Day 1: Daniel Haudenschild (Swisscom Blockchain)

Transcript

[Music] Financial Services account for about 1/10 I think of Switzerland's economy so had snow comes as no surprise that the countries we've been hearing from the local government earlier today is very keen to make sure that it's well positioned for the future of finance as well with that in mind I'd like to invite our next speaker to the stage he is the CEO of Swisscom blockchain Daniel Holden shield so thank you very much and welcome to toque it's my hometown I live

here it's the first time that I got to actually just walk down the street and go to work so I'm very happy about that I'm also extremely excited at the the the volume and the size and if you think back a couple years ago and you look at what the crypto valley association is now and what it's done it's absolutely fantastic to you to focus energy and concentration in what is extremely collaborative field blockchain so at Swiss come as Switzerland's telecom giant obviously we have some models one of them is do and don't talk right and and I think that's that's kind of what I

want to be up here and and and the messages that we want to talk to you about today right so we've been very busy doing in in Swiss cup blockchains short history and some of the things that we're doing is some of the things that we're working on is is you know one of the biggest problems with icos at the moment and raising capital through them is the ability to get a bank account afterwards and and some of the biggest challenges with that is obviously having a kyc an AML done right kyc and AML our guidelines their laws and following foul of them obviously creates significant challenges so one of the things that we work with is an e rc 20 launch pad we're now also offering a stellar lumens launch pad in the same way and will be soon working with an f5 for the neo

token for launching I see O's in different protocols from laughs what we've done is we've baked in the ICO framework the same kyc digital identity service is anti-money laundering pep check reg check traced the origin trace to Jennison Bitcoin and aetherium the same stuff that we do for the largest Swiss banks like credit Swiss UBS and others we've now made that service available to the ICO world we've then taken that dossier that comes out of proper done kyc AML and brought that to several different banks in Switzerland and one in this one Stein and we said what does good look like and what do you need from us to ensure that an ICO entrepreneur can quickly turn around raise funds into a bank account and

start operating in Fiat in Switzerland right and so that service is available we've also built obviously a relatively robust platform as Swisscom that's a very attack resilient against DDoS attacks phishing site and whatever else so if you'd like information about that please come visit us at our stand we think it's one of the most secure ways to bring I SEOs into Switzerland and to make sure that they don't wander off for lack of having a bank account um another thing that we've been working on very hard is like to the slide here materialises we've realized that in a lot of our corporate customers that there's a knowledge gap and that although people may have heard of

blockchains they've come to seminars like this and they get a kind of touched and filled and introduced into the blockchain space but there's no place that you can say okay well so how do I evaluate a business case in blockchain how can I look at the use cases how do I create a proof of concept what am I trying to prove how do I assemble a proof inventory that I can then get sponsorship around what are consortium and then ultimately taking that down and saying one thing further how do I then start to code what a smart contracts look like so we've created a training and certification program we're working with different universities to put this on a master's level in a PhD level including EPFL atha high scale as well as some international schools and we've created two tracks of Education one in

the business view which goes into the different industry applications including Pharma banking and insurance and commodity trading and the second track for developers which allows you to explore different different ball shades right so at Swisscom we're running a fury 'm neo kurta and several other blockchains and we have detailed courses on the differences and advantages of each one of those but also then in specifically those courses so please if you're interested in training and education come by and I think that the next eight beast is actually very interesting though it's not listening to my power here the next piece is what we see is a very big proliferation of companies

wanting to store crypto and digital asset properties on site right so this is a picture of a hardware secure module we work with several different companies and have several different solutions from the small on-site on-premise redundant backup to the industrial-scale multi data center a Faraday cage HSM what's interesting is that in January we couldn't we couldn't give these things away and now they're kind of moving out the door like buttered croissants and and that's interesting because everybody seems to be getting ready for September right so now if all these you know and primarily their small wealth and asset managers primarily their small hedge funds primarily very small investment companies and capital groups that are

getting ready to store crypto professionally on site offer that to their high ultra high-net-worth customers but also for their own investments in different icos right so what are we seeing in this space is that it's gone beyond the ledger dangal it's gone beyond your hardware secure module that you kept at home but this is now the professional industrial scale of this right now that's that's an interesting development because if you think about it for an asset management company having let's say bought Bitcoin at $100 and now seeing it at close to 7,000 what happens in that space right if you're not actively trading that's a currency appreciation currency appreciation is increasing the asset class it doesn't necessarily will go

over your European oh okay so you don't pay income tax and/or capital gains taxes in Switzerland on currency appreciation right now that is extremely interesting right and if you looked at the alternatives you see in other spaces that that's kind of not you know available anywhere near the curve in Bitcoin yes has come down a bit since December but let's not forget that two years ago it was significant it was over 700 right now it's 7,000 that's still quite nice and it's so much better than you can get anywhere else we're also seeing a proliferation in the tokenization of assets from gold to diamonds to artwork to the buckets of metal and linking those physically to assets and having those backed right and

I think that also proliferate sin well what's easier an ETF or I got a call my banker and the ETF takes most of the fund or most of the fees and most of the reward for my investment or an asset backed currency where I could buy oil as an ER c20 token or perhaps even currency like Swiss francs as an ER c20 token I and and we're seeing companies now kind of saying well we're comfortable with this actually we should understand the volatility we understand the cryptology behind it and we're ready to jump in the space and these are not like small you know new companies that have been around for the last six months these are hundred-year-old Swiss banks right that are saying we're ready to go

now what they're also saying is we're kind of nervous about hosting our crypto assets with other places because we don't really know who's listening all right and we heard that several times is that like well look we saw what happened with phat calm and you know the Americans came over and they kind of watched the space for a while and they said we have a list on this list we have a bunch of names and we know you ever listed on that list you also have a bunch of names right and then you say show us your list please otherwise take withholding tax right and and that's that's a scary prospect right now if you then they decide to say okay I'm going to host with my digital secured property with another company even if you can get over the fact that those companies are

charging really o horrendous fees as far as account opening and then custody fees and then every trade has a fee on it as well if you can get over that fact then you still have to name it like I don't know what that company needs to report or what its reporting on the that it's stored right so we're seeing these on-premise Hardware modules become extremely attractive and and and really kind of this for us I mean for me it says one thing buy Bitcoin because we seem to be seeing to be getting ready for the fall right so we also see quite a lot that what's happening is that the companies are preparing to store Bitcoin so if they're preparing to store crypto

assets and digital properties then obviously they're probably also going to buy you always balance it a bit out with sue two or three of the top currencies right so we see that the probability towards the end of this year there would be an appreciation in some of the major crypto currencies and therefore also the Hodel feeling that people are kind of hold on for dear life that's actually kind of stagnating the ICO market is is one of the things that we probably see here anticipating right now yesterday at 10 o'clock this slide had a typo in it it says don't think talk they corrected it thank God all right that's not that's really really happen thank God somebody caught it right but that's

that's what was up there before but but in this is very much our spirit right I mean Swisscom is a massive infrastructure provider in Switzerland and beyond we you know it's a strategic direction for Swiss come to be in the blockchain space and therefore we we you know we want to introduce new projects we want to share our infrastructure strength and and and the Swiss factor of being able to store safely store and provide infrastructure services to the blockchain community and that's why we're very excited to be here but in the motto of don't talk do what I'd like to show you is one of the most exciting projects that we've come across in a long while and this is you know perhaps okay and we know that shape right but

this one is solid coin and sonna coin is a cryptocurrency that's transmittable by a wave file yeah and I'd like to introduce flag the CTO of Sandow coin to come out here and talk a little bit about what they're doing in in the Sonico space and give you some examples of what we're doing so but first we're just gonna show you a quick video hopefully with some sound around what sound aucoin is and what it does and then you can get an idea a little bit of the artisanal coin it's the first audible cryptocurrency mobile phones computers televisions tablets and anything else functioning with speakers is compatible with so no coins audible transactions Jack loves listening to the

radio while listening to an advertisement he receives 10 so no coins to use toward his next purchase at his local supermarkets Jack wakes up every morning and picks up a coffee on his way into the office seminal coins QR code feature enables quick and secure transactions between Jack and the coffee shop with the click of a button the API connects so no coin to virtually any service provider and payment terminal but as he leaves the coffee shop Jack forgets his phone on the table no need to worry because Jack has safely backed up his so no coins on a secure cloud service allowing him to recover his funds on his new phone online games keeps jack up all night now he and his friends can transact across any platform

seamlessly thanks to so no coins dot wait format hits as easy as sending a music file now fast forward to the near future while streaming an online video an advertisement shows up on his screen and seconds later Jack and his friends have registered five so no coins on their devices this will be possible with so no coins ultrasonic frequency transactions not heard by the human ear Jack lives in the city and he was his public transport to avoid traffic chance so no coins NFC contactless payment solution will be perfect for on-the-go ticket purchases and the best thing about it most credit cards and payment terminals are already compatible so no

coin is more than audible it's a perfect for anyone in any situation within any so no coin the cryptocurrency you can hear really hello my name is lat I'm a CTO of silicon project what is it so no coin so the coil is a technology of future where we can send our money by sounds by audio file QR code and other ways today we need your feedback to understand in which way we need to create new positions and do technology more better we have cards on

our stage viscom solution : cards for present for 20 yeah each card for 20 so no coins and we start our back bounty program and invite all of them to participate this program and find new ways to understand what is it sorry about my English yeah so and so if you have any questions I will be happy to

answer for you to own the state and be here all day this ok perfect thanks thanks so so flat is flat is a flat is very much from the do camp and he you know the technology is actually quite quite impressive so we have we have over 100 cards here with QR codes on the back they'll be available the Swiss columnist and each one has 20 sana coins on it there are five cards that have 500 sana coins on them you can download the program onto

your I Android phone or if you register you can download it also of the iOS App Store so that's and and and the the ramifications of this is quite amazing right so I could buy everybody in here in the stadium of beer today right just right now by playing an inaudible file that that reaches your your coin right if or your phone and your app that's an amazing kind of break in technology I'm going to buy everybody a beer here because we're hosting the the party tonight at 10 o'clock after the cruise so please do come by it's not going to be a sauna coin but it still should be very good it's at the ball so Torino gg6 um but the other applications that we have with Sano coin if you imagine that

Pokemon was actually just a test right and when you go out and you find your next Pokemon hiding behind a corner it squeals it lets off a sound and it pays you if you imagine movie theaters and when you're sitting in the movie theater before the show starts to sit there and actually get there early is so that you can receive some sonic coins if you imagine pay-per-view as a whole new definition that you're actually being paid to view if you imagine trainings you know that we have to do for compliance and other things within a company you can actually reward people individually for those augmented reality virtual reality have a lot of applications in the space too as well as gaming events and concerts right so for us sonic coin was an extremely interesting venture and something that we are very excited to be part of the

the program is new and we are looking for applications so that's when you register please give us feedback or give Sonico and team feedback on the other side we're running a bug bounty program on the protocol we're asking hackers to come and explore and try to break it yeah because we want this to be one of the most strongest secure crypto I was speaking with Vlad outside just before the event and you know the next step of the protocol that they're working on is that you can actually transmit sounds up to 30 miles without having any internet or anything in between right so that's something that they're working on and so it's an evolution of what the coin could do right but if you start thinking about how manual sound is and how often we can use it and interface into different

devices I think you get kind of in a picture of where we have or we are going with that so in the in the don't talk do camp as well you know what we see is on the market a really strong appreciation for how hard it is to do an IC oh yeah and and I think what was around in 2016 when we did our first one and now in 2017 through the kind of valley of tears after the price fall we realized that the IC o---- mechanisms have matured significantly the prices have gone up the legal fees have gone up the ability to then safely receive coin and turn it into a bank

account has become more challenging and certainly you know how do you get traffic to your site has changed substantially it used to be enough that you could get mentioned on coin base pay a few bitcoins and you would be repeat the article you get 10,000 links on to your on to your page and that traffic was enough at the moment that's not what we see happening right since the hold on for dear life kind of challenges come towards the cryptocurrency people aren't investing in off right and so that also needs to change right hold on for dear life is actually impacting the IC o---- world quite quite drastically but we also see it as a maturity because we run about five or six icos a month right over our platforms and we also see it as maturity of the market in general right

people aren't being lured in to things that of you know sort of dubious nature where a white paper was enough or a good team was enough for technical people or the technology was enough right now you need really more and you need all of those things and then you also need to build a community right we're seeing a lot of bought traffic yeah on some of the community building sites which we find hard to understand you know we've got 40,000 people on our community site and yet we are still struggling to meet our soft cap right so those that replication of the bot doesn't necessarily give you good traffic and good content right so if you are looking at an ICO right what you need to do is choose carefully and

the timing of when you want to do it but also what you need to do is you need to understand what kind of partners can you get in in order to get that traffic to get under the eyeballs and to get into the minds of the people around you right and and that that are impacted by your ICO that's probably one of the most difficult things at the moment right because there is a we are awash in different types of tokens and we have a lot of different types of tokens that come from different sources and it's difficult sometimes to feel which one of these are going to be successful in which ones are not we see an awful lot of different types of suggestions and and and and tokens and all different kinds of stages of maturity but we also have kind of now worked with a lot of

partners in order to bring the process into a more stable with a more predictable results alright so for us one of the things one of the kind of top leading indicators is you know try to get your soft cap before you go into outside of the defendants family and fool around right go into the community who sails around and try to do something with that by having already achieved the significant fundraising right that kind of changes the perspective of what the ICO is there to do but it but it also significantly reduces the risk that you're not going to make it and then I have to backtrack from statements that are made what we also see is then you know if you're working on a utility token right FINRA will take a judgment on the

utility token add issuance right so that's an interesting term issuance well that means when it's publicly traded or it's available to trade now you can lock a contract down so that you could have a relatively large community but it's still not an issued coin right so you can do fundraising before fitme actually takes a judgment if you have a utility token and if it's just access to a platform right then you can get that access and utility token out there before you actually get that assessment from Finland right now and then you have a utility token and we were for several utility tokens at the moment you need to have a platform that's blockchain based and this is the other kind of big mistake that we see in the blockchain space at the moment we see

companies going in there and they don't have anything there yet right so so they do an awful lot of development in the market and the communities and things and then when it comes they say oh god we need to actually have something live in the blockchain that's where they start saving money right and now our recommendation is that's almost the opposite of what you need to do you need to take a solid core foundation of something that works and then build out on it and and and then build a community and get them interested in what you actually have more 'king technologically alright and and that's the type of companies that we see are much more successful and in this case with with sonic Oien right the coin is issued its minted it works it functions it does the

payment methods that it can do the one that's still being worked on right now is the broadcast wasn't or we can actually broadcast it to a crowd of people and they can receive it and and then receive the coins so but but that just as an example of the things that actually come together where you have a very strong core and you have the technical resources there right other companies choose to sort of you hail-mary programming where are you kind of in the last 20 days before you've promised your community that something's going to be available to interact with you throw about a hundred programmers at it and you try to code something out now we've had some you know companies that have asked us for help in situations like that and we're happy to help in

situations like that but that's not how you generates an enthusiasm that lasts for a long term that's how you actually open yourself up to an awful lot of criticism you know and and and you basically have to dig yourself out of from that right so our strong suggestion is build around a technical core all right it shouldn't be Bob's shoe shop is now on the blockchain and we're gonna raise 100 million dollars right that's not necessarily what a utility token is therefore it has to be a new function that's not previously available in the blockchain space allowing people to do something that they can't do because of blockchain and there's a token behind it that gives you access to that platform right and in that sense right that's kind of what good looks like in the ico space

at the moment right so we also have again the tokenization of assets right now when you look at different tokenization of assets there's two things for us that are the most important critical functions of that one is what is the legal tie that I have between my token that can be traded and the document we've seen some incredibly creative aspects right but that's exactly where companies ran into challenges because they had they had the asset backing was audited but it wasn't consistently there right and we can name those examples will we which probably shouldn't all right so the the link between the asset and the underlying asset and the token is

extremely important right if you're talking about a property per token what is the link between the property and the token what rights do you have as a token because you're buying an asset if you're talking about a basket of metals what is the digital document that ties you and gives you the bearer rights to having a token if you're talking about gold right are you actually physically owning a piece of gold that's audited with the warehouse behind it and where is that enforcement is it a bearer bond if I walk into a room of the corporate headquarters of this company that's guaranteeing the asset do I have a bearer bond well they would pay me the cash equivalent - storage handling for the token I walked in the door with or or give me the gold right and not those are the type of questions that we see in

the asset space of being the absolute fundamental and then it becomes a question of reputation all right who do we trust right well if we have the biggest gold trading company in the world right and it happens to be in Switzerland and they issue an asset coin that's backed in gold right well okay that's that's pretty good right and and therefore and because you can kind of see that with the the jurisdiction of Switzerland as a legal framework right that gives you recourse into the law to claim if if if that company doesn't back up and you you trust the reputation of those companies and you still look for an independent audit of the actual warehouse if you stay then start to look at you know the other end of the spectrum oh it's El Dorado a gold mine not a gold

asset it's not audible its auditable because the might of the gold still in the ground but trust me then this kinda goes back into the Wild West days of early USA 1860s where people were trying to sell each other gold mines or the Brooklyn Bridge right and so that link between the asset token and what's the underlying asset and what rights do you have to call on that underlying asset are probably going to be the strongest things that you have in the future and and that's where the concentration should be if you're thinking about making an asset coin that's where the believability needs to come in if you're thinking about investing in an asset coin that's the what you need to look for as far as what you know do you trust the reputation of the company that's issuing that they actually have the asset that's behind it

we can help obviously with any of those different items and in the last couple minutes that I have left I'd like to tell you you know one of the reasons we're Swisscom why Swisscom even in the blockchain space well okay so you know proof of work best consensus mechanism out there right nobody can fool the big coin blockchain it's just requires too much calculation power to try to trick it and ten minutes later you got to do it all over again that's really hard right even if everything is in China and not in Australia or wherever it needs to be right but the other thing is that okay that you know you're limited there right you're limited to change the protocol it's hard enough to get the block size from one megabyte to 2 megabyte you have challenges so and especially in the private permission

world you need to trust you have this kind of paradox where you need to trust the central authority in a decentralized ledger technology right so how are you gonna get these two worlds together well one way is you could obviously come to Swisscom and say you know we'll give you our infrastructure and you please host it and become a validator node we'll work on a proof of authority and because you're Swisscom we trust you all right we're 51% state owned it's it's pretty good but it's not good enough right for some of the companies that we work with that are in you know commodity trading business where you have every transaction is millions of dollars and you have a requirement for absolute secrecy and privacy you want to have more so we said okay well look we're one 51% state-owned company that

can provide to your for infrastructure at 99% availability to ISO 9001 banking degree standards and we can spread that over cross our data centers but if Swisscom for some reason gets older or or or goes bankrupt or some other thing then that might not be good enough so maybe if we open up and build a virtual private cloud between multiple state owned Swiss government organizations that have the ability to you know provide this ultra secure infrastructure that would be even be safer because if you know from one day to the next day Swisscom disappears from the world the blockchain wouldn't be interrupted right and and that's something that we're actively working on we hope to have some success Sun to talk about in the fall

and and that would mean essentially that you know we have a trust triangle in Switzerland where where you could do proof of stake proof of reputation proof of authority blockchains in hosted core and that's been become extremely exciting for some of the global block chains who would like us to play validator nodes if when they're not working on a proof of stake consensus mechanism and it's also become exciting for different parts of the world for example the Land Registry and the Philippines who would like to have put one of their nodes into this trust center because they know the entire you know Manila could be eaten up by the ground and they still would have a complete copy of the Land Registry of the Philippines right and so for those trust Services Switzerland is an

internationally trusted brand and within Switzerland we also have the infrastructure to do some of the heavy lifting so I hope in that time there's a couple things that that that stuck in any case in the motive of don't talk do I'm gonna I'm gonna say thank you and if you have any questions I'll be at the stand for the rest of the I'm at the stic jury this afternoon but I'll be also at the party tonight and at the stand all day tomorrow so if you would like to talk to us about anything you heard today or have any more questions about us or Sandow coin or some of the other projects were working on please feel free to come by and I hope you really enjoy this event and are as excited to be here as I am