It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness. 160 years since those lines were written, they still ring true in today’s context – especially when there are discussions on cryptos and blockchain. May be that is always the case with revolutions.
Two years ago @bernardlunn wrote a great article on crypto valley that touched upon the ecosystem that was taking shape at Zug. Two years on, now might be a good time to take stocks on whether we really are seeing Web 3.0 unravel, or is it all just one big hype.
I think its important to first talk a little bit about the context in which Web 2.0 took shape, and see if there are any similarities between the two valleys, Silicon Valley and the Crypto Valley. Silicon Valley got the name as it turned out to be the hub manufacturing chips. microprocessors and micro computers.
Significant success stories emerged out of the dot-com boom, rather the survivors of the bust. While many firms folded, the survivors have since become the tech giants that monopolize the world today.
This was possible, thanks to the tech culture, the skills made available from world class institutions in that part of the world, but also due the amount of VC money. Regulation was not necessarily a factor in those days, as it is today.
As Zug in Switzerland started evolving as the crypto heart of the world, I felt it had many similarities to the Tech boom of the Silicon Valley. Some of the top firms in the crypto world are currently based out of Zug, so there is no lack of the crypto culture. Some names are Ethereum, Xapo, ShapeShift, ConsenSys etc.,
The Crypto Valley Association led by Oliver Bussmann has since then been established and grown, thanks to its agenda around bringing credibility to the crypto ecosystem through legal, tax and compliance working groups. Ethereum Enterprise Alliance, the world’s largest open source Blockchain initiative, was formed almost a year and a half ago to expand the Ethereum ecosystem. About 500 firms from large banks, tech giants and startups in the Blockchain world are all members of this ecosystem.
Switzerland’s political system that is largely bottom up and people driven, has been helpful to promote Blockchain. And the country has historically been a base for Family office wealth from around the world – not that ICOs depend on local wealth anyways.
Swiss and Europe in general, have some world class academic institutions that produce the talent pool required for the tech and the business community. Regulation has been more of a guiding hand (unlike other parts of the world), helping to groom innovation rather than keeping them on a short leash. Creativity seldom thrives in a world of absolutism.
Last year ICOs managed an average return of of 573% to investors – could be easily seen as the crypto boom. The last 12 months have seen pretty bad PR for the crypto/ICO world. that has largely pushed 76% of the ICOs in the first half of 2018 into the red. Switzerland has brought about 60% of all the significant ICOs in the past 12 months, so it has had its fair share of gloom.
Does the Silicon Valley stand a chance in the Web 3.0 world? I am not sure it does. Silicon valley in principle has become a world of capitalist power houses that largely monopolize with the power of data. Blockchain as a concept stands for the exact opposite – democratization. decentralization and disintermediation. How many of these principles are practically viable is yet to be seen though. The regulatory climate in the US hasn’t been very favourable to ICOs and Cryptos either.
Like most others, I believe both Blockchain and Cryptos conceptually are sound. However the paper glory hasn’t yet translated to real world execution, largely due to the idiosyncrasies of the world. However there are tweaks and improvisations that need to happen to the technology itself. Once a credible ecosystem is setup and the dust settles from the ICO gloom, the survivors could be the Googles of the next decade.
Arunkumar Krishnakumar is a Fintech commentator and an investor.
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