Just as California’s ‘Santa Clara’ renamed to ‘Silicon’ Valley when it became home of computing and the Internet, a Swiss valley aims to become ‘Crypto’, home of blockchain technology and digital currencies. Seed capital and talent are pouring in.
From north the landscape looks like it hosts hobbits: verdant foothills run to misty mountains. Then it opens into an alpine lake, crystal-clear and warm enough in summer for swimming. Water sports are big, as are climbing, cycling, hiking, paragliding and ski/snowboarding in winter – all of them on the doorstep. Income taxes are famously low, traffic not bad, public transit and services great, and everywhere is clean and safe. Life in and around Zug, 25 km south of Zurich, magnetically attracts people who can choose where they live. One group so choosing is the entrepreneurs behind blockchain and related cryptocurrencies.
Where the elite meet
“Today some 450 blockchain/crypto companies are active in the region,” says Tom Lyons of the Crypto Valley Association, a chamber of commerce for the area and sector. Half are technology start-ups, the other half are service-providers to the start-ups. An official growth rate has not been tracked, but put it this way: five years ago the company count was near zero. Internationally the valley has made the map: in 2017 Switzerland ranked 3rd in cryptocurrency fundraising, according to ICO Watchlist, behind only Russia and the USA, ahead of other financial-technology-hotbeds such as London, Singapore and Israel.
Out of the ether
Crypto Valley’s origins date to 2013 when Bitcoin Suisse and Monetas, a ‘digital notary’, put down roots. Critical mass was reached the next year, after a Russia-born, Canada-raised computer geek joined the scene. Inspired by the 2009 launch of Bitcoin, Vitalik Buterin broadened the blockchain behind the digital currency into a software that can be used in other currencies and in various non-currency applications. At only 20 years old, he moved from Toronto to the old town of Zug to start up the Ethereum Foundation. After that, the deluge: more and more companies piled in. One of the recent arrivals is the European headquarters of Beijing-based Bitmain, the world’s largest supplier of Bitcoin mining-gear.
We accept Bitcoin!
Its flames soon spread to support providers. For instance, for legal advice, Ethereum turned to local law-firm MME – which has since become a leading expert in blockchain and smart contracts. Crypto Valley Labs set up an incubator/office-provider in the heart of Zug. Investors, accountants, even the local government welcomed crypto newcomers with open arms. In mid-2016 the City of Zug announced it would accept payments of up to CHF 200 in Bitcoin. Although actual Bitcoin transactions have been few, the gesture was a powerful signal to entrepreneurs, says Lyons, “that Zug is open for crypto business.”
Here’s the beef
The signal is backed up by infrastructure. Zug offers great life quality and business support. And Switzerland is generally crypto-friendly: its universities churn out top technical talent, its regulators try to accommodate rather than block blockchain. At a crypto-conference this January, Switzerland’s Minister for Economics, Johann Schneider-Ammann, declared his hope that “in 5-10 years nobody will speak of Crypto Valley Zug anymore, but rather of Crypto-nation Switzerland.” Finally, major end-users are right around the corner and eager to cooperate. Just one example: a Swiss consortium of car dealers, insurers, motor-vehicle regulators and blockchain experts are piloting ‘Car Dossier’, record of a car’s mileage, maintenance and accidents that cannot be defrauded. Yes – blockchain makes it possible.
Making dealers (of used-cars and other things) tell the truth: blockchain’s promise
Was the salesperson right in saying the car’s previous user ‘drove it only on Sundays to church’, or was the car abused, crashed and its odometer back-clocked? Blockchain knows the truth. How? The technology is complex, but the principle is simple: blockchain creates a public ledger of events, within which each event must be verified and thereafter not changed. Applications range from cryptocurrencies such as Bitcoin to title transfer of high-value items like automobiles (think ‘Car Dossier’), cash, insurance, land, securities, even pharmaceuticals. Its motto might be “Transactions you can trust, with people you can’t.”
Crypto’s momentum just keeps growing. According to a study published in June by the Crypto Valley Association and consultancy PwC, the USD 13.7 billion invested globally in blockchain in the first half of 2018 is more than all previous fundraising combined. Switzerland leads Europe in attracting funds, the study says, although the United Kingdom, Estonia and Lithuania are hot on its heels. Meanwhile, the city of Zug is introducing blockchain-based identification cards and, on a pilot basis, electronic voting. Watch this space, implies Oliver Bussmann, President of the Crypto Valley Association. It is and will continue to be “a leading hub for blockchain.”