Even as far back as the Roman Empire, deeds were often used to record legally binding information. A deed acts as paper evidence of the authenticity and veracity of its content. Back then, the state-of-the-­art medium was parchment and later, paper. With the increase in trade in the late Middle Ages, there was a growing need to add further functionality to these deeds. They were used not only to make a right binding, but also to mobilize it, i. e. by transferring them from person to person (peer-to peer). This led to the creation of the security.

According to the current understanding of Swiss law, a security is a deed linked to a right in such a way that the right can neither be asserted nor transferred without the deed. Possession of the deed is proof of the assertion of the right, and the transfer of ownership is the prerequisite for transferring the right.

Paper securities began to become widespread in the 16th century and experienced their first heyday in the early 20th century. Millions of deeds had to be physically stored and exchanged. The limits of the mobilizing function of the paper-based security soon became apparent. In 1970, Swiss banks founded a joint venture, Schweizerische Effekten-Giro AG (SEGA — a predecessor of today’s SIX Group AG), for the central safekeeping of physical share certificates. This holding of securities by an intermediary meant that they no longer had to be physically delivered to the new owner in order to transfer the right. The security was rendered immobile by its holding, and the rights to it could now only be transferred by means of credit entries (book entries). These book entries were recorded on the central computers of banks and depositories as digitalization progressed. Thus the first foundation stone for digitally recording, holding, and transferring a legal claim to a security was laid. A central digital database was and still is the “holy grail” when it comes to this original form of digital trust.

The history of the security has been shaped by the efforts of market participants and legislators to protect security ownership and the associated rights under civil law in the most effective way, and at the same time to ensure secure transfers even with high volumes and large numbers of market participants. The legal concepts developed over the years must always be understood in the context of the "gold standard" technology available at the time. The focus always has been, and remains, on the question of which digital information and functions can be trusted. The technology surrounding this has developed rapidly since the beginning of the 21^st century, and has also influenced the next stage in the evolution of digital trust.

With the introduction of the ledger-based security (Article 973d of the Swiss Code of Obligations, CO) in 2021, Swiss lawmakers demonstrated an astonishing openness to a new technology. The new ledger-based security is based on the realization that it is now technically possible to program digital functions and operate them so reliably on digital infrastructures that they are — as an information carrier — functionally comparable to a deed or security. Using this technology, legally relevant information can be entered unalterably and made available for transfer exclusively to the authorized party. The beneficiary can thereby also verify themself to the debtor and third parties as the holder of the right. Swiss lawmakers have thus created a legal concept for an important application of digital trust.

To remain as technology-neutral as possible, lawmakers sumarized these digital functions and infrastructures under the term “distributed ledger technology” (DLT), which also covers technologies known as blockchain. Blockchain protocols such as Bitcoin from 2009 and Ethereum from 2015, which are often devalued as simply “crypto”, contain these functions. What has also been overlooked in the reporting on crypto so far is the fact that these protocols have been running like Swiss clockwork since their introduction. In addition to their functionality, this is precisely where the radical nature of these protocols lies: They function reliably and securely as decen- tralized systems. These protocols are today's state-of-the-art technology and the “paper” of the future. They are the pioneers for the further development of digital trust, not only in the area of securities, but also for other applications such as certificates, titles to goods, ID cards, etc.

Thanks to distributed ledger technology, rights can be mobilized digitally and securely with this new legal concept of the ledger-based security. This makes it possible to do digitally what once used to be solely possible through direct physical transfer of a deed or book entry by a licensed intermediary. Issuing, holding, and transferring digital mobilized rights will once again be possible without intermediaries. The circle is complete.

Swiss lawmakers have not been resting on their laurels. They have recognized the potential of distributed ledger technology and, in addition to paper and central databases, have now approved digital functions as an information carrier and form of digital trust for mobilizing a right. Thanks to digital trust and an attentive legislator, the humble paper-based security is experiencing a new lease of life, albeit it in a different format. The way is being paved for a new era of digital mobilization of rights and legally relevant information with a redistribution of some roles among the various market players. New opportunities are opening up to develop products and services for users who are becoming increasingly digital, and whose need for secure and accurate digital information is unbroken. This new era will be able to unfold in an already well-regulated legal environment in Switzerland. Of course, it will still be necessary to make certain adjustments. And these will need to be made carefully and in the right place.