balance. We will gradually add new groups to the social program. Everyone should be aware that we are going to build new roads for which no data exist. It’s like being on the road and navigating completely on google maps, you have no idea where exactly you are and then you get the infamous message: no network connection. From the start of the project, that message will be constantly on our screen and there is no one we can fall back on. While we do expect a large audience that look and wait for the moment that we will take some damage. Something we can’t afford.

Blockchain Network Platform

We are in talks with 3 different blockchain based network platforms: Algorand, Avalanche and Cardano. We will launch our crypto token on one of these platforms, which platforms it will be is a decision that involves many facets. Safety is by far the most important one. We can easily choose an ERC-20 token on the Ethereum platform, or a Binance Smart Chain token, but that is not a solution for us. We don’t have a good feeling about either platform. In addition to the security issue, there is the difficulty of development and programmability. There the possibility for the Cardano network seems to be the most difficult solution, can we attract enough developers/programmers to help us develop our own infrastructure?

We prefer the Cardano network, because of the versatility and the very thorough research they do. We think the social project fits in perfectly with Cardano’s ecosystem as they try to pursue similar goals. At this moment we have Algorand in second place. There are two important things that clearly speaks in favor of Algorand: 1, relative ease of use of the platform. A lot can be done on the platform in programming languages that are more common. For example, Python, C#, Java, JavaScript. None of these programming languages are simple per se, but the languages are generally more common, so it will be easier to find or retrain programmers for them. 2, and this is something we really like, Main Chain – Co-Chain interaction. This allows the local social programs on a Co-Chain to be run in relative anonymity for the members and absolute direct control over the transactions, but when transactions need to be made on the open Main Chain, it can be easily facilitated. This may not be very important at the start of the project, but once all the facilities for the project are rolled out to members, it is a crucial factor for smooth operation. Then there is Avalanche, this is not just another wheel on the cart, it could certainly be of importance in the future as the Avalanche network offers a speed in transactions that not many other networks can offer. This can be especially important for general token holders.

Issuance of a crypto token

The big question remains, what is the need to issue a crypto token ourselves? Whoever asks the question must answer it.

It is the perfect opportunity to create value that cannot be realized in any other way. We can engage capital partners, but they each have their own wishes and interests that often conflict with the interests of the Community Welfare Program. We do not want to provide commercial loans to the needy. Commerce must stay away from this program if the Community Welfare Program wants to reach full maturity. Charging members to pay interest does not seem to us to be a solution to close the wealth gap.
The project is so diverse and unique that in our opinion it is not appropriate to insert it into an infrastructure of an existing token platform somewhere. Tokens residing on blockchain include reward tokens, currency tokens, utility tokens, securities tokens, and asset tokens. All those tokens have a purpose anchored in their raison d’être; each token represents a certain partial claim to the purpose of these tokens. While our token holders want to pursue a goal, the token enables the holders to achieve that goal.
The project is more versatile than just providing Credit Reserves to the target group. The Credit Reserve is a means, not the goal, in order to pursue the goal of a better financial foundation for the target group, the entire project must have a solid foundation. This can be accomplished very well with a proprietary token, especially when that token has multiple uses. It allows us to create an intrinsic value for the whole project that will benefit all users by creating a fundamental structure that will be translated into the value of the token.

Launching a token is one thing but making that token publicly available is quite another. This can harm the project, especially in the beginning. As you see with almost every IPO, after launch comes a time of reflection and the price drops drastically. This is no different with an ICO, but we still want to go for that step. Because it gives the token better tradability and clear price indication. It actually makes no difference to the price value of the token whether 10 million, 1 billion or even 100 billion tokens are issued, the total project market value remains the same. But there is a distinct difference in emotional experience when the price of something valued previously at $60.000 drops to $30.000 in a few days, or from $2 to $1. Same price swing, but most holders of the tokens will approach this differently. One can intuitively see more quickly whether we can climb back from 1 dollar to 2 dollars, if only the plan is robust enough, then make a price jump from 30 thousand to 60 thousand. Any feeling below 60 thousand will be a negative sense of loss, while if the price goes from 1 dollar back up to 1.30 most will think positively that we are back on track.

The feeling of owning something can also be influenced by the total numbers. Let a child, who is not yet aware of the total value of something, choose between a $100 bill or 10 $10 bills, almost guaranteed that the child will choose the 10X10 variant. This also goes for the community welfare program, tell the members that they get a collateral of maybe half a token, or 15.000 token has a totally different psychological effect. This is something that should not be underestimated. This also applies to commercial token holders. By commercial token holders, we mean the public, or investors in the project and not the Community Welfare Program members, as both groups have a very different perspective on the project.

When investors are in possession of the tokens and they have to make a decision to hold or sell, then there is also a partial emotional decision-making process involved. It is good that we have been able to see the price decline of Bitcoin and other crypto tokens up close. There is a clear difference in perception. Where you mainly saw anger and deep pessimism within the Bitcoin community, there was a firmer belief among the other token holders that everything will be okay. The long-term holders of the other crypto tokens saw this drop in price as a good time to buy. The Bitcoin community has a completely different experience there and the positive sentiment of the previous period immediately makes way for often outright aggression.

All this has nothing to do with facts, but purely emotion-driven sentiments. Something that can never be filtered out, we have been in the financial sector long enough to know that it will always be that way. What we can do is learn, because even though Bitcoin and crypto tokens has been publicly traded for 10 years now, it is still a new sector. Learning is what we try to do continuously, so we end up with a total circulation of 1 to 3 billion tokens, because we think that’s where the best finetuning can be done. We have performed several simulations on it. We would instinctively say, less is better, but is that really the case? It must remain realistic, it must also be tangible, with a price valuation that reflects a value that can still be grasped in the traditional way. We’ll have to figure it out. By the traditional way we mean a price value expressed in 2 decimal places. As long as there is a digit before the decimal other than 0, we think it is a tangible concept. With the circulation of 1 to 3 billion tokens, we think we can achieve this in the foreseeable future.

In the simulations we went through, we assume that +/- 22% of the tokens will enter free circulation in a relatively short time. In the first round (pre-ICO), we want to release +/- 8% of the tokens to investors. In the public funding round, the ICO (Initial Coin Offering), another +/- 4% will be released, so from the start of the public pricing of the token, 12% of the tokens are liquid. We do not want to impose any further restrictions on token holders. Tokens released to the public, but subjecting them to trading restrictions, is a form of market manipulation that will negatively affect the price. It will not serve our interests or those of anyone else. During a certain period, we will release another 10% tokens of the Genesis block. All tokens that become available for the free market are deducted from the part intended for funding. None of the tokens allocated to the Community Welfare Program will be released during the funding rounds. That is 25% of the total circulation or 50% of the Genesis Block. In addition to the public funding rounds, another +/- 8.8% of funding tokens will be awarded to founders and employees. These tokens are not directly free tradable, they are reserved exclusively for this group as a reward. The tokens will not be awarded until certain objectives are met and after approval from the community of token holders. There remains a significant number of tokens that can be spent responsibly for the further development of the platform.

What will the raised funds be spent on?

Half or 50% of the funds raised goes directly to the Community Welfare Program. With a starting amount less than US$3.000,00, another family can be added as a member to the program. This is not the total amount a member gets allocated. That is covered by the tokens, but within the program, members can withdraw and repay up to a third of their available Credit Reserve amount per year. Since we are living in a society where crypto tokens cannot be used as legal tender, cash must be available for members that make use of the program. This is not ideal, but we have to deal with the rules and regulations that are available.

The other half will be spent on ongoing development of the crypto token and platform, legal matters for both the crypto token and the social project. Both will have to be steered in the right direction so that no person and no regulation can stop the project. It is an ongoing process, but especially in the beginning we bear the responsibility that this is done properly. This is central to the use of the proceeds of the first financing round. No exact percentage can be attached to any of it, but what is needed will have to be spent on the right things. Another part will be used for marketing and the next funding round. A portion of the funds will be used to increase existing sales and profitability, which will help cover the fixed costs of the entire operation, including personnel costs. We will do everything we can to avoid having to pre-finance personnel costs from the proceeds of fundraising.

For the 2nd and 3rd round, the proceeds are spent in the same line, but the percentage spent on each individual part shifts. Gradually, less needs to be spent on development and legal affairs and more on business development. As long as 50% of the proceeds automatically continue to flow to the social program, that should never change. We want to reach as many members as possible with the social project. Our goal is to serve at least 70.000 to 115.000 families. This may not seem much, but it means adding 40 to 60 families to the Community Welfare Program every day for 5 years. That is an organization of mega proportions, it is not only administration, but also education and assistance for the members, the physical roll-out of the Credit Reserves and much more. We will not limit ourselves, if we have the financial space, we will involve more members in the project, but the organization will gradually have to grow with it.

In the beginning, the memberships will not grow as fast, because we still have to develop the path we are taking, everything still has to be implemented and adjusted where necessary. Still, it’s not a job that keeps us up at night. The overall development of the crypto platform and the presence of liquid assets will be the biggest inhibiting factor on growth. At a later stage, that limiting factor on growth will disappear on its own as the token gains momentum. Not for us, but for all parties around it. We are already more than convinced of the possibilities that this platform can offer, we just have to show it again and again. Therefore, we will continue to spread the word of what we are trying to achieve. Continue to show that we are right by doing what we promise.

Stability in the platform, stability, and reliability in the price value of the crypto token is essential. This is only possible if we offer more than just a story. Somewhat surprised, we watched the price trend in Bitcoin and other crypto tokens. At the moment no distinction is made at all, if one token drops in price, the others will follow the same path, the same counts price hikes. The only explanation that can be given is that investors are not aware of the physical value of a platform. What one is trying to achieve, the other has just come up with the same but with a different flavor, but all stays the same. We therefore need to develop a foundation upon which to build operational activities that will accumulate intrinsic value for the benefit of all involved.

When it comes to intrinsic value creation, we shouldn’t count on the Community Welfare Program, because that’s where costs are incurred to serve the members. However, the social project does have a very big advantage and that is that it automatically generates active users of the token. The social project will accelerate the adoption of the token as a medium of exchange. However, this has no direct physical value for the token holders, at most it will be an advantage for the short-term imputed value of the token. Physical value creation can be achieved if resources are properly used and be invested in business development that generates long-term intrinsic value. Investments will have to be made in sectors with which we have knowledge and experience, in order to be able to add the highest value.

One of the investments we have in mind is a company that we cannot name by name for now, because the company is listed and there are restrictions attached to it. However, it is a company that we would like to get our hands on. This is a business in the food processing industry in which the current owner has clearly lost interest, lacking perspective on a clear vision for the future. We know the company and the current situation reasonably well to be able to form an opinion about this. The current operating activities are break even, there are a plethora of excuses being made as to why the profitability is lacking. In our opinion, little is needed to improve profitability. The problem is that the current owner bought a legacy brand and thought the name was enough to sell products. The current product range has no synergy with the legacy brand, leaving the consumer confused as to what to do with it. The production itself is in good condition and the range that is carried is also very strong. There is an enthusiastic group of employees who take care of the product. Unfortunately, the marketing and sales department continues to perform poorly. In addition, each product category also has its own product name, which only makes it more confusing for the consumer. Little or nothing needs to be done on the production side, all production facilities are in good condition and thus meet all food processing standards. Partly for this reason, we are convinced that a cosmetic marketing facelift is needed and that consumers should be made familiar with the brand name and products. It doesn’t take that much to be operationally profitable in the short term. What needs to be paid more attention to is the long-term valuation of the company.

If given the opportunity, we would like to make an offer for all shares that are not part of the free float shares. Less than a quarter of the shares are freely tradable, which we would like to keep. We want to keep the listing because it reflects a direct valuation of the company. What we want to do is expand the activities with a clear vision for the future. A lot will have to be invested in the future of the company. This cannot be directly expressed in profit and the listing can help to show that we are on the right track. When the time is right, we will communicate our plans clearly to the token holders and investors, as well as to the shareholders. Rather than going deep into specifics, we want to highlight what this means for the crypto token and what it means for investors and token holders. Three parties can be distinguished that should benefit from the investment:

PT Emas Cemerlang Bersama: when making an investment, the company is given the opportunity to realize the intended investment wholly or partly from its own resources.
The employees, we believe that you get a strong involvement of the employees in the company if they feel more ownership of that company, the degree of that ownership is negotiable. The remuneration structure will have to be part of that same discussion. Whether this is in the form of a dividend payment, pension provision or in some other form remains to be determined.
The token holders, At least 1/3 of the interests that are built up in a company will have to go to the token holders in whatever form. For example, a Foundation or Trust can become the physical shareholder and the token holders can become the beneficiaries of that Foundation or Trust. This means that the dividend on the shares goes directly to the token holders.

All three parties must therefore also be present in the company, mainly through one or more seats on the Board of Directors and/or the Board of Commissioners. This path has not yet been explored and the format in which such activities must take place has yet to be compiled, we will explicitly involve the token holders in this.

What will be done with tokens that are with the company?

They are certainly not intended for internal use at P.T. Emas Cemerlang Bersama. Any remaining tokens should be spent on value enhancement of the token platform. Whether these tokens will be invested in corporate takeovers and restructuring of the relevant companies, or whether they will be invested in other ways that generate cash for the social program will be considered on a case-by-case basis. Prior to each decision to be made, consultation takes place with the token holders. A proposal will be submitted and then consent is sought from the token holders through voting for execution on the proposed plans.

It is expected that a significant part of the remaining tokens will go to the Foundation that will be established on behalf of the token holders. Part of the tokens will therefore also be used to realize further development of the platform. Besides, a significant part of the tokens outside the genesis block are also available for this purpose. But more on that later.

One company will not be enough to add real value to the platform, which will make a significant difference. Several companies and business plans will therefore have to be viewed and studied. Therefore, we do not invest in companies in the service sector. Service companies are only added if it increases the efficiency of other companies or parts of the overall platform. We see no advantages in a service provider as an independent company. A company should have production facilities and preferably a product that fits in with our entrepreneurial philosophy. In other words, basic necessities such as food and clothing, where sustainability and health should predominate. Personalized lifestyle branding and health & wellness are the common thread through our product portfolio, and we will mainly invest in related sectors.

Whenever possible, any business investment will need to partner with the communities where the Community Welfare Program is deployed. The most obvious cooperation will be in the area of employment. Suppliers can be recruited within the communities. Where both can be mutually reinforcing, the community should be the first option to consider, but it should be clear to everyone that all business investments are commercial ventures, and that collaboration can only take place on a competitive basis. This message will always have to be conveyed to the token holders and any proposals for cooperation will have to be well substantiated. When we have a candidate company in sight, it must be clearly stated during the negotiations that this is a token-driven project and where possible tokens will be part of the negotiations. But careful consideration should be given to whether this is a smart move, if it is clear that the price of the token will increase in the foreseeable future, we may have overpaid for that venture. There are enough constructions that this shouldn’t be a problem, the most obvious construction will be a lock-up period in which the seller will have to guarantee that he will not trade the tokens within the stipulated time. However, it is also possible to use the tokens as collateral when closing deals.

Blockchain Platform & Community Welfare Program

The question behind this all. Why blockchain and how can the platform benefit from the Community Welfare Program? Otherwise, it is just one of many projects that are simply using the hype of the crypto and blockchain to fund their wild dreams without bearing the costs themselves. The social program is already there, we are already doing a lot in a personal capacity to help the people around us and the community. But we lack financial resources to do this structurally for a larger community. In addition, the worldwide pandemic has shown that something structurally needs to be done for the less fortunate in society. The question remains, is it necessary for this to run on blockchain technology? The answer is simple yes, blockchain technology makes it possible for all beneficiaries to put together an identity in which the creditworthiness is conclusively proven.

Most of the targeted members will never qualify for any form of credit through traditional banking without participating in the Community Welfare Program. As a result, they are at the mercy of usurers, which means that they are burdened by the often extremely high interest charges. These are bad practices, but the reality of everyday life. With blockchain, a member does not have to worry about the Credit Reserve being taken away again. Again, in the beginning it will not be possible to use the full possibilities. But we are working towards a situation in which all participants receive their own tokens in their name, and therefore also full registration in blockchain. No one can threaten this, no political gain in any way beneficial or detrimental to the beneficiaries. Not even a law that can stop it. Once they join the project, they are entitled to a part of the tokens. After a certain phase in the project, the ownership of those tokens is registered, and they have an X number of tokens at their disposal in their own “wallet”.

The idea is to allocate an X number of tokens directly to each participant from the start. This will not be for the full conversion value of the tokens at that time, because as mentioned the price value development of the tokens will be quite erratic from the start. What we can do is allocate an X number of tokens based on the expected future value with the replenishment up to the current conversion value of the Credit Reserve, or 2 times the average annual income of the group. Revaluation can take place annually on a fixed date, based on the price development of the last 12 months. In addition, a fixed moment in time can be built in where the settlement will take place and the Personal Credit Reserve consists entirely of tokens. However, the platform must be ready for that. A simple example:

The platform, or the usability of the platform, will have to be expanded as quickly as possible. We cannot do this alone, but fortunately we do not have to do this alone. That is the main reason why we will carefully consider which blockchain protocol we are going to choose. We can benefit from the developments within a sector that has been building for years, I am talking about the decentralized financial sector (DeFi). Together with the Fund Manager, who will be written about in part 1, we will carefully select parties who will have access to the membership database of the Social Welfare Program.

The first focus will be on infrastructural applications, such as digital wallets, decentralized trading platforms, but also lending platforms and the likes. We hope that the entire token community will become the arbiter that decides whether a defi player should be allowed access to the network. We will be in favor of custom applications for the benefit of the “army” of members of the social program. All these members become the engine for usability of the platform. If we can grow to 135.000 members within the social program, this means 135.000 daily active users for the platform. And that’s just the beginning with the social program actively run by us, what about all its future spin-offs? If the social program succeeds in becoming a full-fledged alternative to a Universal Basic Income, the targeted users of the platform will explode because there are other parties who want to follow us. We will be actively involved to take full advantage of that opportunity. As soon as there are parties that want to roll out the social program within their own community, we will support them and have a blueprint ready for the rollout. The advantage we have is that every day we work with the platform and social program we are making history on behalf of others in a way that they can benefit from. That is why we attach great importance to the collection and processing of usage data, and blockchain technology is once again the best solution for this. The use of this technology guarantees absolute transparency, the data stored in the blockchain about users and usability cannot be manipulated and/or corrupted.

The future of the platform

The strength of the platform stands or falls with its users. When it becomes a platform with many users, there will be enough developers who develop applications that benefit the users even more. The user must be central, accessibility and ease of use (UI – User Interface) must be guaranteed. Many users will be present because of the Community Welfare Program participants. User-friendliness will be the guideline for frequent use (UX – User Experience), otherwise the members will only use the platform for the social program but ignore it for other general financial matters. That would be an absolute missed opportunity. It starts with a “wallet” that should be able to handle even the most inexperienced user. The security should be built into the wallet in such a way that no unnecessary actions need to take place other than logging in. There will have to be a mix of applications that both benefit the users of the social program and get the support of the commercial token holders as loyal users.

As we look to the future, there are several things that we need to take care of now. The most important thing is that there is a robust house that can withstand various storms. But even if the house is as robust as possible, but is in the wrong place, it is of no use to anyone. That is like building a robust house with very large windows on the south and a garden on the north. To say that the large windows are so great for the view is denying that the house is unnecessarily heated during sunny hours. Yes, an air conditioner with a larger capacity can be installed, but this will result in an unnecessarily high power consumption. And then also expect that piece of land on the north will yield so much return by planting fruit and vegetables for sale so that the proceeds can cover the mortgage costs, then you have a very serious problem. It is important to realize what we want to achieve. We are not going to launch a token that we want the holders to “hold on for dear life” (HODL). The user group for which we are launching the platform wants to use and distribute the tokens. They should be given the opportunity that while they put tokens into circulation and spend at any point, they will also be given the opportunity to recoup tokens.

We will not benefit from a sustained price increase, which could be wiped out during a major storm. What we need to achieve for our users is price stabilization, which should be able to withstand the biggest storms, which gives confidence to our token holders, allowing them to circulate the tokens. No high peaks and deep troughs in the price swing. A very limited edition therefore does not fit. On the other hand, flooding the market with tokens indefinitely does not help to gain stability in price either. What helps is that we realize that emotions play a role in large price movements, we even think that these emotions are decisive in nature. We need to make sure that the token holder community remains satisfied, that they can navigate the platform, that they are happy with the possibilities the platform offers.

This goal can be achieved if we provide a good foundation at the right coordinates. The platform should be user-friendly, and we prefer that people can find as many things as possible within the platform. For example, crypto tokens are not legal tender in the country where we are rolling out the social project. How does the user get a payment method that is acceptable? We need to provide a method that fits the needs, this could be by making sure there is enough cash in the desired currency. We can perform an exchange transaction by accepting the tokens against the desired currency or taking tokens as collateral if the counter currency is only needed for a limited time, for example for short-term loans that are quickly repaid. But it can also be a network of ATM (Automated Teller Machine) access points when there is a relatively high concentration of users in a certain area.

Bringing volume to the platform that will provide guaranteed circulation is a good foundation for price stabilization when the crypto asset market is hit by a stormy price fluctuation. Again, a lot if not everything has to do with trust (emotions), if the users maintain their trust in the platform they will not engage in a pump and dump operation. But who or what can guarantee that volume? What always surprises us is the reluctance of commercial banks to develop a relatively simple system for trade finance. Then we are not talking about trading in shares etc., but the physical trading in, for example, commodities. The big players probably don’t suffer from this at all, but from our experience the trouble starts with the medium-sized players right down to the infrequent users of these banking facilities. What continues to amaze us the most is that the buyer is left to his own devices and that only limited facilities are available to the sellers. While it could be so much easier. We have a very long experience in this, the suppliers (seller) will do everything they can if they have a party that takes the problem off their hands. It is not the buyer who provides volume, but the selling party who continues to provide recurring volume, because he wants to get rid of his batch of goods.

This is not the place to go into all the details, but what has struck us for years is that banks only provide trade finance based on the creditworthiness of the buying party. In doing so, they do not want to take the value of the transaction and the creditworthiness of the selling party as collateral. We believe we can offer a total solution with which all parties will be more than satisfied and can therefore provide a lot of volume. If the service is of such a level that the selling party can count on the transaction, customers will queue, and we will again have to slow down the influx of new customers. We probably won’t do this ourselves, but we’ll facilitate it, if we can’t find a suitable candidate who at least shares the same philosophy as us, we may take the initiative, but then it will be run as a separate company. Something like this is not integrated into the platform by default, it is a service and not an absolute infrastructural necessity.

If we can tie these types of players to the platform, then there is another thing that is an absolute infrastructural necessity to guarantee a certain stability and that is a banking institution. This banking institution will bridge the gap between the digital crypto world and the current fiat world. No commercial business operations, but an original facilitating service provider. This cannot be a decentralized autonomous organization; the licensing obligation does not allow that. The token holders can become shareholders in the institution, or it can be formed as a Cooperative or a Foundation with the token holders as legitimate beneficiaries. The decision in which form this legal entity should be established can be postponed until the right moment. A banking institution is not needed from the start but will make the whole platform more robust in the future.

In the most ideal form, the entire organization surrounding the token development will become a DAO (Decentralized Autonomous Organization), in which the token holders jointly determine what the further development of the token will look like in the long term. As an arbitrator, we would like to keep the Foundation in an organizational and direction function, in the midst of all opinions. The Foundation can monitor a certain philosophy, organize referendums, and supervise the implementation of decision-making. The main task of the Foundation will be to ensure that there is never one among those present who suggests that the social program is no longer needed. It can be said that the social program can stand on its own two feet once it has been allocated a quarter of all tokens, but let’s not forget that the entire platform and issuance of tokens came about through the Community Welfare Program in the first place. The policy behind the token is not to become a commercial for-profit organization. A good interaction between the available options and the token holders will ensure this. The DAO can therefore also manage the Foundation, whereby the Foundation has an executive task. And certainly not the other way around where the Foundation directs the DAO, because then it is no longer a real DAO and we want to prevent something from being put into operation with a hidden agenda.

Hopefully it can be concluded from the above that we would like to see the platform become a total community collaboration. Where everyone who can or wants to can contribute. No unnecessary interference from a higher hand because that higher hand must be completely gone sooner or later. But we must develop it in such a way that there is a platform with its own infrastructure where external parties can develop and operate applications.

However, there is a much more important role for the Foundation that we should not lose sight of. There must be an organization that can act at any time when regulations and legislation require it. We can’t look beyond the horizon, but we still expect that there will be governments that struggle with the adoption of crypto tokens and integration into society. We will have to be ready for that. The first reaction will be that we will try to avoid confrontation, but if there is no other option, we will have to enter a (legal) battle. Let one thing be clear, where and when we encounter laws and regulations and we must comply with a permit obligation, we will do everything we can to obtain the relevant permit. Until there comes a point when the legal team says it will no longer serve the token holder. Then we need to see what the next options are. But one thing should be clear to everyone, a government can never ban a crypto token, at most
they can ban its use.

Risks associated with this project

Although we are very positive about the projects, we would like to point out to everyone that there are risks associated with any form of investing. We have managed to keep the risks to an absolute minimum, but we cannot guarantee the result of any investment in advance. There are several factors that are beyond our control but can negatively affect the return on investment, including:

Currency risk:

What is currency risk? Currency risk refers to the losses that an international financial transaction can incur as a result of currency movements. The value of an investment may fall as a result of changes in the relative value of the currencies involved. Investors may be exposed to currency risk when investing in different jurisdictions because exchange rates fluctuate.

Currency risk arises when a company enters into financial transactions that are denominated in a currency other than the currency of the country or territory in which the company is located. Any appreciation/depreciation of the base currency or the depreciation/appreciation of the denominated currency will affect the cash flows resulting from that transaction. Currency risks can also affect investors, who trade in international markets, and companies that import/export products or services to multiple countries.

The proceeds of a closed trade, be it profit or loss, are expressed in the foreign currency and must be converted back to the investor’s base currency. Fluctuations in the exchange rate can negatively affect this conversion and result in a lower than expected amount.

An import/export company exposes itself to currency risk because creditors and receivables are influenced by exchange rates. This risk arises when a contract between two parties specifies exact prices for goods or services, as well as delivery dates. If the value of a currency fluctuates between the time of signing the contract and the date of delivery, it could lead to a loss for one of the parties.

There are three types of currency risk:

Transaction risk: This is the risk a company incurs when it buys a product from a company in another country. The price of the product is expressed in the currency of the selling company. If the selling company’s currency were to rise against the buying company’s currency, then the company making the purchase would have to make a larger payment in its base currency to meet the contract price.
Translation risk: A parent that owns a subsidiary in another country may incur losses if the subsidiary’s financial statements, which are denominated in that country’s currency, are translated into the parent’s currency.
Economic risk: Also called predicted risk, it refers to when a company’s market value is continuously affected by an unavoidable exposure to currency movements.

Global Economic Outlook:

A financial and/or economic crisis can have consequences for the implementation of the projects. This can strongly influence the outcome of the project in the short term but will have a positive effect in the longer term. It is precisely the objective of the social program that then emerges, and its positive effects will be more than clearly visible. This can strongly influence the whole project from a positive feeling that it gets more than the attention that other projects like this normally get.

The opposite is also true, in times of economic prosperity people will find less necessity in this type of project, but that does not apply to the target group that benefits from the project. Negative or positive economic prospects therefore have little or no influence on the outcome of this project because it is clearer than ever that something needs to be done about the wealth gap. It is up to everyone involved in the project to demand the attention the project deserves, even though the rest of the world is enjoying renewed wealth, there is still a very large group that needs this kind of initiative and if that problem is not solved, the project will float on it.

In fact, we believe that the longer this project will be around, the more robust it becomes and can withstand any economic challenge, along with the social program that it can even act as a buffer. But there is one major caveat: if not enough applications and capabilities are developed for the platform, then the user will still have to find most of their financial activities outside the platform. This can have a very negative effect during an economic downturn because that is when the user will be the first to ignore the platform. If it becomes an all-round user platform, the platform can serve as a beacon of stability. Therein lies our task to ensure that there are sufficient applications on the platform as quickly as possible, whereby the users do not want to stay away from the platform.

Market dynamics

What are market dynamics? Market dynamics are forces that will influence prices and behavior of producers and consumers. In a market, these forces create price signals that result from the fluctuation of supply and demand for a particular product or service. Market dynamics can affect any industry or government policy. There are more dynamic market forces than just price, supply and demand. Human emotions also drive decisions, influence the market and create price signals.

Is this project sensitive to market dynamics? The market dynamics is much broader than its own internal market of supply and demand of products, especially in the beginning this project will be under pressure from the general market dynamics of crypto tokens. How our project will respond to this remains to be seen. Going forward, we are doing everything we can to free ourselves from the prevailing sentiment that persists within the entire crypto market. Because it may be clear that at this moment the crypto market is sensitive to this. If one rises, the other follows and vice versa. The entire crypto market needs to mature even more before a distinction can be made between the different types of projects. In addition, it does not help that there are many different signals from multiple governments, there is no consistency in the wishes of all these governments. In fact, they are emphatically intervening in the battle for consumer favor by speaking negatively about the decentralized crypto projects on the one hand, but on the other hand pushing their own digital version of the fiat currency down the throat of the same consumer. Unfortunately for the consumer, they have no influence whatsoever on the characteristics of the CBDC and it is no different than the development of fiat money moving at the whim of the central bankers and the economic situation being determined by the politics of the day.

Our influence is limited to the possibilities of our own project. We will have to do everything we can to ensure that what we communicate to the token holders, that we realize it. Communication and decisiveness are important to maintain the trust of the token holders, then we believe that we will weather many storms and otherwise limit any damage. Time will tell if we succeed. Because unfortunately we are not alone, and we cannot bear the sentiment of the market alone. We first look at our own performance and maintain open communication with our community.

(Geo)political risks

In the short and medium term, we see no direct geopolitical threat that could affect the project. However, this does not mean that we are blind or deaf to (future) developments and where necessary, adequately anticipate possible events. For us it is much more important to stay well informed about the laws and regulations of the different countries in the field of crypto. We do not rely on secrecy, on the contrary, we strive for a high degree of transparency. This applies to everything from the crypto platform to the social program. Each member of the Community Welfare Program is registered, and the register is made available to public authorities upon request. However, this will have to be complied with in accordance with legislation and regulations. Unauthorized requests to provide information will not be honored. The same data is not standard accessible to commercial parties. There is privacy legislation, and we want to adhere to it strictly.

The company is located in Indonesia, the Foundation for the Community Welfare Program will also be located in Indonesia. There is a discussion going on where we will establish the Foundation behind the crypto token, initially we also want to go for Indonesia, if this does not fit well, we can move it directly to Singapore. In all cases, we can count on the services of a legal team in Indonesia that will support us in consultation with the various government agencies and help us obtain the necessary permits and licenses. We have been working with this legal team since the company was founded, but where necessary it can be expanded with specific expertise.

We don’t want any political affiliation for all projects, it should be a project for everyone regardless of political color or opinion. Any benefits of collaborating with political parties or key players do not outweigh any drawbacks. This also prevents political interference in the projects, especially when viewed in the light of the social program. This project was created to structurally do something about the wealth gap, and it will always have to stay that way. So that should be clear to everyone, to the token holder community, to the developers, but also to anyone who looks at it from the outside and thinks there is something to gain from it.

We have no doubts about the realization of the project. The social program has already started, we are doing this entirely from our own resources and have started this partly due to the pandemic. With regard to the Blockchain protocol and crypto token, we will make a final decision in the short term for which blockchain network we will choose. We are emphatically studying 2 networks and are already doing a number of tests, with the third one we keep in close contact with. We do not see any risks arising on either front that could threaten the project, or which will stop the realization. We will have to maintain a high degree of flexibility regarding the development of the crypto token, but this has more to do with the changing legislation in the countries involved, than it will complicate the development of the blockchain protocol and the crypto token. Initially, we will focus on reliability and a relatively ease of use experience during development. We hope that, in collaboration with external parties, we can launch as many applications as possible, however we will remain cautious in expressing expectations in the beginning. The basics must be good before we start looking at other applications.

Epilogue

We have now come to the end of this document. We hope this document has provided more insight into what we want to achieve. This is not a project for personal gain, but a project where the need is more present than ever. The project is set up in such a way that those who make the Community Welfare Program possible immediately receive something in return with a certain imputed value that can be translated into profit instead of a gift. In other words, the social program does not only rely on the generosity of others, but it is also not the philanthropy of the giver that the project depends on, it is a win-win situation for all involved. Such an obvious situation in which all parties involved benefit directly from their participation in the project that cannot be achieved in any other way.

The blockchain technology makes the project transparent that the executives can be held accountable at any time if it is suspected that they are profiting from the project in a personal capacity or that funds are being spent improperly. Again, a way that is not so evident in any other form. Any form of philanthropy relies on the honesty and trustworthiness of executives and is only tested when a whistleblower stands up. Nobody needs to worry about that, because of the transparency of the blockchain technology, every moment that tokens change address is a moment of checks and balances. All agreements are put on paper in advance and can be used as a simple benchmark to determine whether we are doing what has been agreed. The community of token holders then always has a great advantage to hold the Board of the Company to account and possibly relieve them of their duties.

We will involve the token holders in any change to the protocol, it is the token holders themselves who vote for such changes. The Foundation that is being established is there for the token holders, the Foundation will sit on the Board of Commissioners of the Company. This also gives the token holders a direct involvement in the company’s policy. If the token holders are not satisfied with the level of participation, we are always open to suggestions. We just have to make sure that we don’t get bogged down in endless discussions and that no action is taken. Therefore, we will extensively document and sign our objectives and the goals of the social program, these documents can be used by the token holders as a gauge whether we are doing what we promise.

Documenting the objectives of the social program is even more important for a very different reason. We want these objectives to be set and not to be changed without a fight. This must be delineated in the governance of the blockchain platform and crypto token that it can never be changed. We do not have the illusion that we will eradicate poverty from the world with the Community Welfare Program, so there will always be a need for a program like this. The Community Welfare program is not implemented to make a limited number of people incredibly rich at the expense of many. Therefore, a significant portion of the tokens will always have to be allocated to the social program, regardless of how they are distributed among the members of the Community Welfare Program. It cannot be the case that each individual participant is allocated an X number of tokens without taking the underlying value into account. The same applies to the moment of settlement for the underlying value. The current value is based on the exchange rate value of the fiat currency of the country where the program is being rolled out. This is a fictitious underlying value, especially in the early stages of a crypto project, it contains at most a reflected value. Because we humans just need something tangible to determine if something is valuable.

However, this must change as soon as possible to ensure the longevity of the project. We can achieve this by delivering what we promise, both for the blockchain protocol and crypto token platform as well as for the social program. The more members participate in the Community Welfare Program, the more native users we will generate for the crypto token platform. We will need to create further constructive value that lasts. We do this as described earlier in this document by investing in production companies. These are direct investments, not an indirect investment by investing only a percentage of the shares, but by acquiring at least a controlling majority of the shares and thereby taking over the management of the operational activities. As a result, any further investments in the company concerned will be fully utilized. The shares, or at least the proceeds thereof, of each investment are broken down as follows: 30% is allocated to the social program, 30% is allocated to the Foundation of the blockchain project, 30% is allocated to the employees of the company concerned, the remaining 10% is intended for the Executive Management of the company. The Executive Management is initially provided by us as initiators but could eventually be replaced by permanent management within the production company, appointed by the token holders. If the investment concerns a listed company, the token holders are given the option to invest in newly issued shares. The shares that are not listed are distributed among the stakeholders according to the above formula.

We believe it is important to only invest in production companies, and we also believe that production has a better intrinsic value in the longer term. If we take over a service provider in the future, it will only be to cut costs and make production more efficient. Or in a supporting role within the network of production companies. Innovation and startups will also be integrated into the network to maximize the benefits of the new developments for all stakeholders. If external financing is required for the innovation or a startup, this will be submitted to the token holders for approval, and they will also be given the opportunity to participate in the financing in a personal capacity. No tokens are used to facilitate any funding round for innovation or startups. The project in question will have to go through an external funding round based entirely on the performance of the individual project.

The funds that we attract for the projects will be used, among other things, for the development of the blockchain network and the crypto token platform and the implementation of an organizational structure, for this purpose 50% of the funds will be allocated. The remaining 50% of the funds will go directly to the Community Welfare Program and will be allocated to the members, it will not be spent on organizational costs of the Community Welfare Program. The costs associated with the Community Welfare Program are organizational costs and are borne directly by the company. Funds earmarked for the program will be fully utilized by being spent solely on establishing Credit Reserves for members. If there is dilution of the money due to the members withdrawing money from the Credit Reserve and not returning it, they will lose their tokens, it is up to the community of token holders to decide whether these tokens will go back to the social program for new members, or that they flow back to the organization to give it more room for further expansion of the entire platform.

We hope that the Foundation of the blockchain project will take the lead for the further development of the platform as soon as possible. Then there will be even more separation between the initiators and the development of the platform, so that there is less chance of a conflict of interest. The most ideal situation arises when the token holders choose a Board for this Foundation. If the token holders agree to install a Board of Directors, a governance plan can be developed and implemented. During a predetermined period, we reserve the right to claim at least 1 Board position within this Foundation as we want to ensure the certainty that the social program is the engine on which the platform runs. After the governance plan has been approved by the token holders, it is up to them to determine what our role remains in the entire organization and development of the platform. We are willing to take a step back but reserve the right to make our voice heard like any other token holder.

Like any other external third party, we can continue to perform the other tasks by means of a fiduciary management agreement. It should be noted that this agreement is subject to revision when the token holders believe it is appropriate. We want to avoid at all times that it becomes a decentralized platform but with a dominant party that continues to determine policy in the long term. Because then there is a fictitious decentralization.

We will regularly issue publications discussing developments, this is expected to be weekly, but due to time constraints this could be at least twice a month. We are immediately accessible to everyone, but if the reader sends a message or e-mail, we ask you to clearly state that it concerns blockchain and crypto. The publications are not only published on our own website but are also distributed via the usual social media channels. If you have any questions or comments after reading this document, you can contact us directly, all contact details can be found at the end of this document. (Including the links to social media)

We would like to express our appreciation for your attention and hope to hear from you further.

On behalf of the entire team of:

P.T. Emas Cemerlang Bersama

A publication of:

P.T. Emas Cemerlang Bersama

Axa Tower Lt.45, Jalan Prof. Dr. Satrio 18, Karet Kuningan, Setiabudi,

12940, Jakarta Selatan, DKI Jakarta, INDONESIA

Tel: +62-821-1377-8883

info@emcebe.com

PROJECT -2

Table of Contents

PROJECT -2, Community Welfare Program fueled by Blockchain and Crypto

PART 1

The Proposal

What is a Credit Reserve and why do we choose this model?

UBI vs. Cash Transfers to Personal Credit Reserve