Zug is becoming a fintech centre
Zug is well known for being at the forefront when it comes to commodities trading. But in recent years young entrepreneurs and programmers have set out to make Zug a leader in the field of digital finance – cryptocurrencies, to be more precise. New trading markets, new encryption technologies or new digital currencies are being developed. The room for possibilities is huge – Bitcoins are only one option out of many.
The start-up scene is being fuelled by two highly promising projects. One is Monetas. The start-up aspires to a decentralised, global system for financial and legal transactions – without intermediaries, with extremely low transaction fees, using a smartphone and faster than traditional bank transactions. Security is provided by an as-of-yet uncracked technology based on Bitcoin transactions. Monetas’ ideas are catching on: the first system tests in Africa are being prepared, and earlier this year Swisscom voted the start-up one of the winners in its StartUp Challenge. And the Internet community is following Monetas’ progress with great interest.
Ethereum wants to go one step further with its ambitious goal: it’s not just money transactions or cloud storage, as many know from the Dropbox system, that should be decentralised. Complex financial products, insurance contracts – everything should be decentralised and automated. These could be realised through small programmes that run themselves on the network. For instance, these smart contracts could activate a payment when certain conditions are met, such as when a certain price limit is exceeded or a weather forecast predicts a flood.
Enormous crowdfunding project
The idea for Ethereum comes from Vitalik Buterin. The 21-year-old Russian is well known in the crypto scene: he co-founded Bitcoin Magazine and has long critically followed cryptocurrencies and shaped them with his development suggestions. With Ethereum he hopes to make his plans a reality. The first units of the newly created currency, Ethers, were recently generated, and at the end of July the first version of the system was brought online. But it will take many more months until all the functions are integrated.
The associated Ethereum Foundation is located in Baar, while the company’s developers work in Amsterdam, Berlin or London. Buterin’s team succeeded in raising Bitcoins in the value of CHF 15 million francs for the project in only six week – one of the largest crowdfunding projects to date.
Global centre in Switzerland
In addition to Monetas and Ethereum, a number of other companies from the industry have settled in the neighbourhood. Bitcoin Suisse develops ATMs for digital currencies, the first of which came into operation in August last year. Nearby is MME, a legal consulting company known for its expertise in the digital word. But why Zug and why Switzerland?
The vision to establish a Crypto Valley in Zug is largely driven by Johan Gevers, CEO and founder of Monetas and co-founder of the Bitcoin Association Switzerland as well as the Digital Finance Compliance Association (DFCA), a self-regulatory organisation in the industry. “When digital financial services first came about, we had to build a global centre where you could find a safe and supportive environment for emerging technologies,” says Gevers. And he thinks that Switzerland is the right place for this.
A place for trailblazers
For Gevers the reasons for this are first of all the well-known site advantages: the long tradition of privacy, stable direct-democratic politics, and a supportive environment in computer sciences. But more specifically there is considerable expertise in cryptographic or security matters. And then there’s the fact that cryptocurrencies are treated as foreign currencies in Switzerland, which means that it’s not necessary to create new laws and the tax environment is extremely advantageous. This is great news for the industry, says Gevers.
Gevers and his company provide other organisations from the industry with start-up support to relocate to Switzerland or form companies in the small alpine nation. Interest abounds. The team learned a lot when building up Monetas and want to pass it on to other companies. Trailblazers are welcome and Gevers believes that many more will follow.