By Bill Taylor/ Managing Editor – Could blockchain actually cripple a country? No war, no army and no fighting? Well, maybe not in the classic sense but in an economic sense, maybe. Oh, I forgot, we are talking Switzerland. Gasp!
Yup, the Swiss are heavily entrenched in the banking industry which, of course, derives a whole lot of fees and commissions that blockchain is compressing. The blockchain technology (the underlying technology of bitcoin) is driving the cost of transferring money cheaper and faster. We (FintekNews) just ran a piece that a $99M litecoin transaction between two wallets took just two and half minutes and cost $0.40. That’s $0.40 everybody. So, with that kind of efficiency and fee compression who is going to be most affected by blockchain? Hmmmm! First guess, banks. Where is there huge economic bank exposure? Hmmmmm! Switzerland.
Moody’s Investor Service points out the banking systems with the largest chunk of fee and commission income by revenues in their graph below:
Because blockchain eliminates the need for a middle person, or third party intermediary, by almost instantaneously creating a secure and permanent record of transactions between two parties, cross border payments can be reduced to mere seconds from days at a fraction of the cost.
This has been Switzerland’s bread and butter (or chocolate) forever.
Ironically Switzerland has recently become one of the friendliest countries in the world to welcome blockchain and digital currency fanatics. Indeed, Zug already has the nickname “Crypto Valley”. The Swiss financial markets regulator has also approved the very first Swiss private bank for bitcoin asset management. That model may very well pave the way for other global banks to follow as well
So, will blockchain technology and all its remarkable accomplishments actually be a hindrance to the Swiss economy? OR are the Swiss, with their embrace of digital currencies, just way out in front of the rest of the world?
Of course, they always have the luxury of falling back on making chocolate if the blockchain thing hurts too much.