How will blockchain technology affect our lives? Can digital currencies establish themselves as an asset class? The questions that arise in the world of crypto seem limitless. We limit ourselves to five and turn to experts in the field.
The development in the blockchain and cryptocurrency space as well as the rapidly growing ecosystem around the new technology is fascinating. Behind it are people who believe in this innovation from the bottom of their hearts. People with a pronounced passion for the field, contagious enthusiasm and entrepreneurial spirit.
In the CVJ.CH format “5 questions”, prominent and respected specialists and entrepreneurs in the crypto space are asked for their opinion. Different views and exciting contributions from the ever-changing blockchain world are presented in response to the same recurring questions.
Brief overview Jan Brzezek
Jan Brzezek is founder and board member of the Crypto Finance Group, and CEO of Crypto Finance AG, an award-winning Swiss fintech company for professional investors in crypto assets. The company offers a full suite of services, including crypto asset management, brokerage, blockhain infrastructure solutions and tokenisation services. Before founding Crypto Finance, Jan held various positions at UBS Asset Management, Wealth Management, and Investment Banking as well as roles in derivatives and fixed income sales and trading with UBS in Zurich and Asia, and with the SIX Swiss Exchange. Jan holds a bachelor’s degree in Banking and Finance from the Zurich University of Applied Sciences.
CVJ.CH: How did you come across the crypto space?
Jan Brzezek: It was a coincidence, actually. Although I had heard of bitcoin much earlier, I became more familiar with bitcoin in 2016 through projects with my employer at the time. These projects were focused primarily on blockchain technology, but if you try to understand this, you inevitably start examining bitcoin as well. The more I became involved in the topic, the more I felt like Alice in Wonderland diving into a new world. I realised that we were at the very beginning of something very big. I saw early on how computers and the internet evolved, I did not want to miss that again. But to experience that, you have to leave your comfort zone, because that is where the magic happens.
Where will the blockchain technology have its biggest impact?
As with all disruptive technologies, the short-term impact is overestimated and the long-term impact is massively underestimated. We still have a very difficult time estimating how blockchain in general and bitcoin in particular will prevail.
Basically, I always distinguish between the two topics. For me, blockchain is “just” a technological advancement. It will take us from physical shares and bonds to digitised debt securities at a central depository like SIX and to decentralised, intelligent registers that not only keep accounting records, but also automatically execute corporate actions. Through more efficient and cheaper issuing processes, there will be an explosion of new products in which it will be easy to invest. As an example, I think that you will not only be able to invest in Roche shares, but also in specific drug patents. In my view, however, customers will not hold these tokens in their own wallets, but the technology-oriented bank will store them and the customer will see his positions like they do in e-banking today. When it comes to the Internet, most people are not interested in the technology used by the Migros online store.
On the other hand, we have bitcoin and other “digital currencies”. How these are developing and what this future holds is one of the most fascinating developments I have seen in a long time. From a fiscal and monetary policy perspective, bitcoin could have the same historical relevance as the separation of church and state. Why? History shows us that most currencies do not live to be 100 years old. Governments often fixed their unbalanced budgets by printing new money, which in most cases led to a devaluation that left people worse off than before. Right now we are at such a point again. Unheard of rescue packages will have to be repaid by the public in the future, which is easiest to engineer by devaluating a currency. This will hit the lower classes harder than the upper classes, which will lead to an even greater imbalance.
Exactly the same thing happened in the Middle Ages, when the princes had more coins minted or mixed them with cheaper alloys. The difference today, however, is that with bitcoin we have a commodity that is clearly limited in quantity and easily transferable around the world, and which cannot be confiscated or diluted by any government. Even if bitcoin does not yet benefit from the same confidence as physical gold, all other points speak clearly in favour of this new digital gold.
What will it take for digital currencies to become more widely adopted?
I think it will take education, serious market participants, and time. Many people still do not understand digital currencies and perhaps rely on past events that they read about just once, and we have to work together to counteract this. Secondly, serious, professional, and regulated market participants are needed so that this asset class can leave behind its negative associations and become safe for investors. And thirdly, it will take time. Rome was not built in a day. As with all innovations, many would-be adopters are critical in the beginning, become curious, and finally are enthusiasts.
Will digital currencies establish themselves as an asset class and can Bitcoin remain at the top?
Here we need to distinguish between public blockchains, like the Bitcoin blockchain, and private blockchains, like those for the emerging central bank digital currencies (CBDCs). I personally believe that both will prevail. Bitcoin and other crypto currencies are most likely to establish themselves as safe haven assets in place of gold in countries with high inflation, corrupt governments, and weak financial services. A key point to remember: in countries with high inflation, the value of bitcoin is relatively stable. In Turkish lira, for example, bitcoin is already almost twice as expensive as it was during the previous all-time high in December 2017.
I can imagine that there will be different currencies depending on the application and region, just as economies vary. I am convinced that bitcoin will maintain its leading position as digital gold.
What is your view on the future of tokenized assets (e.g. financial products on the blockchain)?
I think tokenisation will allow for a huge expansion and granularity in terms of investment opportunities. This is less about the tokenisation of established, publicly traded stocks and bonds, and much more about so-called “non-bankable assets”. For this, we need international standards and cooperation across companies and countries. The Swiss financial industry must now develop a completely new financial market infrastructure that is not just owned by one company, but must be operated by everyone together. Of course, this is difficult for the short-term thinking of many managers, as they currently have purely costs and only will benefit from these in a few years, but only those who are agile and can adapt to new circumstances will survive the future.
For this reason, the mission of the Crypto Finance Group is to establish Switzerland as an international tokenisation and custody capital and thus ensure that this financial centre remains relevant for the next 100 years. We have all the essential ingredients, and all we need now is to call on the courage, the vision, and the entrepreneurial spirit that made Switzerland what it is.