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The country of Switzerland is known around the world for many things: chocolate, watches, army knives, and banking to name just a few. However, it might be about time that we add cryptocurrency & blockchain technology to that list.

In 2017, the Ethereum Foundation decided to set up their headquarters in Zug, Switzerland. The decision largely came down to the combination of Zug's favourable corporate tax rates, their clear rules around cryptocurrencies, and their history of accepting Bitcoin payments from their citizens. Obviously, with Ether now being the number 2 biggest cryptocurrency in the world - this caused quite an impact. However, the Ethereum Foundation is far from the only crypto player in town.

Also in 2017, the Crypto Valley Association was set up to provide advice and support to crypto and blockchain businesses interested in setting up shop in the area. Today, there are over 400 businesses who are part of the CVA, showing that in Zug, crypto is indeed here to stay.

So what lessons can other cities or states take from Zug?

Lesson #1: If you embrace it, they will come

By embracing cryptocurrency and creating clear and specific rules for how businesses can operate, Zug attracted both start-ups and established companies to their region. Companies knew the rules when entering Zug, which helped establish clarity and trust between companies and government. Indeed, the canton of Zug hosts conferences numerous times per year, where even more companies, investors and individuals can come to see what all the fuss is about.

Lesson #2: You can benefit your citizens by embracing crypto

Currently, Zug allows its citizens to pay for certain municipal services with either Bitcoin or Ether. By offering these services, Zug helps to legitimize Bitcoin and cryptocurrency for its citizens. Whereas before, someone might have viewed Bitcoin with scorn or distrust - now that same person sees it as a perfectly legit and legal way to conduct business. If Bitcoin and blockchain technology are indeed the way of the future - would a region not want their citizens to be early and informed adopters? I'd say yes.

Lesson #3: It inspires innovation

Paying for municipal services with Bitcoin or Ether is far from the only blockchain inspired perk for citizens living in Zug. On a local level, there are plans being worked on to use blockchain technology for voting in local elections. Crypto companies based in Zug are currently working on a wide variety of projects, from asset management to data storage, and more. Evidently, by embracing these companies - Zug has positioned itself at the forefront of a new 'Silicone Valley' - one centred around blockchain technology.

It is my hope that more regions around the world will follow the Zug model, bringing more opportunity for innovation and advancements in blockchain and crypto development worldwide.

The Zug Model: How Governments Can (And Should) Embrace Cryptocurrency

On June 8th, 2021, El Salvador passed The Bitcoin Law - granting Bitcoin the status of legal tender.

Many speculated on what this decision would mean for El Salvador, Bitcoin, and indeed cryptocurrency in general. However, the question this article will seek to address is:

Why El Salvador?

Of all the countries in the world who could have switched to Bitcoin as legal tender - what unique factors made El Salvador the world's first country to officially recognize Bitcoin as legal tender?

Reason #1: A leader with wide reaching power

Nayib Bukele has been a controversial leader since taking power On June 1st, 2019. Proponents have argued he has helped clean up El Salvador by being hard on crime, while also helping to secure a (comparatively) high number of vaccines for his citizens during the COVID-19 pandemic. Critics have slammed his anti-abortion views, as well as his seemingly authoritarian style of leadership.

Regardless of your opinion of him, Bukele has a tremendous amount of individual power and influence over the decisions his country makes. This makes a radical idea such as adopting Bitcoin as one's legal tender much easier than a country which relies on a series of checks and balances, or partisan agreement.

Reason #2: Not a 1st world country

Many 1st world countries have the benefit of having a (relatively) stable currency. Countries like Canada, Japan, the USA and the UK may go up or down comparatively to other countries, but they can rely on their currency to remain relatively stable as an accepted medium of exchange.

However, countries who suffer from hyper-inflation - or who may potentially suffer from hyper-inflation may be more likely to adopt a cryptocurrency as legal tender to hedge against runaway inflation, or their currency losing power on the global stage. While this 'bet' may seem wise - detractors point to Bitcoin and cryptocurrency's volatility as reasons why it is actually not a wise policy.

So which country might be next?

If we take these 'ingredients' into account, countries which spring to mind include Cuba, fellow Central American neighbours Nicaragua and Guatemala, as well as Venezuela. It will remain to be seen how China's banning of Bitcoin and cryptocurrencies will affect Asian countries from adopting Bitcoin. 

Please feel free to share your own predictions for which country may grant Bitcoin legal tender status as well!