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Interview with Mathias Ruch – swisspartners – The art of finance

THIS IS JUST THE START OF A GROUND-BREAKING DEVELOPMENT

Mathias Ruch was interviewed by Kathrin Meister.

Mr Ruch, what opportunities do digitalisation and blockchain offer to private investors?

The technology sector as a whole is generally benefiting from a global surge in digitalisation on an unprecedented scale. This is a ubiquitous trend, affecting everything from the federal government in Switzerland to start-ups and SMEs.

Based on past experience, the technology stocks listed on the public markets have benefited extensively from this movement – especially in the US. Given the demand for alternatives in the tech environment, we expect to see a shift towards private markets. In terms of specialist technology investments such as blockchain, there are a variety of options available to institutional and private investors.

The most obvious of these are listed companies. For example, if I invest in IBM, I will also have some degree of exposure to blockchain. Another option would be to invest via a venture capital fund. However, these funds are often difficult to access and don’t necessarily specialise in blockchain as they are more broadly based. Well-informed investors can also invest directly in start-ups. Another option is to invest in cryptocurrencies as a private individual. I think that bitcoin will remain an important player as we have seen over the years that it works. However, the cryptocurrency repeatedly attracts criticism because, for example, as the first generation of blockchain technology, it is pretty energy-intensive.

What are the alternatives to bitcoin?

When talking about alternatives to bitcoin, I don’t necessarily mean alternative cryptocurrencies, but products that we can currently only imagine.

Examples of some of the topics on trend are decentralised finance (DeFi) or investments in the art market using non-fungible tokens (NFTs). Digital artwork has been fetching record prices recently thanks to blockchain-based NFT technology. Paintings, or to take another example, the first tweet in history, are attracting bids in the millions in some cases – and all in cryptocurrency of course. It’s all sheer hype that attracts attention, but also potential investors who are showing increasing interest in these areas of investment.

But it’s not just about digitalising processes – we’re talking about completely new types of products and services, aren’t we?

Yes. If we move away from existing infrastructures com¬pletely and use new ones, we can represent payment flows or make automated interest payments via tokens. We can structure products so that a particular event is triggered only if condition A and condition B are met, for example. These are areas in which it is currently impossible to make any accurate predictions of what direction their development will take. An initial phase such as this obviously always entails risks – such as in the whole DeFI space, which is a focus of major attention at the moment. What it shows is that this is just the start of a ground-breaking development.

What do you think is the biggest trend for private investors?

Digital assets without a doubt – for both investors and the sector as a whole. As well as enabling the infrastructure to be modernised, blockchain technology and digitalisation will pave the way for completely new products to be launched. New regulatory legislation will come into full force from summer onwards in Switzerland. This will create the backdrop – which does not yet exist anywhere else in the world – for innovative products to break into the institutional market. As far as I’m concerned, this will be the hot topic in the years ahead.

Looking ahead, another aspect of digitalisation that is likely to come to the fore is the ability to enhance the efficiency of an investment product. Having a verified digital identity will allow me to process investments on a completely digital basis, from subscription to settlement. In equity trading, for example, settlement can take several days. But by using blockchain technology, the actual exchange will coincide with the settlement as it is one and the same process.

 

„Blockchain technology and digitalisation enable completely new products to be launched.”

When and how did your fascination with blockchain technology begin?

I’m not an early bitcoin adopter who bought bitcoins back in 2009 – unfortunately (laughs). In 2015, I analysed the rapidly growing crowdfunding market. During the course of the analysis, we became aware of the first major fundraising event via blockchain in 2016: “The DAO” raised over US$ 150 million in cryptocurrencies within a few weeks. Of course I wanted to know exactly how that works and decided to investigate blockchain technology more closely.

I am also very lucky to be living in Switzerland: I realised one day that Silicon Valley has relocated – it’s now called Crypto Valley and is right on my doorstep (laughs). We already had our companies in Zug at that point and a connection with this ecosystem from the very beginning. We thought: something big is happening here and we would like to be part of it.

How much does digital living feature in your daily routine, Mr Ruch?

It varies. In some areas, I think not enough, while in others, it’s already excessive. My children, aged four and six, are used to seeing their dad spending a lot of time on a smartphone or laptop. And they copy me of course. It’s difficult to resist the pull of these devices and that’s something that has to be managed properly – this is the challenge I face as a father.

I would describe myself as a very digital person. I’m always keen to try out digital innovations as soon as possible. If I find something I like, I’ll keep using it. For example, I have been buying groceries online for more than ten years. When using online grocery providers quickly became impossible in Switzerland during the first lockdown in spring 2020, I had to revert to shopping in stores. When you realise you have no cash on you at the bakery, that can be a problem. It was a reminder of how digital I have become in my everyday life.

What do you do to find a balance in your analogue life?

I try to be more mindful in my non-digital activities. Nature is very important to me as a counterbalance to digital living. I am also passionate about cooking. I don’t follow a recipe when I am cooking – I like to use my imagination. I also do a lot of exercise, I find that very enjoyable. However, I do use digital gadgets to measure my performance when exercising. So even as I speak, I realise that my life is very much defined by digitalisation.

 

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