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Swiss city integrates bitcoin into daily commerce
In the heart of Lugano, a Swiss city nestled by a lake and surrounded by mountains, a customer at a McDonald's asks to pay for coffee with bitcoin. The cashier presents a device resembling a credit card terminal-except it processes cryptocurrency transactions. The city government provided these machines free of charge to local businesses, marking a bold step toward normalizing digital currency in everyday life.
From investment to utility
The transaction amounts to 0.00008629 bitcoin, roughly $8.80. While bitcoin is predominantly viewed as a speculative asset globally, Lugano has carved out a different narrative. Approximately 350 shops and restaurants in the city now accept bitcoin, alongside traditional Swiss francs. The local government has even begun accepting cryptocurrency for municipal services, including pre-school childcare fees.
A French customer, Nicolas, expresses his enthusiasm for the system. "Paying with bitcoin gives you a sense of freedom," he says. "You're no longer tied to a financial system with intermediaries and fees." Nicolas highlights the availability of bitcoin prepaid cards in Switzerland, which allow users to load Swiss francs and convert them into cryptocurrency for everyday use.
Businesses weigh risks and rewards
Walking through Lugano's luxury shopping district, Cherubino Fry, owner of Vintage Nassa-a store selling high-end bags and watches-explains why he adopted bitcoin. "The transaction fees are lower than those for credit cards," he notes. While credit card fees can reach up to 3.4%, bitcoin transactions typically incur less than 1%. However, Fry admits that bitcoin sales remain sporadic, with only a handful of customers using the option.
"Bitcoin adoption is like a growing tree," Fry says. "It will take five to ten years to reach its full potential."
Plan B: Lugano's cryptocurrency experiment
A short distance from Fry's shop, the headquarters of Plan B-a collaboration between the City of Lugano and cryptocurrency platform Tether-serves as the nerve center for the city's bitcoin initiative. Launched in 2022, Plan B aims to position Lugano as Europe's bitcoin hub through education and infrastructure development.
Mir Liponi, Plan B's hub director, shares her personal experience living exclusively on bitcoin for 11 days after encountering issues with her traditional bank account. "You can mostly survive on bitcoin in Lugano," she says, listing groceries, medical services, and home deliveries as accessible via cryptocurrency. However, she notes gaps in the system, such as public transportation, fuel stations, and utility bill payments, which still require traditional currency.
Global contrasts and local backlash
Lugano's experiment stands in stark contrast to other global attempts at bitcoin adoption. In 2021, El Salvador declared bitcoin legal tender and distributed $30 worth of the cryptocurrency to citizens via an app. However, Vincent Charles, head of cryptocurrency firm Unchain Data, found that most recipients quickly converted their bitcoin to dollars and never used it again. Retailers in El Salvador rarely accept bitcoin today.
Yet, other cities have seen success. A report in April ranked Ljubljana, Slovenia, as the world's most crypto-friendly city, followed by Hong Kong and Zurich. Back in Lugano, not everyone is convinced. In August, vandals destroyed a statue of Satoshi Nakamoto-the pseudonymous creator of bitcoin-located in a lakeside park and threw the pieces into Lake Lugano.
Lucia, a local resident and university student, voices skepticism about cryptocurrencies. "They're associated with crime, the dark web, and speculation," she says. "Many people lose money when cryptocurrencies crash." She also questions her university's promotion of bitcoin, calling it surprising for an institution to endorse such a volatile asset.
Economists warn of volatility and risks
Sergio Rossi, an economics professor at the University of Fribourg, highlights the risks of bitcoin's price volatility for businesses. "Shopkeepers must instantly convert bitcoin into fiat currency to avoid losses," he advises. He also warns of reputational risks tied to cryptocurrencies' association with illegal transactions, which could impact Lugano's financial institutions.
Additionally, Rossi points out the lack of consumer protections for bitcoin holders. "If the platform hosting your digital wallet fails, your cryptocurrency disappears instantly," he says. In contrast, Swiss bank deposits are guaranteed up to 100,000 Swiss francs ($125,000).
Mayor defends bitcoin's role in Lugano
Lugano Mayor Michele Foletti dismisses concerns about cryptocurrency attracting illicit activities. "Bitcoin can be used for good or bad, just like fiat money," he says. "Mafia groups prefer cash for money laundering because it's more anonymous."
Foletti emphasizes the positive impact of bitcoin on Lugano's economy, noting that 110 cryptocurrency-related companies have established operations in the city. "Bitcoin continues to benefit Lugano," he asserts, framing the initiative as a forward-thinking move for the city's financial future.
