The TAO: Rationale

The Telcoin Platform, as hereinafter defined, is a system that works on mobile phones and uses blockchain technology. It allows people to do many different things, like sending money to each other, exchanging digital assets, and storing their own digital assets securely. People can also create and use various applications on the system. One of the features of the Telcoin Platform is its design and goal to make it easier for people to make payments to each other no matter where they are or what telecom network they use. It democratizes financial services, especially for the unbanked, by enabling customers to use smartphones to have better access to financial services at the same time having more control over their money. This will increase efficiencies of capital flows and in turn decrease the cost of capital.

The Telcoin Platform enables the generation of a digital good called TEL. Miners on the Telcoin Platform compete with each other to earn TEL by contributing to the platform. Each miner earns TEL based on their own efforts and abilities, following rules set by the Telcoin governance system. Demand for TEL comes from people who need TEL in order to use the platform, like trading on TELx or sending money on the Telcoin Network. Miners also use TEL to help make the platform work and provide influence in the governance of the platform.

The Telcoin Platform is governed and managed by four distinct types of miners operating through two legal structures, a Swiss Verein and a Lithuanian corporation.

The Telcoin Association is the legal entity with authority over governance and platform management activities that structure interactions with Telcoin Network, TELx and Telcoin Application Network (collectively the “Telcoin Platform”) and the flow of TEL units it generates.

The Telcoin Association is a non-stock, nonprofit collective association of persons that come together through a legally-recognized entity called an association. Telcoin Association’s nonprofit mission is to use of blockchain technology to globally support financial inclusion and prosperity.

The TAO is meant to be a general-purpose operating entity that serves to carry out the directives of the Telcoin Association. Another way to look at it, is that the TAO is a producer of collective goods and services that is financed by, and authorized to facilitate, produce, administer on behalf of the Telcoin Association.

The TAO also serves to facilitate governance activities within the Telcoin Association and work with Miner Councils. Further, the TAO helps to drive Telcoin Platform ecosystem development internally with the community and externally with prospective miners. Some further examples of the efficiency and effectiveness provided by the TAO include, but are not limited to, the following:

Overall, the TAO is meant to effectively be a production unit that helps miners and Telcoin Association Miner Councils to implement proposals in terms of construction and maintenance, research and development, education, networking and other operational tasks as determined by the Assembly working through Miner Groups and their elected Miner Councils. The Miner Councils provide funding to the TAO to either implement proposals itself or coordinate with external parties to implement and contract for services. TAO’s revenue to cover the above expenses comes primarily from periodic sales of TEL as directed by the Telcoin Association.

Lithuania has demonstrated an acceptance of cryptocurrencies and fostering their development. Furthermore, Lithuania is located within the European Union. This provides better alignment with the Telcoin Association which is located in Switzerland (a member of the European Economic Area). To the extent of regulatory oversight, we believe it will be more uniform between the two entities. Furthermore, the EU overall is more welcoming of cryptocurrencies than other jurisdictions, but also is a jurisdiction which has a better developed regulatory structure aligning with the Telcoin Platform’s goal of operating in a proper manner in compliance with applicable law.

In order to enable persons to come together and provide services for a collective benefit, they need to have a structure to facilitate the efficiency and effectiveness of their efforts. A corporation, which is a legal person, gives such a structure to operate in this manner. For example, the corporate structure, which is governed by its controlling shareholder, i.e. the Telcoin Association, operating through the corporation’s elected Board of Directors and its appointed officers, allows for clear and proper governance which enables more efficient and effective implementation. Moreover, the corporate structure provides limited liability protection for its officers and directors which incents greater participation in TAO’s business.