Blockchain, a number of initiatives are popping up in Romandie
Fortunately, our region boasts favourable framework conditions and is home to many Blockchain specialists. In Geneva, a guide to Initial Coin Offering is set to be published by the Canton and an exchange will soon see the light of day. Additionally, a new research centre in “digital trust” has already been established.
Throughout this digital transformation, we see a rapid acceleration in the appearance of new buzzwords. The most recent term is Blockchain. Grasping this term and fully realizing the impact on its business model can be difficult, like climbing a steep, craggy mountain: the technology is complex and includes several new concepts such as tokens or Smart Contracts. Since it’s an emerging technology, even when you’ve reached the top, you may still feel as though you’re in the fog.
However, it would be a mistake not to be intrigued. Technological scouting and experimentation are no longer just factors of competitiveness, they have become essential to the long-term survival of the company. These new technologies will change business models and redistribute the value chain across all sectors of the economy.
On 3 May, this theme was discussed in the framework of the 6th Connected Event organized by Swisscom, the Canton of Geneva, the EPFL and the Federation of Enterprises Romandes (FER Geneva). Having prepared and moderated this event, here are some elements that I find particularly interesting to share, through a concrete example.
Making real estate investment accessible to all
By placing your savings in real estate, you can possibly outperform the interest rate of a bank account by taking limited risks. However, the barrier to entry is high: commission rates are exorbitant, a minimum investment of several tens of thousands of francs is required and the money must remain blocked for several years.
So, how does it work? Imagine that you want to invest in a hotel that has a real estate value of 10 million francs and whose owner is ready to sell shares. Tokenestate.io will produce tokens that will give you property rights to this hotel (for example issuing 100,000 tokens equal 100 CHF each). By means of a credit card, you will be able to buy these tokens using an application. These tokens will be linked to a Smart Contract (lines of code containing your token rights) registered with cryptography techniques on thousands of computers in order to make the transaction tamper-proof.
This organism of trust becomes Blockchain technology. This makes it possible to issue property deeds (the tokens) which will be registered in a decentralized and secure manner. The start-up will also offer an online stock market where one can sell these tokens. This stock market will make the real estate market much more fluid.
Facilitate and accelerate the raising of capital
To finance these activities, Tokenestate.io will begin with fundraising. This raising of capital will also be based on the Blockchain. This new method is called the Initial Coin Offering (ICO). An ICO consists of issuing tokens to finance the development of the business. The advantages to using this type of procedure:
- To be able to offer investors different types of counterparts: for example, tokens can give access to the start-up’s future services or products (called utility tokens) or tokens can be associated with a part of the company (called investment tokens)
- To succeed in raising capital more quickly than with traditional fundraising schemes with amounts of several million CHF: some ICOs limit the type of investors but in general, an ICO works on the same principle as crowdfunding, everyone can subscribe.
Tokenestate.io is not a exceptional case. Start-ups that carry out ICOs are showing strong growth. A total of 3.5 billion francs was raised in 2017. This year, we have already reached an amount of more than 6 billion francs between January and the end of April. Switzerland is very well positioned as it is ranked 2nd in the word with 13 ICOs and more than 370 million francs raised (full report).
In order to support this fortuitous dynamic, the Canton of Geneva will, in the coming weeks, publish a practical guide to accompany those projects wishing to do an ICO in Geneva. The outline of which was presented on 3 May: the guide will contain a project qualification grid and a directory of local actors (banks, lawyers, entities specializing in compliance, etc.).
Collaborate to solve the many challenges
The challenges facing Blockchain are numerous, here are two examples:
- A technological challenge concerning energy consumption: Bitcoin, the most widely used virtual currency currently has an annual power consumption estimated at 60 terawatt-hours, equivalent to the electricity consumption of all of Switzerland: To make this technology sustainable, performance must be improved;
- A regulatory challenge is the need to know the investor, as well as, the source of funds in order to prevent money laundering (known as KYC, Know Your Customer).
To address these challenges, collaborations must be strengthened:
- This is one of the missions of the new Digital Trust Center which the EPFL launched at the end of last year: bring together research institutes, the public sector and businesses around cybersecurity and digital trust;
- Traditional actors have an important role to play and must also collaborate with the new players of FinTech. To perform an ICO, one needs to be able to open a cryptocurrency bank account: For example, Tokenestate.io will carry out its ICO in the Canton of Neuchâtel by working with the Cantonal Bank Neuchâteloise (BCN);
- In the Canton of Vaud, you can learn about the 9 entities that already provide offers related to Blockchain, they have been listed on the new platform vaud.digital.
Start early to find the right chain
In sum, initiatives are multiplying and interest is growing. The Connected Event filled up in just a few days, with over 380 registered.
Let’s use this dynamic to explore the impact of this new technology whose potential is very well summarized by the title of one of the first articles in The Economist: The Promise of Blockchain, the Trust Machine.
As Blockchain will impact many areas, there are many choices of where to begin exploring. For example, we can start with a current issue: regaining control of our digital personal data. This is the promise of new platforms like dock.io. This platform, which has just passed the milestone of 500,000 users, gives you the ability to manage your profile and your network in one place rather than juggling between Facebook, Twitter and Linkedin. The application also allows you to acquire tokens named DOCK Tokens and to exchange them on a stock exchange. Its a great way to roll up your sleeves and discover this decentralized internet future based on Blockchain, also called web 3.0.
For the complete presentations from the Connected Event:
The latest edition of MIT Technology Review is devoted to this topic:
You can also access my articles in French on the website of the newspaper LeTemps