Reflections on a trip to crypto valley

While waiting at Zurich airport I try to make sense of the last 3 days I spent in Zug and Zürich as recommended by Fred Wilson some weeks ago. A diverse crowd of about 25 selected crypto enthusiasts accepted Ken Berger ✈and Jeremie Epstein’s invitation (more details here — apply here) to an organized trip to crypto valley. More than 200 people were on the waiting list. The few lucky ones gained new perspectives, made friends, established promising business contacts, learned a ton and had fun. Everybody else might have another shot soon.

The city of Zug — picture taken from a boat.

Down the rabbit hole

The group couldn’t have been more heterogenous in terms of profession — developers, researchers, entrepreneurs, artists, investors and my favorite one: a token explorer living of his ether. What they all had in common was their passion for a decentralized and more inclusive global economy and a long journey they accepted to become part of the heavily over subscribed trip. People flew in from Canada, US, Mexico, Brazil, Europe and China.

As usual we started with a short introductory round. Everybody told his “flippening moment” in the sense of a specific event which made him go down the crypto rabbit hole. The stories around their flippening moments were hilarious — some people bought bitcoin in the early days, forgot about it and made a fortune when getting back to it 5 years later realizing the technology’s potential. Others read the whitepapers of Bitcoin or the ethereum and fell in love with immediately. Some were kind of forced by friends or colleagues to do a deep dive. One guy was sitting in an airport bar where he randomly bumped into a geeky weirdo wearing giant headphones — not like beats but rather the airfield worker’s type of, way oversized for people with regular heads. The stranger started and kept on talking about cryptocurrencies for hours until he handed over a cold wallet storing 1 BTC as a present. Loved those stories.

Personally, I got into crypto step by step. From 2013 on I worked as a data protection commissioner (side job) when I stumbled across bitcoin. It was exciting but I simply did not get the bigger picture and its potential impact back then.

Source: http://bankinnovation.net/2016/09/bitcoin-is-currency-now-or-not-or-yes/

The launch of ethereum was what really hooked me. Since the DAO project raised $120mn I was damn sure that tokens were a game changer for venture financing.

Why Zug is (not) the perfect place to create a crypto ecosystem

Having studied in the french speaking parts of Switzerland for a while I gained some insights into what makes swiss people tick. In general they are very humble, long term orientated, reliable business partners who preserved their focused but still kind of laid back working ethics (compared with US, Germany or Japan). They don’t create to much noise or hype around their often outstanding performance — maybe that’s why it took the two extrovert americans to initiate the #cryptovalleytrip.

Zug seems to be among the winners of the global “war for jurisdiction” when it comes to crypto companies — low taxes, open minded legislators, sandbox regulations for fintechs and strong privacy protection laws are a competitive edge. Many reputable service providers, such as MME or Bitcoinsuisse support the ecosystem by structuring TGEs (= token generating event) — the legally neutral term for ICOs. Apart from that the financial infrastructure provided to crypto startups is still immature — opening up a bank account or getting work permits is far from being standardized.

Crypto valley benefits from its access to super strong tech as well as business talent being educated at the universities of ETH Zurich and HSG St. Gallen. The relatively low density of tech employers allows startups and decentralized organizations to hire candidates from those institutions. On the other hand the ecosystem does not seem to attract many foreigners — young high potentials might prefer to live in more metropolitan and energized areas.

Zug offerers a breathtaking landscape and best in class infrastructure what all comes at a (literally) high price though — costs of living, operating a business as well as salary levels are about 2x higher than in other european tech hubs, especially Berlin. From the outside the ecosystem appears much bigger than it actually is because many crypto companies are officially headquartered in Zug but are actually run from other places like our portfolio company ShapeShift.io or the Ethereum foundation before it moved to Singapore.

Lake Zug from a boat.

For now I think crypto valley is for crypto what Delaware is for LLCs — a jurisdiction but not a home base.

In the future Zug might become the Palo Alto of Zurich provided that Zurich becomes kind of a SF for crypto.

Where crypto anarchists meet bankers

During the 3 day trip we met and discussed with a broad variety of speakers — from bankers through entrepreneurs, corporate executives, government officials to lawyers. Given the wild spirit of crypto it attracts many libertarians and also more radical groups calling themselves “crypto anarchists” who are disgusted by how the conventional financial systems Switzerland represents work. The thing is that crypto valley is way too small to avoid each other so what happens is that these completely opposing conceptions of the world clash every day. At the crypto meetups hackers dressed in black hoodies are exchanging their progressive views with conservative bankers wearing suits — all without fighting each other, yet. Maybe this is going to change one day when incumbent institutions perceive blockchain technologies as a serious threat to the status quo they benefit from. Hopefully not.

The lovely crypto crowd at work.

“Small bubbles within the big bubble lead to stability”

One of the highlights was a quick chat with Nicolai Oster from Bitcoinsuisse who is part of the industry for about 5 years and screens 5–10 TGE pitches per day. When he was asked about potential market downturns in the future he replied

“Look, even if there are some digital assets which are ridiculously over priced there are others which are not and which have gigantic potential. The burst of some smaller bubbles won’t have an impact on the big crypto market bubble as long as there are more exciting projects creating new small bubbles.”

I don’t agree — an interesting statement anyways. Nicolai’s outlook for the near future sounded pretty positive:

“There are much more exciting TGEs in the pipe which might lead to another skyrocketing of ETH prices before the markets might potentially cool down around beginning of 2018.”

This is not meant to be any investment advice!

Crypto valley is worth a trip!

I can only recommend to book a flight to crypto valley and gain your own experiences. It is one of the hottest crypto hubs in the world.

Thank you again Ken Berger ✈ and Jeremie for all your efforts, for picking the right speakers, attendees and locations, for pulling together an amazing agenda and for always being in a good mood. If you are interested to join the next session — apply here.


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