SEAL
We believe the designers, artists, scientists, programmers and creators are the unsung heroes behind brands that make magic happen in our lives. The brands are the seal of these creators’ souls: they symbolize their blood, sweat and tears. We believe that we should cherish brands and its creators, protect them, encourage them to keep going and strengthen the connection between people and brands.
DISCLAIMER
Seal and its team take your safety and security very seriously. Please be aware that with all blockchain activities in general, and Initial Coin Offerings (ICO's) specifically, come significant risks. These risks may for instance comprise of complete or partial loss of tokens, loss of value, technology flaws, insufficient or incorrect information and regulatory changes. You are explicitly warned to ensure that you fully understand these risks before engaging in blockchain activities, especially in the Seal ICO.
Target Audience
This document is intended for people who have experience purchasing blockchain tokens. If you have not regularly participated in prior token sales, nor fully understand risks associated with it, we strongly advise against participating in the Seal token sale. Each participant fully accepts any risks associated in the process of the token sales, distribution and accepts that no guarantees will be made for the tradability of the token.
mission
to create a more genuine world, out of love for creation.
WHY SEAL
Out of love for creation We believe that the designers, artists, scientists, programmers and creators are the unsung heroes behind brands that make magic happen in our lives. The brands are the seal of these creators’ souls: they symbolize their blood, sweat and tears. Together they turn ideas into reality, transform things into culture and bring us confidence, laughter and joy in our lives.
Origin story Bart and Joris worked together on a social mobile games startup in the past. Back in 2013 they put their gaming hardware to work mining Bitcoin and Litecoin after office hours. They quickly figured out that coupling NFC technology with the blockchain could disrupt counterfeiters, and that this is a use case with the potential to put the blockchain into the hands of millions of people. Although their initial work was done back then, they knew the market was not ready yet. In 2017, they realized it was time to put their master plan to work, and so they did. Born as children of an artist whose work fell victim to counterfeiters more than once, Bart and Joris know first hand how devastating counterfeiting is to the lives of creatives.
Company Overview Bloomsix Established in 2008 • Founded Bloomsix as a publisher and developer of premium social mobile games • Based in Amsterdam, the Netherlands • Independent company Pivot to blockchain • Started mining Bitcoin and Litecoin in 2012 using gaming hardware • Developed primitive version of the Seal Network concept Seal Network started • Developed first prototype in Q3’16 • Set up the Seal Network team in 2017 • Refined the proposition • Token sale preparations
WHAT IS SEAL
Seal is the best way for anyone to check if a product is genuine or fake. Seal combines NFC chips, which are embedded into physical products, the Seal app, and the Seal Network to provide a fast, simple, and secure way to provide products authenticity and other services. By facilitating a secure tokenized version of a physical product, Seal allows product-specific services to operate such as transferring ownership, theft prevention, insurance, but also brand activation campaigns and product analytics.
counterfeiting conundrum
Primary Market Counterfeiting, Secondary Market Counterfeiting, Secondhand Market, Shift .
scope of the problem
1 2 3 4 Nike is the most frequently imitated brand, but no brand is immune. Counterfeits reach the EU & US by the hundreds of millions of units. Unlicensed products are produced during midnight shifts and sold through parallel import. NO PROPER PROTECTION 85% of global counterfeiting originates from Asia. 20% of China’s total production is counterfeit goods. Global counterfeit products are projected to rise to $1954 billion* by 2022 MINDBOGGLING MAGNITUDE OECD states counterfeiting has scourging impact on economies. The profits end up funding cartels and terrorist cells. It is a bigger revenue stream for crime rings than the drug trade. Safety of people globally is jeopardized by fake medicine, airbags and airplane parts. GEOPOLITICAL SCALE 8 scope of the problem * The Economic Impacts Of Counterfeiting And Piracy, A Report prepared for BASCAP and INTA by Frontier Economics, 2022 predictions It is almost impossible for people to differentiate genuine from counterfeit products. Especially on the secondary market where fraudsters run amok, and there is no trust in the counterparty
DIFFICULTIES RECOGNIZING COUNTERFEIT FROM GENUINE PRODUCTS
Counterfeiting Targets In its essence, counterfeiting is the arbitrage of a product’s extrinsic value. A brand’s sensitivity to counterfeiting depends on the extrinsic value of its products. Extrinsic value is usually derived from brand equity but it can also be derived from other sources such as certifications in the case of medicine. Secondary Submarket Counterfeiters target both primary market and secondary markets. In primary markets prices are similar to authentic products. In secondary markets prices may vary widely (Note: The secondary market is not the same as the secondhand market). According to a study by the OECD, counterfeit Ray-Ban sunglasses, Rolex watches, Louis Vuitton bags and Nike shoes with very low prices target the secondary submarket.
SCOPE OF THE PROBLEM
Primary Submarket Counterfeit products in a higher price category belong to the primary submarket. These counterfeits do not only infringe IP, but also intentionally deceive consumers. The prices for these products are only slightly below the original product and are often sold as authentic products at a discount. The Seal Network protects this market. The OECD estimates the international trade in counterfeit products was up to $461b in 2013, or 2.5% global trade. This amount does not include domestically produced and consumed counterfeits nor counterfeits that were distributed online. This is an 80% increase to the OECD’s 2007 findings. A recent report by Frontier Economics (2017) has extended the OECD report. Its authors estimate that the value of international and domestic trade in counterfeit and pirated goods in 2013 was between $710b and $917b after taking into account the value of domestically produced and consumed counterfeits. In addition, the total economic and social losses amount to another $737bn to $898bn. These losses are associated with missed foreign direct investments, fiscal losses, displacement of legitimate economic activity and criminal activity. Frontier Economics’ forecast for 2022 paints a grim future. The total costs of the counterfeiting industry in 2022, excluding software is between $1516bn and $1954bn. Over 85% of all counterfeit products are produced in China at the time of writing.
SCOPE OF THE PROBLEM
Secondhand market The secondhand market is extremely sensitive to corruption and very low in consumer trust. Many products lose value in the secondhand market, but the products that Seal targets typically act as value stores. The integrity of the secondhand market dictates whether or not the brand can sell products at a price premium. Customers will churn en masse once trust in the authenticity of products in the secondhand market is jeopardized, because collectibility is drastically reduced when counterfeiters pollute the market. In other words, when counterfeits flood the market, consumers will no longer feel safe purchasing those products. They will not just stop buying, but exit the market altogether (for instance by selling off their collection). The secondhand market is the place where value stores form a lucrative trade, such as in the case of collectibles, comics, vinyl, wines, sneakers, designer clothes, leather goods and other vintage or limited edition products. These categories are prime targets for counterfeiters, thus the demand for authenticity is highest here.
solving the problem
1 2 3 4 Static solutions like QR-codes, holograms and RFID will eventually be copied and compromised. The Seal Network’s blockchain and NFC chips are tamper resistant. CURRENT SOLUTIONS ARE INSUFFICIENT One tap is all it takes to verify the authenticity of a product. Anyone can now check if a product is genuine. No additional knowledge about other counterfeit detection measures is needed. MAKE IT EASY TO AUTHENTICATE While products can still be copied, the Seal chips in combination with the Seal Network cannot. We therefore make it impossible for counterfeiters to make money from selling counterfeit products.
CURRENT SOLUTIONS
Today, many anti-counterfeiting methods exist. Some of these include watermarks, security threads, invisible ultra-violet inks, color-shifting inks, holograms, product numbering, fluorescent fiber, Moiré patterns, micro-print and many others. Anti-counterfeiting is an endless cat- and-mouse game between counterfeiters and security specialists. Inevitably, all offline authentication methods become compromised, as long as a sufficiently large financial motive exists.
ONLINE AUTHENTICATION Online authentication is the only way to ensure authenticity, but the data that resides on the product’s embedded chip can be copied as well. Copies would still point to a valid product entry in the database. In order to solve the problem there must be a way to ensure the data is not duplicable.
INCENTIVIZE ADOPTION The way to disrupt counterfeiters is by creating the conditions that will lead brands to adopt Seal. Brands pay millions in brand protection and legal costs each year. Seal turns anti-counterfeiting into a profit center, and turbocharges the platform with a plethora of valuable services. Each time ownership is transferred the brand offsets the cost of the chip and makes a profit. The ability to make a profit over the course of the product’s lifecycle easily justifies the adoption of Seal, while also fortifying themselves against counterfeiters. This model disrupts the counterfeit economy by turning a cost-center into a profit center.
RESTORE MARKET INTEGRITY The secondhand market suffers most from counterfeiting because value stores are lucrative counterfeit targets, the size of the market is enormous and it is both easy and low risk to scam regular people. Seal solves this by completely removing ambiguity out of the equation. Not only is checking authenticity foolproof, brands can finally monetize the secondhand market for the very first time in history.
SERVICES EXPLAINED 20 Theft-Prevention When people register ownership of a product it is registered on the blockchain. Unfortunately, sometimes products are lost or stolen. Especially when it comes to expensive products, the risk of theft is high and owners have no effective way to track or retrieve stolen items. Seal protects these consumers by offering a powerful theft-prevention service. In the case of lost or stolen products, the owner can flag the item as lost or stolen using the Seal App. He or she can enter a custom message that will be displayed the next time the product is scanned. This message could be a request to return the product to its rightful owner alongside a name and phone number.
SERVICES EXPLAINED 21 Track Parallel Trade Parallel trade is the import of products from another country without the permission of the brand. While this sounds innocent, this is a major issue for brands. Prices for products are often based on the strength of the economy and the tax regime the product is sold in. Major distributors from tier 2 economies undercut prices in tier 1 economies by illegally importing and selling the products for less than the manufacturer's suggested retail price (MSRP).
SERVICES EXPLAINED 22 Product Recalls A product recall is a request to return a product after the discovery of safety issues or product defects that might endanger the consumer or put the maker/seller at risk of legal action. They pose a severe threat to the reputation of a brand. Though a good reputation has a warding effect against negative information in the minds of consumers, an illhandled product recall can destroy the reputation of a brand quickly. After all, reputation is simply a scorecard of every promise a brand makes to its stakeholders, and whether or not it lives up to those promises.
SERVICES EXPLAINED 23 Product Analytics Currently, retail analytics for physical goods is primitive at best. Brands can analyze scanner data, but not much more. Scanner data is data on sales of consumer goods obtained by ‘scanning’ the barcodes for individual products at electronic points of sale in retail outlets. The data can provide information about quantities, characteristics and values of goods sold as well as their prices. This works for high volume commodity items such as groceries, but is much less useful for expensive products that often serve as value stores because (1) the volume is much lower and (2) the most interesting data is created after the point-of-sale. Seal provides geospatial and time series analytics so that brands can understand: (1) Collectibility index - How frequently do products change hands on the secondhand market? (2) Track product streams - How do products move over time? (3) Detect ambassador hubs for precision marketing - Find pockets of fans and collectors to understand where marketing efforts should be concentrated (4) Identification of growth and decline areas (5) Drill-down from country level to city level or even store level (6) Identify theft areas (7) Identify which specific products are popular in which region (8) Measure retention and brand engagement (9) Decision support and dash-boarding for executive team, R&D and marketing (10) Combine demographic and behavioral variables to segment and target products better
SERVICES EXPLAINED 24 Custom Integration Brands are encouraged to make custom brand experiences using the Seal platform. By default, scanning a Seal chip opens the Seal app where the inventory of all the customer’s items is listed. Brands may wish to change it so that scanning the Seal app opens the brand’s own app instead of the Seal app. Seal facilitates this by allowing the technology to be embedded in third-party software by using an API. API calls redirect to a custom source such as an app or browser. The product will still appear in the inventory list of the Seal app, but scanning the product will launch a custom event such as launching the brand’s app instead of the Seal app. Some examples are: (1) General interaction with the brand app (Nike+ app) (2) Loyalty app (3) Access to exclusive content, such as bonus tracks from music artists, books, emojis or in-game items (4) Access to behind-the-scenes or making-off material (5) Purchasing refills or replacements of consumable products (6) Product service and support (7) Access to a limited edition item obtainable only if you own a complete set of products
Semiconductor Suppliers Seal has selected NXP Semiconductors to deliver cost-effective secure NFC chips for the Seal Network. NXP Semiconductors is based in Eindhoven (the Netherlands) and is the global market leader in NFC technology. NXP and Sony are the inventors of NFC technology. Seal plans to develop an optimized proprietary chip in the future. However, this depends on the economic performance of the project. Seal chips cost approx $0.25. Inlays NFC inlay chips are custom designed and manufactured by a trusted facility in Germany. Inlays range from heat resistant and washable plastic casings suitable for fashion items to flexible thin-film electronics and printed materials, such as cards and stickers. The small footprint of NFC chips make them suitable for a broad range of applications and the available inlays make it possible to embed it in virtually any type of consumer product. Inlays cost between $0.03 and $0.20 depending on the type and specifications
SEAL NETWORK 35 Availability of Engineers Ethereum’s smart contract technology is easy to learn. Due to Ethereum’s sustained momentum, documentation and proper tooling (e.g. Truffle, Solidity) the availability of engineers is high and the learning curve is relatively low. Scaling the operation requires access to engineers who are skilled in writing blockchain applications using secure smart contracts. To ensure our business is not hindered by hyperinflation of blockchain engineering salaries we employ three methods: (1) attractive location, (2) direct access to top academic talent via a personal network, (3) using the most widely adopted smart contract technology. ERC20 vs. ERC223 Seal is built on the ERC20 token standard. ERC223 token standard has technical advantages compared to ERC20. Specifically, ERC223 eliminates the problem of lost tokens which happens during the transfer of ERC20 tokens to a contract (when people mistakenly use the instructions for sending tokens to a wallet). ERC223 allows users to send their tokens to either wallet or contract with the same function transfer, thereby eliminating the potential for confusion and lost tokens. Unfortunately, ERC223 lacks sufficient third-party support. In order to ensure widespread adoption of Seal and be compatible with exchanges, we have instead selected the ERC20 token standard. If, in the future, third-party support for ERC223 improves, Seal may migrate to the ERC223 standard. Blockchain Depending on the developments of blockchain technology and the funds we will raise, we will need to develop our own blockchain to support higher transaction volumes, and reduce transaction fees. More information can be found in the scenarios section in this document.
TOKEN UTILITY 41 Value Creation The value in the Seal ecosystem is linked to the brands that place their products on the Seal Network. Each service on the Seal Network costs a service fee. Brands decide on the price of ownership transfers so that it suits their product, strategy and brand image. The more value is captured and protected by Seal chips, the higher the value of the entire network becomes. This will depend on the total volume and value of these goods. Network Effects The utility of Seal tokens increases as more and more brands adopt the platform. To explain how network effects improve utility, a classic example is a phone network where the utility of the first phone in the network is low, but becomes more useful as more people start using phones. Network effects will impact the value of Seal, for the same reasons the increasing adoption of Bitcoin and Ethereum has impacted their respective value. When more brands use Seal and when more services are available for use within the Seal Network, consumer adoption of the token will increase, together with its demand. With time, more and more products will reach the secondary market, where we expect Seal and its token to have the biggest impact. Tokens Required Seal tokens are required to enter the ecosystem. The Seal tokens power the Seal Network. They enable low-cost micropayments between the Seal Network, consumers, and brands. Future Use Depending on future developments and regulations, additional properties can be added to the token. These properties could include voting rights or other token holder incentives.
TOKEN DIAGRAM
TOKEN SALE
Token Cap A maximum of 1.2b tokens will be minted and will never exceed this amount. No more than 492m tokens will be allocated for the token sale rounds. Discounts and bonuses depend on strategic partnerships and deal size. Token Emission KYC and AML is required prior to buying tokens. Buyers need to provide their details and the address that will be used to send Ether from. If tokens in the presale round remain unsold, they will be offered in the mainsale. Offered tokens that remain unsold after the main sale will be distributed proportionately to ALL token sale participants.
PROJECT RISKS & MITIGATION STRATEGIES 54 This section is intended to educate, inform and warn readers for some of the potential risks that may jeopardize the continuity of Seal and/or affect the value of tokens. KYC (Know Your Customer) & AML (Anti-Money Laundering) Seal aims to be compliant with relevant KYC and AML laws. As these laws may differ per jurisdiction, you may be required or asked by relevant authorities to supply additional information. It could also be that because of local regulations or of future regulation changes, Seal shall be legally required to share certain information pertaining to you or your account with competent authorities, which may include personal or fiscal information, or be required to take certain actions, such as suspending your account. We encourage you to verify if this is the case for your local jurisdiction and if so, take the necessary steps to ensure you comply with your local jurisdiction. Regulatory & Litigation risks Although cryptocurrencies are still unregulated in most parts of the world, there is a notable trend towards stricter governance and regulatory oversight. This is a step into maturity for the blockchain industry. There exists a significant risk of litigation due to the current ambiguity concerning the regulatory environment across many regions. This could result in significant financial penalties or cease and desist orders that may be too heavy for Seal to carry. There is a risk that future unfavorable laws will be enforced retroactively. While the exact details will differ from region to region, the spirit, or underlying reason for regulation, will be similar. Despite the current legal ambiguity Seal proactively displays duty of care by acting responsibly, in good faith, with integrity, transparency and honesty and to the best of our abilities.
PROJECT RISKS & MITIGATION STRATEGIES 57 Loss of Key Personnel The loss of key personnel could threaten the operation. The Seal core team has committed to contribute for at least the next two years. Part of their compensation is in Seal tokens that follow a vesting schedule. The impact of force majeure, such as sickness or death, is mitigated by ensuring redundancy in our team composition and by documenting processes as much as possible. We are actively looking to expand our team to reduce our reliance on key members. Our company culture states specifically that we look for growth-players. This is, amongst other reasons, to reduce our reliance on ‘unicorns’ who are difficult to replace. Looking for unicorns may impede our growth, thus we rely on processes in the company and strength of character in the team members. Search Risk Although we believe that we have a strong proposition for brands, we are a vibrant startup. A large part of being a startup is finding out how to sell your product in the most efficient and compelling way. As mentioned before, Seal engagements are complex in nature due to the impact it makes on major parts of a brand’s business. Seal is in search mode to find a product-market fit and tailor its sales process accordingly. This is most likely a lengthy process which could even result in Seal not being able to find a product-market fit at all.
PROJECT RISKS & MITIGATION STRATEGIES 58 Warranties and indemnifications Please be aware that by entering into the Seal Token ICO or otherwise participating in Seal activities, you acknowledge that all information and services are provided "as-is". The Seal Network is still under development and although we aim to offer you the best service and products, we cannot guarantee its functionality, nor its availability. We make no representations or warranties of any kind. Except to the extent prohibited by law, Seal disclaims all warranties and shall not accept any liability or responsibility for the risks and consequences of participation mentioned here or otherwise. Your participation is completely at your own risk.
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