Digital money or cryptocurrency may be taking a baby step on the path of official acceptance as the Swiss town of Zug is planning to allow its residents to use Bitcoin to pay for municipal services in its bid to transform itself into the digitization hub or "Crypto Valley".
The town council decided on May 3 to trial Bitcoin for payments for public services, which would be the first time digital currency is being considered for official use. The trial will be applicable for payments up to 200 Swiss francs and will run from July 1 till the end of this year, when a review will be conducted.
Based on the year-end review, authorities shall decide whether Bitcoin and other cryptocurrencies, should be retained for payments for other municipal services in future.
Bitcoin is the first decentralized peer-to-peer payment network over the internet that is powered by its users with no central authority or middlemen. All transactions on the network is recorded in a public ledger called the "blockchain" and the value of a Bitcoin is determined by demand and supply.
First introduced in 2008, Bitcoin is gaining acceptance among growing number of individuals and businesses, especially online services. According to the Bitcoin website, the value of all bitcoins in circulation exceeded $1.5 billion at the end of August 2013.
Zug is fast becoming the Silicon Valley of cryptotechnology and hosts a cluster of more than 15 Financial Technology, or FinTech, companies. By accepting Bitcoins, the town wants to set an example for embracing new technology and innovation to attract more crypto-startups.
Despite being the capital of one of the smallest cantons of Switzerland, Zug is a commercial and services hub with around 24,000 residents and home to over 30,000 companies. The town's low tax rates have attracted many foreign companies to settle in the region.
Services is a dominant sector claiming two third of total employees in Zug. The prominent fields are commodity trading, wholesale trade, medical and bio technology, IT and electronic components, pharmaceuticals, sports articles and sports marketing, education, metal and general finance.
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