Switzerland as a Blockchain Hub today and tomorrow

Digital transformation is here to stay. That is why we constantly need to foster dialogue to increase awareness for all that is and will be digital. To do so, Digital Day 2019 will have a strong focus on getting into conversations with Switzerland’s population – without fear of debating challenging topics. Digitalisation brings not only opportunities, but also risks that need to be addressed and taken seriously. In addition, I am also starting a new series of “Dialogue Interviews” with leaders of this country, representatives from member organisations, digital shapers and the brightest people in the area of innovation and digitalisation. 

This time around, I talked to Alexander Denzler, Head of Blockchain Lab at the University of Applied Science in Lucerne and Director of the Crypto Valley Conference, about everything blockchain-related and Switzerland’s role in it.

Nicolas Bürer: There was an incredible hype around blockchain, especially from 2016 to 2018. During that time, the Crypto Valley became well-known worldwide. These days, it seems we moved beyond the hype, can you explain what is currently happening in the blockchain ecosystem in Switzerland and worldwide?

Alexander Denzler: It is true that we experienced a so-called “crypto winter” in the last few months. However, this phenomenon is nothing new in the IT sector as most technologies cycle between winter and summer and between hype and skepticism. AI, for example, experienced several “winters” in the past and is currently thriving again. Blockchain is and will be no different. It is important to keep in mind that this technology is still fairly young and various technological issues remain unsolved, such as scalability. Hence, a lot of time and effort is being invested into resolving these issues. This is crucial, as technology maturity is one of the key factors for a wider adoption. No business case will work, if the relevant functionalities to support it are not in place. Switzerland, with a strong research community, is providing significant contributions and hosts one of the leading research and innovation focused conferences worldwide: the Crypto Valley Conference on Blockchain Technology brings together all relevant players, in a bid to discuss the current status quo and future developments.

Nicolas Bürer: The blockchain and its technology was pushed intensely by new start-ups and disruptors in the last few years; though lately, it seems like other actors joined the race and invested heavily in blockchain technology. Who is, in your opinion, here to stay and win the race?

Alexander Denzler: Correct, a lot of start-ups entered the scene and even big companies like Facebook, Amazon or Tesla are evaluating on how to harness the unique benefits provided by the technology. Academia is no different, as more and more Universities found labs and competence centers to research blockchain technology. Who of these actors are here to stay, you ask? All entities with a clear understanding of the capabilities and limitations provided by this technology, as the days of ICO’s trying to “blockchainify” anything and everything are fortunately over. Blockchain is not the solution to all the world’s problems, but it opens up a vast majority of possibilities that were not available in the past. New business models can and will arise, challenging old, cumbersome and monopolistic solutions in which few reap a majority of the profits. A good example is the latest decision by the Supreme Court, in which Apple faces a lawsuit due to its App store monopoly. Decentralized App stores, anyone?

Nicolas Bürer: Taking a look at Switzerland: after positioning itself as an epicenter for everything blockchain, mainly through the Crypto Valley, many other regions and countries worldwide, like Malta, Singapore, France, Gibraltar or Liechtenstein, followed lead and discovered the advantages of the blockchain. Considering these competitors, how well is Switzerland positioned today?

Alexander Denzler: If you take a look at the Silicon Valley for reference, two characteristics are crucial to its success: investors and talent. One without the other simply doesn’t work. Switzerland has both and therewith provides an ideal setting for start-ups and established companies alike to thrive. The active and positive endorsement by the Swiss government for this new industry completes a perfect set-up, resulting in Switzerland’s leading position in everything blockchain.

Nicolas Bürer: Last question, what should Switzerland undertake as two or three first priorities in order to maintain our leading position in the years ahead?

Alexander Denzler: In order to maintain its leading position, it is crucial for Switzerland to be able to continuously tap into an extensive talent pool. Especially highly skilled developers are always needed, as there is a big shortage of them. To date, a majority of education programs, focus solely on the business and legal aspects, which certainly is important, but most open positions require technical expertise. Furthermore, the Swiss government needs to ensure a stable environment for the blockchain ecosystem. Uncertainty and continuous changes in vision can and will have damaging effects. Last but not least, more widely used applications by Swiss companies have to be placed on the global market. This will ultimately act as a catalyst for further investments and cement the leading position of Switzerland.

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Alexander Denzler: Nicolas, let me ask you a few questions: Digitalisation is omnipresent and has a big impact on how we live. Where do you see the biggest opportunities for blockchain in this process?

Nicolas Bürer: Indeed, digitalisation will change a lot of products and services we will use in the years ahead. I believe blockchain will need a few more years and will then be widely used in various supply chain processes, international payment transactions and e-government processes. In any case, it will be crucial that it will be widely adopted among many stakeholders (incumbents, governments, etc.) and gain more trust in the population.

Alexander Denzler: digitalswitzerland plays a vital role in facilitating innovation. Could you share some details on what your plans are for the blockchain ecosystem in the future?

Nicolas Bürer: Among our Vertical FinTech & Crypto, we are pursuing two important goals: on the one hand, we drive the legal requirements for DLT (Distributed Ledger Technology) in Switzerland by coordinating and aligning with the broader Swiss FinTech ecosystem and legislative and executive bodies. On the other hand, we focus on selecting, developing and testing (prototypes) assets that can be tokenized. Being first-movers enables us to build a stable foundation for the ecosystem. The Vertical is helmed by SwissRe, MME and Mobiliar/SwissCaution and more than other 20 actors and experts are supporting their work. It is important to mention that our job is not to do business. That role should be occupied by corporates and start-ups. We put in place a fundament in order to enhance the ecosystem. We act as enabler and catalyst.

Alexander Denzler: Where do you see the Swiss blockchain ecosystem in five years?

Nicolas Bürer: I’m very positive about its perspectives. Start-ups and talent are here, but of course we could always profit of more from both. Swiss-based incumbents are increasingly investing in blockchain innovation and experiments. Different regions like Zug, Zurich, Geneva and Ticino are pushing the technology, which is good for internal competition. But we need some breakthroughs, for example in transaction energy consumption or transaction scalability. Why not reaching these breakthroughs in Switzerland? In five years, I am sure the amount of jobs in the blockchain space will have tripled or quadrupled in Switzerland and the country will be known as one of the top three hubs for the technology.