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Taking Blockchain Down A More Mainstream, Energy-Efficient Path

Tom Burroughes

25 July 2022

There is a need for blockchain technology enthusiasts to recognise that rules matter and that this tech will become a mainstream area, a senior figure in Europe’s banking industry argues.

A man unafraid to challenge established business models, while also keeping his feet firmly on the ground, is Lars Christensen. He’s the co-founder of , has a family office, Seier Capital, and is based in St Gallen, Switzerland. He sold his final stake in Saxo in 2018. A man who relishes sports, Christensen is co-owner of FC Copenhagen, the Danish football team. While at Saxo, the firm was a prominent sponsor of a Tour de France team (winning in 2008 and 2010) and has also been prominent in other cycling races. 

And now Christensen has another creation to look after: The Swiss business Concordium Blockchain, based in Zug. It is designed to provide compliant services for distributed ledger technology. 

“We are trying to build a strong foundation for other people who want to use blockchain that is 'off-the-shelf’ and stays stable,” he told this news service in an interview. “We are taking the best of what is in blockchain and trying to marry it with the real world.”

Christensen said he is not a fan of the more overtly “disruptive,” noisy side of cryptocurrencies and their like. A lot of the regulations being considered and applied to these technologies are “reasonable and necessary,” he said.

Blockchain is the first example of a genuinely transformative technology that Christensen has seen since the internet. Saxo, founded in the early 90s, was launched at a time when the internet was a nascent technology, he said. 

“Saxo was based on the internet…I was looking to start it in 1994 and it was seen as extremely nerdy and that it was a fad that would go away. I have never seen a new technology with as much market potential as the internet until I saw blockchain.”

A quick reminder of what blockchain is: A blockchain is a distributed database or ledger that is shared among the nodes of a computer network. A blockchain stores information in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as bitcoin, for maintaining a secure and decentralised record of transactions. The key point is that blockchain guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party. A blockchain collects information together in groups, known as blocks, that hold sets of information – hence the name “blockchain.”

This technology continues to be an important investment area for big financial players. To give one example, European funds platform Allfunds how has a sister business, Allfunds Blockchain, focused entirely on making the most of this technology. In another case, JP Morgan uses blockchain for collateral settlements.

There’s a palpable air of excitement. In a recent paper, Blockchain – The New Economy of Trust, Goldman Sachs wrote: “Blockchain has the potential to change the way we buy and sell, interact with government and verify the authenticity of everything from property titles to organic vegetables.” When the Wall Street bigshots got involved, the game changed. 

Trust and verify
Christensen is enthusiastic about blockchain’s potential. For example, it produces “immutable data,” he said. With the internet, there is a single point of value and data can be corrupted. That can’t occur with blockchain.

For example, with non-fungible tokens, blockchain can be used to register ownership in a completely immutable way, Christensen said. “We can store it with complete certainty that it stays there.”

“This form of registration of certainty in assets is not just a big improvement, but it allows you to tap into new forms of ownership data,” he said, referring to areas such as intellectual property (patents, copyrights, trademarks, etc).

In fact, Christensen said, intellectual property is a “much-overlooked asset class.” 

The rise of platforms such as Youtube and Spotify are reminders that artists and other creators often receive scant return for their work. Blockchain changes the game in their favour, he said.

Another quality of blockchain tech is “finality.” “Once a deal is done, it is done and not reversible.” This contrasts with some of the failed trades and problems that arose in the foreign exchange markets – a field Christensen knows well from his Saxo days.

“This has huge implications…a lot of capital is consumed by the banks for these short periods of insecurity. This will lower capital requirements,” he continued. 

Energy efficiency
In the past, a criticism levelled at such tech is that it consumes a lot of electricity – a point that’s particularly sensitive with energy prices shooting up. 

A crucial part of how the Concordium Blockchain business works is that is uses a “proof of stake” way to achieve blockchain consensus. While PoW mechanisms require miners to solve cryptographic puzzles, POS mechanisms only require validators to hold and stake tokens. The Concordium website said POS is 80 per cent or more energy-efficient than the POW approach.

“Proof of stake means that you risk your stake but do not submit lottery bids. Rewards are given out by a random lottery between all stakers. This only requires a turned-on computer and uses much, much less energy,” Christensen said. “In the case of Concordium, we offset this very limited use of energy by buying offsetting carbon credits, leading us to a net-zero solution. The POS solution is also more democratic as everyone can participate and gets their share of rewards, rather than all the rewards going to huge and expensive computer firms available only to miners that can make huge investments in mining e.g. bitcoin,” he said. 

“POW is also prone to concentration risk with big miners, so in my view it is not as secure as POS,” he added. 

A discussion of this area shows how technical, but also how important such details are. Christensen’s colleagues certainly come from a strong “tech” background. Michael Jackson, an advisor, was chief operating officer for Skype for the first four years of its life, and has worked at places such as Mangrove Capital, a venture capital fund. Lone Fønss Schrøder, chief executive, has worked in sectors from aviation to banks, and among other stints was at AP Moller-Maersk, the shipping giant, for 22 years. Jørgen Hauglund, chief financial officer, has served in senior roles at Saxo, Sydbank, AP Moller-Maersk and East Asiatic Company. Kåre Kjelstrøm, chief technology officer, has worked at Uber, and founded a consulting firm Silverbullet.

Cryptos, central banks and disruption
Christensen is a pro-free market individual and enjoys challenging established ways of doing things. For example, he is a member of the The Mont Pelerin Society, an organisation of intellectuals founded in the 1940s by renowned economists and writers Milton Friedman and FA Hayek. Christensen would, being a good classical liberal, argue that strong markets need clear rules. “We have to recognise the reality of governments, and of compliance, of KYC, AML," he told this publication. “We think central banks will shift to some form of blockchain-based money or something similar.”

“Bitcoin maximalists think it will one day replace the dollar but that is not going to happen,” he said. Central banks, knowing they could lose control of interest rates, aren’t going to let that happen, Christensen added.

From restaurants to high tech
All this mind-bending tech must appear a million miles away from the world that Christensen embarked upon when, at the age of 18, he moved to Spain to start his first business, a restaurant. 

This early venture into the startup world led to a lifelong passion for the restaurant business, both as a discerning guest and as the owner of several gourmet restaurants, most notably Denmark’s first three Michelin star restaurant, Geranium, and hi-tech restaurant Alchemist, which opened in 2019. In 2020, he added the iconic Cafe Dan Turell in Copenhagen to the portfolio, as it was his favourite hang-out in his youth. 

After Spain, and a brief return to Copenhagen, Christensen embarked on a financial services career in London in 1988 particularly focusing on foreign exchange and derivatives trading.

In 1992, he co-founded what was to become Saxo Bank, a financial multi-asset trading and investment platform. In 2016, after 20 years as co-CEO of Saxo Bank, he stepped down to focus on other investments through his private family office. (Seier Capital is 100 per cent owned by Mr Christensen and does not manage capital for other investors.)

And sports remain a passion; Christensen was keen to explain why it makes sense for financial organisations to forge links. 

Cycling sponsorship works, for example, because it is relatively affordable for a sponsor to take lots of clients and staff to races, to handle merchandising and support, and it is an international sport, watched across the globe in English and non-English speaking countries. It is clearly associated with health and the outdoors, and super-competitive. All these qualities can rub off on a business.

“Most of the people who are into cycling can remember the teams and their names…. even if you stop sponsoring you get this sort of halo effect,” he said.