Bitcoin will pay for public services in a small Swiss town

Zug wants to show that the digital currency can work on a municipal level.

Hans Georg Eiben via Getty Images

Most experiments in paying with digital currencies have come from private companies, but the Swiss town of Zug is trying something different. As of July 1st, the community is launching a trial that will let you pay for public services using Bitcoin -- as long as you're shelling out the equivalent of 200 francs ($206 US) or less, you can skip old-fashioned money. The trial will run through the rest of 2016, though whether or not it lives beyond that depends on the town council's findings.

It might seem odd to center a trial like this on a municipality with less than 30,000 people, but this is potentially an ideal testbed. Zug takes a laissez-faire attitude toward its economy, even in the context of Switzerland, and has much more financial clout than you'd expect -- 3 percent of the world's oil trades through the area. Combine that with a burgeoning financial tech sector and it's likely that at least some locals will fork over some Bitcoin.

The real question is whether or not any other cities will bite. While some governments have been warming up to Bitcoin, the currency is still far from a household name. Zug would have to show that there are clear advantages (or at least, few drawbacks) to taking Bitcoin at municipal offices. The technology is secure and can lower transaction costs, but that has yet to be proven on this kind of government scale.