Just over a month ago, we saw the blockchain-based consultative election in Zug, Switzerland. It wasn’t much as elections go – no binding referenda, no actual candidates, and only 72 people took part in the pilot. Nevertheless, it’s one of the earliest uses of blockchain by an official state or municipal body in any kind of election and it helped Zug tout its newly minted Crypto Valley moniker.
There are still many other locales vying for the claim to be the most welcoming to all things blockchain, though, so we thought we’d run through just a few notable places to add to the map.
No list on cryptocurrency pioneering could be complete without at least mentioning Estonia, which proudly calls itself a “digital society” and began testing blockchain technologies even before the launch of Bitcoin as a cryptocurrency. Since then, the small eastern European nation, widely considered the most generally tech savvy in the post-Soviet area (and famously the birthplace of Skype, that once grand pioneer of cross-border telecoms), has continued to build its crypto rep. Last year, the rumor mill was churning after hints and official statements that Estonia was to establish a state cryptocurrency. Estonian crypto dreamers, however, were awakened earlier this summer by a stern reminder from the European Central Bank that Eurozone nations cannot introduce their own currencies. That has not stopped blockchain-based tech companies from flourishing in Estonia, however, and government continues to use the blockchain to secure patient health information and online identities.
It is perhaps no surprise that the Emirati “city of the future,” which has built its modern reputation as being a home to foreign business and investment, would also play host to the blockchain. An ambitious e-government initiative in Dubai is aiming to put basic municipal services that currently cost $1.5B in labor onto an automated blockchain-based system by 2020. (Of course, this could affect employment levels in the public sector, one of the most open to Emirati nationals in a nation of expat labor.) Dubai has kept business taxes at or near zero for many years and could be an attractive site of operations for blockchain firms just as it has been for many others.
The island nation in the Mediterranean will let others vie for “Crypto Valley” status as it seems content with Blockchain Island, the nickname observers recently bestowed upon it after passage of several landmark bills that amount to the most favorable state regulatory frameworks for blockchain. Analysts and the pro-blockchain government believe these regulations will allow Malta to continue its embrace of the technology. It has already partnered with Learning Machine to provide its students with blockchain-based credentialing, and Binance, one of the largest crypto exchanges, is set to relocate there as well.
The capital of the Czech Republic deserves note because it has more Bitcoin-accepting vendors than any city in the world. A recent money laundering law would require traders on cryptocurrency exchanges there to identify themselves, but the government has remained largely indifferent to blockchain technologies themselves. Prague is also home to the Crypto Anarchy Institute, which aims to help provide the tools and conditions for a “parallel decentralized economy” inclusive of cryptocurrencies.
If Zug is Crypto Valley, it sits in the Blockchain Alps of Switzerland, a country freer in many ways to welcome new systems of finance and administration than its EU-regulated neighbors. According to a recent study by a European Blockchain organization, Switzerland is the most blockchain-friendly country in all of Europe for new companies. Otherwise little-known Zug has become the center of much of the country’s blockchain activity, but it owes much of its appeal to the broader business-friendly environment of Switzerland, where corporate taxes are lower than much of Europe. The centuries-old Swiss reputation for banking confidentiality is slowly succumbing to pressure to uphold standards of accountability, but even this potentially sits neatly with the intersection of anonymity and transparency brought by the blockchain. And while Switzerland is also well known for its own layered bureaucracy, a Swiss blockchain company has already built a hack for that, which would cut down processing time to a tiny fraction of the current system should the government adopt it.
. . .
In general, the right conditions for blockchain-friendly locales seems to be driven by a not entirely predictable combination of personality, bureaucracy, and history. Major economies like the EU and the US have by and large not moved on implementing unified regulations for blockchain, in part because of slow-moving bureaucracies and vested interests in legacy systems. Their approach to introducing blockchain innovation, if not blocking it entirely, is to allow so-called regulatory sandboxes where limited trials can run. In some US states and European nations, this has led to broader regulatory uptake and could be a way forward in these places. In more newly independent nations, like Estonia and other post-Soviet countries, the lack of older legacy systems to compete with can actually be an advantage for Blockchain companies. For other places known for high-tech standard-bearing, being the first to allow a blockchain alternative may be as much a matter of staying hip as anything. Or, in the case of Zug’s mayor, it may be a personal passion. Whatever the reason, the blockchain era is still new upon us and its territory unsettled, and given the role decentralization plays in its very make-up, we are perhaps more likely to see a federation of blockchain villages rather than a single capital.