Kelly Richdale is a member of the Innovation Council of Innosuisse. As a dedicated entrepreneur, she has founded and built-up high-tech companies focusing on biometrics, identity management, quantum technologies and cryptography. She is passionate about bringing women into startups and information technology, and about driving innovation. Since 2020 she has been involved in helping develop the blockchain-based payment network Diem.
So far, the Blockchain industry seems to be driven by startups. How do you see their role in this industry today, and their dynamic with established banking institutions who seem reluctant to engage in cryptocurrencies?
The role of startups is of course critical to drive innovation in any industry. I would be a bit more precise though and say that blockchain, or distributed ledger technology (DLT), is a technology which can underpin almost any industry where the establishment of digital trust plays a central role. Of course, in the world of finance it will have a revolutionary effect. The tokenization of assets, decentralized finance, the potential for smart contracts on chain to streamline processes and replace intermediaries -all of these can and will drive disruption. However, there is inevitably a tension between rapid change and compliance in highly regulated industries like finance. Here startups play a critical role to showcase such use cases. We already see the large financial players both testing out these concepts internally, as well as investing in the leading Fintech startups. I believe that change will mostly be driven from outside the large financial institutions but will be internalized once the regulatory environment adapts accordingly. And the critical element here is that the regulation must be technology agnostic -the fundamental regulatory principles should be adhered to while being agnostic to the underlying technology. Switzerland provides a very good example of this principle.
Besides the fear of change, what is the biggest factor holding cryptocurrency back from going mainstream?
We should differentiate between various types of cryptocurrencies. The pre-cursor to all crypto-currencies is Bitcoin, which is essentially a speculative asset whose current value is based on public perception of its future value or utility. My opinion is that the far greater uptake will come from stablecoins, which are cryptocurrencies with values tied to fiat currencies or other assets, such as commodities. And then later from CBDC -central bank digital currencies. Stablecoins & CBDC benefit from all the advantages of being based on distributed ledger technology, but are asset backed and regulated. The regulatory environments for stablecoins and the Virtual Asset Service Providers (wallets) which can handle them is now maturing in all the developed economies, and this will drive greater adoption and broader utility globally. CBDCs are also developing, but like most government initiatives will take longer to fruition.
As of today, would you say the involvement and innovation of Swiss startups in Blockchain is up-to-par with the potential of the industry?
Absolutely. I think that Switzerland has occupied a leading role to date in fintech startups. We have crypto valleys around both Zurich and Geneva where the critical clusters of academia, startups and established institutional players and industry are located. Switzerland also has a strong position in cryptography and associated digital trust which underpins the DLT. We see real innovations coming out of Switzerland in this arena.
Since Crypto-mining is very carbon intensive, is it possible that the desire to fight climate change and cryptocurrency technologies will clash in the future?
They will certainly clash and I hope that this will happen sooner rather than later. The concept of crypto-mining is based on a proof of work algorithm which currently underpins both Bitcoin and Ethereum. Although processing power is becoming ever more efficient, it is undeniable that these technologies use vast amounts of electricity and as such are detrimental. There are other consensus mechanisms, such as proof of stake and variations thereof, which are much more energy efficient and should be encouraged in the future. Moreover, as quantum computing becomes a reality, the security of proof of work-based algorithms may be compromised. New quantum resistant approaches based on proof of stake and other experimental approaches are being explored and would certainly have a longer-term viability and environmental sustainability.
Any advice, for a startup going into cryptocurrencies? What kind of programs at Innosuisse could be helpful for them? Specifically for startups, the Innosuisse coaching program supports teams with a great idea and a new company to develop their entrepreneurial skills. There is also support for start-ups hoping to enter international markets to test the waters in the international hubs of entrepreneurship, as well as for attending trade fairs. There is also the Innosuisse NTN Innovation Booster –Blockchain Nation Switzerland -which promotes the transfer of knowledge between research, business and society and fosters cooperation between partners. Finally startups and SMEs can also act as implementation partners in Innosuisse-funded projects together with academic partners with the goal to bring innovations to market and to develop new types of products or services.