Swiss Review 5/2019

Swiss Review / September 2019 / No.5 22 Economy STEPHANE HERZOG The internet has seen several revolu- tions, not least the 1989 invention of the Transmission Control Protocol / Internet Protocol (TCP/IP) which en- abled the creation of a worldwide system: the web. Today, it is the de- centralised encryption system termed ‘blockchain’ that is marking the beginning of a new era. “You could compare it to the invention of mathematics after the invention of writing,” says Shaban Shaame from Geneva. Shaame, a 38-year-old entre- preneur, created his own blockchain for use in developing video game ac- tivities. A blockchain is a ledger shared between several computer devices. Any modifications made to this ‘ge- nome’ must be validated by all of its participants. It is for this reason that it is considered impossible to violate the system. This technology enables web users to exchange information, goods and services instantaneously, without involving any intermediary authority. Contracts are inscribed on the blockchain using ‘tokens’ and operations are settled using digital currency, produced by the block- chain. “This systemwill enable Uber to be bypassed,” explains technology and finance specialist, Vincent Pignon. Indeed, a blockchain effec- tively connects the customer and the driver directly, without the need to access a commercial application. Pignon is the head of Geneva-based company Wecan, dedicated to block- chain. He is also employed by the city-state of Geneva to support the canton in promoting this new tech- nology. In reality, there is not just one blockchain in the world, but thou- sands. Their owners, the Ethereum foundation for example, are in compe- tition with each other to make their protocol the most widely used. It is in this context that Switzerland appears to have become an El Dorado of com- panies and foundations operating in the sector. In 2018, Federal Councillor and Economics Minister Johann Sch- neider-Ammann made public his am- bition to make Switzerland a ‘block- chainnation’. In contrast to the United States, where strict rules have been es- tablished in this area, Switzerland has decided not to create any specific leg- islation. Zug invites citizens to pay in bitcoins Several administrations have imple- mented actions intended to facilitate and oversee the development of this concept. In the city of Zug, citizens can pay for administrative procedures us- ing bitcoins, the most widely used cryptocurrency. In 2014, Zug saw the first instance of fundraising for a blockchain with the launch of Ethereumand its digital currency, the ether. In plain language, shareholders invested in this project with classic currency, and they received ethers in exchange. In Geneva, the Directorate General for Economic Development has published a guide dedicated to the issuing of cryptocurrencies and their tax treatment. Facebook has chosen Geneva as the central home for its up- coming and already controversial cryptocurrency, Libra, for which op- erations are led via a subsidiary – Li- bra Network – and an association. “Facebook considered that the other blockchains and their currencieswere not fast enough. Their plan is to offer an optimal payment andmoney trans- fer system to their 2.3 billion users,” explains Pignon. Returning power to the people of the world Shaban Shaame welcomes the arrival of Facebook’s Libra because Facebook is offering to entrust themanagement of this project to an association made up of numerous actors, such as PayPal and Visa. Libra would also be sup- ported by several strong currencies. It is this decentralisation that is at the heart of the blockchain project. It orig- inated in 2008 with the bitcoin, a pro- tocol created by cyber-punks as a re- action to the financial crisis, with the aim of regaining a handle on a finan- cial system that was out of control. According to the head of Ever- dreamSoft, the diffusion of this tech- nologywill have a tremendous impact. Blockchain will place more power in the hands of the world’s citizens, who will be able to participate in exchanges and value creation without the use of banks, notaries and administrative authorities. These connections will take place in a new legal and social en- vironment. “Each blockchain will of- fer a political system to its users, for examplewith social rules like a tax in- The competition for a universal blockchain is raging in Switzerland A blockchain is a decentralised encryption system which offers revolutionary exchange possibilities via the internet. Switzerland welcomes this technology: there is fierce competition between several blockchains and their cryptocurrencies.