Rail ticket machines to offer bitcoins

Swiss Railways is entering the digital payment world Keystone

Bitcoin users will soon be able to buy the digital currency from Swiss rail ticket machines. The pilot project starts on November 11 and will initially last two years to see how much demand there is for the service.

To use the service, customers need to have a bitcoin wallet. They must also identify themselves over their mobile phones and enter a security code.

They will be able to exchange up to CHF500 for bitcoins, with an upper limit of CHF5,000 to guard against money laundering. Swiss laws were changed at the start of the year to allow limited bitcoin services without needing a banking licence.

Swiss Railways has teamed up with Zug-based firm SweePay to distribute bitcoins from over 1,000 ticket machines. The service will charge a fee of 6% of the value of transaction.

Only a handful of vendors accept bitcoin so far in Switzerland. Earlier this year Zug City started accepting bitcoin payments for services in a pilot project that will last until the end of 2016. Zug and its surroundings is emerging as a centre for the Swiss cryptocurrency business.

In July, the private Bank Vontobel introduced a financial instrument to enable trading in the bitcoin on the Swiss stock market.

Bitcoin

Bitcoin is a digital cryptocurrency that circulates around the world using blockchain technology.

Created in 2008, blockchain is an encrypted programme that acts as an online ledger of transactions. Each block of transactions is linked in a chain, giving participants an overall picture of what is taking place in the system.

The programme is designed to be decentralised, allowing transactions to take place between users without the need for third parties such as banks, or a central clearing system like SWIFT. In essence, each user acts as their own independent bank – free from the administration, and associated costs, found in a traditional financial centre.