Zug becomes the first city in the world that launches a 6-month trial to see whether accepting bitcoin payment for government services is rational.

Switzerland aims to be ahead of the curve in the sphere of cryptocurrency payments. The Swiss town of Zug becomes the first one in the world to start accepting bitcoin as payment for government services.

The experiment with bitcoin payments was negotiated and approved by the Zug municipality at the meeting on May 3. Swissinfo reports that the pilot project will start from July 1 and continue until the end of 2016, when the town will analyze the trial results and then decide whether it is reasonable to continue with accepting digital currency payments in the future or not.

“This is the first time worldwide that Bitcoins have been accepted as a currency on a state level,” says Niklas Nikolajsen, the chief executive and co-founder of Bitcoin Suisse. The start-up sells and buys the cryptocurrency and has its headquarters in Baar, not far from Zug.

The Zug municipality will accept bitcoin payments up to a value of CHF200 ($205.8 or 0.44 XBT) for standard government services. Zug is considered to be a “crypto valley” of Switzerland having around 15 companies specializing in the blockchain technology. According to the mayor Dolfi Müller, the town is open for cooperation with such companies.

Despite the openness of the city to new technologies, not all local officials approve of the bitcoin trial. Councillor Gregor Bruhin told Neue Zuercher Zeitung: “It is highly concerning that a state institution should accept Bitcoin, since it is not a secure currency. The town of Zug could undermine the status of cash with its actions.”

However, Mayor Mueller sticks to the opinion that it is time to turn to modern technologies in order to facilitate and revolutionize the daily procedures: “I can imagine that in the near future it will be possible to pay your tax bill with Bitcoin.”

Someone can wonder why the city with less than 30,000 people was chosen for the experiment with bitcoin. But the answer is rather obvious. Zug has become an ideal testbed with its laissez-faire attitude toward its economy, even in the context of Switzerland. The city has a rapidly developing financial tech sector and great financial influence – 3 percent of the world’s oil trades through the area.

What really remains unclear is whether other cities will turn to bitcoin if experiment in Zug is a success. Bitcoin has already taken a firm position on the cryptocurrency market but it is still far from mainstream use. The bitcoin trial in Zug aims at defining clear advantages (or at least, few drawbacks) in using the cryptocurrency at municipal offices. Experts know that bitcoin is rather secure and offers lower transaction costs, but now it is high time to prove it on this kind of government scale.

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