Lugano: The Swiss City Embracing Bitcoin for Everyday Payments
In the picturesque Swiss city of Lugano, nestled by a lake and surrounded by majestic mountains, a quiet revolution is taking place in how people pay for everyday goods and services. Visitors to local shops and restaurants are now able to buy items using bitcoin, one of the world’s most popular cryptocurrencies—a contrast to the common perception of bitcoin primarily as an investment vehicle.
Paying with Bitcoin in Lugano
At a McDonald’s in the heart of Lugano, a customer recently inquired whether he could pay for his coffee with bitcoin. Instead of a traditional credit card terminal, the cashier used a contactless crypto payment device. This technology, distributed at no cost to local businesses by the city council, facilitates simple transactions via bitcoin wallets on mobile phones. The customer’s bill came to about 0.00008629 bitcoin, equivalent to roughly $8.80 (ÂŁ6.60).
While in many places bitcoin is treated mostly as an asset to hold and speculate on, Lugano is pioneering its practical use as a medium of exchange. Approximately 350 businesses, ranging from shops to restaurants, accept bitcoin payments alongside traditional Swiss francs. The city has even extended bitcoin use to municipal services, allowing residents to pay for services such as pre-school childcare using cryptocurrency.
The Appeal of Bitcoin to Users and Businesses
Among the bitcoin users in Lugano is Nicolas, a French customer and self-described bitcoin enthusiast. He appreciates the “feeling of freedom” bitcoin provides by removing dependence on conventional financial intermediaries and their associated costs. He also mentioned using prepaid bitcoin cards available in Switzerland, where a sum is loaded in Swiss francs but stored digitally as bitcoin on mobile apps.
Local business owners have their own reasons for embracing bitcoin. Cherubino Fry, owner of Vintage Nassa, a luxury store selling bags and watches, highlighted the lower processing fees for bitcoin transactions. While debit and credit card fees in the region can reach up to 1.7% and 3.4%, respectively, bitcoin fees generally stay below 1%, offering potential savings to merchants.
Still, Fry notes that bitcoin sales are relatively sporadic at present but expects usage to grow over the coming years, likening it to a tree gradually expanding.
Initiatives and Challenges in Promoting Bitcoin
In 2022, the city launched the Plan B initiative in partnership with the cryptocurrency platform Tether, aiming to educate the public and position Lugano as Europe’s bitcoin hub. Mir Liponi, director of the Plan B hub, shared her personal experiment of relying solely on bitcoin for payments during an 11-day period when traditional banking access was disrupted. She found that while many services—from groceries to medical care—could be paid for in bitcoin, some essentials like fuel, public transport, dental care, and energy bills remained inaccessible via cryptocurrency.
Liponi envisions a future where a circular economy flourishes locally: residents earn, save, spend, and pay taxes all within the bitcoin ecosystem.
Global Comparisons and the Reality of Adoption
Lugano’s experiment with bitcoin acceptance contrasts with other attempts worldwide. For example, El Salvador became the first country to adopt bitcoin as legal tender in 2021, even giving residents the equivalent of $30 in bitcoin as an incentive. However, research by industry expert Vincent Charles found that most people exchanged their bitcoin for US dollars almost immediately, and merchants rarely accepted bitcoin in practice.
On the other hand, some cities like Ljubljana, Hong Kong, and Zurich have achieved recognition for their crypto-friendly environments, reflecting varied approaches to promoting cryptocurrency use.
Skepticism and Risks
Despite enthusiasm from some quarters, bitcoin and cryptocurrencies face skepticism within Lugano. A statue honoring Satoshi Nakamoto—the mysterious creator of bitcoin—was vandalized and thrown into Lake Lugano, signaling some local resistance.
Lucia, a university student, expressed concerns about connections between cryptocurrencies and criminal activities, speculation-driven losses, and the prevalence of bitcoin promotion even in academic institutions.
Economics professor Sergio Rossi from the University of Fribourg warned about bitcoin’s volatility and the risks it poses to merchants. He emphasized the importance of instantly converting bitcoin earnings into traditional “fiat” currencies to avoid losses from price fluctuations. Rossi also pointed out the reputational risks due to cryptocurrencies’ association with illegal transactions, which could impact Lugano’s financial standing. Furthermore, he noted the inherent risk that digital wallets depend on third-party platforms; if these fail or go bankrupt, users could lose their assets permanently—unlike bank deposits in Switzerland, which are insured up to 100,000 Swiss francs ($125,000).
City Leadership and Outlook
When questioned about concerns that Lugano might attract illicit funds through bitcoin, Mayor Michele Foletti remained unfazed. He argued that both cash and bitcoin can be used for legal or illegal purposes and that drug traffickers prefer handling physical cash over cryptocurrencies due to its anonymity. The mayor highlighted that over 110 crypto-sector companies have established themselves in Lugano, underscoring the city’s commitment to fostering a bitcoin-friendly environment.
Conclusion
Lugano’s unique embracing of bitcoin as a payment option represents a bold experiment in integrating cryptocurrencies into everyday life. While challenges remain—such as limited acceptance for certain services and concerns over volatility and security—the city’s leadership and local businesses are optimistic about bitcoin’s future role in the local economy.
As Lugano continues to position itself as a European bitcoin hub, it may offer valuable lessons for other cities worldwide on the opportunities and pitfalls of adopting cryptocurrency beyond investment and speculation.