The Email Market
BitBounce, Credo, & CredoEx
Blockchain Based Spam & Email Access Solution
Turing Technology, Inc.
April 23, 2018
Email is broken. Spam costs the global economy $20 billion per year and still accounts for 70% of all email. Existing regulatory and technological solutions have failed to eliminate the significant monetary cost and negative externalities of unsolicited email and spam. Email access outside of known contacts is difficult. Email access via cold emails is not good for either senders or recipients; such messages are not responded to reliably and consume recipients’ valuable time. Email access via introduction operates inefficiently through unreliable exchanges of social capital and requires senders to have a maintained social path in their network to the recipient. These problems with email present significant negative externalities and an inefficient mechanism of exchange for email access. The solution is to establish a new market for email access in which email senders contacting unknown recipients pay a fee for the email to be sent to the recipient, paid either when it is received or responded to. The fee prices in and compensates recipients for the attention they provide the email, improving senders’ likelihood of obtaining the attention or response of recipients. The solution is implemented in three components: BitBounce, Credo, and CredoEx. BitBounce implements filtering of emails from unknown contacts and the payment mechanisms for email receipt or response. The Credo token is the primary unit of exchange that recipients are compensated with. Credo serves the additional purpose of incentivizing adoption and continued use of the BitBounce solution via distributions based on proof of usage. CredoEx is a cryptocurrency exchange through which email users can easily realize the value of their tokens by converting them into other forms of value. CredoEx also serves as the platform through which those wanting to conduct incentivized email marketing campaigns may purchase more Credo.
1. Value Proposition
We propose the Credo (pl. Credos) as a token of exchange in a market for email access that seamlessly integrates with existing email accounts and infrastructure. The Credo plus BitBounce solution provides:
- Recipients: reduced spam in inbox, restored productivity, compensation for engagement with emails from unknown senders.
- Senders: more reliable acquisition of recipient attention and response, improved access to recipients who are currently difficult and valuable to contact, pricing information on the value of a recipient's inbox (see 3.1 for discussion of the value of email access corresponding to sender-recipient pairings).
CredoEx strengthens this value proposition by allowing recipients to immediately realize the value of their tokens, and enabling senders to easily purchase tokens for incentivized emails and campaigns.
2. State Change
The purpose of Credo, BitBounce, and CredoEx is to establish a global market for email that solves the problems of spam and email access. Given that email usage is fast becoming global with 3.8 billion email users already, solving these problems would create tremendous good through positively impacting a large number of people.
2.1 Starting State
The starting state is a world with free email and many negative externalities. We can discretize free email access into three separate classes, and then assess each class in turn:
2.1.1 Email between known contacts
Email between known contacts is generally fine. This case only becomes problematic if a known sender abuses email access to a recipient (e.g. sending an excessively long series of emails until a response is received).
2.1.2 Cold/unsolicited email
Cold emails take up time and cause loss of productivity. Specifically, they cause a number of negative externalities including but not limited to: lost attention and productivity, overload, difficulty finding the right information, lost time spent on archiving and deleting cold emails, and other general negative effects associated with spam and unsolicited email. These negative externalities have been estimated to cost the global economy $20 billion per year and US businesses $712 per employee each year in lost worker productivity. There is an additional societal cost of scam emails, such as the infamous “Nigerian prince” scams and phishing scams through which theft of information and assets can occur.
Cold emails constitute a significant portion of emails, with research finding 66 percent of email reaching user inboxes is spam despite aggressive spam filters. Other recent estimates from experts at Microsoft and Google indicate that 70% of all global email is still spam. Existing regulations, such as the CAN-SPAM Act, and technology solutions such as spam filters have been found to be largely ineffective at solving the problem.
2.1.3 Email via introduction
Using a social-exchange theory model of email communication, introductions operate via exchanges of social capital. Such email access depends on the network of the sender and the state of relationships in that network, which is much less efficient and reliable than a financial market with clear pricing. Moreover, such introductions conflate email access and referrals, which can be decoupled with email access and referral checking happening via separate processes.
2.2 Goal State
The goal state is a world in which a market for email access has been established and participation in the market for email access is pervasive and global. With that market established, recipients will be sufficiently compensated for any cold/unsolicited emails they receive. Moreover, it will be easy, efficient, and reliable to contact VIPs and other recipients of sender-specific value via monetary rather than social exchanges.
There are two components to the path between the starting and goal states:
- BitBounce is the software that facilitates the email market. It includes user interfaces for managing a whitelist, configuring settings such as the fee amount to reach an inbox, viewing analytics, and composing incentivized emails, as well as a soon to be released mechanism to automatically update a user’s fee to reflect the demand for their inbox, facilitating market transactions. It also includes the background services for conditional email routing, whitelist synchronization, and blockchain transaction handling. These components are closed source and three patents have been filed to cover inventions involved in their implementation.
- Credo is the means of exchange, unit of account, and store of value in the email market. It is primarily used to pay for emails to be received or responded to, maintain accounting for email transactions, and stockpile future access to email attention. It also allows entities to speculate on the valuable digital commodity of email attention, creating a market for this commodity. Lastly, it is used to incentivize the adoption and continued use of BitBounce and CredoEx, and drive future investment for these technologies.
- CredoEx is a cryptocurrency exchange that facilitates liquidity for Credo and the email market. It includes trading pairs Credo and other currencies, tokens, and digital assets.
These components constitute a comprehensive, vertically integrated solution for an email market that rewards attention.
There are two choices that require justification: 1) using a cryptographic token, and 2) creating and using the Credo token. For 1:
- The primary justifying reason to use a cryptographic token rather than a conventional currency is that token transactions can be confirmed in seconds or minutes rather than days and are irreversible which is necessary for timely delivery of emails to untrusted recipients.
- Tokens can also facilitate global micropayments at a fraction of the cost of traditional payment networks especially as scaling protocols continue to be developed for the underlying blockchains. Furthermore, tokens allow users who do not want to or cannot place their trust in centralized institutions (due to lack of access, expense, or institutional integrity) to receive decentralized payments for email receipt, response or delivery, and the ability to withdraw these payments to their own software, hardware, or paper wallets at any time and avoid any issues with their funds being confiscated, misused, discreetly reinvested, frozen, or stolen while being stored with a centralized entity.
- Lastly, using a cryptographic token allows us to easily create and trade digital commodities representing access to email attention, allowing us to create digital commodities markets to reflect physical commodities markets, a vital step towards a more comprehensive digital economy.
- Aside from their enhanced security characteristics, cryptographic tokens also offer potential privacy enhancements as well and advantages overcoming financial censorship.
There is a secondary, non-technological reason: the marketing benefit of using cryptographic tokens.
- The justifying reason for creating the Credo token is the need for more control over the proof of usage distribution of tokens (see 3.6), which incentivizes user and community engagement and growth. Redistributing Bitcoin or some other token to correspond to use of BitBounce seems infeasible. By creating a new token, we can distribute a much larger portion of the token’s total supply in a way that corresponds to usage of BitBounce (see 3.4).
- Another justifying reason to create our own token is that we can raise funds for BitBounce through selling a portion of the tokens.
The idea of using payments to solve spam has been around for a while, but it has only recently become feasible through the innovation of faster transaction confirmation times found in cryptographic tokens. That innovation combined with the emergence of Blockchain technology to facilitate token creation makes now the right time to finally solve the spam and email access problems using this approach.
2.3.2 BitBounce & Credo
22.214.171.124 Spam Filter Use Case
The first use case for BitBounce is to act as a more effective spam filter, which solves the spam problem. This works as follows:
- A new user signs up and adds an email account.
- The user then syncs and/or manually adds contacts to a whitelist.
- Incoming emails received from addresses that are not on the whitelist are filtered to an email folder called unpaid, and an auto-response is then sent to the original email sender as illustrated in Figure 1.
The auto-response asks the sender to do one of the following:
- Request to be on the whitelist, which puts their email address on the recipient’s whitelist with a button to approve their membership.
- Enter a recipient-generated promo code that will allow the email to go through for free.
- Pay the user’s fee for the email to go through.
- If the sender does nothing, the email remains in the unpaid folder.
126.96.36.199 Incentivized Response Use Case
The second use case for BitBounce is to incentivize a response from a recipient, which solves the email access problem. This works as follows:
- A user composes an email to a listed VIP or arbitrary recipient (see Figure 2).
- The user then specifies the fee to pay an arbitrary recipient or accepts the listed price for VIPs.
- The user sends the email.
- The user is asked to pay the fee or pays automatically depending on their account setup.
- If the user pays, the email is sent to the recipient and another email is sent on the email thread informing the recipient that an amount of cryptocurrency is being held in escrow for them until they respond.
- If the original recipient responds to the email thread then the response is then automatically detected and the amount held in escrow is released.
One challenge with this use case is ensuring responder authenticity. This is important because senders would not want to pay for a response from some delegate such as a secretary. Our initial approach will be to vet VIPs listed on our platform and have them agree to terms and conditions that require them to personally respond in order to receive the cryptocurrency incentive payment. At a later date, we can implement a more robust and automated method by using one of the emerging user-device identity platforms to automatically prove the identity of the responder.
188.8.131.52 Autopilot Use Case
The third use case for BitBounce is to automatically pay in Credo for emails to go through to recipients. This reduces payment friction and still ensures the problems are solved because the inbox only contains emails from people you know or those you’ve been paid in Credo to receive.
We have developed a consumer and enterprise version of BitBounce Autopilot. The enterprise version works by checking the from-address of incoming emails against the company’s domain and then sending a Credo to the recipient user when there’s a match. We are currently running a proof of concept with one enterprise for this and it is generating non-trivial transaction volume (98 Credo transactions in the last 24 hours). Given this enterprise is participating in the first pilot, we are subsidizing the proof of concept by providing them with Credo and Ether for their transactions.
184.108.40.206 Incentivized Email Campaign Use Case
The fourth use case for BitBounce is to compose and send incentivized email marketing campaigns. These are emails sent to a large number of recipients with Credo incentives attached to each email. These campaigns can be sent to BitBounce active users or a list provided by the email sender. We will allow campaign senders to release incentives upon email delivery, or when an action has been performed by the recipient, similar to charging for impressions and clicks in other forms of marketing.
This user interface for composing and sending such campaigns will be available via the enterprise version of Bitbounce, which has a target launch date for late Q2 2018.
220.127.116.11 Existing Email Accounts
One of our primary design goals is to improve the state of email with minimal disruption to users’ existing email experience. Users already have significant data in and habits formed around specific email services, and so we want them to be able to continue using their email setup of choice. This goal is accomplished through seamless integration of BitBounce with existing email accounts. As soon as a user adds an email account, BitBounce can sync their contacts to their whitelist and begin filtering spam (see 3.3 for early usage data). The user can then continue using their existing email client (e.g. Gmail, Outlook, etc.) with BitBounce operating in the background. In fact, we expect that many users will only rarely directly access the BitBounce dashboard (see Figure 3), especially as the plugins mature.
In order to further accomplish the goal of improving users email experience with what they are currently using, we intend to develop plugins for Gmail (see Figure 3 for design) and Outlook that allow for the attaching of credos to an email message (as per 2.3.4). These plugins will also facilitate easier adding of addresses to a whitelist via an Add to BitBounce Whitelist button. Plugins for these services have already been developed for Turing Cloud, and the experience from developing them will now be applied to BitBounce plugins.
18.104.22.168 Mobile Apps
iOS and Android apps for BitBounce have been developed. These apps facilitate viewing a wallet balance, managing a whitelist, viewing VIPs, configuring BitBounce, and sending incentivized response emails. Our Android app now has 94,455 installs with a rating of 4.4 out of 5 from 254 reviews. Our iOS app now has 1,340 downloads with a 4.6 out of 5 rating from 5 reviews.
22.214.171.124 Enterprise Edition
The BitBounce products developed until this point have been largely developed for consumers – every day email users who receive too much cold email and would like to get compensated for it. In late Q2, we will be bringing to market an enterprise edition of BitBounce that focuses on the Autopilot and Incentivized Campaigns use cases.
There are two main systems to scale: BitBounce email processing and Credo transactions.
- Scaling BitBounce email processing: much of the initial scaling of BitBounce can be done using experience the team gained from developing Turing Cloud. At some point, BitBounce can be switched to a new architecture that shards accounts across multiple databases, which would facilitate near infinite scalability.
- Scaling Credo transactions: some amount of improved scalability will come from improvements in the scalability of Ethereum’s underlying blockchain by the core developers (e.g. blockchain sharding). We also intend to conduct some portion of transactions off the blockchain that will be settled when a wallet owner wants to withdraw Credo; this will also help us avoid disproportionately large transaction fees on micropayments.
We will measure the success of our solution to the spam problem by the percentage of all email accounts that have BitBounce active on them. We will consider our solution to the spam problem to be more successful as this percentage increases.
We will measure the success of our solution to the email access problem by the volume of Credo transactions sent via BitBounce, which will indicate the level of activity within the market for email access that we have established. We will consider our solution to the email access problem to be more successful as this transaction volume increases.
There are several factors motivating the development of CredoEx, including:
- Community priorities: Following the Credo token sale, our community of owners frequently expressed that exchange support and token liquidity were among their top priorities. Moreover, new BitBounce users would frequently inquire about how to convert their Credo tokens into another currency such as dollars or bitcoins.
- Significant pain points when dealing with existing exchanges: While endeavoring to meet these community priorities, our team had significant challenges dealing with existing exchanges. One leading US exchange that we’d integrated BitBounce with suddenly cut off our API access without warning, froze our account, was unresponsive to our attempts to resolve the situation, and wouldn’t even accept a meeting with us. Another exchange would only list Credo if we agreed to unreasonable, one-sided terms. Other exchanges charged exorbitant listing fees that went into the 6 and 7 figure range, and one exchange never listed our token after receiving a substantial listing fee payment.
- Significant deficiencies in existing exchanges: Moreover, we noticed various problems with existing exchanges including technological unreliability and unavailability, bad user experience, poor customer service, usage of questionable practices, weak information security, pandering to speculators rather than focusing on real utility, and sluggish market-leadership that hinders progress.
- Improving status quo for customers: Our team believed that we could improve upon the deficiencies of the status quo and provide customers with improved liquidity, product reliability, UX, etc. By doing so, our users and customers will receive more value from our service and our email market solution becomes more effective. We built CredoEx from the ground up using the highly scalable Elixir programming language implemented on the Erlang virtual machine. These technologies are designed for performance and throughput, providing CredoEx with a reliable architecture to optimize for availability and avoid technical downtime.
- Opportunity to make Credo a top cryptocurrency: By creating an exchange centered around Credo with many trading pairs established between Credo and other currencies, we will reinforce the value proposition for the token and help propel it to become a top cryptocurrency within the blockchain ecosystem.
- Facilitate large Credo purchases for use on BitBounce Enterprise products: as we prepare to roll out BitBounce for Enterprise, CredoEx will allow our team and our enterprise partners to facilitate purchases of substantial quantities of Credo at market prices rather than relying on buying direct from our company.
- Create an efficient marketplace for the digital commodity of email access: CredoEx will allows buyers and sellers to efficiently trade Credo as a digital commodity for email access. Physical commodities have advanced trading market places and infrastructure helping to facilitate the physical economy. For the digital economy to continue to grow, it is essential that we create advanced trading infrastructure to trade digital commodities of which email access is a valuable type that allows organizations and individuals to better leverage a key communication tool to drive growth of their digital products.
Given the above factors, our team decided to take this area into our own hands and build CredoEx.
Our vision for CredoEx is to create the world's premier cryptocurrency exchange that solves the major deficiencies in the product category. Additionally, this exchange can provide the primary source of liquidity for BitBounce-using consumers and enterprises; consumers will be able to easily sell Credo they earn by receiving paid emails, and enterprises can easily purchase substantial quantities of Credo from the market to fuel their incentivized email marketing campaigns. Additionally, users can aquire Credo to use a store of value or speculate on the future value of the email communication power unlocked by Credo.
Our specific goals for CredoEx include the following:
- Accept new users immediately
- Be lightning fast to get setup on
- Be extremely easy to use for beginners and experts
- Be extremely reliable and ready to scale from day one
- Have transparent, low fees and no hidden withdrawal/deposit fees
- Have powerful functionality for price analysis and advanced trading features
- Have a responsive and easy to use interface
- Have nearly no downtime, not lock users out and not prevent new users from signing up.
- Comply with AML, KYC, GLBA and other applicable regulations.
- List and provide liquidity for other tokens using a token-project-friendly approach.
126.96.36.199 Current Product
The current version of CredoEx is beautiful, fast, reliable, featuring a great user experience, and currently available at credoex.com. It supports four types of order: market buy, market sell, limit buy, and limit sell. It currently has one trading pair (Credo / ETH) with more coming soon.
Our roadmap includes fiat support once we’ve confirmed a banking partner, additional trading pairs with many currencies and digital assets, support for stop orders, additional advanced trading features, and native mobile support. We are additionally researching and developing some potential innovations for CredoEx that we’re not ready to disclose at this time.
3.1 Psychology Behind Adoption
Here is a look at the economic rationale for each party in using BitBounce:
- Recipients who sign up to use BitBounce will have to specify or accept a default price at which unknown senders can email them. Given that recipients have specified or accepted such a price, they have determined a value for their attention and a corresponding price at which they are willing to receive or respond to such emails.
- Senders will be able to see the price at which someone is willing to read or respond to their email. If a sender decides to send an email for a given price, then they have judged the value of the recipient’s attention or response to be worth the cost.
Several types of sender-recipient pairing may find greater value in initiating communication with each other via BitBounce. Some examples include entrepreneurs contacting investors, salespeople contacting CXOs, and recruiters contacting candidates (e.g. engineers).
3.2 Viral Marketing Effect
BitBounce has a viral marketing effect via auto-responses, whitelist notifications, and Guaranteed Response emails. In data from early adoption, this effect has been nontrivial.
A secondary viral effect exists in the creation of backlinks to our bitbounce.com domain, which has increased quickly according to Alexa with 1,391 top sites now linking to our domain including 7 of the top 10 global domains. This effect contributes to our domain authority and organic search traffic. In fact, Alexa now ranks bitbounce.com as the 17,823rd most popular domain globally.
3.3 Growth in Fundamentals
We define an active user (AU or DAU) of BitBounce to be a user account that meets the following conditions:
- The user has at least one email account.
- The BitBounce spam filter is enabled on the user’s email account(s).
- Access to the user’s email account has not been revoked.
As of April 21st 2018, we can disclose that BitBounce currently has a user base of 323,030 active users that is growing at a rate of 27.7% MoM. Active users have added 18,413,387 whitelist members and we processed over 1,958,939 emails in the last 24 hours. The metric we place highest priority on is active user growth because we expect this growth in fundamentals to be the primary cause of increased transaction volume and the success of our solution in bringing about the goal state.
3.4 Transaction Volume
The Autopilot Use Case (see 2.3.6) has started generating growing transaction volume. As of the time of writing, 98 Credo transactions were sent in the last 24 hours with 151 attempted Credo transactions (logic to retry failed transactions – such as failures from insufficient gas - will be implemented soon). These early indicators suggest that the enterprise Autopilot version of BitBounce could be the largest driver of increasing Credo transaction volume.
The total volume of transactions from other use cases remains low yet promising.
3.5 Reward Mechanisms
BitBounce stakeholders (contributors and shareholders in Turing Technology, Inc) will be issued an allocation of credos in proportion to their contribution and/or ownership of the parent company. Participants in the token pre-sale and sale will be rewarded with credos in exchange for financial contributions in ether (ETH). The early adopter and mainstream groups will be rewarded for usage of BitBounce. See 4.4 for a more detailed breakdown.
3.6 Proof of Usage
Given that credos are implemented on the Ethereum Blockchain, a consensus algorithm is not needed. However, consensus algorithms usually serve a secondary purpose as a reward function. With this in mind, we will be introducing a new reward function called Proof of Usage. This function will reward actions that constitute usage of the BitBounce technology. The following uses of BitBounce will be rewarded:
- Enable BitBounce on an email account for a specific length of time.
- BitBounce an unsolicited email.
- Send a Guaranteed Response email.
- Respond to a Guaranteed Response email.
- Add more than one email account.
- Get friends, colleagues, or associates to adopt BitBounce.
Actions will be rewarded according to varied weightings that are set for specific promotional waves (see 3.6). We will additionally look into developing an algorithmic usage score based on the credo transaction graph, though this unfortunately cannot power a purely technical credo distribution mechanism because of reasons that we’ll now address.
3.7 Fraud Prevention
One problem with proof of usage is that it’s susceptible to attack. Two significant attack vectors are 1) automating usage that is supposed to be performed by a human, and 2) having one entity create multiple identities in order to receive multiple rewards. Various reputation and identity systems have been developed to deal with this kind of problem, yet they remain sufficiently inadequate that a purely technical solution does not seem sufficient here.
Given this, our solution will be to iterate via a series of promotional waves to a proof of usage reward scheme that maximizes the likelihood that rewarded actions have the following properties:
- A human performed the rewarded actions.
- The human rewarded for the actions was not previously rewarded for taking such actions.
In order to achieve these properties, we will utilize a combination of data science to detect potential fraud, know your customer (KYC) for certain waves, varied weighting of rewards to actions, and rewards for combinations or patterns of actions that would be difficult to automate.
3.8 A New Email Standard
Ultimately, we aim to distribute credo by establishing the token as a new standard in email. We will work to establish this new standard technologically through developing extensions to existing email protocols such as SMTP and IMAP. Our non-technological standardization efforts will focus on developing global recognition and trust in credo through transparency, accountability, and continued innovation leadership.
3.9 A New Tradition-Based Norm
Gift giving is an ancient, cross-cultural tradition to demonstrate respect for an elder or superior. This custom has been lost with digital relationships, but now Credo is the modern revival of the honorable custom. We aim to establish a new norm grounded in ancient tradition in which you send Credo to respect and honor your recipient’s time.
We will seek to establish this new norm through a marketing campaign that brands Credo as the Token of Respect™ and encourages people to Send the Token of Respect™.
Token Dynamics & Launch
4.1 Blockchain Implementation
Credo is implemented as an Ethereum-based token on the Ethereum blockchain. Credo complies with the ERC20 token standard.
Our team will closely monitor development of the Ethereum protocol. There is a possibility that if development of Ethereum stagnates, the Ethereum community becomes a less hospitable environment, or other strategic reasons to migrate away arise, we may choose to develop our own Credo blockchain to host Credo as the native token; in such a case, all ownership positions would be preserved 1-to-1.
4.2 Total Supply
The total supply of credos was determined during the Credo pre-sale. 1.37 billion credos were created in total. To be precise, 1374729257.2286 credos exist.
Credo account totals are stored on the blockchain to 18 decimal places, so the smallest unit of account for Credo is 0.000000000000000001 CREDO.
There will be no inflation in credos. The Credo smart contract does not permit any new tokens to be created.
4.4 Division of Tokens
The project maintains the following pools of tokens:
- A user growth pool of approximately 30% of tokens that is intended for Proof of Usage distribution of Credo and bootstrapping the BitBounce network.
- A general company expense pool of approximately 14.5% of the tokens that will be used to fund general company operations.
- Pools of unsold and re-purchased tokens that will be sold at a later date.
The market will set the price based on the price traded on cryptocurrency exchanges. We will contribute to market making activities in accordance with an internal protocol we are developing.
We now have a strong team of 11 full-time and 3 part-time employees and contractors. Here are the full time team members:
- Stewart Dennis is the founder and CEO. He has a degree in Computer Science (systems track) from Stanford University. He leads engineering and the enterprise in general for BitBounce. He was also the lead engineer for Turing Cloud (owned and operated by the same parent company as BitBounce), through which he has gained significant expertise in email.
- Tim Draper is an investor in BitBounce and originator of the concept. He is the founding partner of Draper Associates and DFJ.
- Oleg is the Chief Technology Officer.
- Nishant Jacob is the Senior Product Manager. He has a degree in Science, Technology, and Society with concentrations in Human Computer Interaction and Product Design from Stanford University and works on product, compliance, and strategy for BitBounce and CredoEx. He has previously worked in the big data industry as one of two lead PMs on a product with over $100 million a year in revenue and is currently pursuing a certification as an Ethereum and Bitcoin professional.
- Nick is the Lead Front-End Engineer.
- Ivan is the Senior Back-End Engineer.
- Sergey is the Senior Full-Stack Engineer.
- David is the Lead Front-End Architect.
- Mark is the Test Engineer.
- Zaid is the Customer Success & Compliance Lead.
A strong community has grown around Credo, with community members interested in providing feedback and evangelizing usage of the token and product.
We currently maintain the following community groups/channels:
- Credo Owners Facebook group
- BitBounce Facebook page
- Slack Credo Owners group
- Credo Telegram group
- WeChat group
The team behind Credo is working with outside legal counsel to ensure full compliance. However, the emerging cryptographic token space is sparsely regulated right now. Our goal is to be as compliant as possible within such a regulatory environment, and some have raised the possibility that US securities regulations could apply. For the question of whether they apply, the appropriate framework is the Howey Test established in SEC v. Howey. Our understanding and interpretation of this test is that credos do not pass it because 1) ownership of Credo does not provide any ownership or related rights in a company, 2) Credos are deployed in production and have real utility via the BitBounce service, and 3) credos serve a distinct function more akin to application credits than a financial instrument. That said, the contents of this document do not constitute legal advice and we encourage prospective purchasers with concerns to consult with an attorney. We expect the regulatory environment to evolve as the cryptocurrency space matures and we will do everything we can to maintain compliance.
As with any cryptographic token, significant risks exist. These risks include potential failures in the still new Ethereum platform and with BitBounce technology. Prospective token purchasers ought to thoroughly assess the involved risks and know that possibilities involving a catastrophic failure in underlying technology that wipe out token value could happen. These risks will be further covered in the terms and conditions for the sale.
We will endeavor to mitigate risks relating to BitBounce technology through rigorous testing and through using Credo bounties for identification of security vulnerabilities. We will mitigate risks relating to the Ethereum platform by monitoring other options for public blockchains (see 4.1).
Operating CredoEx introduces a number of additional risks to the project. The most significant of such risks is the possibility of a hacker stealing digital assets held on behalf of users. We will mitigate the risk of digital asset theft through securely storing the vast majority off funds away from our production servers. A second significant risk area relates to being exposed to further regulation and associated obligations; we have hired a compliance officer and will build out a team dedicated to maintaining full compliance.
4.10 Smart Contract
The smart contract for Credo is available on GitHub. In order to ensure security, the token is based on the ERC20 standard with minimal deviations coupled with inspiration from other ERC20 tokens such as the Ethereum token tutorial, the FirstBlood token, and the BAT.
4.11 Token Sales
The Credo pre-sale took place from June 2nd to June 12th 2017 and over 26 million Credos were sold for 260.79 ETH. The Credo token sale took place from July 26th 2017 until September 1st 2017 and over 118,545,571.228 Credos were sold for 31,595.3015 ETH.
Our team may conduct additional minor or significant sales of Credo from our reserves in order to meet future capital requirements. Such sales may occur through routine market making on CredoEx.
4.12 Use of Proceeds
The token sale proceeds have enabled us to operate with an expanded budget, and thereby grow our team and marketing budget. Specifically, we have pursued several primary goals in our use of proceeds, including:
- Improving the BitBounce service through product improvements, recruiting VIPs for email access, customer support, partnerships, etc.
- Acquiring market share through additional viral growth mechanisms, paid marketing, advertising, PR, etc.
- Defending against threats via security enhancements, use of encryption, proactive defense against any advanced persistent threats, protecting our trademarks and the IP of our inventions, etc.
- Research and development via testing new ideas and potential innovations that we can bring to market.
We will also use the proceeds for miscellaneous operating expenses and to establish the project and related entities on a firm financial footing going forward.
A new market for email access has been established via the Credo-BitBounce-CredoEx solution. This market has various atypical dynamics and properties that derive from its structure. Providing participants with an informed understanding of the market will help them operate successfully within it. This section presents a step towards that end: a clear description of this new market and the benefits of early participation in it.
We operate within a social economy in which many participants make exchanges via markets. Communication between participants in this economy is needed in order to conduct exchanges. Prior to BitBounce, initiation of such communication between unknown parties either occurred through unsolicited communications or through social-exchange based introductions. With BitBounce, such communication can be initiated between market participants in a more efficient manner via financial exchanges in the form of Credo tokens. Before BitBounce, unsolicited and spam communications also had close to zero cost, allowing for large market externalities.
The abstract concept of this market is instantiated via an exchange built on top of the existing email infrastructure. This exchange blockades communication access between unknown parties and then trades access to the inbox for Credos when a payment is made.
The participants in this market are email senders and email recipients. Email senders are the buyers because they buy access to recipients’ inboxes. Email recipients are the sellers because they sell access to their inbox. Email senders may buy access to many inboxes and recipients may sell access to their inbox to many sellers.
5.4 Tradable item
The tradable item in this market is email access, which is the ability to send an email to a recipient’s inbox. Ownership of email access is defined on a per-email-account basis with an owner being an entity that is able to legitimately authenticate and control the email account.
5.5 Value of Email Access
5.5.1 Goal-directed interpretation of value: Economic behavior can be viewed as goal-directed even when these goals are implicit, chaotic, or intended to not be goal-directed. With this view, value can be seen as a measure of the degree to which a particular economic behavior or action contributes towards a goal. For example, a recruiter may have a goal of recruiting candidates for a new position; email access to strong prospects for that position has value because it helps the recruiter accomplish the goal.
5.5.2 Value relativity: The value of email access is relative to sender-recipients pairings for a given email. This can be illustrated by a straightforward example. Let’s say an email recipient is an executive within a niche industry. When that email recipient is paired with an email sender who is a salesperson for a niche product targeted exclusively at that industry, email access is of high value. However, when that email recipient is paired with an email sender who is a random person selected from the general population such as a surgeon based in a different geographic region, email access is of low value. That said, the overall market value for a recipients’ email access can be viewed as the average — or another aggregate measure — across prospective senders.
5.5.3 Value fluctuating based on changing economic context: The value of email access will fluctuate depending on changes in economic circumstance for the sender and recipient. Let’s illustrate this observation with an example:
- Let a recruiter be the email sender and a relevant recruiting prospect be the email recipient.
- If a new job opens up that a recruiter needs to fill, the email access to that email recipient increases.
- If a recruiter fills all available jobs relevant to the recipient then the value of the email access decreases.
- If the recipient were to retire, the value of the email access decreases.
Therefore, the value of email access for a given sender-recipient pairing is continually fluctuating depending on changes to the current state of economic reality.
5.6 Pricing of Email Access
Prior to BitBounce, this value was not priced into email exchanges. BitBounce implements a price for this value.
Prices for email access are denominated in Credo. An equivalent fiat figure may be provided to buyers until such time as they have become accustomed to Credo-denominated prices.
5.6.2 Threshold price
Sellers set or accept a threshold price at which they agree to sell email access. Payments below this threshold price will not result in email access being purchased.
5.6.3 Prioritizing price
Amounts paid beyond the threshold price can be viewed as a prioritization price to further increase the priority of an email for the recipient. This could be useful if an email sender would like to initiate communication with a recipient about an urgent matter and would like the recipient to receive and respond to the communication more quickly.
5.6.4 Price-value differential problem
One economic problem within this market is to ensure that the price of email access for a recipient corresponds to the value. In other words, the problem is to minimize the difference between the price and value of email access across the market.
5.6.5 Price-value differential solution
One solution to this problem is to implement an optional mode for BitBounce in which the threshold price is automatically adjusted based on the demand for that recipient. For instance, if a recipient receives a large number of paid emails with prices above the threshold then the threshold could be automatically increased; and if the user receives a dearth of paid emails then the payment threshold could be automatically decreased. This algorithm could incorporate user preferences coupled with well-tested default behavior.
5.6.6 Pareto distribution for price threshold hypothesis
One hypothesis is that algorithm-adjusted payment thresholds across the market will fall along a Pareto distribution in which some recipients have a very high price for contacting them, and many will likely have a sub-cent threshold price.
5.7 Medium of Exchange, Unit of Account, and Store of Value:
The medium of exchange within this market is Credo, which is a cryptographic token hosted on the Ethereum blockchain. Credos are primarily used to pay for emails to be received or responded to, maintain accounting for email transactions, and stockpile future access to email attention. Credos have a price denominated in other currencies based on exchange trading activity.
5.7.2 Credo ownership
Credo ownership is defined as secure storage and management of private keys associated with addresses that have Credos.
5.7.3 Credo supply
The total supply of Credo is fixed at 1,374,729,257.2286 tokens. However, subsets of the total supply are of more practical relevance. There is a smaller for-sale supply compromised of the portion of the total supply that owners are willing to sell; this is probably a strict subset of the total supply given that some portion of owners will likely choose to hold their tokens. Furthermore, there is a for-sale supply at a given price, which is the quantity of tokens that owners are willing to sell at a given price point.
5.7.4 Credo demand
The demand for Credo is the amount of interest in purchasing Credo at specific prices. There are various factors that will increase demand for Credo. One significant factor is the acquisition of additional senders to the market who require Credo in order for their emails to go through. Another significant source of demand for Credo will the introduction of the BitBounce enterprise product with corporations purchasing Credo in bulk from CredoEx in order to be used in mass, incentivized email marketing campaigns that enable higher user engagement and open rates. Demand can also be increased through buying back tokens from the market. Some portion of Credo tokens will be used as a store of value and some for speculation on the future value of the communication power enabled by Credo leading to increased demand as well. Certain portions of Credo may also be used as a means of exchange and a unit of account within the email domain and outside of it as well as a broader currency. Trading activity could also increase demand. Since, BitBounce will charge a Credo transaction fee for each transaction in the email marketplace and CredoEx will charge a Credo transaction free for transactions on the exchange, Credos will leave the circulation pool reducing the available supply of remaining Credo.
5.7.5 Credo pricing
The combination of the supply and demand will result in an exchange-determined market price for Credo. This price could be influenced by owners who play the role of market maker, yet even they would be bought out at a given price if there is sufficient buy pressure (hence supply and demand principles still hold).
5.7.6 Credo liquidity
Credo’s liquidity is determined by a number of factors including which exchanges Credo is listed on, the buying and selling activity of owners, and the activity of market makers. Credo’s liquidity can be expected to improve over time as it gains wider adoption and support from additional exchanges.
5.7.7 Credo necessity
As adoption of BitBounce grows, Credo will increasingly become a necessity for economic actors to initiate communication. This can happen because the portion of potential unknown recipients that senders can contact without paying Credos will gradually decrease to the point at which it may become infeasible for senders to accomplish their economic goals without Credo; in this case, Credo ownership and usage would become a necessity.
5.7.8 Credo as a digital commodity
Our economy is run on commodities like wheat, steel, and oil. It is essential that these commodities are financialized so that they can be traded allowing prices for these commodities to remain stable and capital to be provided for investment into manufacturing these commodities. Currently, essential digital commodities like distributed cloud storage, access to email inboxes, or distributed computing aren’t efficiently financialized. Utility tokens like Credo allow for the financialization of critical commodities for the digital economy like attention, access to email inboxes, and future digital communication power. Credo provides a way to trade these digital commodities in a marketplace in a decentralized manner to help build the digital economy more efficiently.
5.8 Early Adoption and Market participation
With most new markets and products, early adoption only yields unfortunately worthless bragging rights. With the email access market, early participation confers significant advantages. Specifically, the analysis in 7.3 and 7.4 indicates that growing participation in the market should create more demand for Credo and should increase the price. This means that early adopters will be able to purchase Credos as a discounted rate from the expected future price. Therefore, once the market has gained more widespread participation, early adopters will have far greater buying power for email access and will be able to communicate much more effectively in this economy. So, the size of conferred future advantage will be inversely proportional to the stage of market adoption at which a participant enters it (assuming that the participant purchases Credos on entry and does not liquidate them prior to use in the market).
5.9 Ensuring effective participation in the market
Given this is a new market, efforts will need to be made to ensure effective participation. These can be partly technological in nature, such as BitBounce mechanisms that prohibit delivery of an email to the inbox without payment, algorithms that automatically adjust the threshold price to receive email based on the demand for that recipient, and simplification of the payment experience. Efforts can additionally be sociological, such as through education and training of market participants; this could include development and dissemination of a set of best practices for participants, such as recommending the purchase and maintenance of a reserve of Credos for expected future use in the market.
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- Cyrus Khajvandi, a cryptocurrency expert who consulted on the development of credo, coined the Proof of Usage term.
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- Token of Respect™ and Send the Token of Respect™ are trademarks of BitBounce via Turing Technology, Inc. with all rights reserved.
- Create Your Own Crypto-currency With Ethereum. URL: https://www.ethereum.org/token
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- The concept of a token as digital commodity was taken from Chris Burniske’s work.