Daniel Haudenschild, is not your typical thought leader, he has 20 years of financial consulting experience, working with the big four consulting companies. He had the opportunity to observe their inner processes and infrastructure from a close perspective, as well as guiding companies through their digital strategy from all over the globe including London, USA, India and other places in Europe.
In order for us to fully comprehend Daniel’s transition into the blockchain, we need to know, that he was working in an audit house in London during the global financial crisis of 2008-2009, which allowed him to observe the process closely. Additionally, he has mentioned, that the financial crisis wasn’t as much of a surprise, as one would think.
“It didn't come as a surprise for many in 2005 and 2006 when you could walk around the halls of the banks and hear how overexposed the property markets were and when it was all going to come crashing down. At the same time, you had the banks offering 120% loan of the value, just assuming that the rates would go in.”
After remaining in London until 2014, Daniel came to Zug, Switzerland. Back then he was a partner in EY and together with his team, he started building up practices around financial services. That was exactly the point when Daniel got into Bitcoin because some of his friends were into Bitcoin. The location, of course, played a big role. Ask anyone who is involved in the blockchain space, where the crypto capital of Europe is, and they would point you to the direction of Zug, Switzerland, commonly referred to as “Crypto Valley”. After Daniel’s first exposure to the blockchain, he got really excited about it, I especially liked how he described it:
“This is a clarity in the darkness, this is an absolute certainty!”
Considering the fact that Daniel came from the reconciliation processes in top banks and he experienced first hand, the disadvantages of global financial systems, that were based on Microsoft Excel spreadsheets, he was quick to recognize the benefits, that blockchain could bring into the infrastructure. One of my favorite things about the conversation with Daniel was that you can really feel, that his enthusiasm is fueled by his strong belief in the technology, what it can do, how it can change the bad to good that is happening in the world. He thinks, that once you get into the blockchain there’s no turning back, he refers to it as a light switch; once turned on, there’s no going back. Furthermore, he defines two types of people alongside this “light switch.” The ones that are completely switched on to it and The ones that haven’t yet understood it well enough to completely switch themselves on to it.
After discussing his rather fascinating background, I asked Daniel about Swisscom Blockchain AG, which is the blockchain arm of a major Swiss telco. To better understand Swisscom, we need to go back to his EY days, where together with his team they brought EY to the blockchain. In fact, they were the first of the big four companies that started accepting Bitcoins, had a Bitcoin ATM in their lobby and even branded BitPay wallets for all of their 150,000 employees.
Although EY was really open to the whole blockchain idea, Daniel recalls the frustration that was going on within the walls.
“But it was frustrating within the walls because you know you are a big four, you have an independence requirement and the blockchain is built around consortia and the chances that one of your customers is in the consortia is relatively high. That really stops you from getting into the delivery of blockchain infrastructure.”
As you can see their hands were still tied for various reasons. They have decided to move the entire team into a telco, which, as he mentioned, has a natural advantage for adoption and distribution since they sell millions of phones, where they can pre-install value-added software. With the obvious advantages, as Daniel describes, Swisscom was a “natural next step”. Furthermore, the appetite Swisscom showed towards the blockchain practice, also played a huge role and the fact that it was established as a separate company, took care of the independence issues. The company is 51% state-owned, which means that they have all the resources and greens lights to keep Switzerland as one of the blockchain centers globally.
I have to say, Daniel is a perfect candidate to lead this kind of initiative. He calls blockchain the “trust mechanism.” However, he recognizes the lack of trust the general public has towards the blockchain and his reason for that was very clear and sound. It’s the education! And, for whatever it counts, I absolutely agree with him. For the comparison, Daniel describes that world that we are built on balanced payments and macroeconomics, the theory that is 150 years old. He also compared it to the Greek Drachma and said that these are the kind of systems where the trust is eroding. Through his substantial experience in traditional finance, Daniel portrayed the role Bitcoin could play in the systems.
“Macroeconomic trust is built on monetary levels of M1, M2, M3, and balance payments, but the challenge is that people do not know any of those levels, so you cannot measure that, but you can measure it very accurately with something like Bitcoin, if everybody was using Bitcoin you could measure exactly where the value is, where your monetary system is, and I think that’s the difference and that’s the way of the future. I don't think people understand it at all and that's the problem.”
What’s the solution? People need to give decentralization a chance, feel it, play around with it. As an industry, we need to be focusing on building technologies, like digital avatars that make people’s lives easier. Whether by proving their identity through a sovereign ID or by having quick access to credit. To make the digital processes easier.
While we were talking about projects, I wanted to ask Daniel what he thought was a recipe for a successful project. He right away said two things: clear financial business case and adoption. Let’s elaborate, shall we? He described, that if we are talking about a large scale project like a protocol for example, then we need adoption. We have seen a lot of people, in the industry come up with great ideas around protocols, but couldn’t get people to adapt to it. Besides, it is very hard and very expensive, because you need to penetrate the market.
“we had seen big blockchains like Tron, Neo, NEM and EOS buying market. They did an ICO, have collected hundreds of millions of Dollars and mostly from large investor funds and they're using that money to seed out particular position. You can tell by the apps and where the grants are going. It's the position of gaming, position of corporate systems. You can see this profile of different major blockchains you think about what costs were put in the place, we’re talking about billions of dollars”
Daniel doesn’t think that it’s worth trying to create a new protocol since the competition and their resources are far greater. On the other hand, if it’s a small project with a clear financial business case and your incentive isn’t philanthropy, that’s an entirely different conversation. Doing it this way would be quite interesting for Daniel.
Towards the end of our conversation, I wanted to discuss how he sees the future of blockchain. According to Daniel, we will not be talking about blockchain per se, because we never talk about the underlying technology. We discuss applications, websites and what we can do with them and how to use them. These are the things that spark people’s interest. He envisions that in the future, there will be a “battle”, as he calls it, about Identity, providence and where things come from. Furthermore, in regards to identity, he has mentioned that digitization of assets will be very interesting for the future, in a way that it’s possible to prove that a certain identity owns a certain asset.
“All the banks that we have spoken to, are ready to store digital assets saying that many of them are actually working on digitization projects themselves. Looking at the standards like ERC888 which has the kind of custodian concept and is an asset-backed token. We are seeing security token offerings much more than ICOs, where people are securitizing diamonds and other assets in a very effective way”
Through his experience in this field, Daniel believes that the banks are getting ready for it, people are getting ready for it, and if the infrastructure will be in place, there will definitely be more parties involved. But the most important aspect of this adoption is identity. Whether you can prove who you are and get access to the funds within the infrastructure.
“Privacy of your identity is an absolute human right.”
With this last quote, I consider Daniel Haudenschild as a true “Thought Leader”.