LIGO. Global Real-Time Cryptocurrency Tax Data Management Solution. White Paper. Version 1.3. April 24, 2018

Transcription

1 LIGO Global Real-Time Cryptocurrency Tax Data Management Solution White Paper Version 1.3 April 24, LIGO LEDGER INCORPORATED OTTAWA, ON CANADA

2 Contents Our Mission... 1 Background... 2 A Short History of Cryptocurrencies... 2 Who is Buying Cryptocurrency and Why?... 2 Why Does the Cryptocurrency Community Need Accurate Records?... 4 The Problem: Cryptocurrency Chaos... 6 Location... 6 Date and Time... 7 Exchange Rates... 7 The Solution: Ligo Keeps It Legal... 9 Calm the Chaos... 9 Ligo Register... 9 On the blockchain:... 9 Off the blockchain and open source:... 9 Ligo Keychain Reports + Analysis Real-time Tracking Historical Report Transaction History On-going Analysis Business Report Estate Report Choose the Plan That s Right for You How Does It Work? Ligo Ledger Ligo Token Ligo Keychain Ligo App Ligo Core Ligo Web Ligo Node Privacy + Security Customer Data Accessibility... 19

3 Know Your Customer ITO Revenue and Expenses ITO Process Initial LIGO Token Genesis Token Allocation Wave 1 Ignition Start-up Wave 2 Soft Cap (First Gear) Wave 3 (Top Gear!) Purchase Limits How to Register and Participate in the ITO ITO Summary Information Roadmap: Future Enhancements and Expected Releases Our Team of Blockheads Disclaimer A reminder to all Ligo token purchasers: Appendix 1: Glossary... 30

4 Our Mission Ligo is a simple-to-use secure solution for real-time cryptocurrency transaction evaluation to produce reports and inputs into tax calculations, serving individuals and businesses around the world. Built on the blockchain, Ligo (pronounced lee-go ) is set to be the industry standard as the first and only immutable global cryptocurrency transaction valuation solution (patent pending). The cryptocurrency market has exploded in the last 2 years, and this peer-to-peer technology is changing the way people do business. You, as a user, are part of this new ecosystem, and have chosen to jump on board the block train. You have joined a community that is on the cutting-edge of a major change in both the financial and technological sectors. We at Ligo Ledger Incorporated are huge fans of this community, and we re building Ligo to help prepare it. There s a looming problem in the world of cryptocurrency that will be a big shock to many: The tax man is coming! Cue the dramatic music! Not everyone in this space knows that there are tax implications when it comes to cryptocurrency. 1 The more mainstream these coins and tokens become, the more governments and tax agencies are taking notice. Cryptocurrencies, as volatile as they are these days, have real value, to the tune of $480 billion globally, roughly the same as both Visa and MasterCard combined. And when you own or exchange something of value, the tax man wants a piece. And, it s not just capital gains he wants to get his hands on, which is what much of the media is focusing on. It s also the income or payroll tax on your cryptocurrency salaries and wages and all the value added taxes (VAT) for business transactions. Don t be so naïve to think that he won t visit you; he will. 2 And when he does, Ligo will ensure you have accurate and immutable records to show him. Ligo has got your back. Ligo s mission is to prepare its community. Ligo makes it easy to log and analyse all your cryptocurrency transactions, whether it s buying coffee at the local shop, trading the latest coin on an exchange, or tracking revenues and expenses for your business. Have you been keeping accurate records of all your transactions since you started? Start now with Ligo. Ligo prepares its community with real-time and accurate records. Ligo integrates information on the user s location, exact exchange rates, and appropriate tax regulations for your jurisdiction with blockchain transaction data. This means that no matter which tax jurisdiction around the globe you live in, and no matter how you use your cryptocurrencies (income, payment, or assets), your records will be accurate and immutable. Ligo gets you ready for your tax-time form filing, and for any audit that might come your way. Wherever you are in the world, you should never have to pay more taxes than you need to in compliance with the rules of your country. Ligo protects you by preparing you. And Ligo keeps it legal P a g e

5 Background A Short History of Cryptocurrencies Cryptocurrencies had their start quite some time before Bitcoin, in fact, way back in the early 1990s by a group known as cypherpunks (basically your idealist techie rebel-types). They believed in defending anonymity with cryptography as a means to connect society in the electronic age and they spoke up against any regulations that would stop the spread of anonymous transaction systems. For a time, the cypherpunks wish came true the transactions took place in a completely unregulated cyberspace, but this unfortunately often led to the use of transfers for illicit and illegal transactions, including, later on, the Silk Road. 3 Nobody knows if Satoshi Nakamoto was one of the original cypherpunks, but his introduction of Bitcoin to the world 4 is seen as a major shift in cryptocurrency technology and philosophy. Although started in 2009, it wasn t valued in a financial sense until 2010 when 2 pizzas were bought for 10,000 bitcoin. 5 Bitcoin continued to trade and grow in popularity over the following years, and since then, hundreds of altcoins such as Ethereum, Litecoin, Ripple, and Dogecoin, have been created and continue to grow in value. The financial crash in 2008 shook the world. People had put their trust in financial institutions, and they ended up being betrayed. Another solution was needed. Enter cryptocurrencies. The notion of a decentralized and secure replacement of currencies and monolithic financial systems became more and more enticing to people around the world. In countries with corrupt and failing banks and government systems, where the currency was no longer worth the paper it was printed on, cryptocurrencies were seen as a viable solution. People started buying and selling coins and products with those coins to avoid interacting with banks. They wanted to take back control. Over time, cryptocurrencies went from an underground secret society to a community rallying against the power of the financial world. As more and more people outside the underground economy began using cryptocurrencies, instead of a community based on illegal deals, it became a community of people who thought it was fun to buy some coins with a QR code on their cell phone. Who is Buying Cryptocurrency and Why? The current number of cryptocurrency users (as of December 2017) is estimated at over 21 million, each contributing to the estimated 500,000 transactions per day. This number is sure to grow exponentially P a g e

6 over the next several years. People are trading cryptocurrencies to the tune of billions of dollars worth each day. Figure 1 - Source: Certainly, there are lots of rich tycoons who dabble in cryptocurrencies. But the largest volume of users is regular people, individuals who have a little extra money to play with, or just don t want to miss out. Many of these individuals run their own businesses and want an easy way to buy and sell goods and services and love being part of this technological and financial crypto-curious community. They ve worked hard in order to build a comfortable future for themselves, their families, and their local and global communities. 3 P a g e

7 Billions Cryptocurrencies by Market Cap (historical) Altcoin Market Cap Bitcoin Market Cap Figure 2 - Data Source: Why Does the Cryptocurrency Community Need Accurate Records? You can now choose to have your wages and contracts paid in cryptocurrency. 6 You can pay bills, 7 conduct your business, 8 or go on a trip 9 without ever leaving the cryptocurrency ecosystem. You can buy thousands of products with bitcoin and other cryptocurrencies at places like Overstock.com, or through e-commerce providers such as Shopify 10 that are jumping in to help businesses and customers connect with alternative methods of payment. Even Amazon.com is said to be looking into cryptocurrencies, given their interest in of a number of cryptocurrency-related domain names. 11 While there are some tools out there to help you keep track of your cryptocurrency transactions and produce historical estimate reports, to date, there are very few tools or products that provide you with global real-time information on these activities. Taxes are seriously not fun, but they have to be paid. People already understand and follow through on their obligations when it comes to a country s currency such as dollars, pounds, or euros. But Bitcoin? Ethereum? How do you track and calculate your taxes on P a g e

8 them? 12 Furthermore, the few tools that are out there that do help with taxes only focus on one or two jurisdictions or types of taxes such as capital gains. But cryptocurrencies are inherently global. And you aren t only doing one type of transaction with them. So where does that leave you? Until Ligo, you have not had the proper tools to help you meet your cryptocurrency tax obligations. As cryptocurrencies have moved from underground arenas to trillion dollar companies, governments and tax agencies are following suit. It s much easier to collect tax dollars on legal purchases and transactions than to go deep into the underground. Just like the (World) Wild West beginnings of the Internet, we are just at the start of regulations, legislation, and policies as governments wake up to the fact that this is not simply a technological shift, but a financial one at its core. Tax authorities around the world are now frantically writing rules and policies to govern the tax implications for using, exchanging, and participating in economies and systems based on these decentralized tools. 13 The faster they finish writing those rules, the faster they ll come to collect their taxes. 14 The problem is that the rules are complex and unclear. And much of the time, cryptocurrency users are not keeping track of all the important information about their purchases and sales. Without accurate records, it is impossible to accurately figure out the taxes you owe, or the refund you are entitled to. With accurate records, calculations, and reports, no matter where you live or how you use cryptocurrencies, Ligo will help you gather the information required when it comes time to file your taxes P a g e

9 The Problem: Cryptocurrency Chaos What exactly are the regulations surrounding cryptocurrencies around the world? That depends on three different factors: Location: how a government treats cryptocurrencies, and the rules surrounding any potential value-added taxes (VAT) depends on where you live/work/do business and where you file taxes Date and Time: when does the exchange or transaction take place? Exchange Rate: what exchange rate is used for the transaction? Location Although cryptocurrencies exist in a nebulous cyberspace between countries, every person or business using cryptocurrencies resides in an actual country, and part of the equation is that you are required to abide by the tax regulations of that country (and potentially those of other countries as well). Some countries, such as Morocco 15 and Ecuador have made cryptocurrencies completely illegal 16 for their citizens. Others like Mexico and Saudi Arabia restrict their use. But in most countries, cryptocurrencies are legal and welcome. 17 And where they are legal, they can be considered a business or personal property, a taxable supply, a commodity, or a foreign currency. And within those definitions, you ll find different tax obligations depending on whether your cryptocurrencies include income, capital gains and losses, and/or value added taxes like GST in Canada. Example: In the United States, cryptocurrencies are deemed a property and therefore capital gains and losses, calculated based on how long the asset is held, are applied. However, if they are used for payment, they should be treated as currency, but must be converted and the fair market value checked on an exchange; and, the peer-to-peer nature means the fair market value could be appealed. And wages paid to employees using cryptocurrencies are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes in US dollar equivalents. 18 Example: The Canada Revenue Agency (CRA) states that in Canada, cryptocurrencies, when used to purchase goods and services are a barter transaction wherein the value of that transaction needs to be considered as revenue and could trigger Goods and Services Tax (GST a VAT tax). However, when they are bought and sold as commodities, the rules are different, and taxes are then applied as capital gains or losses Cryptocurrencies-graphic.pdf P a g e

10 Example: Although the European Union has not passed any specific cryptocurrency legislation, it has stated that VAT is not applicable to the purchase of cryptocurrency, but that VAT and Income Tax are applicable to the purchase of goods and services with cryptocurrency. 20 Full details showing the state of the world in terms of cryptocurrency acceptance can be found here: Cryptocurrencies-graphic.pdf Those living and doing business across multiple jurisdictions will need to comply with all regulations within their sphere of operations. Oh, and just when you think you ve figured out all the regulations for your locations, they go and change the rules. Case in point: prior to July 2017, Australians paid GST twice on cryptocurrencies; once on the initial purchase of the coins, and then again on its use in exchange for other goods and services that were subject to GST. The Australian Taxation Office changed the legislation as of July 1 st, 2017, and now cryptocurrencies are seen differently, and the GST treatment of them aligns with the Australian Dollar. 21 Are you an Australian citizen who bought and sold cryptocurrencies before and after the legislation change? Did you keep track of all the transactions in real-time? If not, how are you going to properly calculate your taxes? In the global economy that is today s norm, without accurate records your taxes may be next to impossible to sort out. Date and Time In addition to knowing the laws regarding cryptocurrencies, it is extremely important to keep track of the time and date of the transactions, because exchange rates can vary significantly over short periods of time, and legislation are changing almost daily too. Luckily, the blockchain has a built-in timestamp which Ligo will put to good use. Exchange Rates Not only do exchange rates of cryptocurrencies vary drastically based on the location and time of the transactions, but they also vary drastically between vendors at the same time. Peer-to-peer means there is a potential for enormous exchange rate variability. Currently, each cryptocurrency blockchain keeps track of transactions that occur and records the timestamp, but they don t link in the external feeds of P a g e

11 exchange rates. Without scrupulous record keeping and without this key indicator, any tax agency could state that your transaction should use the rate of exchange they feel was appropriate. You need to have complete books and records. Governments must estimate historical exchange rates: some use an average for the day, while others use the maximum rate. There is no way for them to get the details of the exchange rate you actually used in your transaction unless you provide the record. You are choosing peer-to-peer transactions for a reason. Don t leave it to others to value your transactions and use estimated exchange rates, as in some cases they can get it completely wrong. 22 Bottom line, having accurate records will help ensure more accurate tax calculations P a g e

12 The Solution: Ligo Keeps It Legal Calm the Chaos Ligo brings control back to you and makes it easy to track and analyse your transactions and will help get your tax filing right. Ligo does the work of collecting all the scattered pieces of information about your location, exchange rates and tax regulations and integrate them with the immutable transaction data from the blockchain. What makes Ligo stand out? Our commitment to our community: Accurate records. In real-time. Globally. Essentially, Ligo offers a simple-to-use, accurate, and immutable tracking solution to help simplify the task of bookkeeping related to your cryptocurrency taxes. Ligo Register At its core, Ligo is a blockchain-based register. This means that data is immutable: it cannot be altered, falsified, rewritten, or manipulated. We collect data from many different trusted sources, organize it, validate it and store it on the blockchain. To calculate your taxes properly, you need to have realtime access to location, time and date, cryptocurrency and exchange rate information and it must be tied to the blockchain record of your transactions. In real-time, Ligo will capture these data points and link them to each of your transactions. The necessary data points to calculate this valuation can be found: On the blockchain: the details of the transaction data (whose wallet and what is involved); the cryptocurrency amount of the transaction; and, the date and time of the transaction The valuation starts at the moment of the transaction. Ligo will pull the fixed and unchangeable transaction data directly from the blockchain: a perfect timestamp and snapshot of all the important details. Thank you, blockchain! Off the blockchain and open source: exchange rates from the peer (which could be a business or an individual) you are interacting with; tax categories and rates; location of the transaction; service and product directories; and, data entry by the user 9 P a g e

13 Ligo will integrate geocoding into the analysis to ensure that the user s location for each transaction is not just set at the country level but is literally down to the GPS coordinates of where you are, even if you are in an area of a country that does not have street addresses. With our Ligo App we will use GPS to help define your location and ensure - with your collaboration - that the location found correctly matches that of the transaction. Having your exact location during the transaction will enable us to ensure the correct exchange rate is being recorded. We believe that a large part of the problem with cryptocurrency tax reporting is not compliance 23 24, but rather tools or lack thereof. No other cryptocurrency transaction management solution combines data in the way that Ligo does to help you get the most accurate tax calculations possible. Listen, there are only two sure things in life: death and taxes. We can t help you with the first one, but Ligo can definitely help you with the second. You will get bitten at some point if you don t have accurate cryptocurrency transaction records. Take control of it now. Let Ligo help you prepare. Ligo Keychain Upon creating a free Ligo account, you will be given your own unique Keychain where you ll store the public keys for all the cryptocurrency wallets you own and use. The keychain also stores information relevant to taxation for the wallet s associated cryptocurrency or token. We have seen already that regulators are differentiating between ICOs and ITOs and utility and securities and we know that eventually this could impact taxability, so, we are staying ahead of the taxman and storing relevant information ready for future use. It is with this Keychain that you allow Ligo to access your blockchain transaction activity, and collect the records you need when it comes time to calculate your taxes. You do not need to share your private keys with Ligo they are For Your Eyes Only and we will never ask you to share that information with us. The keys on the Keychain do not give Ligo any ability to transact on your behalf or access your wallet funds. It is a strictly read-only access to your transactions. The most accurate picture of your full cryptocurrency P a g e

14 portfolio can only be ensured by you adding the public keys to all your wallets onto the Ligo keychain: we cannot keep track of things for you that you have not told us about. Reports + Analysis Real-time Tracking The unique strength of the Ligo solution lies in its ability to take a list of your Ligo validated blockchain transactions and give you real-time collected information for each transaction regarding exchange rates, as well as appropriate tax categories and rates for your location and type of transaction. Once your Keychain is set up and you start using the Ligo App, each transaction you do moving forward will provide input into the full picture you need to calculate your taxes accurately. You will select the type of transaction, such as income, a purchase or sale of goods, services, or cryptocurrencies, and whether VAT applies. Ligo will then assemble data about your jurisdiction, the time and date of the transaction, the exchange rate, and the micro-location: you re not simply in the United States, you re in New York City, at the coffee shop at the corner of Main and First. Micro-location is key as it ensures Ligo is collecting the most accurate exchange rate for you. This data is then validated by you and external sources and sent encrypted to the Ligo Ledger. The power of Ligo is knowing that you are not using some picked-for-you average that may not be the same as the actual exchange rate you used. Ligo provides a variety of in-depth reports and tools for you including full transaction tables, network graphs, histories, historical and current reports, business analysis reports, and estate reports. The reports will give you the big picture of your cryptocurrency transactions, and provide inputs into your tax preparation process. Historical Report We are pleased to announce that our back to the past product the Historical Report - will be available as soon as the ITO process completes and LIGO tokens are released. This report will be available for free 11 P a g e

15 to all Wave 1 and Wave 2 participants for the Ether wallet used to purchase the LIGO tokens. After the ITO, the report will be available for 100 LIGO and is not part of any Ligo subscription plan. The following cryptocurrencies are initially supported: Bitcoin, Bitcoin Cash, Bitcoin Gold, Ethereum, Ethereum Classic, Ripple, Litecoin, EOS, and Cardano. We will be working on availability for other cryptocurrencies based on the needs of our ITO participants. Our Historical Report uses past cryptomarket data and your wallets transaction history. In this report, Ligo estimates the value change you had in your portfolio for a particular wallet, so you can use the numbers help sort out past taxes. This report also provides some very cool analytics: market insights, a timeline of changes to taxes in your country, and a network graph view of your transactions to give you a starting point for your hodling or purchases. You can use this report to go back in time on any of your wallets. NOTE: Ligo, just like any other software, cannot scan transactions in some currencies, cannot (in a historical analysis) potentially locate transactions moving between blockchains, and cannot historically differentiate mixers from other types of transactions. Ligo will only provide this analysis on wallets that the Ligo purchaser controls. Transaction History The Transaction History report shows you all your prior blockchain transactions associated with the public keys linked to your Keychain. Think of it as a bank account statement but with a nice network graph - a record of all your inputs and outputs on the blockchain. The Transaction History report is part of all Ligo subscriptions. On-going Analysis With your subscription account, you will also have options to produce different types of reports and statements relevant to bookkeeping and cryptocurrency taxes. The goal is that these statements will help you to complete your tax filing accurately by providing records and reports that can be used as inputs into your filing process, performed by you or your tax accounting professional. We will continue to work with all jurisdictions publicly available tax legislation information to ensure the reports are current and remain relevant. Business Report First off, if you ve chosen to do business on the blockchain, can we give you a high five? You are definitely in a small and elite group of people who really understands how the financial world is changing. Whether you accept it as a method of payment, make all your business purchases and expenses with it, or do all your payroll in cryptocurrency, Ligo can help you with your tax obligations from start to finish, including any VAT you are required to file in your jurisdiction, by providing the Business Report. This report will be used by you and your tax accounting professional to help accurately assess your VAT and taxes related to business cryptocurrency transactions. The Business Report is available in Ligo for Business Subscriptions. Estate Report In the unfortunate event of the death of an account holder (remember that whole death and taxes saying), Ligo can produce an Estate Report for the last year of the account. This is where smart contracts shine and can provide a secure mechanism to grant report access to estate executors. Wills should be updated with instructions, because when presented with appropriate documentation, the Ligo system will provide the executor necessary details and data to help the estate file final taxes. There are different 12 P a g e

16 regulations around the world when it comes to how assets are disposed upon death. For example, in many countries, dying is akin to having disposed of all your assets, just as if you had sold them. This may trigger a tax obligation, which might leave your estate and loved ones with an unsuspecting tax bill. Via a smart contract, Ligo can help prepare your estate by providing a report so that final taxation can be accurately assessed by a tax professional. Choose the Plan That s Right for You You can set up an account for free, download the mobile Ligo app, and start tracking all your transactions immediately. Next, a tiered annual Ligo for Individuals subscription, paid for in LIGO tokens, will let you access the various Ligo analysis and reports. Ligo for Business subscription accounts are tiered as well, with first tiers for areas with no VAT and a second tier for businesses in the over 160 countries with VAT. Any Ligo token purchase amount during the ITO guarantees a basic Individual 1-year subscription at the introductory cost at time of launch. By making even the minimum ITO purchase, you essentially pre-pay your first year of access to Ligo s platform and reporting tools. 13 P a g e

17 How Does It Work? We ve talked about the problems that cryptocurrency users are experiencing with respect to their tax obligations. And we ve introduced the solution - in broad strokes. But what s really under the hood in the Ligo garage? Clearly, a ledger to record transactions in a bookkeeping system is nothing new. Starting with a paper ledger, then evolving into a computer-based ledger, and recent offerings in the cloud and Software as a Service (SaaS), ledgers have been around for a very long time. All of these systems have the basic characteristic that they are centralized in some way: on your desk, on your computer, or on a company server. Even cloud-based solutions are run and maintained by central authorities which you must trust with your data. With the very recent emergence of blockchain technologies, a secure, decentralized, immutable ledger that is shared by all users, and validated by the community has become a possibility. Ligo takes the concept of a ledger much further by integrating the cryptocurrency transaction details with point-in-time external inputs, such as exchange rates, location, tax jurisdiction information, and currency valuations. By registering these enhanced transactions on our blockchain, we have created a very robust, very fast, very affordable, and specifically-tailored decentralized storage system to hold the ledger. The key requirements of our solution were identified as follows: 1. Easily, quickly, and cheaply record the details of a user s cryptocurrency transaction 2. Enhance the transaction details with point-in-time information relevant to tax categorization 3. Ensure the stored transaction details cannot be altered in any way 4. Provide irrefutable and accurate inputs for tax calculations in the face of changing and arbitrary legislation 5. Provide accurate reports to help in preparing taxes 6. Provide value-added location-based crypto-intelligence 7. Create an ecosphere for cryptocurrency users on a global scale In order to meet these requirements and to bring the world a solution to the complex problem of tax preparation in the cryptocurrency space, the Ligo project consists of several key technologies and components. Ligo Ledger Ligo Ledger is our blockchain-based decentralized ledger based on the Ethereum network. Ethereum employs smart contracts distributed computer programs which can facilitate online contractual agreements in a cryptographically secure manner. Smart contracts are what enables the existence of Ligo as a truly transparent and decentralized service. This technology also ensures that Ligo removes the need for intermediaries and a trusted central authority. Through smart contracts, the complex process of choosing peers, tracking delivery, and facilitating bidding/payment can be described in the contract itself, while still running on the distributed network and taking advantage of the blockchain s excellent qualities. Ligo Ledger is what keeps your transaction history record permanent and secure. By the very nature of blockchain technology, data stored on Ligo Ledger is immutable it cannot be changed. It stores validated cryptocurrency transaction details, complete with the point-in-time exchange rate, location details, value 14 P a g e

18 of the transaction; information you or your tax professional needs to accurately prepare your tax forms. It is the evidence-based recorded proof for taxation and audit purposes. Your validated Ligo Ledger transactions can only be accessed by using your secure private key and as part of the Ligo services you subscribe to. We will always put your data security first and will not release your data without clear legal reasons to any outside party without your prior knowledge. Ligo Token The Ligo Token (symbol: LIGO) is a digital utility token based on the ERC20 protocol and derived from Ethereum and is ready for purchase as soon as the ITO process is complete. Details of the token can be found on the Ethereum network at the following address: The Ligo token is the entry point into the Ligo ecosphere and is what empowers you to make use of the Ligo services. Think of it as the fuel you put into the Ligo car to make it run. You will buy Ligo tokens that you will then use in exchange for Ligo services, similar to how you would use an arcade or subway token. Because the token is ERC20 compliant, it can be sent to and held in any Ethereum wallet. 15 P a g e

19 Ligo tokens are also used to fuel the transaction validations on the Ligo Ledger. They are part of the incentive method by which validators (users running the Ligo Node software) can earn tokens in exchange for ensuring the validity and reliability of the Ligo blockchain. Of course, the validators in turn will use these same Ligo tokens to take advantage of the Ligo system and services. The circle of life is complete! Ligo Keychain The Ligo Keychain is a storage mechanism for the public keys (addresses) of wallets you own and will track in the Ligo system. It also stores details about the different blockchains, and categorizes their utility so that when tax legislation evolves, we can evolve as well. Tokens could represent things like movie tickets or loyalty points or currency and all three may end up with different tax implications in different jurisdictions. Ligo will be ready for these changes. A verification process to confirm the wallet s ownership ensures that only the wallet s true owner can track its transactions. Of course, the public keys stored on the Ligo Keychain will never allow Ligo to interact with or access your wallet. The Ligo Keychain is always securely stored. Ligo App The Ligo App is the interactive portal into the Ligo system. Installed on a mobile device, the app is the tool you use to record and validate your cryptocurrency transactions. From it you push your encrypted, validated transactions to the Ligo blockchain. The app is a lightweight deployed component that communicates with the Ligo Core if external information is required for transaction validation. The Ligo App uses industry best practices to secure access to your Ligo account. No information is stored on the mobile device itself, and no access to your transactions is possible should the device be stolen or otherwise compromised. The Ligo App is also your in-hand location-based cryptocurrency intelligence tool. In our future development plans, push notifications will provide timely information about the spaces around you so you can make informed choices about how you live, work, and play in the cryptocurrency world. Coupled with Ligo Core, the Ligo App ties into existing and future advertising and mapping networks and APIs to provide always-evolving intelligence to you. 16 P a g e

20 Ligo Core Ligo Core is at the heart of the Ligo solution. It is a set of processes and services that make the Ligo system work. While the Ligo Token is the way to pay for the services, and the Ligo Ledger is the decentralized storage mechanism, Ligo Core is the engine that links all the pieces and ensures that the work gets done. It is built with an extensible plug-in framework to allow new processes, taxation rules, and as yet undiscovered cryptocurrencies to be easily incorporated into the system by the Ligo developer team. While the Core is a centralized component, it is not a central authority. The Ligo Token and Ligo Ledger exist independently of the Ligo Core, and storage, validation, and incentive mechanisms are decentralized. Ligo Core scans blockchains for transactions with the wallets you added to your Ligo Keychain. Ligo Core tracks global cryptocurrency and fiat exchange rates. Ligo Core components like the graph database and statistics data stack are producing your reports. Ligo Web Sometimes you just want to be in front of a nice big monitor. Ligo Web is where you create and manage your Ligo account, your transactions, and your Ligo Keychain. Along with data from the Ligo Core and Ligo Ledger, it is also where you review your reports, and can buy more Ligo Tokens as well. 17 P a g e

21 Ligo Node In decentralized blockchain networks such as Ligo and Ethereum, many computers participate in the system in order to share the workload of validating new blocks being added to the chain. Ligo Node is the software which will run on the node computers and perform these validation tasks. An incentive system provides the mechanism by which node owners earn tokens for their work and a distributed consensus algorithm (yay for the mathemagicians!) is used to achieve overall Ligo system reliability and robustness, even in the presence of a number of faulty or malicious processes. 18 P a g e

22 Privacy + Security Our members privacy and security are of utmost importance to us: data leaks are terrible for everyone involved. 25 It is one of the reasons that we chose to build this solution using blockchain technology: it inherently has built-in trust and transparency. The Ligo decentralized ledger stores completely immutable data creating beautifully accurate transaction information to present to your tax authority. Your economic portfolio, your purchases, your savings are just that: yours. Ligo ensures your privacy. Only you should know your financial position, and while the Ligo blockchain itself is public, we use industry standard practices to ensure that your transaction details and financial position remain secure. While we will always abide by regulations in place across the globe, you are our customer and community member, and unless there is a legal requirement issued by a governing body, your information will not be shared with a tax agency or any other entity without your prior knowledge. Customer Data Accessibility The data contained in the Ligo Keychain and the Ligo Ledger is only accessible to the account holder and the Ligo system and smart contracts. However, if you, as the account holder, wish to share your information and grant access to a third party such as an accountant, lawyer, power of attorney, or executor, you will be able to do so. All data within the Ligo system and all personal identifying information, including addresses and account details will be stored securely P a g e

23 Know Your Customer At Ligo, one of our biggest beliefs is that people, as a whole, are honest. Not only do we want to live up to the same standards, we want to help protect our community from those who are not. Know Your Customer (KYC) is not primarily about accessing a customer s personal information. It is a process that financial institutions around the world follow in order to protect its customers from fraud, money laundering, and terrorist financing. The due diligence process includes screening against international sanction and terrorist lists, politically exposed persons, and people with adverse international reputations. As with all other identifying data, your personal information will be stored securely. During the ITO registration process, we will collect a small amount of identifying information, consisting at a minimum of: First Name, Last Name, Address, Country of Residence, Wallet address Ligo prides itself on growing a sustainable community of like-minded crypto-curious people, and therefore we will follow the appropriate KYC protocols as development of the Ligo solution continues. 20 P a g e

24 ITO Revenue and Expenses Because Ligo is a simple-to-use solution to an extremely complex global financial problem requiring not only technical, but also legal and accounting expertise, we have set a soft cap of 8000 ETH (a breakdown is detailed below) ETH will ensure that we have a strong foundation during the next 18 months to continue to build the full Ligo system, secure partnerships with tax lawyers and accountants globally, enrich our current resources, and maintain a healthy operational status during the initial growth period of the company. The ITO crowdsale will allow us to hire additional talent, pay for ongoing marketing, as well as for further business and product development beyond the LIGO token and our Historical Report products. Our goal is to establish a working company with a cash positive revenue stream in the shortest period possible. With such a large-scale global solution and to further expand our product line, we will need further expertise in compliance, accounting, law, and statistics. With all ITO sales beyond the 8000 ETH soft cap, Ligo Ledger Incorporated will use the additional Ether to expand our core team and partnerships in an effort to deliver more products to market sooner. Ether received during the ITO will cover the expansion and sustainable growth of the company over the next 18 months, tentatively divided as follows: Development: 35% Lead by our IT team of Engineers, Architects, Project Managers, and Programmers, development consists of ongoing product and website development and maintenance, Android and ios App development, project management, and solutions delivery. 21 P a g e

25 Compliance and Data Analysis: 40% Compliance and accurate data collection and analysis are key to Ligo and will be a main ongoing focus of the business. Our Lead Compliance Officer, Lead Mathemagician, Lead GIS and their teams will work with partners and subcontractors to ensure that the data collected is as accurate as possible. We will continue to develop reports and analytical tools that are useful to our Individual and Business clients around the world. Marketing: 10% With hundreds of thousands of transactions happening each day on the blockchain, we understand how significant the number of people in the cryptocurrency space is. And the number will grow each year as cryptocurrencies become more of an established and regulated entity in the world. We feel this is a solution that is absolutely essential to everyone in this space. We want to help as many people as possible keep it legal, so we want to get the word out. Infrastructure: 15% You can t build a house without tools, and you can t develop a technical solution without technology. We are allocating fifteen percent to making sure that we have the necessary infrastructure to continue to develop Ligo in the best and fastest way possible. 22 P a g e

26 ITO Process Ligo will launch a public Initial Token Offering (ITO) during which a crowdsale of LIGO tokens (Symbol: LIGO) will be held. Registration for and all updates regarding the ITO be found on our website: Initial LIGO Token Genesis The cost of 1 LIGO is set at ETH (the ETH:LIGO ratio is 1:500). This will be the barter value used in your LIGO token purchase transaction. Your ITO participation will trigger a smart contract which will allocate an amount of LIGO proportional to the amount of ETH sent. A total of 1,000,000,000 LIGO has been generated on the Ethereum network, and no further LIGO tokens will be minted. This number of tokens will handle all current and future cryptocurrency users demand for Ligo services and the Ligo incentive mechanism as the tokens will be recycled when exchanged for services. Token Allocation One billion (1,000,000,000) LIGO have been created and are available for distribution. The tokens will be allocated as follows: 80% available to be sold by Ligo during the crowdsale o All unsold tokens after the public crowdsale will stay on the Ligo platform and will be available for sale on the platform 20% reserved for use for by the company in part to incentivize community, beta testers, and strategic partners o Tokens distributed will be locked for 12 months after the end of the crowdsale The Ligo public token crowdsale will be executed in 3 waves. All waves will be executed via smart contracts on the Ethereum Network. The ITO crowdsale will run for a total of 60 days, plus a 30 day 23 P a g e

27 escrow period. Ether sent by participating buyers and LIGO tokens purchased during the crowdsale will be held in the ITO smart contracts during the entire 60-day ITO process, and will be automatically released 30 days after the end of the crowdsale. Wave 1 Ignition Start-up The first wave will be 2000 ETH. All LIGO token purchases made during the first wave are non-refundable and the Ether will be used by Ligo Ledger Incorporated for marketing, development, and legal expenses thus far, during the ITO crowdsale, and going forward. As a huge thank you, all Wave 1 participants will receive 25% additional bonus tokens as well as a free 1-year basic Ligo for Individuals subscription (payment of 10 ETH or less) or a basic Ligo for Business + a basic Ligo for Individuals subscriptions (payment of 10 ETH or more) if the ITO is successful and the soft cap is reached. NOTE: Regardless of waves 2 and 3 progress and outcomes, all wave 1 participants will receive a single one-time Historical Report for the Ether wallet used to purchase the LIGO tokens. The report will be available 30 days after the close of the ITO process to immediately be able to take advantage of the current Ligo system. Wave 2 Soft Cap (First Gear) The second wave is the soft cap, and will be completed when a total of 8000 ETH is reached (including Wave 1 contributions). If Ligo does not reach the soft cap, all Wave 2 payments (excluding Ether sent during Wave 1) will be refunded. If the soft cap is reached, all Wave 2 participants will receive 10% additional bonus tokens as well as a single one-time Historical Report for the Ether wallet used to purchase the LIGO tokens. The report will be available 30 days after the close of the ITO process to immediately be able to take advantage of the current Ligo system. Wave 3 (Top Gear!) Ligo will offer for sale a total of 80% of the generated tokens during the ITO. Wave 3 will commence after the wave 2 soft cap has been reached, and continue until either 60 days from the start of the ITO have elapsed, or all available LIGO tokens have been sold. Purchase Limits Ligo is a global solution for a global problem. We want to allow as many customers as possible to join as community members, and so, to that end, we have placed a minimum and maximum purchase amount for the ITO, regardless of their location in the world. We want to allow as many customers in the cryptocurrency space as possible to join, from many different countries around the world. We want Ligo to grow sustainably, both as a company and as a community. With this in mind, the following limits are established: Maximum purchase: 100 ETH (50,000 LIGO) Minimum contribution: 0.02 ETH (10 LIGO) Any token purchase amount, including the minimum contribution, guarantees that each and every participant is able to exchange their Ligo tokens for a basic Individual 1-year subscription at an introductory cost at time of launch. By making the minimum purchase, you have essentially pre-paid your first year of access to the Ligo platform and reporting tools. 24 P a g e

28 How to Register and Participate in the ITO Registration for the Ligo token crowdsale will be exclusively through our website at and payment will be exclusively accepted in Ether. Clear instructions for ITO participation, as well as ITO progress and updates are posted on the web site. Ligo tokens will be available for withdrawal by all participants via smart contract when the ITO process is complete. The ETH sent during the ITO will be held in a company wallet owned by Ligo Ledger Incorporated and locked until the end of the campaign. 25 P a g e

29 ITO Summary Information ITO registration and information Exchange symbol for Ligo token LIGO Number of LIGO tokens 1,000,000,000 ETH to LIGO exchange rate 1:500 Minimum ITO contribution 0.02 ETH (buys 10 LIGO) Maximum ITO contribution 100 ETH (buys 50,000 LIGO) Wave 1 cap 2000 ETH Wave 2 cap 8000 ETH (including Wave 1) ITO payment accepted Ether only (ETH) 26 P a g e

30 Roadmap: Future Enhancements and Expected Releases Ligo design and solution architecture and development of the LIGO token, ITO smart contracts, and preliminary Historical Report Q1 Identification of problem. After trading several cryptocurrencies, we realized there were no tools to help us figure out what the heck to do on those tax forms. So we decided to build Ligo for ourselves and our community Q2 The Ligo ITO crowdsale will run for 60 days, starting on May 15, days after the conclusion of the ITO, the Historical Report will be available to all Ligo ITO participants 2018 Q3 Focus will be on continued product development and building the team of compliance officers and researchers, and partnerships with international tax accountants and lawyers Q4 Ligo will soft launch with the Ligo Ledger, the Ligo Keychain and the Ligo App to allow users to start recording their blockchain transactions as soon as possible. Completion of development and expansion of the Ligo platform as currently envisioned, including full reporting and analysis stacks 2019 Research and design of Ligo v.next to ensure product evolution matches the rapid pace of change in the cryptocurrency space 2019 Q4 Full global Ligo solution launch, ready for reporting tax year Marketing push and adoption by a wide cryptocurrency user base Q Q1 Ligo aims to be fully financially stable and profitable by Q1 of P a g e

31 Our Team of Blockheads Our team is highly experienced in developing and delivering technical and research projects as well as policy and regulatory interpretations in the private and public sectors. In addition to the core team our partners and advisors have many years of financial, legal, ethical, and geospatial experience. David Cooper Director, Chief Software Engineer Ruth Bankey Lead Research and Ethics Officer Michael Fox Director, Lead Mathemagician Statistician Richard Becher Tax Compliance and Financial Systems Architect Paul Gibson Director, Lead Solution Architect Samantha Larin User Support Lead Vivian Nobrega Director, Lead Developer Anu Pinnamaneni Project Management and Solutions Delivery Lead Arek Wojciechowski Director, Lead Technical Architect Sander Post Geospatial and Data Analysis Lead 28 P a g e

32 Disclaimer We at Ligo Ledger Incorporated are using the ITO process to raise funds to expand our company so we can provide accurate cryptocurrency tracking and reporting for every single user of cryptocurrency globally. We want to keep it legal, so you can keep it legal. Ligo tokens will be used in exchange for subscriptions the services provided through the Ligo platform. The tokens do not represent or confer any ownership right or stake, share, security, or equivalent rights, or any right to receive dividends, other payments, intellectual property rights, or any other form of participation in, or relating to, the business and project described in this white paper and/or in Ligo Ledger Incorporated or any of its affiliates. The holders of Ligo tokens are entitled to use Ligo products as described in this and future Ligo documentation. Tokens are not intended for the purpose of secondary market trading. Ligo token s use is for access and use for, and on, the Ligo platform. No other use of the Ligo token has been defined by Ligo Ledger Incorporated. For all jurisdictions, it will be important to review your particular case with an accountant or other tax professional to ensure it is as accurate as can be. While Ligo will strive to be accurate as possible, the responsibility of correctly submitting your taxes is up to you. All information provided in this whitepaper, as well as on the Ligo Ledger website is for informational purposes only. The information presented does not constitute financial, tax, or legal advice. Ligo Ledger Incorporated and its partners make no warranties, expressed or implied, concerning the suitability or fitness of any information provided herein for any particular purpose or use. For financial, tax compliance, or legal advice, please consult your own professional. A reminder to all Ligo token purchasers: You are purchasing Ligo tokens solely for the purpose of receiving services via the Ligo platform. As set forth in the Ligo Ledger Incorporated crowdsale Terms and Conditions (the Terms and Conditions) that you will be required to agree to, be bound by (or have already agreed to be bound by virtue of your previous purchase(s) of Ligo tokens), you acknowledged and agree that you are aware of the commercial risks associated with Ligo, the purchase of Ligo tokens, and you acknowledge and agree that you are not purchasing Ligo tokens for any other purposes other than use and consumption on the Ligo platform, including, but not limited to, any investment, speculative, or financial purpose. If you purchased your Ligo tokens for investment, speculative or secondary market purposes, Ligo wishes to take this opportunity to remind you of the Terms of Conditions whereby you, as a purchaser of Ligo tokens, made representations to Ligo that you would not be purchasing the Ligo tokens for such purposes. Investments regarding token sales are presently the subject of regulatory scrutiny in all concerned jurisdictions; we have updated the whitepaper to help disambiguate any implied but unintended reference that the previous version may have contained. We will continue to update this document as legislation in this area becomes clearer. This will include continued review by our legal counsel as needed. 29 P a g e

33 Appendix 1: Glossary Altcoins: "Altcoin" is a combination of two words: "alt" and "coin"; alt is short for alternative and coin signifies currency. Thus, together they imply a category of cryptocurrency that is alternative to the digital currency Bitcoin. 26 Bitcoin: a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. 27 Block: Blocks are files where data pertaining to the Bitcoin network is permanently recorded. A block records some or all of the most recent Bitcoin transactions that have not yet entered any prior blocks. Thus, a block is like a page of a ledger or record book. 28 Blockchain: record of all validated transactions grouped into blocks, each cryptographically linked to predecessor transactions down to the genesis block, thereby creating a chain of blocks. 29 Capital Gains: profit from the sale of assets, as bonds or real estate. 30 Capital Loss: loss from the sale of assets, as of bonds or real estate. 31 Cryptocurrency: a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Cypherpunk: individuals who advocate use of strong cryptography to achieve social and political change. Cypherpunks see the intrusions of the state as inherently violent, and view privacy as key to weapon of resistance. Ethereum: Ethereum is a decentralized platform that runs smart contract. 32 It is also a type of digital currency similar to Bitcoin. ERC20: with ERC standing for Ethereum Request for Comment, a standard developed in 2015 which defines a common list of rules that an Ethereum token is required to implement which gives developers the ability to program new tokens to function properly within the Ethereum system. Fiat: Government-issued currency, such as the US dollar. Geocoding: Geocoding is the process of transforming a description of a location such as a pair of coordinates, an address, or a name of a place to a location on the earth's surface global-cryptocurrency-benchmarking-study.pdf P a g e

34 Graph Database: A database that uses graph structures for semantic queries with nodes, edges, and properties to represent and store data. A key concept of the system is the graph (or edge or relationship), which directly relates data items in the store. 34 Hodl or Hodling: a term to describe the act of holding on to cryptocurrency assets. It started as a mistype of the word hold, and now has become a rally cry for the community. 35 ICO: Initial Coin Offering. It is a means of crowdfunding centered around cryptocurrency, which can be a source of capital for startup companies. ITO: Initial Token Offering. It is means of crowdfunding centered around tokens for use on a blockchain, which can be a source of capital for startup companies. Keys: term used to describe a pair of cryptographic keys that consists of a private (secret) key and a corresponding public key: the private key can be compared to a password needed to unlock the funds while the public key can be compared to a public address or bank account number. 36 Keychain: A Ligo technology that stores public keys and information from different blockchains. Ledger: Bookkeeping. An account book of final entry, in which business transactions are recorded. 37 Ligo: Esperanto word meaning link or connection, pronounced lee-go. Network Analysis: a mathematical method of analyzing complex problems, as in transportation or project scheduling, by representing the problem as a network of lines and nodes. 38 QR code: QR code (short for Quick Response Code) is the trademark for a type of matrix barcode. 39 Smart Contract: A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible. 40 Token: Tokens are a representation of a particular asset or utility that usually resides on top of another blockchain. Tokens can represent basically any assets that are fungible and tradeable, from commodities to loyalty points to even other cryptocurrencies. 41 VAT: A value-added tax (VAT) is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at the point of retail sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed global-cryptocurrency-benchmarking-study.pdf P a g e

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