CVA Podcast: Hubert Ritzdorf, PwC

Transcript

[Music] hello hello and welcome to another bite size episode of the crypto valley association podcast let's discover together the latest trends of this turbulent space and try to shed some light on the mysteries it contains here with us today is hubert ritsdorf from pwc switzerland the technical lead smart contract assurance i'm looking forward to learning about how one of the big four accounting firms is getting further involved in blockchain technology so let's dive straight in to the hidden world of smart contracts hoobit great having you with us today how have you been since we last met at the world economic forum i feel like the

world has has turned a bit upside down since then yeah thanks a lot for having me very happy to be here uh i've been quite well luckily i hope uh so have the listeners been oh yes i i hope so too and i mean we've been talking about global adoption for some time and i'm just surprised that the world has taken more to the volatility of the crypto markets rather than all the other benefits of of this industry great so to kick this off maybe you can tell our listeners a bit about yourself and what first raised your awareness to the sector yes so um i kind of got into the whole crypto market in 2012 um so at the time i was writing my master

thesis at eth zurich and um so there was another thesis going on kind of next to me physically speaking and that was quite interesting and that was about bitcoin double spending and some network measurements for that and so on and so on and um yeah so that really piqued my interest that's how i initially got involved at the time one bitcoin cost five dollars but still a five dollars felt like a lot because what could you do with the bitcoin at the time um so yeah the the kind of markets were slowly starting to pop up then we did some measurements on like um how

big certain bitcoin transactions propagated in the network they i found that really interesting um afterwards started my phd at eth lyric then um from time to time worked with different blockchains and blockchain technologies looked at bitcoin looked at ethereum and after i was done with my phd was one of the co-founders of chain security so the startup was which was also an eth spinoff was focused on smart contract and blockchain security and we were trying to help people um to secure their smart contracts and

generally their blockchain related projects and then at the beginning of this year um chain security joined pwc um and now we have kind of a joint offering here um with smart contract and and other services at pwc okay well that's that's great so what has kept you here today i hope it's not just the fact that bitcoin has gone from five dollars to 20 and then back down to 10 but what keeps you here today yes so it's it's really the interest it's the technology because the technology is so powerful i think so initially bitcoin was already quite impressive with what it was able to achieve um and you have this global network where

you where you can reach this really rough consensus and and you can really generate some strong properties but you need a lot of things to go right and sometimes small mistakes can have like really big impacts which is something that's always super interesting because it depends on all the small details and then um as the space progressed what was uh really i mean as i already mentioned got my interest were smart contracts because um people who have ever implemented a distributed system and thought about like the technical complexities of implementing such a system they know how complicated it is they

know how many things have to be solved under the hood and nowadays you can write a smart contract in like 10 lines of code or like 50 lines of code or something like that and um it's doing such a magical and powerful thing and you can do like worldwide um transactions and that's really what what has kept me this kind of this technological advancement and the technological capabilities well yeah that global element i think is truly truly fantastic so um and speaking about about global right um tell us maybe a bit more about pwc's involvement within um blockchain technology and the cryptocurrency space as a whole

and maybe the role that they in particular play within this growing industry yes so it's um yeah it's quite interesting because pwc is involved from different angles um so of course as a financial auditor um pwc encounters that more and more companies have crypto currencies on their balance sheet so that's something that people priority has to deal with and that's where pwc has developed um tools to deal with this and to do the accounting correctly and to make sure that um the accounting uh is uh shows what it's supposed to

show in the sense of like you you cannot fake your balances and all of these things and so that's that's the one side then of course especially in the beginning um but still now the there's the whole legal and regulatory side so um where in the beginning it was quite unclear um how what do these tokens mean how who can trade them how can they be traded and so on um how can all of this fit into the existing legal frameworks then after icos came seos and and then came like like let's say more established

companies that got involved and then finally there's a the more technical side there is the field of cryptocurrency custody so um how do you store correctly and securely where pwc issues kind of these certificates which ensure that the service provider does correctly store and and has proper key management on all of these things and then there's our department the smart contract assurance practice so we try to make sure that what you code is what you wanted to code so we um we try to protect

and um increase trust which is also the overall kind of pwc vision because this blockchain space has the ability to really build these kind of trustworthy systems but often you need to be technically very strong to understand whether you can trust it or not so like you need to read all the smart contracts and you before you invest in them or you need to understand like the underlying blockchain technology and so on and that's why we think it can be so powerful to have kind of this this stamp of quality so that you say like okay this this smart contract has been checked um the business model is actually sound

it's legally sound the keys are being managed properly like because if you invest into cryptocurrencies or if you invest into um some tokenized economy and of course you you want your funds to be safe and that's that's what we're working on that we can increase this trust that your funds are actually safe great and it's very very important right the security element uh of all that um as well and maybe you can tell us more about the importance of accounting uh within this uh within this space yeah so so yeah i mean as well as was mentioned

accounting is of course the traditional business of pwc and and it's still a very important business and that's something that um yeah has of has changed a lot over the years and will probably change a lot more uh in the coming years because on the one hand side we have all these cryptocurrencies and we have the new requirements from that side on the other side we have generally companies that are way more globalized way more globally connected have significantly more complicated accounting structures and um have subsidiaries and so on where they have internal settlements and so on

and that's um from the other side that's of course something where blockchain and distributed ledgers can potentially help and that's something where that we are also looking at with with customers um how they can use these technologies to to improve their accounting infrastructure to improve their accuracy to improve their speed yeah accuracy is is important as well right and and within that pwc having having over a quarter of a million employees and offices all over the world really in four corners of the globe are you looking to implement in any blockchain technology

within internally as i know that you're helping a lot of big firms and smaller ones to to adopt this technology is is pwc internally uh trying to do something with this yeah that's an excellent question and um so actually we are um we are exploring some ideas so obviously there's nothing nothing public yet but we are exploring some ideas and i think it's something that can potentially provide a lot of benefit also for pwc i mean pwc is also to some degree a trust-based business right so the the reputation of poc is

very powerful and hence the goal of the company and its employees is also to to protect this reputation and to uphold it and to um to deliver the kind of service that that our customers expect so that's something where to on the one hand provide the transparency to the customer and on the other hand also to provide the internal quality standards that something where distributed ledgers can definitely help and that's something that we're exploring but unfortunately i cannot provide any concrete of course well i look forward to seeing those developments

in the future and and and following this futuristic approach you know how much we in this space love to try to predict the future i wish i was a bit better at it if not i would have i would have bought a bitcoin at five dollars but where do you see the development of smart contracts in in the future yeah a quick side note on that um if it if it makes you feel any better i bought bitcoin at five dollars but i bought them for the university so the university could do the measurements and not for myself personally maybe that maybe that provides some relief for you but um then yeah so where do you see the future going so especially in terms of smart contracts

we have seen a lot of change so we um are now helping people and secure the smart contracts for the past three years and we have seen a dramatic change the industry has kind of gone from the early stages to something that's fairly professional now we're talking to international banks that are getting involved we're talking to really big players that are getting involved so i think what has really changed is the kind of the precision and the what the the exact nature of it so and that's something that's also really core to our work because in the beginning i don't want to

discredit anyone but there was of course a lot of trial and error and there were a lot of mistakes being made and now that the stakes are higher these mistakes cannot be made anymore so something that we're working on quite intensively is also together with our clients to make sure that their specifications are correct and precise just last week we had a major client where we were working with them and their specification is not quite as precise as it should be because it contains some ambiguities and our job is normally to check that what's written in the specification is correctly implemented in the code but of course if the specification leaves

open points or is not quite clear then that leaves room for errors in the code or least room for misunderstandings for for customers so for us it's been crucial to improve these specifications and thereby improve the the quality in the space and also improve the trust that customers can have in these projects yes i agree and successes in the details right and i think we it's important to be able to really go into the details within with my contract so there are no loopholes or problems that occur within them so yeah thank you for that that site is very insightful and um yeah i also know that you're a special coach for blockchain at you know swiss

maybe would you like to tell us a little bit more of that role and the role the government has to play in the development of this ecosystem yeah so inner swiss is the swiss federal agency for innovation and it supports startups by providing them coaching and i'm one of these coaches and i'm coaching around the topics of blockchain and smart contracts and they have helped multiple startups um how they could use blockchain how they maybe shouldn't use it also what kind of platforms they could and should build upon how they can use smart contracts and also kind of the the education side of it because

especially in this space there's like there is not so much experience around this in other spaces like of course there's people who have been around for a while but they're not so common so there's a lot of kind of early mistakes still being made because new people are constantly getting into this space and there's not so many senior people guiding them so what i try to do as an inner swiss coach is i try to help with these uh early mistakes so that they are not being repeated too much and um so yeah that's that's been a really interesting thing and i've been really happy that i had this opportunity i'm really thankful to innis with that they gave me this

opportunity just to to kind of give back a little bit and on the other side when we talk about governments and their role in the space i think it comes in in two ways uh i think the one side is kind of the enabling side where they um allow the space to to flourish in some way and and don't block it in any way and the other side and i think that's the one that we'll see in the future more and more it's kind of the site where legal requirements make it necessary to use distributed ledger technologies and that's of course something that that

we are not necessarily demanding from the government but i think that's something that it will come around eventually for certain for certain areas that um the strong requirements just make it necessary to show this transparency and to show this level of security so that's that's how i think uh government fits into the picture in general great and yeah i i agree that the government has to play an important role and i think we have the good fortune being in switzerland that they are very much open to this innovation even though they may be a bit slow at times they are open to it and they want to be able to create something that is sustainable for the future alongside corporation and thought

leaders like yourself great so maybe to finish it off here i'm hubert how about giving our listeners a personal glimpse of the future of this industry as a whole and and some closing words yeah so actually i'm quite excited for the future because while we talk about this real ledges and blockchain and so on a lot to me there's a bigger picture here and the bigger picture is that it's kind of the next step in digitalization because we we all experience like everything becoming digital then things being way more connected over the internet and now we have these companies that are

highly connected but they are also highly distributed and we have these markers that are highly connected but they're also highly distributed and they have all of these trust issues and so on and so on and we have trust as such a central role in in so many different markets so i think the logical next step is that we have these distributed systems and to be able to work and trade in these distributed systems we need these technologies we need these technologies to reach consensus we need these technologies to have the necessary level of assurance and in that sense we we're kind of seeing the natural next step

that we have seen with like computers and internet and now we're seeing like the highly distributed systems and yeah in that sense i'm excited in the possibilities and what it could bring for the future awesome thank you for those insights and yeah i'm very much looking forward to a digital world and supported by smart contracts and and everything that you mentioned so um awesome thank you and and if you enjoyed hearing this short conversation with hubert feel free to check out more on our website cryptovalley.swiss where we host plenty of events educational content and even provide information on how you can join our growing community so thank you once again hubert

stay tuned stay safe and until next time from the crypto valley in switzerland [Music]