The Silicon Valley for blockchain startups and cryptocurrencies — Meet Switzerland’s Crypto Valley
As the world moves towards decentralization, the importance of Silicon Valley as a core ecosystem for technology decreases. With the decentralization of world capital markets, it is not intended to create a single global network of capital, but rather a set of complementary regional competencies. With this model in mind, what unique competences does Switzerland have?
Switzerland has been an incredibly successful financial culture. More than 3 billion euros of global capital are stored in Switzerland. In part because of Switzerland’s reputation as an extremely reliable nation with strong protections for security and anonymity, Switzerland is seen as a global hub for banking, with Zurich in particular as the global capital for banking and finance. With Bitcoin and the cryptographic currencies, Switzerland returns to occupy a leading position, in particular the canton of Zug. Not long time ago, we could read that the small town of Zug in Switzerland began to accept crypto currencies for taxes and public services. Since then this small city became a magnet for entrepreneurs. Many big companies, related to crypto currency market decided to move their business there and now we can call this place “Crypto Valley”.
The area is known for its high concentration of blockchain startups and cryptocurrencies. In fact, it seems to have achieved it already. A highly favorable regulatory framework for innovation and low taxes has attracted Zug to dozens of leading companies in the sector, including, among others, the Ethereum Foundation, Xapo, Bitcon etc.
Returning to the topic, now in this small Swiss canton, we have a great technology center, focused on blockchain and crypto currencies development. Founding members are well known companies like PWC, Thomson Reuters, Monetas, Consensys and Luxoft. The mission of Crypto Valley is to develop the world’s best ecosystem for blockchain and other cryptographic technologies and businesses. Zug has active connections with other big centers of blockchain innovation in London, Singapore, Silicon Valley and New York. Thanks to a very supportive environment, Crypto Valley already attracted leading cryptographic companies and organizations, including Ethereum, Monetas, Bitcoin Suisse, Xapo, ShapeShift and Tezos. And this is just a beginning.
Interestingly, the term Crypto Valley was introduced by Ethereum co-founder Mihai Alisie. However, the person who, inspired by the success of Silicon Valley, defined the vision of the place as a global center blockchain was Johann Gevers, CEO and founder of Monetas, who moved his startup to the Crypto Valley in July 2013. Soon, the ecosystem began to grow and Crypto Valley established relationships with local authorities, as well as with other international centers with similar characteristics in London, Singapore, New York and Silicon Valley. In 2016, the city of Zug (capital of the canton of the same name) became the first municipality in the world to accept bitcoins as a means of payment for public services.
The Crypto Valley Association was born as an independent, non-profit association supported by the Swiss Government (tending not to obstruct Fintech innovation in the country) in the mission to convert Crypto Valley into the leading blockchain ecosystem in the world. Among the 16 founding members are UBS, Thomson Reuters (which has an innovation hub in Zug), PwC and the University of Lucerne.
While it is still early to establish clear predictions about the extent to which the impact of blockchain can have on the world, the Crypto Valley of Zug reveals itself as an interesting and hopeful ‘microhabitat’ in which to observe how the different actors involved in the process they relate to each other, creating solid structures that allow receiving and crystallizing the magma of a technology that promises great explosions. The Crypto Valley Association wants to drive innovation through collaboration with entrepreneurs, startups, investors, educational institutions, service providers, and governments. It will be a huge boost for blockchain technology development and a great step forward to implement this in everyday use.
In the future we can expect an enormous number of innovations coming from the Crypto Valley. In fact, I came across a Forbes article by Rachel Wolfson (Swiss Investors On What Silicon Valley Can Learn About Blockchain Adoption From ‘Crypto Valley’) mentioning that the city of Zug recently demonstrated the successful test of a blockchain-based voting platform. Unfortunately, Wolfson does not give details on who is behind this exciting project. Further researches revealed to me that a global IT service provider and founding team member of The Crypto Valley Association Luxoft created that e-voting platform to enable the first consultative vote based on blockchain in Switzerland. As explained by Yahya Mohamed Mao in an article published on June 2018, “the solution uses an innovative encryption technology that anonymizes the votes and allows tamper-proof tally and secure audit. With the help from the Lucerne University of Applied Sciences and Arts, Amazon AWS and n’cloud.swiss, the platform is deployed on three different data centers in the cloud. Two of these are in Switzerland and one in Ireland. By distributing the data into three different data centers, security and data loss risks are distributed geographically, making the system more robust.”
Wolfson highlights in her article three lessons that the Crypto Valley can learn from the Silicon Valley. Firstly, she points out that Switzerland already has a decentralized government system in place making it easier from entrepreneurs and investors to believe in the idea behind blockchain. Secondly, Switzerland is small country and yet a country with a “culturally diverse population”. Technological and innovative ideas seem to flourish quickly. Thirdly, Switzerland has compared to the rest of the world a very small market. Wolfson emphasizes on the fact that the size of the Swiss market encourages entrepreneurs and investors to think globally from day one.