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Welcome to 'Bitcoin city'
00:17:28
In Lugano, Switzerland, the cryptocurrency is accepted in shops and for local services
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Transcript47 lines
- [00:00]
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- [01:09]
John Laurenson
Hello and welcome to Business Daily from the BBC World Service. I'm John Laurenson. Today I'm in Europe's Bitcoin city.
- [01:17]
Mia Lippone
So I experimented living only with bitcoin in Lugano. Groceries are okay, plenty of medical places you can survive here in bitcoin only.
- [01:27]
John Laurenson
By the side of a vast lake surrounded by vast mountains. The pretty prosperous town of Lugano in the Italian speaking part of Switzerland has gone a long way to encourage the use of cryptocurrency alongside the Swiss franc. You can even pay for municipal services in crypto in this city. Your kids creche for example, or a parking fine.
- [01:49]
Cherubino Free
Young people start with the cellular with the phone to have account in Bitcoin because it will be like trees are growing industry. We're growing very big. In five, 10 years we look at.
- [02:03]
John Laurenson
This attempt to bring bitcoin into people's everyday money transactions and ask is using this notoriously volatile currency a good thing and is this the future? That's all coming up in Business Daily. In what is the classiest McDonald's and I've ever set foot in by the lake in the centre of Lugano, a customer orders coffee. The salesperson holds out what looks like a credit card payment terminal, but which in fact is a special crypto one distributed free to businesses by the town council. The customer pays contact lists from the bitcoin wallet on his telephone. 0.00008629 Bitcoin it comes to. Not many people who've bought bitcoin will probably ever think about using it to buy actual things like a diamond ring or a pizza. Bitcoin, this purely digital currency that uses encryption to control, manage and issue units rather than relying on a central bank or a government, is something people more usually buy as an investment in the hope that its value will go up, as it has spectacularly in the past, rather than down, as it has also done very spectacularly in recent weeks, for example, shedding nearly a quarter of its value in a month. I get talking to my McDonald's coffee buyer. He tells me his name is Nicolas and that he's from France.
- [03:41]
Nicolas
It's a really quick and simple way to pay. Using your phone, you scan a QR code and in three seconds the payment is completed.
- [03:50]
John Laurenson
And you, if you don't mind me asking, did you just pay with your main Bitcoin account?
- [03:59]
Nicolas
I have several Bitcoin wallets. One that I keep my savings in, which I'm holding for the future, so it's really long term, and another which is like a purse for everyday spending.
- [04:10]
John Laurenson
You're over here from France. Is it good to be able to pay in Bitcoin when you're in a country that doesn't use the euro? Does it make things simpler or cheaper?
- [04:22]
Nicolas
Exactly. You can pay all over the world without currency exchange and without having to think about paying in local money. You can take all your savings with you. They're there in your phone, in your pocket and they're invisible. You don't have to declare them to customs. The other thing is that in Ngano you can buy cards that are a bit like phone cards or debit cards that are pre charged with something like $30 worth of Bitcoin. And you can use those cards to buy things or you can offer them as gifts and they can be a way of acquiring or conserving Bitcoin without having to go through an online platform where you have to give your identity, your passport details and so on.
- [05:01]
John Laurenson
A way of buying Bitcoin without the government knowing exactly. I walked through the centre of town, down a high street where just about all the shops are selling luxury stuff, jewelry or expensive clothes. Mainly in a shop called Vintage NASA that sells new and second hand bags and watches. I get talking to the owner, Cherubino free.
- [05:24]
Cherubino Free
We accept Bitcoin because it's a possibility to the client to pay in another way. There is cash, there is credit card, there is Bitcoin that have no cost.
- [05:37]
John Laurenson
Actually there is a transaction charge of about 1% when you receive payment in Bitcoin, but bank Cards often charge more than that. Do you already do some business in bitcoin?
- [05:47]
Cherubino Free
In reality, not a lot of. For now, only sporadically, only some client. But young people start with the cellular, with the phone to have account in Bitcoin because it will be like a tree. Are growing in this tree. We're growing very big in five, 10 years.
- [06:10]
John Laurenson
Carabino Free is about one of 350 business owners now accepting Bitcoin in Lugano. Out of a total of around 2,000. I get through the quite serious security and into the headquarters of Plan. That's B for Bitcoin, of course, in a former convent. The Plan B initiative was launched in 2022 by the city council and Tether, a company which has become enormously wealthy because of the success of its USDT Stablecoin, a crypto pegged to the US dollar that's popular in countries with unstable currencies like Turkey, Argentina and Nigeria. Plan B's aim is to educate people about Bitcoin and to make Lugano a European centre for bitcoin and digital asset innovation. The Plan B hub's director in charge of this place where bitcoiners meet, work, eat in the restaurant and work out in the gym is Mia Lipponi.
- [07:11]
Mia Lippone
I want to talk about an experiment I did this July. I have a problem with my bank. They cut me off the bank for a very stupid reason. But I had to live in bitcoin only for 11 days. And so I experimented living only with bitcoin in Lugano completely. And it worked it out. You can survive here in bitcoin only. And this is very an unicom of Lugano. And of course, there are some services still missing. It's missing public transportation at the moment, which is really important. Another one is is very, very important is fuel. And that's a problem.
- [07:50]
John Laurenson
So you did a lot of walking during those?
- [07:52]
Mia Lippone
Yeah, exactly. You really need to use your feet. Other things are just like groceries are. Okay, there is a spa, is like a supermarket spa. I got things delivered at home. Even so, everything is fine. So I would say fuel, public transportation. I couldn't find a dentist. Plenty of medical places, but not a dentist. And another big things are bills. You cannot pay bills with bitcoin, although.
- [08:24]
John Laurenson
You can pay for municipal services. If you get a parking fine, you can pay it in Bitcoin.
- [08:30]
Mia Lippone
Yes, you can also pay taxes in.
- [08:33]
John Laurenson
Bitcoin, which is probably not why bitcoin enthusiasts move to this town. But still. I wander along the lakefront and into a park where there's a square Block of metal, a plinth, upon which stood a statue of Satoshi Nakamoto, the name of, or the name given to the mysterious person or persons who brought bitcoin into being in 2009. He, she or they still own a fabulous amount of bitcoin, but have stepped back, back from its development. Playing on the mystery, the statue of Nakamoto, made of slats of metal, is transparent when you look at it from the front. And it's now completely invisible because this summer some equally anonymous individual or individuals unscrewed it, broke it into bits and threw it in the lake. The parts were all fished out and it's now undergoing restoration. The story of this statue tells us two things that the authorities in Lugano love bitcoin and that not everyone is happy about that. I get talking to a few passersby. I ask one woman, Lucia, what she thinks of this statue, to the glory of bitcoin, being attacked.
- [09:44]
Lucia
It's interesting because not that many things get vandalized around here.
- [09:49]
John Laurenson
This is a quiet place.
- [09:50]
Lucia
Yeah, people are usually fairly well behaved and you don't see often people having very strong political opinions either. Like, I'm from the University of Lugano and there's a lot of workshops, there's a club to promote bitcoin and everything. I personally don't use any cryptocurrencies, so I don't feel like it impacts me at all. But I do find it surprising that institutions such as my university would promote it so much.
- [10:18]
John Laurenson
Surprising good, surprising bad, not great.
- [10:22]
Lucia
I think it's associated to crime, to the dark web and speculation. Like cryptocurrencies in general, a lot of people lose their money because they invest in it and then it crashes. So I don't feel like it's a great thing.
- [10:35]
John Laurenson
You're listening to Business Daily on the BBC World Service.
- [10:41]
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- [11:09]
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- [11:43]
John Laurenson
I'm John Laurenson and today I'm looking at how the Swiss city of Lugano has embraced bitcoin. The fears I heard raised near that empty plinth of are echoed by economics professor Sergio Rossi of Switzerland's Freiburg University, who's from Lugano.
- [12:01]
Professor Sergio Rossi
The fact that Lugano is crypto friendly is a problem because this implies several risks. First of all, those individuals having some cryptocurrencies and their digital wallets could suffer a loss in their purchasing power due to the high volatility of these cryptocurrencies. This also concerns many shopkeepers if they don't transform instantaneously their cryptos into Swiss francs when they sell their goods. There is also a reputation of risk with those cryptocurrencies used in illegal transactions, which could affect the city of Lugano and a number of economic activities in this region involving also various financial institutions.
- [12:37]
John Laurenson
Bitcoin supporters say the number of units that can be issued is limited, unlike dollars, pounds or yen, where government central banks can print as much as they like. This, they argue, protects the value of your money and is anti inflationary. Professor Rossi says that on the contrary, holding Bitcoin is risky.
- [12:57]
Professor Sergio Rossi
Bitcoin is the name of something which doesn't exist really, because there is nothing behind bitcoin. Another problem with cryptocurrencies is that there is no guarantee that the owners of them are protected against bankruptcy. If the platform where my digital wallet is recorded fails or goes bankrupt, my cryptocurrencies disappear instantaneously and and therefore I lose the corresponding amount forever. By contrast, in Switzerland, all bank deposits are guaranteed up to the amount of 100,000 Swiss francs. This means that if the bank where my savings are recorded goes bankrupt, I can recover them up to this amount.
- [13:34]
John Laurenson
Professor Rossi is also concerned that because bitcoin sales can be complicated to trace, it could encourage the underground economy or the dark web and could facilitate tax evasion. To get responses to these criticisms, I go to the town hall past a series of posters announcing a two day Plan B event when hundreds of bitcoiners are expected to descend on this city, making Lugano a magnet for bitcoin people. And Bitcoin itself is one of the Reasons this city has done so much to encourage its use here, says the Mayor Michele Folletti.
- [14:10]
Mayor Michele Folletti
The first motivation was that I would, and I won't build a bridge between old finance and new finance. Lugalo is the third financial place in Switzerland, but was the old finance. And I see that the future is the new finance. Digital finance, tokenization, digital asset. And so. But the banks at that time doesn't look forward. But now, after three years, all the banks in Lugano do custody in Bitcoin for the clients, or trading in crypto for the client. So we start to move something.
- [14:50]
John Laurenson
Have companies moved to Lugano because of this?
- [14:55]
Mayor Michele Folletti
Yes, Sikhi. The last 3, 4 years, almost 100, 110 new company moved to Lugano or start up in Lugano. In Lugano live only less than 70,000 people. So Lugano is a small city, but is a huge performance. I think what I see is a big community of people and young people that move to Lugano for working in this company.
- [15:25]
John Laurenson
Although that is out of a total of about 12,000 business entities in this city. Mayor Folletti says that accepting payments in crypto rather than fiat money, that is government issued currencies, does not expose Lugano to risk due to the volatility of the market value of cryptocurrencies, because they immediately convert payment in Bitcoin into Swiss francs. Are you at all worried that Lugano would become a magnet to mafia people, for example?
- [15:54]
Mayor Michele Folletti
No, because mafia people are more interested to use fiat for money laundering. And the risk for Switzerland is this with the Swiss franc, not with the Bitcoin. Because when they sell drugs or something like this, they receive fiat money, not Bitcoin. Because the most anonymous is the cash. You can use fiat money or do something good or something bad. The same with Bitcoin.
- [16:27]
John Laurenson
For Mayor Folletti, Bitcoin is a good thing because it's bringing tangible benefits to this town. Lugano's getting more money by accepting crypto money. But for Bitcoin's true believers, like Plan B's Mia Lippone, the Lugano experiment is also a first, tentative step towards something much bigger.
- [16:49]
Mia Lippone
It's important that we create sort of a circular economy where people earn bitcoin, keep Bitcoin, spend bitcoin, pay for services in Bitcoin and keep bitcoin circulating in the space. Once you want to convert in fiat money, this is like where the government can intervene again. So this is why also circular economies in bitcoin only are so important. You don't have to share your data all the time. You don't have to ask for permission.
- [17:21]
John Laurenson
Looking ahead, what does the future hold as regards Bitcoin?
- [17:26]
Mia Lippone
So we are very early. We are super early in this. I think that in the future, like in five, 10 years, unfortunately, I am not very optimistic that bitcoin will be adopted in such a nice way. Just like here in Lugano, probably people will need bitcoin and so it's going to be like they are going to realize that the money as we know is kind of broken at this point. We really need something that it's a real gold to keep for ourselves that doesn't. It is not like so easily inflated over time. But I really hope that more places like Lugano will arise all over the world. And this is why I believe in these physical hubs and also to involve the community, to make the communities even bigger and bigger and bigger. So for example, right now we are in the south of Switzerland, but there are some connection within the northern part of Switzerland, like creating more of a network. And ideally all Switzerland would be a bitcoin friendly place. And we want to contaminate in a good way, of course, like the center of Europe. But this is the project, this is what we envision and what we want. But at the same time, I believe that sometimes the traumatic events will really be like the boost for, for the bitcoin adoption.
- [18:56]
John Laurenson
To Bitcoin or not to Bitcoin? The question is at root also a philosophical one. People who think governments are basically a force for good tend to dislike it. People who think that they're generally a force for bad, at least in the economic sphere, tend to like it. Crypto libertarians dream of a financial world beyond government issued money. And Lugano has become, in Europe at least, their unofficial capital. That's all for this episode of Business Daily from the BBC World Service. You can hear more episodes just search for Business Daily wherever you get your BBC podcasts from me. John Laurenson, Goodbye.
- [19:43]
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