Canton of Zug advances knowledge of their management team on Blockchain and Smart Contracts
Author: Dr. Thomas von Bomhard, PM, Validity Labs
Zug — also known as “Crypto Valley” — is an established blockchain and cryptographic technologies ecosystem with well-known companies like Ethereum Foundation, Status, Melonport, BitcoinSuisse AG, Xapo, as well as leading law firms specialised on the legal aspects and problems of this new space.
The Canton of Zug has supported the development of the Crypto Valley since the beginning. Also, the City of Zug is exploring new possibilities of the blockchain technology themselves, by introducing the first blockchain identity for their citizens together with Consensys Uport Project. The pilot of this project has already received more than 200 sign-ups even though the IDs cannot yet be used at this stage. However, in 2018 the identity will be used for first consultative votings as well as for authentication and billing at certain parking systems in Zug.
As part of this blockchain endeavour, Validity Labs was invited to give an introduction to blockchain to enhance the knowledge of the management representatives of the Department of Economic Affairs of the Canton of Zug.
The blockchain course consisted of three main parts:
First, by utilising a simplifying “Gedankenexperiment” the course introduced the necessary fundamentals of cryptography and the Bitcoin blockchain, e.g. p2p networks, cryptographic hash functions, public/private keys and digital signatures. Based on this understanding, the key properties of the Bitcoin blockchain, i.e. censorship resistant, pseudo-anonymous, tamper-resistant, were explained and their practical consequences discussed.
Second, the course advanced from Bitcoin to Ethereum and smart contracts using again the “Gedankenexperiment” vehicle. The fascinating opportunities of having “smart contracts”, i.e. programs on the blockchain (besides people/organisations) which can control financial assets, were discussed extensively with the audience.
Third, Sebastian presented three use cases (based on smart contracts) to show the possibilities and disruptive potential of the technology:
ICO: How do you raise funds in the 21st century?
An Initial Coin Offering is a completely new fundraising approach based on smart contracts, which can be described in its simplest form like this: for a given project idea, the developers code and deploy a new token (in most cases ERC20) smart contract and the mechanics of the crowd sale smart contract on the Ethereum blockchain. Then everybody can invest/send ETH to the deployed smart contract and receives the new tokens in return. And, the project owner can use the ETH funds to realize his project idea.
Etherisc: Decentralised insurance for flight delays
Etherisc’s mission is to build decentralized insurance applications. Their first example of such a new kind of insurance is the Flight Delay DAPP. It allows everybody to insure his flight against delays using a smart contract. Thus the insurance taker pays a fee before the flight. In case the flight is delayed, the smart contract is automatically informed by flightstats and returns the insured amount directly to the insurance taker. Since no other intermediaries are involved, this process can be much more efficient and transparent.
Capital increase with cryptocurrencies
When founding a new company in Switzerland initial capital needs to be provided and also increased at some point, depending on your type of company. Traditionally, this is achieved by sending the money to a special locked account of a bank. Once the company is officially founded, the bank transfers the money to the company’s account, which can actually take some time. In cooperation with our legal partner Wenger & Vieli, Validity Labs improved this process using cryptocurrencies: the founders put the necessary capital increase in ETHER on the company’s hardware wallet. The excerpt of the company on Zefix.ch is signed as well. A notary verifies the signature and the capital amount. The capital increase is transferred to the company’s balance sheet.
As a consequence, this new process allows the launch of a new company in Switzerland without being obliged to have an actual bank account.
After the presentation, we had an interesting discussion with the participants about the different use cases, potentials & risks of the blockchain technology, the influence of regulators, the future (e.g. the good and bad of AI-DAO). Moreover, participants directly applied the new concepts and came up with their own first token ideas ranging from a non-serious but awesome Swiss Kirsch Token to more serious supply chain token cases.
Contact us at hello@validitylabs.org if you are interested in tailor-made blockchain trainings.
