LTO Network - Interview with CEO - Rick Schmitz - Vol. I
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Intro
2019 does not need to be a key moment for defining what blockchain is to the masses but it can be a time-shifting bridge that will help us to cross the abyss between a non-blockchain technology world and mass adoption. A critical aspect of the solution for this problem is not to use blockchain everywhere "at all costs", but to use it in a way where blockchain acts as a meta-technology. The technology that can challenge and improve already working solutions and smoothen them, while lowering costs.
To make people see that this is already possible, we need an example. An example of a company that uses the blockchain as a way to ameliorate already working processes; saving time and work as a side effect and thus money. LTO Network is one of those unique projects and in today's interview, we will be digging into the brain of its chairman (CEO) and see what brought forth this blockchain solution that is taking the cryptoverse by storm.
This project is really unique in a way they got to where they are now. Instead of going from a whitepaper to a product, they made a product on demand and created a blockchain based project out of that. The goal of LTO Network (Liquid Tack Orchestration) is to provide a technological solution which fights bureaucracy, fraud, and nepotism. They believe that privacy and transparency are not mutually exclusive and they are willing to prove it.
They found a way in which governments or multinationals can trust each other in a business manner while being GDPR compliant. The problem is that those groups are reluctant to replace their own systems and are working on one central solution. In other words, they want to work together, but this has to be by participating in the process with their own stuff. They have already codified so much in legislation on how to work on a process that runs between multiple organizations, but they don't automate them. They use the old school fax machines, post, and emails to communicate during the process.
LTO Network wants to step up the game by developing and providing the Toolkit for Trustless Workflows. LTO is a solution to automate workflows in the B2B market by making them trustworthy between each party. To execute this, they split up their solution into a Hybrid Chain with 2 different layers.
The second layer uses permissionless private chains, which utilize LTO “Live Contracts”. The “Live Contract” is like a workflow to automate processes. For example, a customer who applies within a KYC, which is getting signed by the company. The information about this event happening gets hashed (saved within the cryptographic algorithm) on the first layer, which acts then as the security layer. All of this is possible by connecting legacy systems that the parties already use, making adoption easy and seamless.
Ladies and gentlemen, our today's guest is a successful businessman who is focusing on legal things (also, LegalThings is another project of Rick Schmitz btw) and leading aspect of his second project registered in Netherlands, LTO Network. Ladies and gentlemen, the CEO at LTO Network, Mr. Rick Schmitz.
The Interview
Good afternoon, Rick! Thank you for making some time in your tight schedule for this interview. First, I have introduced you as the CEO of LTO Network. Please tell us something more about yourself and, more importantly, how the idea about creating your own blockchain based project has begun?
I used to work as an M&A tax lawyer up to 2013 at PWC. Starting with our blockchain was not something that happened after a couple of drinks with your friends, it was a journey that already begun in 2014. Arnold pointed me on a cool project (Ethereum) were they introduced smart contracts. For the purpose were we wanted to use it for back then it wasn't suited, so we decided to build our own deterministic workflow engine. We started to sell this workflow engine as a SaaS to companies as a centralized solution. We had implemented anchoring of data implemented already in 2016 to secure data integrity going around on the platform. We used bitcoin BC back then.
The reason to start our own dedicated blockchain solution was winning the hackathon challenge from the Dutch Ministry of Justice back in 2017. The challenge was to speed up the process of an impoundment of a vehicle. Multiple actors using different systems needed to work together on the same process. Our workflow engine was perfect for this as it was based on a deterministic finite state machine technique. We modified the workflow engine in such a way it was possible to communicate the state change in the respective process to the other participant in the process. These actors didn't need to wait for an email, phone call or fax that a step was executed, they could all calculate it themselves on their own nodes.
This was unlocking a whole new level of efficiency that could change the way organizations and governments work together on repetitive processes. That when we decided to take this to the next level adding also a public chain layer (as bitcoin was too slow and expensive) to secure the data transactions taking place in those private workflows.
Is this your first project or do you already have experiences from previous startups, projects or corporation we could hear about?
This is definitely not my first venture. I started lensdeal.nl, a website for online contacts in 2011. Sold that in 2016.
In 2012/2013 I started FIRM24.com, as a platform for entrepreneurs to incorporate entities. About 15% of all corporate notary work in the Netherlands flows through this platform. This company is still owned by me and my business partner. I became a passive shareholder there in 2016 to focus solely on the software branch (LTO Network).
Tell us something about your past working experiences.
I was in M&A and so was my business partner Martijn Migchelsen. I was doing tax structuring and legal stuff on a transaction and Martijn was doing corporate finance on the deals. From this experience, we gained a lot of knowledge on how to run, finance and structure a company. We also had staff members working for us, so it teaches you how to complete a project with multiple people working in multiple jurisdictions to complete an M&A transaction. This was a perfect school to run a company and also to get the maximum output from a team. We have been doing that on every deal.
How did you get into IT and meet your current team?
I kinda always knew that I was more an entrepreneur, but the convenience of a salary and bonus was just too good in the first years. In 2012/2013 FIRM24 became too big to run that on the side, so I went and all-in on the entrepreneurial life first, Martijn still supporting me with his PWC salary, and 3 months later it was also time for him to quit his job. We have been a team ever since. Me as business development and sales and Martijn the financial matters and team.
In 2014 I met Arnold Daniels, who had a lot of experience in the startup scene. Together with his brother Ruben Daniels they where behind Helder Hosting and Cloud9 IDE (sold to Amazon). Arnold is our Vitalik, but with social skills. Me and Martijn needed a new workflow engine to automate the notary process on FIRM24. From one thing came another and all up a sudden we were engaging in a blockchain project with now Arnold as a business partner too.
The rest of our IT team. Most guys we recruit from Uni. We do a ping-pong beer party every year on the Amsterdam Science park where all the software engineers, AI students and other beta people go. This is great to recruit at the bottom and find fresh talent before the big tech companies snitch them away.
Has the team ever won some coding or IT-related contest?
Yes, we won the 2017 Blockchain hackathon of the Ministry of Justice.
How long have you been interested in blockchain technology and when did you make your first Bitcoin (BTC) purchase?
In December 2014 Arnold showed me the ethereum project. I remember him saying hey let's set up a node and purchase ETH for 1000 EUR or to run these smart contracts to see if it's useful for us. I said, do the research first and when you think we can use this technique let's set up a node and buy some ETH. He came back with the conclusion that smart contracts were not useful for anything except for holding and transferring something of value. Great for things like ICO's but that's about it. So we pulled the plug on Ethereum, didn't purchase EUR 1000 in ETH when it was almost free.
My first bitcoin I purchased was in 2016. So quite late to the party. The developers wherein way earlier.
How many years are you assuming that it will take for blockchain to become fully adopted in the ordinary life of everyday people?
If you notice blockchain, it's bad. Blockchain is nothing more than a technique which can be used to reduce friction and make things more efficient. This underlying technology is already being implemented in businesses today. Currently in smaller scales, but I've seen things moving to production phase already. Users won't even know they are using blockchain. I think in 2/3 years from now that the majority (more than 50%) of the large organizations have implemented blockchain in their day to day operational systems.
What helps for adoption are the tech giants (like Facebook with Whatsapp messenger) breaking the barriers. It might not be the best fit for the narrative of decentralization, but as a company, we need to think in terms of making what users need, and not just build stuff we like.
I provided a bit of an LTO Network introduction above. How would you introduce the concept to people who have not heard of LTO Network before?
LTO Network dual-layer approach enables collaborations between multiple organizations and departments via our decentralized workflows engine, where parties can keep using their own (legacy) systems to participate in a process while securing every data transaction in the LTO Network public chain.
Have you been pleased with the result of your crowdsale?
Yes definitely. We raised enough to accomplish the goals I've set for the team in the next 3 years. Super grateful to the community, and we did not stop working for a single day.
What is your core vision and how can LTO Network change and ameliorate the face of today's service using via crypto and Blockchain technology?
LTO Network has been servicing enterprise clients for the last four years. In 2017
we started focusing on decentralized workflows. This changed the way new clients
approach us, in the most peculiar way.
“We want to do something with the blockchain. Can you please come up with a way, how we
can apply it to our organization?”
There is no lack of great blockchain projects. But all of them seem to suffer from the
same problem; little to no adoption.
That's why we only engage in projects that bring value and have a good chance to be rolled out in the production phase.
For LTO Network this value is unlocking a new level of efficiency to automate processes that run between multiple parties or parties that want to secure their data integrity (only layer 1).
If you want to dive deeper have a look at the visionary paper we wrote.
What does LTO Network have that no other crypto project has? What’s the killer feature? Is it that Hybrid element of your solution?
We have the only permissionless private blockchain(s).
You can start as a centralized workflow solution but can decide to decentralize the workflow by inviting other organizations on the respective workflow. This party can decide for themselves if they want to participate via the node of the invitee or to spin up their own node to communicate on the process. Permissions to participate as an actor are orchestrated in the workflow itself, and not by the network. This allows for ad hoc collaborations, which are happening all the time in the real world. Just to give you an example. What is a trucking company goes bankrupt the day that you need to ship your waste from A to B. If you would use hyperledger or another permissioned private chain, you would have a problem, as you would need to ask permission to join. And the bigger the consortium, the more bureaucratic and time consuming that process takes. We solved that to allow ad hoc collaborations on the fly. No other chain is designed like this.
Other USP's:
- Parties can delete private chains to comply with GDPR (right to be forgotten) regulation.
- Layer 1 is dedicated to anchoring so lightweight and cost-efficient to secure data transactions.
- The hybridness of the network: It allows for both on-chain and off chain communication.
What about those “Anchors and the Anchoring process”? Can you explain this in plain English, please?
The first layer, the LTO Network global public chain, is the internet's 'Proof Engine'. Any type of data can be secured and verified on authenticity. You can try it yourself in our anchoring demo. Try it with a PDF, for instance.
Is your GDPR solution ready to stand against all GDPR regulations and is it set up for spreading into US and China market?
We have implemented privacy by design. This is one of our key USP's and why organizations choose us. As you are able to delete private chains, but keep the audit trail in the public chain to proving the authenticity of the respective data and steps taken in a process (immutable audit trail).
We are already working with the biggest legal process outsourcer in the USA and more clients in the USA are in the pipeline. The US is definitely a new focus territory. We don't have anything in China currently but our solution could work perfectly there as well.
Can you provide an example from your real life where LTO Network could help solve some issues in an ordinary person’s day?
If you are working in operations at an organization or government than you are burning a lot of time on communication and administration on processes (process management). Imagine that 50% of this communication and administrative burden would disappear, as it happens automatically using LTO Network. That means you would have 50% to focus on things that cannot be automated (or reduce administrative personnel and save money).
How do you deal with competition from similar crypto oriented projects?
We try to do things differently than other projects, we are more like a normal company but with public exposure. We know how to manage assets and why having a revenue-making company is important. Not just to build something, but build something users need.
We do not spend dozens of thousands on useless blockchain parties or press releases which no one reads. The focus is to try to involve the community and empower them at every step of our journey. The network effect of crypto is really something everyone underestimates. So our transparency, adoption-focus and open communications were probably appreciated by the community members, and we are very humbled by that.
To facilitate that, we do not only provide a lot of documentation and materials, but are also constantly online and try to do a lot of things in an interesting way: token model, adoption strategies, community engagement, etc.
Can you introduce the LTO token to us, please? People can hold it in their ERC20 wallets like MEW and many others, or they can send it to LTO Mainnet and use it there for leasing.
Since the technology and the company have been maturing for many years, mainnet is up and there are a number of ways you can participate in the network! You can set up a node, stake LTO and receive miner rewards. Or, if you are not too techy, you can just “vote” for someone else to run a node and get rewards for you. You can also combine either of those two with doing community work and getting more rewards.
This is really something essential we want to emphasize: we involve the community at every step, and we want to make sure there are multiple cool ways you can participate in the network. If you are tired of passively holding coins, LTO has a few cool engagement ways!
Next cool thing is that Troll Under the Bridge. Can you tell us something about these elements and how can one make some money by holding and providing a bag of LTO tokens to LTO node runners?
The token supply exists simultaneously over 2 blockchains (1:1), and there is a bridge troll in-between controlling the flow of tokens. It is the same supply, just re-distributed over 2 blockchains. It protects the community from dumping and also ensures proper adoption dynamics. It burns your tokens once you go from mainnet to ERC20 depending on the fee, and gives 40 LTO to mainnet nodes if you go from ERC20 to mainnet.
It’s a way to prevent early sell-offs by punishing, as well as reward early node runners.
From the team’s communications, LTO Network believes the community is very important to its blockchain solution design. Can you elaborate on how the token and token value helps bind the community to your project?
We believe an ICO or a blockchain project holds strong power in distributed economic incentives. Everyone, who is a token holder, will benefit from the growth of the ecosystem. Therefore, it is imperative to empower the community, to give them all the tools and rights to bring adoption and users to the network. For that, you need transparent communication, coherent documentation, solution-focused website, etc. We have most of this out already but are constantly improving and educating the community members. The power of the community is not to go around and sell their coins to each other turning this into a zero-sum game, but to bring adoption from the outside of the crypto echo chamber.
And I believe there is a community platform, correct? Is this your marketing strategy to raise awareness of LTO Network and to get more people involved in the community?
Community platform is a way to automate and keep track if that work, We removed the bot-features like spamming comments because this is not the best way to present a project in social media. What it does is it crapes blockchain data (but we do not know how much you hold, don’t worry we are not in the business of selling data) and it calculated your status based on a few automatic and manual factors. It’s like a new way of governance.
Suppose I am a company new to the crypto world and I want to use your application. What steps should I take first?
If you want to use the solution, you do not even need to be involved with crypto. That’s the beauty of our products. We managed to split the layers of a user (token_holder) in such a way, that both can benefit while removing the frictions of “buying tokens” when you are a solution user. The staking model in place and the leasing combine both communities. As a solution user, just go to our website (we are updating it) and see how you can use the blockchain by connecting your existing legacy systems.
Ok, Rick, we are at the end of our first session. I would like to get back to you and ask you one of my favorite questions as a first-half show closer. What is the most inspiring book you have ever read and what book you have enjoyed the most?
I love the autobiography of Richard Branson "Losing My Virginity". This book really inspired me to quit my job at PWC and go all in to become an entrepreneur.
This is also the last book I read. I am more a "do-er" than a reader.
(Prefer Tequila) at Telegram or shoot a shouted "Tweet".
Never stay tuned
With respect, Mickey