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The co-founder of an SA blockchain platform admits that while some investors are sceptical of his startup, his platform is not “a get-rich scheme”, but rather a philanthropic endeavour to provide a basic universal income for all using cryptocurrency.
“Investors say we’re selling air. But yeah, we’re selling air, but with the prospect of (them) becoming richer,” Ubu co-founder Justin McCarthy (pictured above) told Ventureburn today.
Last Tuesday (2 April), Ubu (which stands for Universal Basic Unit) listed its UBX token on Johannesburg based crypto exchange platform DoshEx.
The startup aims to distribute an infinite supply of free cryptocurrency tokens to 500 million people worldwide in an attempt to provide a basic universal income for all.
McCarthy, together with Dudley Baylis, a former stockbroker and a director of boutique merchant bank Bridge Capital who first conceived the idea in 2015, have been developing the Ubu concept and platform since 2017.
Ubu aims to distribute an infinite supply of free cryptocurrency tokens to 500 million people in an attempt to provide a basic universal income for all
The platform, which launched in September last year, has various facets to it, all of which McCarthy says have been “mathematically worked out” (see the White Paper here — downloads as a PDF).
In simple terms it acts as kind of Groupon for businesses looking to promote products and services to customers registered with its app. Using the Ubu token, users that are registered on the platform can purchase products and services from those vendors signed up.
So, far 600 vendors — ranging from coffee shops to online stores — have signed up, while over 150 000 users are now on its app. The aim, says McCarthy, is to register 500 million users.
Once registered, users will get 100 Ubu’s tokens for free every day “for perpetuity” says McCarthy. In so doing, the service provides a universal basic income for all those signed up. Currently each Ubu is worth 6.5 US cents (up from zero when the platform launched in September) and the aim is to grow this to $2.50 for each Ubu.
Registered users can also generate an income by exchanging Ubu tokens for UBX tokens, which are traded on crypto exchange platforms. McCarthy said his startup aims to list on more exchanges, including a securities exchange in the next year.
The startup said DoshEx will enable the market to price UBX in fiat and facilitate an exchange between UBX and Bitcoin.
McCarthy says that because of network effects the UBX promises “long-term value growth”. “A network effect occurs when a product or service becomes more valuable to its users when more people use it, so the longer the network participants hold onto the UBX token, the greater their return on investment,” he said in an earlier statement.
He says he and his team will generate revenue by taking 11 Ubu’s free, for every 100 issued to users. The 11 Ubu’s will be converted to UBXs or used to pay suppliers on the Ubu ecosystem. But he says it will likely take “at least” five more years of development for the startup to generate returns.
Backed by Norwegian investor
The Ubu team is made up of 15 employees — six in Cape Town and nine in Johannesburg.
The company is registered in both South Africa and in Zug, Switzerland. The latter, to take advantage of a tax breaks the canton has for fintech and blockchain companies and to facilitate funding raise. But he admitted his startup will likely not qualify for the tax break. He didn’t specify exactly why.
He said the startup is also looking to register in another location, these he said could include either the tax haven Gibraltar or Malta, or fintech friendly Singapore.
The startup has already raised two rounds of angel investing from Norwegian tech company Global Voice, he said.
He said he couldn’t disclose how much the startup has raised so far, but was able to say that the startup received the first round in 2017 and is hoping to raise more funding in a new round, with the startup’s investor due in Cape Town today. The Norwegian investor, said McCarthy is very hands on, as he visits South Africa every month for two to three days.
McCarthy was initially separately going to distribute a telecommunication product on behalf of the Norwegian company, during the time when Ubu was still being developed. When this didn’t come off, he pitched the idea for Ubu to the Norwegian company who were interested to fund the startup.
The real question is — will the platform really reach 500 million people and create the universal basic income that many nations can only dream of offering? Or is it — as some investors are suggesting — simply creating a whole lot of nothing?
Featured image: Ubu co-founder and CEO Justin McCarthy (Supplied)