$100 Million Blockchain Run By A Model, A Rapper and the Father of the Russian Internet (SmartCoinInvestor).

ParagonCoin ICO – The $100 Mln Blockchain Run By A Model, A Rapper and the Father of the Russian Internet

Before I start my review of ParagonCoin I want to get a few things out of the way. Yes, they have the Game on their advisory board and Founder Jessica Versteeg is former Miss Iowa. But, if you just read the headline, you’ll miss all the interesting bits about this soon to be $100 million ICO. I had a chance to speak with Jessica and her husband Egor Lavrov at length with a friend of mine, Shaun Gindi, who owns the Ajoya chain of dispensaries in Colorado and brought almost a decade’s worth of experience to the table.

Jessica Versteeg Egor Lavrov
Jessica Versteeg and Egor Lavrov

It took me a while to figure out what Paragon’s plan was. Its actually very similar to Ambrosus. The very foundation of project will be their open-source blockchain ParagonChain, a transparent immutable ledger which will record everything from from seed to dispensary.

The data put on the blockchain will include patient information, plant registration ID’s, lab results, THC and CBD concentration and many other individual data points. Their blockchain will cover the entire supply chain, growers, laboratories, manufactures, logistics and finally dispensaries, but only for the sale of non-cannabis items. Retail shops will be able to use the blockchain, but will only be able to pay bud tenders, drivers, security, rent, and basically everything except the actual plant.

Paragon Coin 2

So one thing I probably should have known going into the call was that Colorado already has a tracking system called METRC, using RFID tags produced by Franwell, its parent company. I had Shaun on the call because he has been in the industry since 2008 and was the first ever customer for BioTrackTHC in 2011.

Neither METRC or BioTrackTHC share data with each other, so Shaun has to keep account of his inventory on both systems, which he said is a “real pain in his ass.” METRC doesn’t have a PoS system, but it allows the state to see where every plant is in the system. Both systems are centralized and owned by private companies who won state contracts for the exclusive rights.

It’s not that Paragon won’t have cash to lobby, Egor told me that “We’ve raised $25 out of the $100 million already. Of that $22 million is friends and family and only $3 million is outsiders, we just announced a few days ago.”

While most of their raise will go towards real estate purchases, the remaining cash will allow them to lobby for either exclusive or alternative use as California’s tracking system. In my view it’s extremely important that they get the sole rights to California’s system, as it will allow them to set precedent for other states who are thinking about implementing similar systems.

The future legalization of marijuana will be advanced through greater regulation, activism and most importantly, open, transparent businesses that pay taxes and adhere to local laws. The growing tide of support for the medicinal plant is turning America red, white and “green,” and according to the latest reports “Twenty-six states and the District of Columbia currently have laws broadly legalizing marijuana in some form. Three other states will soon join them after recently passing measures permitting use of medical marijuana.” As more states turn Green, they will need a proven regulatory solution modeled after other states’ experiences and this is where Paragon might step in.

In my view, Paragon must step in and become the primary tracking system across the United States. But Jessica told me that “It’s going to be a question for the community. I want to share and if no one else wants it, I built it for myself and I’ll use it for myself. The community will decide if they like Paragon or not.”

While I agree with her moral beliefs about the matter, government sides with large donors who can hire lobbyists to further their cause. If Paragon wants to really become successful, they will need to use their crowdsale raise to win these large state contracts to be the exclusive tracking system. Egor said though that “If the government will choose one provider, which is a privately held for-profit solution, I think we will have a lot of leverage pitching a free alternative, it will be hard not to let us in.”

ParagonSpace

The success of their coin though is not completely in the hands of governments. Instead, they are going to use a large portion of their crowdsale raise to purchase commercial property in San Francisco and other cities such as Chicago, LA, and Madrid. Commercial space is hard to find and acquire in San Fran. Startups first have to prove they have money to pay for the commercial space, as a lot of them fail in the first few years. Even if a cannabis company meets these standards, a lot of landlords do not want their business due to Federal laws.

Paragon hopes to purchase and develop several spaces, depending on the total crowdsale raise, where “green” businesses can operate without attached stigmas. The spaces will also have a testing laboratory and legal teams working out of them. Yegor said this is why he believes the value of PRG “will grow is because we are building this ecosystem around it and for it. If our co-working spaces are successful, the only way to pay for it will be PRG and if the blockchain is successful, then there will be more adoption and more use and we are burning 50% of the transaction fee on the blockchain. This is how we are adding value for our early adopters.”

ParagonCoin

The co-working spaces are a novel idea, and will take some of the revenue burden off of the company. Plus it will allow for community meetings, shared ideas and other benefits coworking spaces provide.

In their whitepaper, Paragon describes how their co-working spaces will work:

To get a reserved space at our center, applicants will need to pitch their legalization ideas or cannabis startup ideas to our community. All applications will be upvoted and/or downvoted by the community members with our tokens. Only applicants with the most upvotes will secure a reserved space at our centers; other token holders will still have access and use the common floor for workspace.”

They also list the following ways in which PRG will be used in each space:

  • Opening doors by scanning a QR code of an active wallet with at least 1 PRG
  • Paying for your own and/or guest access. Renting floating or fixed desk space or private office with PRG
  • Printing/scanning/faxing services at ParagonCoin Centers can be paid automatically with PRG
  • Paying for food, drinks, events, and merchandise with simple PRG checkout
  • Securing conferences, events, research, and educational space for the legalized cannabis industry
  • Buying time for photo/audio/video studio for product shootings, interviews, pod- casts, etc.
  • Joining a social club and/or café for ParagonCoin Club members
  • Participating in web and in-app coworking, events, and a conference-reservation system with instant PRG payment
  • Specialized retail services and SPAs with cannabis products at a flagship location with PRG payment and tipping (retail of cannabis products at spas limited to jurisdictions where such cannabis products are legal)

With this level of transactions with the coin, the value of the coin will increase naturally as its supply decreases, rewarding long term holders of PRG. Their projections for the first year will be “10 spaces, with 200 members each, and each of those spending 30-50 PRG per day for office space and other amenities. This equates to an annual run rate of close to 25M PRG.”

The profitability of the real estate along is second in importance to the appreciation of PRG. “We will try to let people rent spaces at our co-working spaces below cost, but because they are paying in PRG and because of the mechanism of decreasing supply, we are hoping to profit on the value of PRG and not on the rent,” Egor said. If they fail to achieve the numbers above, this could create a significant cash burn problem, but they already have enough from their pre-sale to purchase their first property.

The extent of their real estate purchases and their final budget depends on the total raise from their crowdsale. Egor told in our interview that “A lot will depend on the success on how the crowdsale goes. If it’s a lower amount we will most likely be California focused, however, if we hit the hard cap, then we will be a global real estate project. We are planning to go to Spain and Paraguay.”

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