Switzerland: The Incentivization of Blockchain Innovation (Esloania Study Tour Part 1)

Phillip Tu | MBA 2019 | Cheesin’ in Gruyères, Switzerland

When I started at MIT Sloan, blockchain and cryptocurrency were those topics that I would occasionally see covered in tech blogs and nod in approval in passing conversations. I honestly had no idea what these innovations were about.

By the second year of my MBA, I still only had a vague understanding. “Enough was enough,” I told myself, I had to learn about these topics. This was new technology that was gaining traction and could change the world, I couldn’t call myself an MIT student if I ignored them.

Zurich Views and the Limmat River

To my incredible surprise, came along an MIT Sloan Study Tour called – Digital Frontiers and Blockchain Havens: Estonia & Switzerland.  The goal of this Study Tour was to expose students to blockchain technology, and its capstone was a trip to Switzerland and Estonia, rising “Digital Republics” that have visioned and executed environments for blockchain to flourish. There we would meet corporations, start-ups, government officials, and academics, as well as immerse ourselves in Swiss and Estonian culture. So I applied for the nerdiest most quintessentially MIT trip I could ever have thought of. And I couldn’t wait!

Before the actual trip, the Esloania study tour crew (as we endearingly nicknamed ourselves =D) spent weeks in the classroom learning about the fundamentals of blockchain by a variety of guest speakers and our fabulous faculty advisor, Professor Gary Gensler. Professor Gensler teaches several blockchain courses at MIT Sloan, and is a senior advisor to both the Media Lab’s Digital Currency Initiative and the Ethics and Governance of AI project. Before coming to MIT, Professor Gensler served in leadership roles spanning the Hillary Clinton Campaign, the Barack Obama and Bill Clinton Administrations, and Goldman Sachs. I’m not doing his resume justice, so if you have the chance, look him up. Undoubtedly, we had the perfect Professor leading us.

Time and time again, Professor Gensler instilled in us that companies that choose to use blockchain as part of their value proposition should justify why they use the technology of blockchain at all – append only logs with consensus amongst multiple parties on a shared ledger. This lens was so fundamental to how we evaluated the companies we would visit. Also as if his resume, accolades, and teaching wasn’t enough, he changed his plans and decided to come on the trip with us!

Our week in Switzerland was an incredible exposure to all the components of Switzerland that allow blockchain businesses to thrive. Our visit to Crypto Valley in Zug helped me understand the Swiss Canton tax system that has been the cradle of blockchain startups for decades. In fact, Crypto Valley is now home to at least four blockchain unicorns such as Ethereum Foundation, Bitmain, Dfinity, and Cardano. These factors and anchor companies combined with the legacy of the legendary Swiss banking system made for a recipe that establishes Switzerland as an epicenter for blockchain innovation.

As a sample of some of the visits in Switzerland:

Six Digital Exchange (SDX): The digital venture arm of SIX, the leading Swiss stock exchange. They are trying to build the world’s first trading, settlement, and custody platform for tokenized assets that will operate in a regulated environment. I was so impressed by how holistic their development was, whether it was from the regulatory, financial services, technology, or customer perspective. SDX has a lofty goal to achieve, but it was refreshing to witness a financial institution, like SIX, actively thinking about disrupting itself.

Six Digital Exchange (SDX) Company Visit

Bitcoin Suisse: One of the oldest existing crypto startup in Switzerland, and recognized by the Swiss Financial Market Supervisory Authority (FINMA) operating as a financial broker, asset manager, and service provider. To me, this was one of the most old school businesses we visited, but its very existence and success proved to me that the more institutions that provide cryptocurrency services, the more entrenched cryptocurrency value is becoming in our society.

Bitcoin Suisse Company Visit

Trust Square: A WeWork-eque space in the heart of Zurich dedicated to blockchain startups. Several Trust Square tenants presented to us about how they were using blockchain for the digital identity space, the insurance industry, and even tokenizing soccer players! While many of their businesses still need to be tested by the market, it was valuable to see various non-crypto applications of blockchain, and how collaborative and supportive their community is.

I cannot thank Professor Gensler enough for his participation with us along all of these visits. His deep expertise as a financier and a regulator helped us sift through hype and reality.

In addition to company visits we had so many other fantastic Swiss experiences. We explored the cities, enjoyed the waterfront, and had wonderful meals. Most memorably, we had dinner in a restaurant called Blindekuh, where the wait staff were vision impaired and the entire meal was in complete darkness. This sensory deprivation was disarming and revelatory, and it actually was so conducive to having deep, intimate conversations.

We spent a couple of days hiking the Swiss Alps and breathtaking doesn’t even begin to describe them. I’ve always heard about the majesty of the Alps, but to witness firsthand the unending horizon of pristine snow covered mountains was such a surreal experience. No trip to Switzerland would be complete without a tour of a delicious chocolate factory. There, we ate our weight in chocolate, and debated if the robotic arms on the automated conveyor belt used motion sensors or computer vision (could you tell we were MIT students?).

Top of Schilthorn Mountain in the Alps

After all of our company visits in Switzerland, it very well could be that traction and acceptance of blockchain technology is more challenging than many of these companies led on. I’m sure that is the case. However, our firsthand interactions with so many different companies and stakeholders helped me establish what the landscape of blockchain looks like and how legitimate it was.

Honestly, if this trip ended after Switzerland, it would have already been an amazing and productive experience that has dramatically increased my knowledge of blockchain. Can you believe, this was just Part 1…

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