The city of Zug will be the first public authority in the world to accept the cryptocurrency Bitcoin. This pilot project, set to begin on July 1, 2016, will allow people to use the virtual currency to pay for services at the residents’ registration office for sums of up to CHF200. However, Bitcoin has been subjected to major fluctuations and critics fear that the city stands to lose money through the project.
Transcript
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From July on, the Zuggers city president can pay his home machine on the population control with bitcoins. A digital currency from the internet, which has never been caught by anyone until today. You just have to log in there with the appropriate provider and then you are in this network. It is a payment system that simply costs nothing.
And I believe that this is also a model for the future. For you and me in the future, too, it is important to ask yourself why you should pay the banks high fees if you can develop this through an intelligent system. On the internet, Swiss francs can be exchanged for bitcoins. The digital currency is stored in a virtual wallet.
It is stored on a computer or mobile phone. Secondarily and without fees, the virtual currency can be transferred to other users. For example, to the employee at the counter or to the treasure in the store. The special feature of Zuggers is that the digital currency is not controlled by any state or bank and the exchange rate of bitcoin is based on an algorithm of a computer program.
In the city of Zug, only fees up to CHF 200 are accepted for bitcoins. But this is already too much for SVP. The city administration of Zug is the first official institution in Switzerland to introduce payment methods with bitcoins. It is a very secure payment method.
It is not subject to high speculation. It has no connection to any currency. You can't control it at all. That's why I don't think it's a good idea to force the city to introduce it before it is thoroughly clarified and checked.
A look into the past shows that bitcoin has big jumps but also big declines. The decision of the city of Zug amazes the digital editor of SRF, Guido Berger. He thinks it is acceptable. I think it's primarily about location marketing, which shows that you are technologically involved, attract companies that also work in this area.
But it is still very limited. It's about small amounts of money. And because of that, the risk of losing money with this experiment is not incredibly high. The state editor has just opened a account, paid 50 CHF and noticed that he even made a profit.
But there could be losses. That's very clear. And that's also the main reason why we don't say you can pay taxes right away with this. These are small, manageable amounts.
If the pilot experiment with digital currency is successful, taxes will return to the topic. But today evening, the city council of Zug will be the first to lead political discussions on bitcoins.