Cryptocurrencies in everyday life

Zug and Lugano – pioneering cities

This development is being driven forward by cities such as Zug, whose municipal administration has accepted Bitcoin for the payment of fees since 2016. In 2021, the Canton of Zug followed suit – natural persons and legal entities have since been able to pay their tax bills in Bitcoin or Ether. The region known as Crypto Valley is certainly living up to its name.

The city of Lugano has also launched an initiative called “Plan ₿” to encourage acceptance of cryptos. In addition to around 300 points of sale that accept cryptos, taxes and municipal services can also be paid for using Bitcoin, Tether and LVGA. The latter is a stablecoin – its rate is tied to the Swiss franc – that was specially developed for Lugano as part of “Plan ₿”.

In parallel with the acceptance points, the number of crypto ATMs is also increasing. The The link will open in a new window Coin ATM Radar lists around 130 ATMs that enable the purchase and sale of cryptocurrencies against the Swiss franc.

International transfers can also be made, an attractive option for migrants. Conventional transfers often incur high charges and are time-consuming, while cryptocurrencies such as Bitcoin provide an efficient and inexpensive alternative. The transfer is also guaranteed to arrive virtually instantly. Another advantage is independence from bank accounts, because only a digital wallet is needed. As around a fifth of people are still unbanked, this factor shouldn’t be underestimated. These crypto transfers are also legally valid, as the providers are subject to the same money laundering provisions as traditional financial service providers.

Integration into payment systems

A key step in the acceptance of cryptocurrencies in everyday life is their integration by payment service providers. One example is Worldline, a leading payment transaction provider, which operates around 55,000 card readers in Switzerland. Crypto integration means companies using Worldline can receive payments in Bitcoin, Ethereum, Bitcoin Lightning and three stablecoins.

The process is extremely straightforward – it’s simply a matter of activating the service via Worldline. Retailers don’t assume any exchange risks: the crypto payments are automatically converted into Swiss francs and credited at the current rate. This immediate conversion protects retailers against the volatility of the crypto market and enables seamless integration into existing financial systems.

PostFinance’s e-commerce solution also enables payment in cryptos – in both offline and online retail stores. Bitcoin, Ethereum and the two stablecoins USDC and USDT are accepted. The crypto payment technology behind this solution is also provided by Worldline.

The fact that there’s still room for improvement in terms of everyday adoption of cryptos points to the lack of integration by the major players, such as Apple Pay and Google Pay – or the highly popular TWINT solution in Switzerland. None of these solutions offers crypto payments – consumers have to make do with a separate app. To ensure further integration in everyday life, payment service providers and banks incorporating crypto payments into their own app would represent a future-oriented approach.

The situation is different for normal crypto trading, where some banks have now taken up this trend and extended their business model. While investors were previously reliant on platforms abroad and had to bear default risks, various Swiss institutions now offer their customers secure crypto investments. PostFinance customers can also invest in a range of cryptos directly via e-banking and the PostFinance App. In addition to safe custody, they also benefit from a simple procedure and a high degree of user-friendliness and transparency.

Pros and cons of cryptos in daily life

The pros

• Security and privacy: cryptocurrencies use highly advanced cryptography, making transactions more secure than conventional online payment methods. Users don’t have to disclose any personal data, reducing the risk of data leaks and identity theft.
• Global transactions: crypto payments enable purchases to be made and money transferred worldwide. These transactions can also be made 24/7, improving flexibility and accessibility.
• Decentralized solution: as cryptos aren’t controlled by a central authority, such as a central bank or government, financial transactions can be made without having to rely on third parties. This can be hugely beneficial, especially in regions with unstable financial systems and/or a volatile political climate.
• Low transaction fees: in the case of international transactions in particular, the fees for crypto payments are often lower than those charged by traditional banks and online payment services. It’s worth comparing transaction costs on the market, especially when making large transactions (see the cons). 

The cons

• Price fluctuations: cryptos are still a volatile asset class, which means their price can fluctuate dramatically. For instance, if the rate rises sharply just before you make a large payment in Bitcoin, you risk losing out on the profit from this increase.
• Technical barriers: using cryptocurrencies requires a degree of technical knowledge. Inexperienced users can struggle with wallets, keys and navigating the crypto space in general.
• Limited acceptance: despite growing popularity, usage is still low in terms of the number of stores – lying in the hundreds of thousands – that accept payments. You can’t get by in everyday life in Switzerland with cryptos alone.
• Risk of total loss: if you lose your private key or the crypto platform you’re using falls victim to a hacker attack, all your crypto assets can be irretrievably lost.
• Transaction costs: the flexible fee structure of the Bitcoin and Ethereum networks can be unfavourable depending on the market situation – fees can rise significantly when demand is strong. It’s worth keeping a close eye on fees, especially for large amounts.

Blockchain-based services in everyday life

Blockchain technology, on which Bitcoin and other cryptocurrencies are based, is also being used more widely in other areas, especially where a high degree of security and confidentiality are required. Blockchain provides an environment that’s secure against manipulation and forgery and which can serve as the basis for a wide variety of applications.

One example is educational certificates, the verification of which previously involved a laborious process invariably requiring a phone call. A more elegant and simpler solution is provided by blockchain or the application used by institutions such as the Swiss Association for Quality (SAQ) or Center for Innovative Finance at the University of Basel. This enables educational certificates to be verified via a link or QR code, an efficient and secure solution that will make life much easier for HR staff in future.

Security is also required in the real estate sector – such as when landlords require tenants to provide an extract from the debt enforcement register. Whether the extract is genuine or falsified can only be established by contacting the relevant debt collection office. That’s not the case with CreditTrust, a digital alternative based on blockchain. CreditTrust provides a forgery-proof credit standing certificate that applicants can order online and attach to their application. 

The process is secure, efficient − and quick. Producing the credit standing certificate takes just a few minutes, while verification by the landlord is even faster. The certificate from CreditTrust can also be used for loan and job applications – and multiple times, obviously. 

Financing and consultation

Another area where cryptos are playing a greater role is financing solutions for companies not listed on the stock exchange. Estimates indicate that this applies to 99 percent of all private limited companies worldwide. The reasons for that include stiff regulatory hurdles and small company sizes – but they also try to finance their growth by using equity instead of relying on debt capital alone.

The conventional process for raising capital is very protracted and, from the search for investors to entry in the commercial register, can take several months. Since the law was amended in 2021, it’s been much simpler and quicker, at least in Switzerland: shares can be issued as blockchain-based tokens known as register value rights. These are equivalent to conventional shares and allow investors to benefit from the company’s share price performance. This opens up exciting opportunities, especially in crowd investing. Companies can appeal directly to their loyal customers and turn them into shareholders. This allows fresh financial resources to be secured, while strengthening customer loyalty.

Blockchain technology is also being deployed more widely in sport. One example is fan tokens, which herald a new era of interaction between clubs and their supporters. These are tokens that fans can buy to obtain exclusive rights, such as participation in surveys. Decisions are made on all sorts of things – from shirt design to the preferred opponent in the next friendly fixture. Interestingly, many fans presumably don’t even realize they’re becoming part of the blockchain ecosystem by using these tokens. But then why would they? The necessary processes run completely in the background.

After FC Barcelona, Paris Saint-Germain and Manchester City, EHC Kloten and champions YB have become the first Swiss sports clubs to launch their own tokens. 

Summary

While investment in cryptocurrencies is now commonplace thanks to easy access via apps, their use as a payment method is still in the early stages. Cryptos are being accepted at more and more places, but widespread acceptance still hasn’t been achieved due to the size of the overall market.

To enable cryptos to achieve similar progress as a payment method to that made in the field of investment, the network of acceptance partners must continue to grow. Security and user-friendliness must be improved, and the risk of misuse minimized.

The number of applications in the services sector also has to grow in range and sophistication. Every procedure involving the exchange of information that could be falsified or manipulated represents a potential use case for the blockchain.