The Swiss city that lets you pay for most things with bitcoin

Sergio Rossi is a professor of economics at Switzerland's University of Fribourg. He says that bitcoin is a risk for shopkeepers in Lugano or elsewhere because of its volatility – its value can go sharply up and down.

So, he says it is important that they instantly convert the bitcoin they receive into Swiss francs, euros, or another currency issued by a government or central bank. These are also known as "fiat" currencies.

He adds: "There is also a reputational risk with those cryptocurrencies used in illegal transactions, which could affect the city of Lugano and its financial institutions."

Prof Rossi also cautions that people's bitcoin is held by a digital third party, which makes it risky. "If the platform where my digital wallet is recorded fails or goes bankrupt, my cryptocurrencies disappear instantaneously.

"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 ($125,000; £94,000). This means that if the bank where my savings are recorded goes bankrupt, I can recover them up to this amount."

At Lugano town hall I ask Mayor Michele Foletti if he is concerned that Lugano could be a magnet for mafia money.

"No. You can use fiat money to do something good or something bad," he says. "The same with bitcoin.

"And mafia people are more interested to use fiat for money laundering. When they sell drugs or something like this, they receive [physical] fiat money, not bitcoin because the more anonymous way is cash," he says.

He adds that bitcoin continues to be positive for Lugano, and that 110 crypto-sector companies have now moved to, or started up, in the city.